While politicians, pundits and businessmen are fretting nonstop over the so-called fiscal cliff -- with its predicted tax hikes and spending cuts -- developers and landowners in the nation's capital are licking their chops.
"Either way, we're good," says a developer too gleeful to be quoted by name. "More regulations and more laws equal more lawyers and lobbyists. They are filling up every office building we can put up."
And we Washingtonians wonder why "the American people" beyond the Beltway look askance at the capital, awash in cash while some Main Streets decline. Despite vows and verbiage from the White House and Congress, the federal government has been growing since 1940, and it's still the foundation of our economy.
The National Association of Realtors reported this week that the office vacancy rate in the D.C. region is the lowest in the nation, at 9.6 percent. It's lower still in D.C., where developers are putting up office buildings in all eight wards. Commercial real estate professionals see a second major boom in sight, comparable though different from the mid-1980 land rush when global investors first discovered that the corner of Connecticut and K streets was paved in gold.
"Clearly everything is in play now, not just Northwest and the central business district," says Jim Abdo, who's been pushing development into the neighborhoods for decades. "Every quadrant of the city has a story to tell. All have legitimacy to them."
Ten years ago Abdo had to plead with investors and "naysayers" to back his residential and office buildings in Logan Circle and H Street Northeast. Now he's almost midway through delivering a 1-million-square-foot mix of office, retail and residential near Catholic University in Brookland, a neighborhood no developer knew existed a few years ago.
Bulldozers are pushing dirt, and cranes are swinging over ambitious projects from border to border. In Ward 8, Microsoft will set up shop on the St. Elizabeths' campus, which will house the Department of Homeland Security. The development of the former Walter Reed Army Medical Center will transform Georgia Avenue in Ward 4. In Ward 6, developers are remaking the Anacostia River waterfront by Nationals Park and the Maine Avenue fish markets. Office buildings and apartment houses are rising in NOMA, north of Union Station. The buildings planned for the air rights project over Interstate 395 will link Capitol Hill to downtown.
The good news is that development will fatten the District's revenues. Mayor Vincent Gray and the city council are doling out tax breaks to lure technology companies and diversify the tax base, but commercial real estate is still the engine of growth and taxes.
The bad news is that private-sector companies are using less office space, and the District is still pricey for businesses and residents, according to Greg Leisch, founder and CEO of Delta Associates, who says: "We have some tough facts facing us. Transportation is difficult, and it's increasingly expensive to live in the District."
Expensive or not, the District will not plunge off the fiscal cliff. Either way, it will thrive.
Harry Jaffe's column appears on Wednesday. He can be contacted at email@example.com.