Preliminary numbers are in for the Washington DC Metro’s office market for the third quarter of 2014. In all three markets that comprise the region – The District of Columbia, Northern Virginia and Suburban Maryland, vacancy edged up, bringing us to 15.9% overall vacancy for the DC Metro region. This is up from 15.6% in the second quarter. 15.9% vacancy equates to 57 million square feet (msf) that remains empty. With this much vacant space – an all-time high, the advantage in lease negotiations will continue to be in the tenant’s court.
Net Absorption was negative in all three markets fueled by continuing downsizing among main office space users across the metro region – the federal government, law firms and government contractors. Year-to-date net absorption for the metro region stands at about negative 1.5 million square feet. With lackluster demand and a street fight to land the tenants that are in the market, most are penciling flat rents in most classes of office for the next two years.
So, what’s working in the tough leasing environment? New and “newish” is setting itself apart from the multitude of office options that are out there. Properties that have undergone significant renovations are outperforming the market as a whole. Downtown office deliveries of newly renovated properties this quarter are between 60-70% preleased to top rent paying law firms.
Total Vacant Space
Q3 2014 Absorption
Year to Date Absorption
District of Columbia
Total Metro DC
Follow the link below and select “DC” from the dropdown menu for a breakdown of the third quarter 2014 leasing fundamentals by market.
By: Nathan Edwards
Director of Research, Cassidy Turley - Washington, D.C.
Email Nathan: Nathan.Edwards@cassidyturley.com
Follow Cassidy Turley on Twitter: @CassidyTurleyRE
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