WBJ Article: The Impact of Government Contractors

Aug-01-2019 ||

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CRE Trends in DC - Analyzing GOV CON Industry

By:  Matt Levin, WLS Principal & Chris Hanafin, WLS Market Rearch Manager

Anyone who works in the D.C. metro region knows the impact government contractors have on the local economy. But what many may not realize, is the impact these businesses have on the commercial real estate industry – with the top government contractors solidifying their footprint in the Metro area and activating submarkets that have been overlooked by other industries.

Analyzing a sample of the top 50 government contractors in the metro area, we noticed some interesting trends. Over the past 10 years, buildings occupied by these tenants have seen vacancy rates decrease by nearly 10-percent overall while rents in these buildings increased by nearly $5 per-square-foot, with some peaks and valleys along the way.

For example, Base Realignment and Closure (BRAC) drastically impacted these buildings between 2011 and 2014, when rents plunged and vacancy rates exhibited volatility. However, since 2016, our research indicates that rents have been increasing as vacancy rates have begun to stabilize, as shown by the graph below. Both graphs and this study feature a survey of buildings in the D.C. metropolitan area that are homes to the 50 largest government contractors in the area based on Metro-Area employees (source: Washington Business Journal 2019 Book of Lists).

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