Washington Metropolitan Area Office Market
| Average Asking Rent (Price/SF) | $41.63 |
| Vacancy Rate (%) | 18.2% |
| Net Absorption (SF) | -1,938,391 |
The economic recovery in the Washington metro area picked up in the second quarter of 2021 after a slow winter. For the 12 months ending May 2021, the region added 207,100 jobs; this compares with the region’s 21-year average growth of 22,911 jobs per annum. This is a positive step in the metro area’s recovery; however, the region still has work to do to recover fully from the jobs lost in 2020 and early 2021. Newmark expects the region-wide office market vacancy rate to rise to approximately 19.4% as of the end of second-quarter 2023 from 18.2%, where it stands today. Job creation will bolster demand for space, but tenants will continue to seek ways to reduce their footprint in the period ahead.
Download Washington Metropolitan Area Office Market Report 2Q21District of Columbia Office Market
| Average Asking Rent (Price/SF) | $57.43 |
| Vacancy Rate (%) | 16.6% |
| Net Absorption (SF) | -836,866 |
The District of Columbia’s office market fundamentals continued to soften in the second quarter, despite the region’s slowly accelerating economic and public health recovery. Net absorption registered -836,866 square feet during second-quarter 2021. Occupancy losses were predictably pronounced due to the move of the U.S. Citizenship and Immigration Services (CIS), which relocated to Maryland. Vacancy rose in the second quarter, reaching 16.6%, a 70-basis-point increase from the first quarter and a 180-basis-point increase from one year ago. The average asking rent rose in the second quarter to $57.43/SF but remains $0.09 below second-quarter 2020 rents. Asking rents have held relatively steady despite the uncertainty of the past year. Effective rents will remain under downward pressure, as elevated vacancy yields generous concession packages for tenants in the market for new space.
Download District of Columbia Office Market Report 2Q21
Suburban Maryland Office Market
| Average Asking Rent (Price/SF) | $29.23 |
| Vacancy Rate (%) | 16.0% |
| Net Absorption (SF) | -277,919 |
Demand for office space in Suburban Maryland softened during the second quarter of 2021. Net absorption totaled -277,919 square feet. As an ongoing result of disruption related to COVID-19, leasing activity was limited. The overall vacancy rate was 16.0% at the end of the second quarter, an increase of 30 basis points from the previous quarter and an increase of 200 basis points from a year ago. Vacancy will likely continue to increase in the latter part of 2021, as 380,000 square feet is scheduled to deliver in the third quarter with 0.0% preleased. The average asking rental rate ended the second quarter at $29.23/SF, an increase of 2.0% from $28.67/SF in the second quarter of 2020. While it may seem counterintuitive that asking rents continued to increase despite occupancy losses, the construction pipeline and recently delivered product includes high-quality space with asking rates that match the quality, which boosts the average asking rent. By contrast, effective rents are under downward pressure as concessions remain high to lure tenants in an environment of tepid demand.
Download Suburban Maryland Office Market Report 2Q21
Northern Virginia Office Market
| Average Asking Rent (Price/SF) | $34.38 |
| Vacancy Rate (%) | 20.4% |
| Net Absorption (SF) | -823,606 |
The effects of the pandemic on the Northern Virginia office market continued into the second quarter of 2021, as leasing activity remained limited. However, the second quarter also saw a nationwide vaccine rollout and the lifting of COVID-19 restrictions across the Washington area, which foreshadows a return to normalcy. Overall vacancy was 20.4% in the second quarter, an increase of 50 basis points from last quarter and 220 basis points from one year ago. The average overall asking rent increased 2.2% from one year ago to $34.38/SF. Despite the increase in asking rents from the second quarter of 2020, effective rents remain under downward pressure as concessions are elevated.
Download Northern Virginia Office Market Report 2Q21