Washington D.C. saw slowing office space demand in the second quarter

At mid-year 2022, the Washington D.C. office market is seeing a slowdown in leasing activity. While this could be due to a seasonal drop in deal volume as deal activity has historically spiked in the second half of the year, macroeconomic concerns such as high inflation and slowing growth, as well as many occupiers utilizing hybrid workplace strategies have acted as headwinds despite strong underlying employment fundamentals. Just over 1.3 million square feet (msf) of leasing was transacted in the second quarter, down from 1.5 msf reported last quarter, as well as down from 2.0 msf reported a year ago. Sublease leasing activity saw a greater drop in demand as only 30,000 square feet (sf) were leased in the second quarter, down from 155,000 sf in the first quarter, and down from 200,000 sf a year ago. Once again, the federal government was the driving factor in leasing activity as the Department of Justice (DOJ) leased 331,000 sf at 555 4th Steet NW. This deal alone comprised nearly 26.0% of total leasing activity in what was otherwise a slow quarter. With office availability remaining at a record high, Washington D.C. will remain a tenant-favorable office market in the near-term.

Read the full report