Q1 2023: Northern Virginia Office Market Report

The Northern Virginia office market has weakened in the first quarter of 2023, failing to keep the momentum of the fourth quarter last year. Net absorption dipped to -704,739 square feet, mostly due to larger tenants vacating longtime offices for newer – and smaller – space to better accommodate remote work policies. Among the largest movers were ICF vacating 330,000 square feet of space in Vienna and relocating to 207,000 square feet at 1902 Reston Metro Plaza.The top three leases this quarter were renewals by large government contractors, totaling north of 600,000 square feet. Direct asking rents in Northern Virginia inched higher to $35.14 per square foot, compared to $34.92 per square foot at end of the fourth quarter. Overall vacancy ended the first quarter at 20.9 percent, compared to 20.1 percent during the same quarter a year prior. Sublease availability continues to rise in Northern Virginia, with more than 5.9 million square feet of sublease space available at the end of the fourth quarter. With record high sublease space on the market, average asking rent for sublease space dropped to $28.20 per square foot at end of the first quarter compared to $29.61 per square foot to end last year.