That pesky real estate financing market

In the past I have written about the real estate market in the Central Business District being one of national and international actors--financiers and developers both--rather than strictly a local market. This poses a problem for neighborhood business districts, because for the most part, the commercial property tax assessment methodology treats commercial properties in neighborhoods more like downtown buildings. Since assessments are high, local retailers and other businesses get crowded out, such as the Warehouse Theater, which closed down, across from the Convention Center.

Now that the national-international real estate market is having extreme financial distress, it is affecting some of the "local" players in the industry. Today's Washington Post reports, in "D.C. Deals Relied On Lehman Funding: Bank Was Monument's Main Financing Source ," about how Monument Realty, which has relied on the now bankrupt Lehman Brothers organization, for the bulk of its financing, and how Archstone-Smith, another company with some issues, is a key player in the redevelopment of the Old Convention Center site.

The New York Times also reported on Lehman Brothers' aggressive participation in real estate deals across the country, in "Risky Real Estate Deals Helped Doom Lehman."

Likely, the real estate market downtown is going to slow as well, even though DC has been one of the strongest commercial real estate markets in the world. (The height limit reduces overall inventory, making the market pretty stable, with high demand, high prices, and quality returns.)

Still, there is some resistance (unless you're the DC government, see "Heavy Traffic Cited As Concern in Move For Housing Agency" from the Post) to paying downtown rents in areas that aren't in downtown and lacking in amenities. See "Though Developers Built It, The Tenants Did Not Come" (and the announcement of the building here, "Next Up: the Baseball Stadium") and "NoMa Gets Gentrified, Now Waits For Tenants: Lean Times Make Area a Tougher Sell" from the Post.