DC's retail real estate improving along with the residential sector

A metro's residential and retail real estate prices tend to rise in tandem. As demand for homes increases, it tends to have a residual effect on the need for providers of goods and services such as restaurants, supermarkets and home-goods suppliers. Therefore, cities experiencing strong growth in the residential market would be expected to see similar expansion in the retail sector. This has been the case for real estate in Washington, DC, this summer, as both rents for retail spaces and home prices have been increasing.

According to World Property Channel, the average national retail-space rent fell 1.7 percent in the second quarter of 2012 compared to the same period from 2011, thanks to a still-sluggish economy, stubborn unemployment figures and stagnant wages. While this was true in most regions, it was not the case in at least three: Miami, Tampa and Washington, DC.

These trend-buckers all have traits that have kept them out of the retail doldrums like most other areas. The increases seen in the two Florida cities, for example, are in step with the other strong gains made in the Florida real estate market since the state took a beating in the late 2000s. Florida, along with some states in the southwest and west, was among the first hit by the housing crash. Employment levels, property values and economic activity all took significant hits. On the other hand, this region has been seeing a particularly steep return to pre-recession levels in the last several months, which helps explain the rising retail rents.

The District, however, is a slightly different story. Strong government employment has helped the residential real estate market stave off losses over the last few years, and the healthy economy appears to be having a similar effect on the retail sector. While DC never faced the same plunge that Floridian cities did, it has managed to rebound more quickly than most other markets. In recent months, home prices and quantity of sales in the area have both increased, and, perhaps relatedly, DC has continued to be one of the nation's leading markets for attracting new residents - it was recently named the most popular city for relocations by United Van Lines. Consequently, citizens have flooded the region and helped raise retail rents.

"As [the economy] continues to expand, so will Washington DC's [retail real estate market]," Greg Maloney, president and CEO of Jones Lang LaSalle, told the World Property Channel.