Washington Metropolitan Area Office Market
The Washington D.C. Metro region experienced over 1.0 MSF of negative net absorption during the first half of 2025. The negative net absorption was largely seen in the District, which experienced 930,000 SF of negative net absorption, followed by Northern Virginia seeing 200,000 SF of negative net absorption. Suburban Maryland, however, saw positive movement during the first half of 2025, experiencing 120,000 SF of positive net absorption. Overall vacancy ended Q2 2025 at 20.7%, expanding 30 bps during the first half of 2025. Availability tightened, however, ending Q2 2025 at 24.3%, tightening 20 bps during the first half of 2025. Leasing activity was concentrated in the District and Northern Virginia during Q2 2025, with these regions containing the five largest transactions. Government agencies and law firms dominated the headlines, with the four largest leases of the quarter. After five deliveries throughout 2024 totaling roughly 1.2 MSF, the market didn’t see a delivery during the first half of 2025. The development pipeline ended Q2 2025 with 950,000 SF under construction spread across five properties.
Download Washington Metropolitan Area Office Market Report 2Q25
District of Columbia Office Market
The District of Columbia experienced 546,635 SF of negative net absorption during the second quarter of 2025. Registering 19.7% as of the second quarter, the vacancy rate increased 50 basis points quarter-over-quarter and 70 basis points year-over-year. Net negative absorption during the second quarter was partly due to CoStar’s official vacating of its former headquarters at 1331 L Street NW, as well as some federal government tenants. The sole property under construction in the district is 600 Fifth NW, a 400,000-square-foot office building in the East End that is scheduled to deliver in the first quarter of 2026. Half of the building is already preleased to law firm Crowell & Moring. Overall asking rental rates declined 0.3% quarter-over-quarter during the second quarter of 2025 and are 2.9% lower than their peak in 2020, ending the quarter at $56.37 psf. Further conversion activity and a limited development pipeline will help to increase future rents. D.C. continues to benefit from one of the lowest sublease availability rates (2.3%) in the nation, ranking #1 among all gateway markets for lowest sublease listings.
Download District of Columbia Office Market Report 2Q25
Suburban Maryland Office Market
Suburban Maryland saw positive activity during Q2 2025, with 101,233 SF of positive net absorption, giving the market positive first-half absorption for the first time since 2018. Overall vacancy ended the quarter at 20.0%, tightening 20 bps quarter-over-quarter and year-over-year. After a building boom over the past five years, the pace of new construction deliveries has begun to slow. There were only two office deliveries in Suburban Maryland in 2023 and no deliveries in 2024. Furthermore, 1600 Rockville Pike is the only property that remains under construction in the market, totaling 237,000 SF. Asking rents rose through the first three quarters of 2024, before declining to end the year, a trend that has continued through the first half of 2025. Asking rents have decreased, ending Q2 2025 at $31.15 PSF, a decline of 1.3% quarter-over-quarter and 2.3% year-over-year.
Download Suburban Maryland Office Market Report 2Q25
Northern Virginia Office Market
Net absorption for the region totaled negative 444,727 square feet during the second quarter of 2025, leading to a 30-basis-point increase in vacancy over the quarter, to 21.9%. Vacancy is up 90 basis points year-over-year. However, overall availability is down 150 basis points from a year ago, to register 24.2% as of the second quarter. Second-quarter leasing transactions were spread across Northern Virginia submarkets and many large transactions were new direct leases. Large transactions include the Department of Homeland Security lease extension of 76,897 square feet at 4601 N Fairfax Drive in the Ballston submarket. Rents in Northern Virginia averaged $36.29 PSF as of the second quarter of 2025, an increase of 2.2% over the past 12 months. Northern Virginia has not experienced any deliveries over the last three quarters. The market’s development pipeline remains historically low, with only three properties totaling 312,000 SF under construction as of 2Q25.
Download Northern Virginia Office Market Report 2Q25