Expanding and relocating law firms, in-migrating trade associations and anyone doing business with a still-growing government are heating up the Washington area's office space market more than enough to cause an economic meltdown in 1981.
This current office leasing and building market is so volatile that professionals are toting up record numbers, scurrying to find available spaces next year and asking themselves, almost incredulously: block between K and L Streets NW.
Earlier in this decade, when times were more normal, prime downtown space was nudging the $10-a-foot rate. Now there is sober speculation that the $20-a-foot level may be budged for preleasing when that long-envisioned new complex of offices, a hotel and shopping is started on the south-west corner of Connecticut and L NW.
In less than ten years the estimated annual absorption rate of new space in the National Capital "Will $20-a-square-foot space be leased in 1980?"
Today's market rate is mostly $14 to $16 for dozens of new downtown buildings started or ready for excavation to begin. And the rates are several dollars less for new spaces in torrid Tysons Corner, Crystal City, Rosslyn, Bethesda and D.C. sites more than a few blocks from the business bull's eye in the Connecticut Avenue area has exploded from the 2 million square feet to the 4-million level. Half of the demand is in downtown. Quarter shares are almost evenly divided into fairly nearby Maryland and Virginia. For instance, Tysons Corner now has 3.8 million feet of existing office and business space and has 23 new structures coming up with 3.3 million more square feet.*tThe space-consumers are many. Some are big names; others are relatively obscure but growing law firms and trade associations or suburban-located research-development firms on U.S. contracts. American Telephone & Telegraph Co. is committed to 165,000 square feet in the one-million-foot Lafayette Center complex going up between 20th and 21st Streets NW. That same utility has its own 416,000-square-footer started in the Oakton area of Fairfax County. Sperry Rand is starting what will be a 500,000-foot complex, to eventually employ 2,000, in Reston. Mobil has dust flying for its new complex near the Beltway and Rte. 50 in Fairfax. And home-grown Marriott recently occupied its own huge building in upper Bethesda.
But what about the law firms and trade associations? Look at the nearly completed Associations Building at 1575 I St. NW. It's an average-size (187,000 feet) midtown building with co-sponsors, one being the American Society of Association Executives, which itself will take a floor. It was expected that other associations would be tenants. Not so. Most of the completed preleasing (at $12- $14 a foot) has been to law firms, with expanding Sellers, Conner and Cuneo taking four floors (one for subleasing and future expansion). Another floor is preleased to Covinggton & Burling and one to a New York firm that will open here in 17,000 feet on the top floor. Name: Davis, Polk, Wardwell, reputedly the 12th biggest law firm in the nation.
Already the National Association of Home Builders is cramped in its new headquarters at 15th and the M NW, and the Associated General Contractors is adding a fourth floor to its building at 1957 E St. NW. Reston has become a haven for 27 associations, and there are 120 more around Fairfax County. This area leads the nation in being home to an estimated 27 percent of all major trade associations, with more than 1,200 being listed in the yellow pages.
While new office buildings moved voraciously west from Connecticut Avenue in the past two decades, the recent intown trend has been to the east. At least four new buildings are in the works in the area just south of Thomas Circle, with the American Medical Association rumored going to that area with a big new building by 1982.
Hundreds of thousands of new square feet of new office and commercial and new hotel rooms will be coming up in the early 1980s in Pensylvania Avenue-related redeveloped areas keyed to the avenue, the likely new convention center and Metro stations.
Much of the newly planned office space is keyed to the city's rapid transit. In place already on air rights is 1100 Connecticut over a station. The 23-story Rosslyn Center is nearing completion overa station that attracted Boeing to take 22,000 feet and Ketron Inc., 30,000 feet.
Crystal City and Pentagon City have Metro already. When service goes farther out Connecticut and Wisconsin, more development will follow.
In Prince George's, the Metro-East terminal (with Amtrak, too) has attracted Digital Equipment Corp. and a Shell Oil development interest in 80 strategic acres.
Views of Washington area office leasing, which may have peaked in recent months, range from developer's Oliver T. Carr's admittedly optimistic perception (he also heads the Board of Trade this year) that this is a "romanticized" market, to developer Giuseppe Cecch's sobering: "We're not going to grind to a halt but we are going to be very deliberate and conservative. . . . A requence of spiralling inflation."
CAPSULES: Shannon & Luchs cites the rehabilitated Marcury Building at 1925 K as an example of what a face-lifting can do for enhancing a 20-year-old structure . . . The landmark Investment building at 15th and K is much older and will get a face-lifting expansion from Rozansky & Kay, new owners . . .
Wpecialist Justin Hinders sees Metro-related locations becoming even more strategic as gasoline prices escalate. Competitors Foster Shannon and James Elichberg agree that the metropolitan area continues to be a viable business location and investment opportunity . . . And the Julien J. Studley office insists that less present and future space is now available here than in Boston, Chicago, Houston, New York and Los Angeles . . . The Donohoe construction-development firm heads a group that has started what will be a multi-building complex of office space, shops and a large hotel at 500 C St. SW. CAPTION: Picture 1, View of L Street NW, looking west from Connecticut Avenue, with site of new retaid office complex at left. By James A. Parcell-The Washington Post; Picture 2, Lafayette