In the face of calls for less high-density growth in many suburban communities, area developers typically argue that the continuing demand for office space is the driving force behind their push for heavily concentrated development.
Restricting commercial development would not only penalize developers but short-circuit the area's booming economy, they contend.
Curtail widespread development and you sabotage prosperity is an accusation implicit in developers' criticism of those who advocate balanced growth. Critics reject the argument that balanced growth will create fewer problems for an overburdened transportation network.
But given the huge demand for office and research and development space that's fueling economic prosperity, the numbers just don't seem to be adding up as they should for much of the area's office building industry.
Several reports on recent office leasing activity, in fact, indicate demand is apparently down considerably in some of the area's hotbeds of office development.
The Northern Virginia market, for example, remains "soft," according to a recent report by Julian J. Studley Inc. In fact, leasing of new office space in July and August declined 23 percent in Northern Virginia, compared to the same period a year ago, Studley said.
To be sure, it's much too early to describe this as a trend. At the same time, there's no certainty that this end-of-the-summer decline is just a blip that will soon fade from view. It's worth noting, meanwhile, that a report from Spaulding & Slye this month put Northern Virginia's vacancy rate at 17 percent at the end of September, up from 15 percent.
According to a report issued by Leggat McCall-Grubb & Ellis Inc. in September, strong development activity in Northern Virginia will approach record levels of a year ago with delivery of 11 million square feet of space. About 7.5 million square feet of that amount is expected to be leased. A vacancy rate of 15 percent to 16 percent should increase slightly in 1988 to 16 percent to 17 percent, however, according to Leggat McCall.
The vacancy rate in the District, meanwhile, fell to slightly more than 9 percent. And even though rates are falling in the District, landlords are still aggressively making concessions in attempts to attract tenants, Spaulding & Slye said.
As a result, leasing activity at the end of the summer in the District proceeded at a healthy pace, Studley said. That has strong implications for suburban areas at a time when vacancy levels are much higher and when an estimated 21 million square feet of space is expected to be added in the area in 1987.
It's also significant that in Prince George's County the vacancy level dropped to 15 percent as tenants absorbed more space than expected. If leasing activity continues at the current rate in Prince George's County, the vacancy level could dip to single digits by the first quarter of 1988, Spaulding & Slye believes.
Already 40 percent of the space scheduled for completion in Prince George's County in 1988 has been preleased and developers are bullish about prospects for the next few years. Just last week, developers of Presidential Corporate Center, a planned 315-acre multiuse business center, celebrated the formal opening of their 6-million-square-foot project with reports of strong interest from prospective tenants.
Demand is said to be strong elsewhere around the Beltway. Still, it's interesting that in those areas where debate over development is shrillest, vacancy levels are significantly higher.
In Montgomery County, for example, the vacancy rate jumped almost 6 percentage points to 16 percent, according to Spaulding & Slye. The vacancy level in the Silver Spring office market has reached a "shocking" 36 percent since its last quarterly report, Spaulding & Slye noted.
In Northern Virginia, where Smithy Braedon Co. reports significant improvement over the first four months of the year, the vacancy rate in the Fairfax-Dulles corridor is up to 25 percent.
Total leasing figures for old and new office space at the end of August showed metropolitan Washington still ranked second only to New York. The overall vacancy rate in the area is about 13.4 percent, still lower than in most areas of the country. Still, the soft spots in the metropolitan Washington market can't be viewed entirely as aberrations.
Either demand is softening for a variety of reasons or developers have overbuilt some submarkets. Either way, worrisome signals in the national economy could further soften demand in an otherwise prosperous market.
It could be that developers in certain areas may have less to fear from so-called slow-growth advocates than from a problem of their own making. And in the end, market forces may have a more significant impact on future development than balanced-growth advocates.