Q1 2021 Suburban Maryland Market Report

Despite a strong start to the year, the Suburban Maryland office market struggled in the second quarter of 2021. After posting 643,976 SF of positive absorption in the first quarter, the market saw negative absorption totaling 495,955 SF. The Consumer Product Safety Commission’s renewal for 126,266 SF at 4330 East-West Highway represented the largest lease of the quarter, marking the fifth straight quarter that GSA provided the top lease in Suburban Maryland. In total, only two of ten submarkets considered had positive absorption, with North Rockville and Gaithersburg posting modest gains. Average direct asking rents did see slight improvement from the first quarter, landing at $28.22/SF, but are still down from year-ago levels. The total vacancy rate also climbed to 17.3%, representing a 170 basis point increase year-over-year. Over 1.3 million SF of construction remains underway in the market, mainly concentrated in downtown Bethesda. The 379,911 SF Avocet Tower project at 7373 Wisconsin Avenue has yet to see pre-leasing activity, which stands to further increase vacancy levels in the market.