Washington, DC office market report

Q1 2024

Through Q1 2024, investment sales volume in Washington DC has shown signs of resurrection, currently sitting at almost 73% of total 2023 volume, with investors seemingly underwriting with more confidence and picking up assets with core profiles at severely discounted values. The ever-shrinking development pipeline will be something to monitor, and has manifested itself in the form of more renewal activity for larger tenants due to a dwindling pool of options.
$ 480 mm

YTD investment volume

2024 investment sales and recapitalization volume in the DC office market have rebounded after heavily suppressed volume in 2023, which was brought on by a rise in interest rates. This figure represents roughly 73% of the $656mm recorded in DC in 2023, just in the first quarter of 2024. Investors are seemingly approaching the marketplace with more conviction than in previous years. Note, that this figure only represents investment sales and recapitalizations, no user sales or entity-level portfolio sales.

28 %

Leasing velocity attributable to Trophy & Class A

While the flight-to-quality trend has been a dominant one in the past several quarters, leasing velocity attributable to Trophy and Class A properties tallied its lowest amount since 2022 in Q1 2024. Several large renewals in Class B properties contributed to this in Q1 2024, such as the Washington Post at 1301 K St NW and Finnegan at 901 New York Ave NW. The limited development pipeline was a major contributory factor, as large tenants facing expirations have very few if any options to upgrade their space in terms of quality, offering the requisite space.

1.09 mm

Total office space under development/ renovation

The Washington, DC office development pipeline sits at its lowest level in over 20 years. This is driven by structural shifts as it relates to office utilization as well as cyclical macroeconomic issues driving up the cost of capital for levered developers. Also contributing to this is elevated construction pricing, which makes development deals increasingly difficult to underwrite given today's office leasing conditions.

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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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