Suburban Maryland Market Report Q2 2019

The Suburban Maryland Office market recorded negative 521,590 SF of absorption in Q2, following a Q1 that recorded 148,691 SF of occupancy growth. This downturn in occupancy was primarily due to Discovery finalizing their relocation out of almost 500K SF in Silver Spring. Overall fundamentals remain steady and demand for Discovery’s old space is reported to be high. In fact, the largest lease of the quarter was the 110,400 SF Children’s National Health System deal at the old Discovery building.

The Trophy Office sector in Downtown Bethesda continues to strengthen. Stonebridge associates’ project known as The Avocet Tower broke ground this quarter. Across the street, WeWork decided to open its first Montgomery County location at 7272 Wisconsin Avenue, and committed to a total of 60,000 SF in the new development. The Wilson is slated to add 360,000 SF by Q4 2020 and is approximately 80% preleased. JBG’s trophy development at 4747 Bethesda Ave is 90% preleased to Booz Allen Hamilton, Host Hotels, and Orano and is expected to deliver 281,000 SF in Q3 2019. These Bethesda Trophy developments are a major engine of growth for Montgomery County and may force traditional Class A building owners to add more amenities in order to remain competitive.