Northern Virginia Office Market Reports | Avison Young US - Washington, DC Metro

Northern Virginia office market reports

Q2 2023

The Northern Virginia office market continues to face headwinds with shrinking tenants, low utilization rates, and foreclosures on the rise. Quarterly and year-to-date net absorption was boosted into positive territory by Amazon’s sizeable occupancy at HQ2. Absorption continues to run negative otherwise, however, and the total vacancy rate remained at an elevated 21%. Still, government contracting remains a bright spot for the market. Leasing activity in Northern Virginia is being driven by occupiers in the aerospace & defense industry, and those tenants are expected to retain significant office footprints.

1.0 msf

Office space leased by aerospace & defense tenants from 2020-2023

Leasing activity in Northern Virginia is being driven by occupiers in the aerospace & defense industry. In an analysis of leases signed from July 2016 to the present across 10 major sectors, aerospace & defense was the only industry that recorded an increase (in both total sf and deal count) for the 2020-2023 time period (ranked 2nd) compared with 2016-2019 (ranked 6th)

-405k sf

Q2 2023 net absorption without Amazon at HQ2

Northern Virginia’s quarterly and year-to-date net absorption was boosted into positive territory by Amazon’s occupancy of two newly-delivered towers (2.1 msf) at HQ2 phase one in Pentagon City. Without that gain in occupancy, overall absorption would have continued its negative trend with -405,000 sf in the second quarter

95 mos.

Average Class A term length

While Northern Virginia’s overall average lease term length has been on a downward trend as tenants have desired more flexible arrangements, the average length for Class A space has remained fairly stable and is trending upward again.

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