D.C. Suburbs Squeezed by Federal Budget Cuts

"Federal budget cuts are taking a toll on the office parks that have mushroomed for years in the capital's suburbs, along with the retailers and restaurants that depend on government workers," reports Eliot Brown. "As office markets in other suburban areas are gradually rebounding with the growth of the private-sector labor force, vacancies are rising in the gently rolling hills of northern Virginia and suburban Maryland—home to many a defense contractor and federal agency."

"To be sure, the Washington-area market is still considered healthy, particularly compared with many suburban areas outside New York and Chicago, where vacancies top 20%," adds Brown. "In addition, federal spending is still expected to grow in the long term, and with it, jobs will likely follow."

"But for now, the trajectory change is rippling through the region."