​WASHINGTON, D.C. – When it comes to the economy, the Washington, D.C., metro is a region in transition. The forces that will drive future economic growth in the region will differ from those that have driven growth in the past, according to research presented at the 19th annual Washington, D.C., TrendLines®. The event was hosted by Transwestern and its research affiliate, Delta Associates, along with sponsors PNC Real Estate and Baker Tilly, on the evening of Feb. 4 at the Ronald Reagan Building and International Trade Center.
David Weisel, CEO of Delta Associates, outlined the state of the regional economy and presented key trends of the Washington, D.C., commercial real estate market.
“In the past, economic growth in the Washington, D.C., region was led primarily by federal employment and procurement,” said Weisel. “But the federal presence in the region, although stabilized, is unlikely to grow significantly in the foreseeable future as a share of the overall economy, and the private sector will lead the current expansion cycle.”
Elizabeth Norton, managing director of research at Transwestern, presented the state of the office and flex/industrial markets, and William Rich, senior vice president and multifamily practice director of Delta Associates, presented the state of the apartment and condominium markets.
All TrendLines attendees received a copy of the 2016 TrendLines® publication, “Trends in Washington, D.C. Commercial Real Estate: A Region in Transition,” which examines trends of 2015 and pivotal forces influencing the regional economy and commercial real estate market in 2016 and beyond.
Delta’s presentation identified four key ways the Washington area is changing. The following is a summary of these “MegaTrends,” which are further detailed in the TrendLines® publication.
1. THE FEDERAL GOVERNMENT IS AT A CROSSROADS. The influence of the federal government over the Washington metro’s economy – direct employment, procurement and related activity – has waned dramatically over the past several decades. The region’s economic prospects going forward will necessarily depend far more on the performance of the private sector.
2. THERE IS A MISMATCH BETWEEN HOUSING SUPPLY AND DEMAND IN THE REGION. At recent construction rates, the Washington metro is producing 13,000 fewer housing units per year than would be justified by job and household growth. Undersupply is helping fuel appreciation that increasingly prices households out of the market. Two significant demographic cohorts – baby boomers and millennials – are driving the housing market but with different and often contradictory preferences. The mismatch between overall supply and demand and between selection/price and household preference/budgets will be key issues for the region in the coming years.
3. THE SHARING ECONOMY. Today, it is possible to take a vacation that includes driving a shared car, staying in a private home, using a rented bicycle, and then returning to work in a shared office space. Two sharing economy examples that directly affect real estate: Airbnb and the hotel industry; and coworking space and its relation to the conventional office market. Looking ahead, Airbnb is expanding into new services that will improve the experiences of both its hosts and their guests and is expected to broaden its strategic partnerships with apartment operators and perhaps even hotel companies. While Delta expects coworking to continue to grow and to be a useful component of the office market, it is not likely to replace the vast majority of conventional office space demand.
4. COMMERCIAL REAL ESTATE MUST BECOME MORE RESILIENT. Catastrophic events, both natural and man-made, require preparation and a new way of looking at the world. The term that has emerged to describe these efforts is resilience. The commercial real estate community – planners, developers, architects, engineers, construction companies, owners and managers – will need to be more proactive in order to make their assets more resilient and protect their investments.
Following the market overview presentation, Delta, Transwestern and sponsors PNC Real Estate and Baker Tilly honored two TrendSetters. TrendSetters are individuals who have made unique and innovative contributions to the commercial real estate industry as a whole and to the Washington, D.C., region in particular. James Abdo, president and CEO of Abdo Development, was honored as the Private Company TrendSetter of the Year, and Deborah Ratner Salzberg, president of Forest City Washington LLC was honored as the Public Company TrendSetter of the Year.
James Abdo
During the past 20 years, Abdo Development has built its reputation as a pioneering, innovative developer of high-end residential, commercial and retail projects. Concentrating its activities in emerging neighborhoods around the urban core of Washington, D.C., and Northern Virginia, Abdo Development is particularly well-regarded for its emphasis on historical preservation, bringing distressed, noteworthy structures back to life without sacrificing their authenticity.
As founder, president and CEO, James Abdo has been at the forefront of this effort to revitalize buildings and neighborhoods often bypassed by others. By focusing on adaptive reuse in all projects, Abdo has proven adept at preserving the past while building modern, new communities.  
In addition to serving on the boards of a host of business and charitable foundations, Abdo has received numerous awards for his responsible approach to urban development.   
Deborah Ratner Salzberg
Since joining Forest City Washington in 1985, Deborah Ratner Salzberg has been instrumental in securing and progressing major mixed-use development projects in the Washington area. Among the most prominent of these are Waterfront Station in southwest Washington, D.C., The Yards in the Capitol Riverfront district and Ballston Quarter in Arlington, Virginia.
All of these massive, groundbreaking projects feature the many elements that have come to define Forest City Washington’s success: transformation of underutilized urban areas; adaptive reuse of historic structures, creative use of public-private partnerships; innovative architectural designs; and the creation of vibrant, thriving neighborhoods where individuals live, work, shop and play.
Beyond her myriad professional accomplishments, Ratner Salzberg has taken an active role in countless community, charitable and business organizations both in the Washington, D.C., region and nationwide. 
Delta Associates, the consulting affiliate of Transwestern, is a firm of experienced professionals providing services to the commercial real estate industry for over 35 years.  Delta’s main practice areas are (1) consulting, research and advisory services for all property types through the United States, including market feasibility, highest and best use, market entry strategies, asset performance enhancement, market due diligence, white papers on special topics, valuation analysis, and litigation support; and (2) subscription publications for selected metro areas in the Mid-Atlantic for the apartment, condominium, office, retail, and housing markets. For more information, or to sign up for complimentary market information, visit www.DeltaAssociates.com or follow @DeltaAssociates.
Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Management, Tenant Advisory, Capital Markets, Research and Sustainability services, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern. For updates from the Mid-Atlantic region, follow @TranswesternDC.