Section 10-A707. ED-2.1 THE OFFICE ECONOMY

 

707.1The District has one of the largest inventories of office space in the nation, with over 112 million square feet. Among American cities, only Midtown Manhattan, Lower Manhattan, and Downtown Chicago boast a greater concentration of office buildings. By most indicators, the District’s office market is performing well. Its vacancy rate is just 6.7 percent, the lowest of any major U.S. market. The average asking rent remains above $45 per square foot-second only to Midtown Manhattan. 707.1

 

707.2Central Washington includes a number of sub-markets, each providing different amenities and locational advantages. The largest of these submarkets are Downtown, traditionally defined as the area east of 16th Street and south of Massachusetts Avenue; and the Golden Triangle, extending from 16th Street west to Foggy Bottom and north to Dupont Circle. Smaller office districts exist in Georgetown, on Capitol Hill, along the avenues of Upper Northwest Washington, around L’Enfant Plaza, and in the Southeast Federal Center and North Capitol Street areas. The large geographic expanse of the city’s office market has been driven at least partially by height limits and the sizeable area dedicated to federal uses and open space in the heart of the city. 707.2

 

707.3The city’s more well-established business districts, such as Downtown and the Golden Triangle, are approaching build-out. As a result, development is pushing east towards Union Station and the North-of-Massachusetts- Avenue (NoMA) areas, and south toward the Anacostia River. Almost nine million square feet of office space is now under construction in the city, much of it in these areas. 707.3

 

707.4Although the District’s commercial land supply is adequate to accommodate the job forecasts, the market faces a number of challenges to its continued high performance. While absorption has been brisk (about 1.75 million square feet per year), approximately half of the space due to come online in the coming years is speculative. In addition, recent federal security standards and related military base closures may open up large quantities of inexpensive office space in Arlington, potentially impacting the demand for space in the District (see “Planning for BRAC” text box). At the same time, some of the existing space in Central Washington has reached the end of its economic life and is in need of renovation or replacement. Going forward, there will be a need for strategies to retain existing office tenants and to attract new tenants through creative marketing. 707.4

 

707.5Planning for BRAC

 

The Department of Defense periodically reorganizes America’s military infrastructure to more effectively and efficiently support its operations. This may result in the redeployment of personnel to new sites, the development of new facilities, and the closure of military bases across the United States. The latest round of base closings, announced in 2005, would close Walter Reed Hospital and scale back operations at Washington Navy Yard and Bolling Air Force Base. According to the George Mason School of Public Policy’s Center for Regional Analysis, the District could lose more than 7,500 military and civilian jobs as a result. The indirect impacts of the BRAC may be even greater than the direct impacts. Specifically, new Department of Defense security standards may result in the vacating of almost 7.2 million square feet of space in Arlington and Alexandria. As contractors and federal tenants leave this space for secured facilities at Fort Belvoir and elsewhere, the local office market may quickly become saturated. Possible impacts on the District could be a downward adjustment in office rents and leasing rates, an increase in vacancy rates, and the loss of firms to Virginia as cheaper space becomes available. In the long-term, there may also be positive impacts from the military realignment. The possibility of future land transfers from federal ownership to the District could mean new economic development opportunities for the city.

 

707.6Policy ED-2.1.1: Office Growth

 

Plan for an office sector that will continue to accommodate growth in government, government contractors, legal services, international business, trade associations, and other service-sector office industries. The primary location for this growth should be in Central Washington and in the emerging office centers along South Capitol Street and the Anacostia Waterfront. 707.6

 

707.7Policy ED-2.1.2: Corporate Headquarters

 

Promote the qualities that favor the District as a headquarters or branch setting for multi-national corporations, including its economic, social, political and locational attributes. Focus in particular on companies that contract with the federal government but are currently headquartered elsewhere. Construct incentive packages to encourage large corporations to locate and maintain their offices in the District. 707.7

 

707.8Policy ED-2.1.3: Signature Office Buildings

 

Emphasize opportunities for build-to-suit/signature office buildings in order to accommodate high-end tenants and users and corporate headquarters. Consider sites in secondary office centers such as NoMA and the Near Southeast for this type of development. 707.8

 

707.9Policy ED-2.1.4: Diversified Office Options

 

Diversify the tenant base by attracting both high-end, mid-range, and low-end office space users, and by supporting a range of office space types. Recognize that while many firms seek to be located in the District, some may prefer lowerend space over premium Downtown office space. 707.9

 

707.10Policy ED-2.1.5: Infill and Renovation

 

Support the continued growth of the office sector through infill and renovation within established commercial districts to more efficiently use available space while providing additional opportunities for new space. 707.10

 

707.11Policy ED-2.1.6: Local-Serving Office Space

 

Encourage the development of small local-serving offices within neighborhood commercial districts throughout the city to provide relatively affordable locations for small businesses and local services (such as real estate and insurance offices, accountants, consultants, and medical offices). 707.11

 

707.12Action ED-2.1.A: Office Sector Assessment

 

Conduct a comprehensive evaluation of the District’s office market at least once every two years, including employment forecasts; space demand estimates; inventories of planned and proposed projects; analysis of location trends; analysis of regional competition including taxes, amenities, and the regulatory environment; and shifts in occupant needs. Use the findings of the evaluation to assist local Business Improvement Districts and Community Development Corporations, and to develop appropriate District economic development strategies and programs. 707.12

 

707.13Action ED-2.1.B: Marketing Programs

 

Prepare and implement a marketing plan for the District of Columbia’s office space, working collaboratively with local economic development organizations such as the Board of Trade and Chamber of Commerce. The marketing plan should focus on companies that are headquartered elsewhere but conduct extensive business with the federal government, including legal firms, national membership organizations and technology-intensive industries, and the domestic offices of international firms. 707.13

 

707.14Action ED-2.1.C: Back Office Construction Incentives

 

Explore the feasibility of financial and/or regulatory incentives to encourage the development of lower-cost office space and office space for small and/or nonprofit businesses in underinvested areas and in commercial districts outside Downtown. 707.14

 

notation

The provisions of Title 10, Part A of the DCMR accessible through this web interface are codification of the District Elements of the Comprehensive Plan for the National Capital. As such, they do not represent the organic provisions adopted by the Council of the District of Columbia. The official version of the District Elements only appears as a hard copy volume of Title 10, Part A published pursuant to section 9a of the District of Columbia Comprehensive Plan Act of 1994, effective April 10, 1984 (D.C. Law 5-76; D.C. Official Code § 1 -301.66)) . In the event of any inconsistency between the provisions accessible through this site and the provisions contained in the published version of Title 10, Part A, the provisions contained in the published version govern. A copy of the published District Elements is available www.planning.dc.gov.