County Moves To Eliminate Office Vacancies With Rental Assistance
Montgomery County Executive Isiah Leggett on Tuesday announced a rental assistance program aimed at new companies to help reduce the county’s 13.5 office vacancy rate.
The program, called MOVE (Make Office Vacancies Extinct), offers $4 per square foot rental assistance for the first year on new commercial leases for newly formed companies or companies that decide to relocate to the county.
The leases must be at least three years and for at least 2,000 square feet of Class A or Class B office space.
According to third quarter 2013 statistics from the Montgomery County Planning Department, the county had a 13.5 percent office vacancy rate, slightly less than the 13.8 percent office vacancy rate for the entire Washington region.
Among the county’s major office submarkets, Bethesda-Chevy Chase had the lowest third quarter vacancy rate, at 9.1 percent. But office rents in Bethesda-Chevy Chase were the highest, ranging from an average of $35-$36.71 per square foot.
Office buildings under construction in the area include a Class A building at 4500 East West Highway and an eight-story, half-leased building in the Pike & Rose development in North Bethesda. The average rent at the Pike & Rose office building is $45 per square foot.
The county says the MOVE program came out of discussion between the county’s Department of Economic Development and the real estate sector.
The press release announcing the program included a quote from Scott Randolph, senior vice president of commercial real estate firm Transwestern.
“This rent subsidy will greatly enhance Montgomery County’s reputation as a pro-business environment,” Randolph said. “Office rents are typically one of the highest expenses on a company’s financial statement and the proposed subsidy represents a significant reduction in start-up and relocation expenses. The workplace has now become both a hiring and retention tool for employers. As these employers seek to attract the best and brightest employees while also reigning in real estate costs, the proposed subsidy will create a competitive advantage for Montgomery County, not only as a place to work, but also to live.”
Each company that takes part will be capped at 10,000 square feet, or $40,000 of county money. The county DED manages assistance for companies looking for more than 10,000 square feet in its regular Economic Development Fund.
The MOVE program is targeted more at smaller life sciences, IT, cybersecurity and green tech businesses.
“MOVE is an innovative program targeted at attracting emerging technology companies to the County. Our local real estate sector has told us they believe it will make a difference and help them fill existing, vacant office space throughout the County,” Leggett said in the press release.
The assistance program is effective immediately and will use funding from DED’s budget for this fiscal year.
DED Director Steve Silverman said the county expects about 15 new businesses in the county and between 250-320 new jobs for every $250,000 in rent assistance provided.