DC office market showing sustained signs of recovery as conversions cut obsolete space

Despite totaling 6.9m sf of net negative absorption since the beginning of the decade, the Washington, DC office market is seeing sustained signs of recovery and strides toward a “new normal”. While underlying caution from landlords and tenants remain, optimism around market health fundamentals is improving. One of the drivers of that optimism is the effect office conversions have had in removing the functionally obsolete offices and bringing in-demand asset types into the city.

Since Q2 2024, total available space as a percentage of inventory has declined 150 basis points to 24.6%, with six of the last seven quarters seeing decreases in total availability. While still above the ideal ~10%-15% availability, this is the first sustained period of improvement since the beginning of the decade. At the same time, the market has recorded 1.9m sf of absorption loss, with negative totals in each quarter since Q2 2024.

Despite continued negative absorption totals, availability has declined thanks, at least in part, to office conversions. 22 office buildings have been removed from inventory as either converted or under conversion, removing a total of 4.8m sf of inventory, the large majority of which was vacant, non-competitive space. With projects like The Geneva at 1825-1875 Connecticut Ave breaking ground in the first quarter of 2026, the office conversion trend will continue to influence the DC office landscape in the near term.