Q4 2020 District of Columbia Market Report
The District of Columbia’s office market fundamentals continued to face significant shocks in the fourth quarter of 2020. Pandemic-induced economic uncertainty continues to influence market indicators and highlights precarious industries. Asking rates in the District of Columbia continued on a downward trend to $57.24/SF, averaging negative yearly growth for the first time since 2013. Fourth-quarter vacancy, another market fundamental affected by COVID uncertainty, ended at 15.7%, a 180 basis points (bps) increase from year-ago levels. As expected, slow leasing activity and limited tenant demand continued to force downward pressure on the market, marking the first year-end negative absorption in more than ten years. Though trepidation and uncertainty encompass the market, the beginning phases of vaccine distribution have led to increased public optimism. This optimism is expected to grow as vaccines are projected to become widely distributed in the upcoming year, bringing momentum and increased activity to the market.