Interesting difference in value of commercial properties between Fairfax County and urban Washington, DC
The media coverage of the sale of the old Mobil Oil Company campus on Gallows Road in Fairfax-- 117 acres, 1.2 million square feet of buildings, 2,850 underground parking spaces---reports that the property value of the site is $193 million according to State of Virginia and Fairfax County tax records ("Inova plans medical research complex in Fairfax," Post).
The PNC Place office building in Downtown Washington has about 365,000 square feet of usable space.In DC, one office building is often worth more than that. A typical city block (although they do vary), is about 1.5 acres in size.
The Mobil Oil campus is about the same size as 78 of DC's city blocks, which would be a significant chunk of the Downtown.
According to the Washington Business Journal ("A new milestone: D.C. joins the $1,000-per-square-foot club with sale of PNC Place"), the building at 800 17th Street NW is worth double the value of the 117 acre Mobil Oil campus in Fairfax County.
Although granted, assessment value and sales value often differ.
Labels: commercial real estate market, property tax assessment methodologies, public finance and spending, urban vs. suburban
posted by Richard Layman @ 11:45 AM&Permanent Link
7 Comments:
it would be nice if DC could capture some of these organizations that all want to go out to NOVA whenever setting up anything large- and now we are losing federal agencies one after another and the city government is basically being apologetic and saying stuipd things like "The FBI was racist and nasty back in the 1960's so it must go"- but this is NOT 1960 anymore and Hoover has been dead for decades. They need to stop justifying bad decisions based on short term political hangups and KEEP the basic functions of the nationa capitol where they were designed to be in the first place .Noone seems to be aware of this problem.
well, the problem is that agencies and organizations have to be willing to "consume" city property on urban terms.
Security requirements for the federal govt. make it very difficult to include govt. agencies in the city now in ways that are urban supportive.
And the agencies have to be willing to be creative about it. So does the city.
Same with corporations. Some corporations are relocating to city locations, e.g., Compuware or Quicken Loans in Detroit; Amazon in Seattle; the Silicon Valley firms that are relocating to San Francisco; etc.
But you still have a press for suburban locations. E.g., Hilton, Intelsat, Gannett, etc.
Well, this is the benefit of not taxing commuters -- your office supply becomes more valuable, and you can tax the buildings.
http://www.nytimes.com/2015/02/11/realestate/high-line-cited-in-chelsea-complexs-decline-poised-to-bolster-a-recovery.html
http://www.loopnet.com/Washington_District-of-Columbia_Market-Trends
I'd suspect on a SF basis getting around Chelsea rents.
Interesting insight into a key driver of the value of the office market. That is true. E.g. compare to cities (other than NYC) like Philadelphia, where a wage tax has shifted a lot of economic activity to the suburbs.
wrt the Loopnet data, it's interesting, but I do think that "asking price" for office buildings isn't a good enough indicator, as it is dependent on what's on the market, how big and how old it is.
Better would be sales price/s.f.
Be that as it may, I have to believe, as long as we have an anti-govt. party in control of Congress, the DC and Greater DC real estate market will be depressed (but still better than many other markets comparatively speaking) because of the fall off in federal govt. spending and employment.
If the military budget continues to be shrunk (there is an interesting article by James Fallows in the Jan-Feb. issue of The Atlantic about how f*ed military oversight is, and how Congress prefers spending in the US by the military rather than on readiness for foreign [misad]ventures) that will further depress the local economy, especially in Virginia and Northern Virginia, not unlike the impact of a fall in the price of oil has on the economies of those places dependent on oil production.
The big period of growth that we experienced over the past few years (in large part due to the rise of spending on anti-terrorism) is likely to be over.
That means that adding 1,000 people per month to DC's residential population for years into the future is pretty unlikely.
That being said, DC needs to do the things it needs to do to strengthen neighborhoods and residential attraction, in order to build a more resilient economy at the neighborhood and city scales.
as you know, the other thing that will make a soft landing in the local real estate market is how international actors see the value in investing in the US/in high value markets in the US to protect their wealth vis-a-vis investing in their own more problematic countries.
The NYT has a big series on this, which started last Sunday, as it relates to NYC's condo market. Obviously, London has the same issue. (Charleston too, but in terms of US buyers unlike the other markets, where non-US buyers are driving up prices.)
In terms of the real estate hot money, yes, DC area exposure is limited.
In terms of CRE, I think there is more hot money in the system than acknowledged. City Center, the PNC center above.
You'll notice Fundrise got sold out to Chinese visa peddlers, for instance.
I've been looking at some REITs. Equity Residential I think may take a path. Forest city, on the other hand (converting to a REIT) has high quality across the board.
I also suspect GSA leasing prices set a floor in the DC market.
I do wonder if DC's ability to do a height increase as a way to fund Metrorail expansion _within the city_ has passed.
I don't have as granular a feel for the individual companies as you do. Companies like Equity though seem to be well positioned and able to act when markets change.
E.g., look at the velocity of the various Bozzuto divisions post-crash. E.g., their apartment management firm is becoming dominant in the strong submarkets.
The trick is to have such a good understanding of the firms so as to know their relative positioning.
Camden, AvalonBay, etc. Not that I am much of an investor...
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