Market Analysis

Connecting Dupont Circle, the White House, and Foggy Bottom, the Golden Triangle neighborhood is the heart of city’s bustling economy, serving as a place where traditional DC businesses – lobbyists, lawyers, and bankers – meld with the city’s new frontiers of tech, digital media, design, and healthcare. Interwoven among this diverse collection of commercial office tenants is some of the region’s premier retail and dining serving the 85,000 workers in the neighborhood as well as the 115,000 people who live within a mile of it in neighborhoods like Dupont and the West End. These features, combined with a burgeoning cultural and events scene (free table tennis, and bean bag toss every Friday in summer, anyone?), and unbeatable access to all means of transportation, make the Golden Triangle one of the region’s most sought after business districts.

“The neighborhood is stronger than ever. Office leasing activity is strong for high-end space, and we’re working to meet that demand with our recent and planned repositionings. What that does for retailers is enhance the quality of their target customer base even more.”

Brad Heming
Senior Director of Portfolio Management, Tishman Speyer

Crossing Connecticut Ave

Office Market

Office Space

The 32 million square feet of office space in the Golden Triangle is home to more than 3,100 businesses with 85,000 workers. Those workers, in turn, have an aggregate annual income of $8.9 billion – in short, this is a high-powered neighborhood, and its office market is firing on all cylinders.

With boundaries that align closely with the District of Columbia’s traditionally-defined central business district, the Golden Triangle has long been at the heart of the city’s office market. Law firms and government relations shops are practically synonymous with K Street, one of the neighborhood’s key corridors, while financial and other professional services have long sought out the neighborhood on account of its prime location at the crossroads of the city and at the center of influence for the nation and the world.

Source: JLL 2015

Micro-Markets

The Golden Triangle contains four micro-markets: Farragut, Dupont, Washington Circle, and White House West. Each micro-market has a unique identity with its own accompanying strengths.

The four micro-markets in the Golden Triangle

Farragut

Farragut is the largest micro-market in terms of land area and office supply. It has historically functioned as the center of the core of the DC office market and continues to attract prestigious law firms and other private sector companies. The market is predominantly 9-5, and as a result, many retailers are closed on the weekend.

  • Buildings: 90
  • Supply: 16.8m sf
  • Direct Vacancy: 9.7%
  • Total Vacancy: 10.7%

*Source: JLL

Dupont

The Dupont micro-market sits north of the core of the CBD and is comprised of mainly commodity Class A and Class B buildings. With a plethora of bars and restaurants, the live-work-play environment attracts creative tenants as well as law firms and large non-profits.

  • Buildings: 53
  • Supply: 8.5m sf
  • Direct Vacancy: 11.3%
  • Total Vacancy: 12.5%

*Source: JLL

Washington Circle

The Washington Circle micro-market is located on the western edge of the Golden Triangle. Washington Circle is mixed-use, containing the George Washington University, the George Washington University Hospital, medical office buildings, and a high concentration of hotels, residential buildings and traditional office buildings.

  • Buildings: 21
  • Supply: 3.9m sf
  • Direct Vacancy: 11.3%
  • Total Vacancy: 11.8%

*Source: JLL

White House West

Located due west of the White House, this micro-market contains a mix of law firms and associations seeking prestigious, top-tier space with a Pennsylvania Avenue address, as well a number of large federal tenants located in the center of the micro-market.

  • Buildings: 14
  • Supply: 2.5m sf
  • Direct Vacancy: 5.6%
  • Total Vacancy: 5.7%

*Source: JLL

Law Firms and Lobbyists

The Golden Triangle is a natural fit for high-powered advocacy firms and legal experts. More than 200 law firms call the neighborhood home and account for more than 6 million square feet of commercial office space – largely clustered along K Street, Pennsylvania Avenue, and Connecticut Avenue.

Top Counties of Residence for Golden Triangle Workers

CountyCountShare
District of Columbia24,73927.6%
Montgomery County, MD13,39014.9%
Prince George’s County, MD11,98713.4%
Fairfax County, VA11,97913.3%
Arlington County, VA7,0197.8%
Alexandria County, VA3,5233.9%
Source: US Census; CES; JLL

“The location is a major benefit for the American Bar Association because it provides easy access to all branches of government as well as to a large number of law firms, law schools, and other members of the legal profession.”

Holly Cook
Principal Deputy Director, American Bar Association

Growth Industries: Tech and Healthcare

Much of the continued enthusiasm for investment in the neighborhood relates to its ability to continually evolve. While the legal sector remains the anchor of the neighborhood, two emerging sectors – technology and healthcare – are showing strong growth and have become crucial parts of the Golden Triangle’s identity. Access to transportation, proximity to related services and industries, as well as neighborhood amenities and vibe are all crucial to businesses in these industries choosing the area. The creative and tech sector especially trend towards a younger workforce – one that has been a driving force behind the migration back to cities as the vast majority of millennials have expressed an interest working and living in walkable neighborhoods with good access to transit.

Tech sector heatmap showing a large tech cluster in the Golden Triangle, just south of Dupont Circle

Source: JLL, 2015

Building off of its live-work-play appeal and rents that are slightly lower than the K Street and Pennsylvania Ave corridors, the section of the Golden Triangle centered on Connecticut Avenue north of L Street is quickly becoming a strong cluster of tech and new media firms.

In the digital media space, one of the biggest national players, Vox Media – which is the parent company for digital platforms like Vox.com and SB Nation – as well as major local tech-focused digital publication, DC Inno (part of the Streetwise Media network), have made Connecticut Avenue home.  Streetwise publisher Reid Snyder is bullish on the neighborhood as “an innovation hub in our local economy.” He adds that the existing concentration of tech and new media in the Golden Triangle “is a huge asset in drawing in leading businesses and growth companies from diverse industries. Upstarts and established firms alike benefit from the density here.”

The rapidly-growing shared office space market is bustling in this neighborhood as well, with UberOffices and cove both located along the Connecticut Avenue corridor. These shared office space environments cater to creative types and startups who need a more fluid work environment, and who seek out proactively collaborative settings where they can work with other individuals and companies in their field and learn from each other’s experiences.

All of this creative energy is bolstered by the presence of influential venture capital firms such as Revolution Ventures, GP Tech Labs, and Core Capital Partners, which can provide financial backing as well as a guiding hand to young companies who are fortunate enough to attract attention from the VCs.

Enduring Appeal: A Bright Future

The metropolitan DC area has undergone countless changes in the past six decades since what is now the Golden Triangle emerged as the city’s business hub. Despite the changing faces of transportation, demographics, and the region’s investments in various emerging neighborhoods, the Golden Triangle has remained a go-to for real estate across all investor classes and types.

Commercial developers, private holders, and investment groups not only see value in owning property in the neighborhood, but also have continued to invest in capital upgrades to their properties, with 16 buildings converted to strong Class A or Trophy spaces within the last five years and at least 10 more in the pipeline.

Tenant Absorption

Despite the recent emergence of a number of new commercial districts in the DC area (NoMa, Capital Riverfront, and a revitalized Silver Spring, for example) the Golden Triangle continues to retain and attract high quality tenants.

Development Pipeline

Recent and future repositionings in the CBD West

Net Absorption 2010-2014

Retail & Dining

Existing Retail

The high density of workers, high levels of income, and active streets of the Golden Triangle make the neighborhood a strong retail hub. The retail character of the neighborhood is built around mid- and high-end men’s and women’s apparel shops, jewelry stores, and boutiques. As the region has seen professionals moving back to towards the urban core over the last fifteen years, retail is following suit. While shoppers used to flock to Tysons Corner and Friendship Heights for designer goods, the downtown core has become the place to go for high-end retail.

The Golden Triangle has seen this trend with the remodeling of Brooks Brothers, the expansion of the Tiny Jewel Box, and the addition of designer lines at Nordstrom Rack. Meanwhile, boutique shops like Betsy Fisher continue to thrive in a neighborhood of increasingly-wealthy employees, surrounded by a number of affluent residential neighborhoods.

In addition to its abundance of destination retailers, the BID also has myriad businesses that cater to the service needs of area offices, including numerous banks, office supply stores, and printing shops.

By the Numbers

Gross Retail Sales in the Golden Triangle

Hotel Rooms In and Around the Golden Triangle

Within a Mile of the Golden Triangle...

Residents

Median Disposable Income

Residents' Annual Apparel and Services Expenditures

Residential Market

Housing

The residential market is still very much a nascent element of the neighborhood. There are currently fewer than 1,000 housing units and 2,000 total residents in the Golden Triangle. There are signs of change on this front, however. The strong housing markets directly west and northeast of the neighborhood, as well as a shortage of available housing units throughout the city, are shifting the value proposition for Class B and C office owners who are looking to renovate or re-build their properties.

As supply increases in the Class A space with major projects in the pipeline throughout the city (Capitol Crossing, Burnham Place, among others), opportunity may exist to explore conversion to residential in partnership with the public sector.

Class A office space still offers higher per-square-foot-returns than does residential in the neighborhood. However, that gap is likely to shrink over the next decade as needs change within the office market and as demand continues to increase in the residential market.

3 of the top 10 hottest residential neighborhoods for real estate value in DC (as rated by Zillow) surround the Golden Triangle: Dupont Circle, Logan Circle, and Foggy Bottom

For more information, please email feedback@goldentriangledc.com.

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