Report: Crisis Can Add Four Million Square Feet to DC

WASHINGTON, DC-For the last year, like everywhere else, there has been concern and even angst in the Washington, DC area over the economic crisis. Then it became clear that the government was going to be the main growth engine pulling the economy out of its current stage. The worry is still present–but it also co-exists with speculation about how the local real estate community will benefit.

There have been some rough back-of-the-envelop calculations, for instance, that the government is going to need between 500,000 square feet to one million square feet of additional space to handle the crisis. So far, the government has identified about 40,000 square feet of additional space that it will need in the immediate term because of the expansion of the roles played by the Treasury Department, the Federal Reserve Bank and other such agencies–like the Federal Deposit Insurance Corp.

But the question remains as to what would the aggregate impact of the bailout firms which are establishing offices here to lobby Congress for funds, or tapping lobbyists who then need to expand space. That number has been more nebulous. Indeed even reports of new leases being inked–specifically to lobby Congress–are more hearsay than anything else. “I have heard of such deals, but haven’t seen them myself,” Thomas Fulcher, EVP and branch manager for Studley’s Washington, DC office, tells GlobeSt.com.

A new report authored by Delta Associates, a research organization headed by Greg Leisch, makes its best guess as to the bailout’s impact on the local community: two to four million square feet over the next two to the three years. That would be the demand generated by the bailout plans, plus follow-on regulations yet to be enacted. It would also be in addition to the demand created by normal market forces, the report pointed out.

This is a big deal for the DC area, the report said, explaining, “The long-term average net absorption of Washington-metro area office space is approximately eight million square feet per year, so an increase of even one million square feet per year would be a material gain.” Delta did not return a call to GlobeSt.com in time for publication.