Washington, DC office market reports

Q3 2022

Washington, DC’s office market recovery, despite recent post Labor Day pushes, continues to lag peer cities regarding return-to-work. The utilization rate sits at roughly 52% as of the week following Labor Day, which is significant due to it representing the first week of over 50% utilization since the onset of the pandemic in March 2020. While progress has been made, vacancies continue to register all-time highs, and trades continue to fall through due to rising interest rates and general uncertainty about the future of the economy. With financing becoming increasingly difficult, office sales have for all intents and purposes ceased, with DC registering only one “true” investment sale in Q3, 601 Massachusetts Ave NW. Office-to-residential conversions also continue to be top of mind for owners, but this process generally comes with challenges of its own such as construction costs. With loan maturities inching closer and distressed asset opportunities becoming increasingly plentiful, a massive opportunity to capitalize on the chaos exists in the DC office market.
149 msf

Inventory

With limited buildings delivering this quarter, DC’s inventory rose slightly by 585k sqft. although remains generally flat. Look for inventory to drop over coming quarters, with limited deliveries slated for the near-future, and up to 5 million square feet of product potentially being converted to residential uses.
-653 ksf

Net absorption

For a second consecutive quarter, absorption has registered a negative figure, with move-outs vastly outpacing move-ins, caused primarily in part due to tenants shrinking footprints as hybrid working arrangements reign supreme.
$62.13
psf

Direct asking rent

Asking rents have remained stagnant in 2022, but record high free rent and tenant improvement packages have caused net effective rents to plummet. Tenants have used this as an opportunity to upgrade their space to higher quality buildings while not actually increasing costs.
21.1%

Availabilities

To accommodate 58% of leasing occurring in the under 10k sf range, landlords are continuing to spec out increasing percentages of their vacancy to meet tenant demand.
16.6%

Vacancy

Vacancy continues to trend upwards quarter-over-quarter, however as more obsolete office product begins the process of being converted to residential or other uses, this figure should compress.
$618 mm

Investment sales

Office investment volume in DC continues to decline as local owners are executing their exit strategies, or consolidating their portfolios, including an exit from the city all-together in favor for emerging markets.
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Get in-depth office market reports and insights from commercial real estate experts in the Washington DC Metro area. Avison Young advisors look at Washington, DC commercial real estate activities and the latest Washington, DC statistics to provide you expert market research on Washington DC's office properties.

Explore different topics like the latest office market pricing trends and analysis of Washington DC's current office real estate market conditions. Gain a better understanding of Washington DC’s office real estate outlook and stay ahead of current office space trends. Make smart decisions when it comes to investing in office properties in Washington DC's competitive office real estate market. Avison Young is your trusted source for commercial real estate office market insights in Washington, DC.

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