The yearend 2014 office leasing statistics are in and the top performing submarkets in the DC Metro region in for the year all have a few things in common.
In the District of Columbia, it was no surprise that the core submarkets of the CBD and East End, which absorbed a combined total of 411,000 sf, performed well. The fact that the law firms that make up a substantial portion of the tenancy in these markets are faring better in recent months than they have in years should continue to propel these markets to more landlord friendly conditions in 2015 and beyond. More interesting perhaps is the performance of Capitol Riverfront/Southeast and NoMa submarkets, which absorbed a combined total of 347,000 sf. Capital Riverfront has gained market share by attracting tenants from other DC submarkets looking for quality product at a value. This was the case with National Labor Relations Board signed at the Riverfront from the East End and CBS Radio consolidated there from various Suburban Maryland locations. Both markets are poised to capture a massive amount of federal government lease roll that will hit the market the next few years.
In the suburbs, Crystal City, a submarket that previously has suffered from government contractor downsizing and the fallout from federal budget austerity, rebounded in 2014, absorbing 239,000 sf in 2014 as a result of inventive incentives to lure technology companies and aggressive concession packages offered by landlords to bring tenants to the submarket. Another top performer included Bethesda/Chevy Chase which remains the tightest submarket in Suburban Maryland with 11.7% vacancy at the close of 2014. The Tysons Corner, Reston, and Old Town submarkets with a diverse array of financial services firms, law firms, media, as well as government contractors also outperformed other areas of the market.
These top performing submarkets all have a common trait – being amenity-rich. The majority of them offer proximity to mass transit, shopping, and a good mix of office and residential, which all continue to attract both residents and a diverse business base. The talent is attracted to vibrant submarkets which lead the business to locate there which drives the demand for office and then more residents and business and the virtuous cycle continues from there.
See our latest yearend stats and market by market analysis by following the links below
By: Nathan Edwards
Director of Research, DTZ- Washington, D.C.
Email Nathan: Nathan.Edwards@dtz.com
Contributor: Urmi Joshi, Senior Research Analyst, DTZ
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