US Govt. Sole Growth Node in US Office Market
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5 Million Square Feet Absorption by Year End in DC Alone
As the government becomes the lone bright spot for office demand (see the Globe Street article ), it relays to the taxpayer that growing government cannot be tamed or shrunk at will.
What is amazing in scale is the estimate in the following article that the US Government will occupy an additional 5 million square feet in Washington DC, by year end.
So how many increased governmental employees does that imply?
While serving as the chief economist at the Real Estate Center at Texas A&M University, we contracted a study with Dr. Wade Ragas (then a professor at the University of New Orleans) to complete a study on how much office space each worker uses. This outstanding study, available online from the Center, and for those of you not familiar with the Real Estate Center, it is a phenomenal source of information for applied real estate research issues and data) found that public administration workers used approximately 250 square feet per worker. That would imply that the U.S. Government in Washington, D.C. alone, is planning to expand employment by 20,000 people in the coming nine months (assuming that no other properties are being vacated).
At an average cost of $50 per square foot per year (Grubb & Ellis’ Q4 2009 report shows an averaging asking rate of $54.69 per foot), the annual rental costs alone for the new space is going to be $250 million, or a minimum of $2.5 billion in 10 years.
The Outlook & Forecast: Income taxes are going only one way—and that is up—to pay for the growing burden of Government.
GlobeStreet article- Fed Demand Far Outranks Private Office Sector