INDUSTRIAL LAND IN A POST-INDUSTRIAL CITY District of ...

District of Columbia Industrial Areas Study DC Office of Planning
Prepared by Phillips Preiss Shapiro Associates, Inc.
Table 3.3: Bulk Standards in the C-M and M Zones
Zone Height (feet) Height (stories) FAR
C-M-1 40 3 3.0
C-M-2 60 N/A 4.0
C-M-3 90 N/A 6.0
M 90 N/A 6.0
Source: District of Columbia Zoning Ordinance
The zoning maps contained in the Appendix show the zoning for each industrial sub-area.
3.2 THE MARKET FOR INDUSTRIAL LAND AND BUILDINGS
Industrial land markets are unlike other types of real estate markets. Tenants tend to choose
their space and site location based on purely functional criteria: access to transportation
resources, layout, the number of loading docks, ceiling clearances, floor loads, etc. Variables
that drive other real estate decisions, such as image or a prestigious address, play little role for
industrial real estate. Further, unlike office rents, which can vary wildly based on the type,
location and quality of buildings, industrial rents tend to fall into a narrower range. Finally, no
matter high-value the location, industrial rents and land values tend to significantly lag other
types of real estate on a per square foot basis, meaning that industrial development must be
developed at lower cost, and on lower cost land, than other types of uses.
The DC market and the suburban market differ significantly in terms of prevailing rents and the
type and quality of product on offer—ironically, the District typically offers a lower quality product
at a higher price than suburban competition, meaning that most users in the District must have a
compelling reason for a DC location. Within DC, both private and public users looking to buy or
lease industrial space will be facing an increasingly tight market. Strong demand, buoyed by the
real estate boom and a strong economy, has coupled with a lack of new construction to create a
constrained market. While the DC market has, on paper, a reasonable vacancy rate, most of
this vacant space is of poor quality and/or unsuitable for most users. When it comes to quality
space, the vacancy rate in the District remains quite low.
The following section provides an overview and summary of current conditions in the market for
industrial buildings in DC and the region, with references to national norms included where such
comparisons are useful. The analysis relies primarily on market reports from major brokerages,
as well as interviews with brokers active in DC’s industrial areas. Note that while the former
track market statistics for all industrial buildings regardless of whether they are located in an
industrial zoning district, the latter concentrated specifically on DC’s industrially-zoned land and
buildings.
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