Washington DC 2018 Q4 Office Market Report

Image treatment

Washington, DC

Overall availability in the District continues to climb, ending the year at 16.2% - a 20-basis-point increase year-over-year. 3.0 million square feet (msf) of new product delivered in 2018 alone, with an additional 4.4 msf currently under construction. New construction remains a top-choice for tenants, as evidenced by the 66% pre-leasing of all buildings delivered this year, yet that still leaves quite a lot of unclaimed space (predominantly lower floors) hitting the market.

Northern Virginia

Northern Virginia also saw an increase in available space over the year with overall availability now at 22.0%, a 40-basis-point increase from Q4 2017. With more subdued development activity, stronger leasing will allow for availability to level off in future quarters – particularly in submarkets like Tysons, Reston and the R-B Corridor. Amazon dominated headlines with its announcement that half of HQ2 will reside in Arlington, and while it has created quite a buzz, only time will tell if demand follows.

Suburban Maryland

New development is keeping overall availability in Suburban Maryland on the rise, ending the year at 21.1%, a 130-basis-point increase yearover- year. Nearly 2.2 msf is currently under construction in Montgomery County, and while 83% of new product in Bethesda / Chevy Chase has been pre-leased, projects further up Rockville Pike are moving forward without any committed tenants.

“Throughout the DC region, 2018 wasmarked by flight to quality and an incredibleamount of high-profile office leasingdecisions being made, across a variety ofindustries and sectors. Validated by Amazon,but not because of it alone, Washingtonhas cemented itself as a place that largecorporations and headquarters need to be.Options remain plentiful for tenants of allsizes, and the tenant-friendly environment willpersist into the coming year and beyond.”

Tom Fulcher, Vice Chairman