More than half of the Washington area's new commercial construction last year was in Fairfax County, while building remained strong in Prince George's and Montgomery counties, according to a study released this week.
In the District of Columbia, however, 32 new commercial projects with 2.7 million square feet of space were started last year, down from 39 projects with 4 million square feet in 1986. The decrease was attributed mostly to higher construction costs, which prompted more developers to seek suburban office sites.
Despite the growth in office construction here last year, developers decided to postpone more projects than in the previous year, which some industry experts said was a sign that the region is overbuilt. It also was seen as an indication that builders are concerned about the economic instability resulting from last October's stock market plunge and the threat of a recession.
In its annual summary and quarterly review of commercial activity in the area, the Metropolitan Washington Council of Governments said developers started 427 projects last year that will add 26.4 million square feet of office, shopping center and hotel space to the region.
That was a total of 29 fewer projects than in 1986, but 3.1 million square feet more commercial space.
There also were fewer projects started in the fourth quarter than a year earlier, but these new projects will have more space. According to the study, there were 109 projects that added 7.5 million square feet of space, compared with 114 projects that had 5.4 million square feet of space for the same quarter in 1986.
But the industry officials said many developers are slowing their rapid pace of construction to make sure not only that they get the required financing to complete their projects, but also to make certain that they have tenants.
Developers deferred 103 projects that would have added 16.5 million square feet of commercial space in the Washington area last year, developers told the COG. In 1986, there were only 66 deferred developments with a planned 7 million square feet of space.
During the fourth quarter last year, Northern Virginia and the District accounted for more than 87 percent of the postponed developments in the region.
During the period between October and December last year, there were 19 projects with 2.9 million square feet of space deferred in Northern Virginia; in the District, five projects with 2.5 million square feet were postponed. Developers in suburban Maryland only dropped eight projects with 831,500 square feet during the same period.
"The market is essentially soft," said Fernando J. Barrueta, president of the D.C. Association of Realtors and president of Barrueta & Associates, a local commercial leasing firm. "But there's still a whole lot of space out there."
Fairfax continued to lead the Washington area in commercial construction activity. It had 109 projects with 10.5 million square feet in 1987, compared with 129 projects and 8.3 million square feet space in 1986.
"It's still a real attractive market," said Jay A. Langford, chief of planning and analysis for the Council of Governments. "Even though there are some areas that are already built out, such as Tysons Corner. But there's still a lot going on along the I-66 corridor, the Fair Oaks area and around Dulles."
On the other hand, Montgomery and Prince George's counties -- aided by fewer concerns about traffic congestion, lower land costs and the availability of land -- attracted more developers. In Prince George's, developers started 99 projects totaling 3.9 million square feet last year, compared to 81 projects with 1.8 million square feet space in 1986.
While much of the new building is continuing to occur in the Bowie, Laurel and Greenbelt areas, southern Prince George's County is beginning to attract development, too, particularly with the start of James T. Lewis' PortAmerica project.
"There are some projects in Prince George's counties that three years ago most developers wouldn't have had anything to do with," Barrueta said. "Some people who thought it was like being in Timbuktu are now realizing that if they are going to pioneer, it's not a bad idea to look there."
Development in Montgomery County was also very strong. It had 88 projects totaling 4.8 million square feet of space last year, compared with 93 projects and 4.6 million square feet in 1986. Much of the development in Montgomery is still along the I-270 corridor, but there also is more construction in Silver Spring and Bethesda.
The amount of commercial space started in Alexandria and Arlington County dropped last year. Availability of building sites was one of the key factors contributing to the decline in these jurisdictions. In Alexandria, 16 projects with 415,271 square feet were started last year, down from 15 projects with 688,752 square feet the year before. Arlington County had 11 projects with 741,100 square feet of space started last year, a drop from 18 projects with 1.8 million square feet in 1986.
Construction around Metrorail stations dropped from 8.1 million square feet in 1986 to 4.9 million square feet last year. Real estate analysts said the decline in commercial construction around the stations was caused by the simple fact that there isn't much space left to build on.
The most intense period of construction occurred between 1980 and 1986, when construction of more than 72 million square feet of space began. Last year, much of the new development -- 913,661 square feet -- was around the Metro Center station in the District. Bethesda, Silver Spring and Clarendon also attracted many builders, but still less than in past years.