Washington Metropolitan Area Office Market
| Average Asking Rent (Price/SF) | $41.15 |
| Vacancy Rate (%) | 17.4% |
| Net Absorption (SF) | -663,390 |
The economic recovery in the Washington metro area slowed in the first quarter of 2021; employment momentum failed to maintain the pace reached in the late summer. Newmark expects the region-wide office market vacancy rate to rise to approximately 18.6% as of the end of first-quarter 2023 from 17.4%, where it stands today. The first quarter tallied -663,390 square feet of net absorption in the region, marking a significant difference from fourth-quarter 2020, in which the region lost about 1.6 million square feet of occupancy. Despite the region’s elevated vacancy rate, weighted average asking rents grew 1.5% over the past 12 months to $41.15/SF. Annualized rent growth has been decelerating for the past year, which is consistent with asking rents serving as lagging indicators during downturns.
Download Washington Metropolitan Area Office Market Report 1Q21District of Columbia Office Market
| Average Asking Rent (Price/SF) | $57.37 |
| Vacancy Rate (%) | 15.7% |
| Net Absorption (SF) | -418,696 |
The District of Columbia’s office market continued softening in the first quarter of 2021. Although market activity modestly rebounded in the fourth quarter, the recovery’s momentum stalled in the new year. Net absorption registered -418,696 square feet during the first quarter of 2021. Slow leasing activity over the last 12 months has limited opportunities for occupancy gains. Vacancy continued to rise steadily during the first quarter, reaching 15.7%, a 50-basis-point increase from the fourth quarter and a 120-basis-point increase from a year ago. Asking rents declined in the first quarter to $57.37/SF, which offset the 12-cent gain measured in the fourth quarter of 2020.
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Suburban Maryland Office Market
| Average Asking Rent (Price/SF) | $29.08 |
| Vacancy Rate (%) | 15.4% |
| Net Absorption (SF) | 415,211 |
Demand for office space in Suburban Maryland continued to soften during the first quarter of 2021. Net absorption totaled positive 415,211 square feet, but this positive demand was due to the completion of the new United States Citizenship and Immigration Services (USCIS) headquarters in Suitland. The overall vacancy rate registered 15.4% at the end of the first quarter, an increase of 30 basis points from the previous quarter and an increase of 170 basis points from a year ago. The average asking rental rate ended the first quarter at $29.08/SF, an increase of 2.3% from $28.42/SF in the first quarter of 2020.
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Northern Virginia Office Market
| Average Asking Rent (Price/SF) | $33.86 |
| Vacancy Rate (%) | 19.6% |
| Net Absorption (SF) | -659,905 |
The effects of the pandemic on the Northern Virginia office market continued to be felt during the first quarter of 2021, as -659,905 square feet was absorbed. Gross leasing was weak in the first quarter; however, there was an uptick in new leases compared to the large percentage of renewals seen in the previous two quarters. Overall vacancy ended the fourth quarter at 19.6%, an increase of 70 basis points from the prior quarter and 140 basis points from one year ago. The average overall asking rent increased 0.9% from one year ago to $33.86/SF, primarily due to new supply that delivered last year without any preleases. However, effective rents remain under downward pressure as concessions are elevated.
Download Northern Virginia Office Market Report 1Q21