Washington Metro Area Real Estate Market Reports

Washington Metropolitan Area Office Market

The Washington metro area vacancy rate ended the first quarter of 2026 at 20.6%, a year-over-year decrease of ten basis points. The Washington metro area registered 163,775 SF of positive net absorption during the first quarter of 2026, after negative net absorption of 1.2 MSF during 2025. Asking rents ended the first quarter of 2026 at $44.12/SF, increasing 1.4% over the year. Rents have increased 6.7% over the last five years. The region’s trophy office product has outperformed all other asset classes, ending the first quarter at a 12.6% vacancy rate, an increase of 20 basis points over the previous quarter, and 110 basis points year-over-year. The Washington metro area office development pipeline remains historically low, with two deliveries occurring over the last year and just three projects totaling 325,000 SF currently under construction. 600 Fifth Street, NW delivered during the fourth quarter of 2025, the market’s second new office property added over the past year, following 1880 Reston Row Plaza, which delivered during the second quarter of 2025. Conversions covering more than 28.3 MSF of office space have been completed or proposed in the region since 2020, approximately 7.8% of the current total inventory in the market. Office-using jobs in the region are currently 3.1% higher than five years ago, but only slightly higher than in March 2020, just before the pandemic began. Year-over-year office employment declined by 2.3%.

Washington Metropolitan Area Industrial Market

The Washington D.C. industrial market experienced 4.2 million SF of deliveries while seeing almost 3.1 million SF of positive net absorption during 2025. With deliveries outpacing absorption, the market saw a slight annual expansion in vacancy, ending 2025 at a 7.3% vacancy rate, an increase of 30 basis points year-over-year. Despite the annual expansion in vacancy, the market’s vacancy remains relatively in line with the decade average of 6.2%. Despite seeing a slight deceleration, asking rents continue to grow at elevated rates, ending 2025 at $17.84/SF across all product types. This is an increase of 5.4% year-over-year, with the market seeing rents decelerate annually since the market had peak annual growth of 9.2% in 2022. Development remained elevated during 2025, as the market saw 4.2 million SF of deliveries throughout the year, higher than the decade-average of 3.4 million SF of annual deliveries. Construction levels remain relatively stabilized, ending 2025 with 38 properties under construction totaling over 4.1 million SF, in line with the market’s historical average of 4.0 million SF under construction.

District of Columbia Office Market

The District of Columbia’s vacancy rate ended the first quarter of 2026 at 20.6%, even with the previous quarter and up 140 basis points year-over-year. Net absorption registered negative 29,561 SF during the first quarter, the fifth consecutive quarter with negative net absorption after DOGE-driven occupancy losses throughout the previous year. Average asking rates have finally turned a corner, increasing by 0.2% over the quarter and 0.5% over the year. Asking rents reached the highest level since the middle of 2021, ending the first quarter at $57.34/SF. The District’s trophy office product has outperformed all other asset classes, with vacancy tightening 870 basis points since peaking during the second quarter of 2020, ending the first quarter at 10.9%. The District of Columbia’s development pipeline remains historically low, with one delivery occurring during 2025 and no projects currently under construction. There were no deliveries during the first quarter of 2026, following just one delivery, 600 Fifth Street, NW during 2025. It was the market’s first new office property added since the second quarter of 2024. Conversions covering more than 7.0 million SF of office space have been completed or proposed in the District since 2020. Office-using jobs in the region are currently 3.1% higher than five years ago, but only slightly higher than in March 2020, just before the pandemic began. Year-over-year office employment declined by 2.3%.

Suburban Maryland Office Market

Suburban Maryland saw over 41,000 SF of negative net absorption during the first quarter of 2026, after approximately 246,408 square feet of positive absorption for the previous year. The market’s vacancy rate remained the same quarter-over-quarter, as well as year-over-year, with a steady rate at 20.2%. The stable vacancy rate, combined with a historically low construction pipeline, suggests the Suburban Maryland may be nearing a cyclical low. After a building boom from 2017-2022, the pace of new construction deliveries has begun to slow. There were two office deliveries in Suburban Maryland in 2023, but no projects have delivered since. There is currently just one property under construction in the market,1600 Rockville Pike, which will deliver 237,000 SF in 2026. Average asking rents in Suburban Maryland have declined each of the last five quarters, starting 2026 at $31.17 PSF, a decrease of 1.0% year-over-year. Since a cyclical high of 4.4% rent growth in 2021, the market has seen decelerating increases in rent as demand wanes, dipping into the negative during 2026.

Northern Virginia Office Market

Northern Virginia’s office market posted 234,883 SF of positive net absorption during the first quarter of 2026, as tenants continued to occupy space from prior leasing activity. Vacancy declined to 20.8%, down 20 basis points year-over-year. Leasing activity moderated during the first quarter following a strong fourth quarter of 2025, with demand driven by select, requirement-based transactions rather than broad-based expansion. In Northern Virginia, rents averaged $37.85/SF during the first quarter of 2026, reflecting 0.8% growth since year-end. Rent growth has moderated but remains supported by limited new supply and continued tenant preference for higher-quality space. The market’s development pipeline remains historically low, with only two properties totaling 89,750 SF under construction as of the first quarter of 2026.