Washington Metropolitan Area Office Market
Net absorption for the region totaled negative 1.0 million square feet during Q2 2024, with Northern Virginia and Suburban Maryland experiencing negative net absorption while the District countered with positive net absorption. Overall vacancy expanded to 21.4%, up 40 basis points over the quarter and 160 basis points year-over-year. Availability also expanded, ending Q2 2024 at 26.4%, an increase of 100 basis points quarter-over-quarter and 210 basis points year-over-year. Major second-quarter transactions were spread throughout the metro, with the top transaction occurring in the District, the second-largest transaction occurring in Northern Virginia, and the third-largest deal occurring in Suburban Maryland. After three deliveries during the quarter totaling 800,000 SF, the office construction pipeline ended Q2 2024 at 1.3 million square feet.
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District of Columbia Office Market
The District of Columbia experienced 210,488 SF of positive net absorption during Q2 2024. The vacancy rate remained steady quarter-over-quarter at 20.3% and increased 140 basis points year-over-year. The District of Columbia’s development pipeline remains historically low, with only one delivery during Q2 2024 being 17XM. The sole property under construction in the district is 600 Fifth, a 400,000-square-foot office building in the East End. Overall, asking rents increased slightly midway through 2024. Class A rents were the cause of this, as they increased 0.4% quarter-over-quarter, while Class B rents increased 0.1% quarter-over-quarter. The longer-term trend, however, shows that both Class A and Class B rents have remained relatively flat since 2019.
Download District of Columbia Office Market Report 2Q24Suburban Maryland Office Market
Suburban Maryland’s net absorption totaled negative 225,789 square feet during the second quarter. Overall vacancy increased to 19.8%, up 20 basis points quarter-over-quarter and 200 basis points year-over-year. After a building boom over the past five years, the pace of new construction deliveries has begun to slow. 2023 only saw two office deliveries in Suburban Maryland and there was just one delivery during the second quarter of 2024. Furthermore, only one property remains under construction in the market. As in other markets, Class A and trophy space in Suburban Maryland has outperformed Class B and C space. This is illustrated in the continued increase in Class A asking rents while Class B asking rents have continued to decline. Lease renewals continue to drive leasing volume as two of the three largest leases of the second quarter were renewals.
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Northern Virginia Office Market
Net absorption for the region totaled negative 1.0 million square feet during Q2 2024, with the negative absorption spread out among many submarkets. Overall vacancy expanded to 22.9%, up 80 bps quarter-over-quarter and 180 bps year-over-year. Availability also expanded, ending Q2 2024 at 27.4%, an increase of 160 bps quarter-over-quarter and 120 bps year-over-year. Major second-quarter transactions were spread throughout the region, with the largest deal in Fairfax Center, the second and third largest deals occurring in Rt. 28 South, and the fourth largest deal occurring in Ballston. Furthermore, renewals were a theme of Q2 2024, with the four largest deals being lease renewals. Rents have taken a step back during the first half of 2024, ending Q2 2024 at $35.27, a decrease of 0.7% since the end of 2023. After two deliveries totaling 467,000 SF during the quarter, the office construction pipeline ended Q2 2024 at three properties totaling 608,000 SF.
Download Northern Virginia Office Market Report 2Q24