Office space demand slowdown continues as occupiers tread carefully

Washington D.C. office space demand remains near historic lows with quarterly leasing activity totaling just under 1.0 million square feet (msf), compared to 1.5 msf reported a year ago. Despite the lower level in demand, some companies have been willing to take advantage of favorable market conditions and the abundance of higher-end available options. Tenant flight to quality continues to characterize the office market with trophy buildings reporting lower availability rates and higher rents, while non-trophy buildings continue to lag in performance, especially as the federal government has been slow to return to office. Activity for the quarter was dominated by legal services. Notably, Pillsbury Winthrop Shaw Pittman signed an extension at 1200 17th Street NW for 89,000 square feet (sf) which was the largest lease signed this quarter.

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