GSA lease cancellations drive further wedge between top and bottom quality of the DC, Maryland, and Virginia office market

As the long-time stalwart of Class B and C office leasing, the Federal Government’s cancellation of over two million sf of leases since the beginning of the year further reinforces distress the region’s commodity offices. For every 1 sf of Class A/Trophy lease terminated, 4.7 sf of Class B/C has been cancelled.

At a time when Trophy availabilities have reached their lowest levels since the pandemic, Class B and C assets see the nation’s largest tenant shed 4% of its leased inventory in a bid to cut spending. Approximately 8% of inventory in the District has been cancelled.

Representing 21.6% of all non-farm jobs within Metro DC, the Federal Government plays a large part in the DMV’s economic health. Despite the GSA downsizing their national footprint by 2.5% on average each year since 2016, this abrupt scaling back of office space creates significant challenges to the already distressed commodity office market.