Q3 2020 District of Columbia Market Report

The District of Columbia’s office market faced a significant shock in the third quarter of 2020. COVID-19 continued to affect a significant portion of the region’s business activity, as many firms consider structural changes to future workplace strategy. A third-quarter renewal leasing trend has emerged in the Washington MSA Region, DC being no exception as 63.2% of all transactions were renewals. Pandemic-induced economic uncertainty has continued to cause leasing activity to decrease, posing problems for landlords as well as highlighting the already existing oversupply of office inventory. Overall asking rents in the District of Columbia continued to fall to $57.09/SF, dropping below previous quarters’ lowest levels, which recorded at a low in 2017. Occupancy losses were measured at -520,977 SF in Q3, bringing year-to-date net growth to -608,048 SF. If occupancy losses continue through the remainder of the year as expected, year-end absorption will end at a negative, the first time in more than ten years.