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DC Small Office Real Estate Market Acts Like Residential

UrbanLand Company
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The ULC Blog continues a dialogue on some of the valuable things we learned during the listing, marketing & sale of our original NW DC office building & brokerage headquarters in Shaw. “We’ve sold over $525 million in residential DC area real estate and various commercial acquisitions in support of our developer new construction representation business over the years,” said Gerard DiRuggiero, Principal Broker of UrbanLand Company. “The sale of the office building was a valuable educational experience and really opened our eyes into the opportunities available for agents in DC’s small office sector.” What’s DC’s small office sector? We’re talking about smaller buildings (under 3,000 sq. ft.) where you can house a 10 – 30 person professional services office. “It’s a narrow section of the huge commercial market in a major city like DC. We’re also using office properties that would list in the $1 to $2 million range,” continued DiRuggiero. “There’s an affordability challenge going higher than that for the 10 – 30 employee firm with tight local ownership. Branch offices of national companies may seek a higher price bracket.” If you already own DC commercial real estate in our defined ‘small office sector’, here’s what you need to know. The traditional DC commercial approach will focus on cap rate (net annual income / all-cash purchase price) as their main method of evaluating your property. “In a high price market like DC, cap rate is not a sufficient indicator to rely upon for properties of this size,” said DiRuggierio. “Supply and demand factors in the small office sector have a huge influence on price. Cap rate has much more validity as an indicator when applied to much larger projects. You may not like what you hear as an owner when commercial agents and their buyers approach you.” When it comes down to it, the traditional commercial audience isn’t always the best place to meet your actual buyer. “We applied our residential property marketing techniques in maximizing the exposure for our office during its marketing & sale,” said Gerard. “We found that, in the small office sector, your actual buyers are influenced by a lot of the same factors that you see when people are buying a home. They’re focused more on location, retention benefits in keeping their staff happy, practicality of the space, and, of course, how things look financially vs. continuing to rent their office space.” And don’t forget, supply and demand play a huge role in this part of the commercial market. Supply of properties in DC suitable for smaller professional services offices remains very thin. “It’s a great time to sell professional services square footage in the city. Even right now, there’s only 3 buildings available between $1 – $2 million. Only 1 of those is turnkey & ready for use without major updates or build-out,” said DiRuggiero.”If you want guidance or advice on what to do with your property, just give us a call.”

Do You Own Commercial Property in DC? Call/text 202.759.4114 for strategic guidance & advice

A lack of supply of properties fitting companies of this size represents a prime opportunity for strategic farming by realtors. “There are plenty of great office buildings in DC that fit the 10 – 30 person office. The issue is, none of them are for sale. Call us to discuss how we help you build a commercial niche while you earn commissions in our residential Agent Leads Generation Program,” said Gerard.

Text us at 202.517.6950 or email us for more info on our agent support & business building program.

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