by Calculated Risk on 8/11/2008 12:47:00 PM

From the WaPo: Office Building Deals Drop Off

[L]ike much of the rest of the nation, the [Washington D.C. area] commercial real estate sector has been hit by the double whammy of a credit crunch and an economic slowdown.
...
In the District, $1.4 billion worth of office space traded hands in the first six months of the year, a 61 percent drop from the $3.6 billion sold by mid-2007 ... The drop-off was even more pronounced in Northern Virginia, where building sales plummeted 87 percent, to $914 million from $6.8 billion a year ago. In Maryland's suburbs, building sales fell 13 percent, to $459 million from $527 million.

... the area's vacancy rate ticked up to 11.3 percent from 9.9 percent over the past year

This is a story about the decline in sales of existing office buildings. Just like for residential, new investment in CRE has a larger impact on the economy than resales because less investment means fewer jobs.

Less turnover dpes impact commissions, but that only has a small impact on overall employment.

Also, just like for residential, declining transaction volumes usually precede price declines (although CRE prices are not as sticky as residential). The key for the economy will be the decline in new office investment in the 2nd half of 2008 and in 2009.