WASHINGTON, DC--The East End closed 2015 with 246,976-square feet of negative absorption for the year, according to DTZ's fourth quarter market report for the District. This quarter's poor showing was mainly due to Arnold & Porter's move to the newly delivered 601 Massachusetts Avenue, NW.

However, fundamentals in the East End have put the submarket on the wrong side of this cycle's leasing trends in DC. For instance, DTZ notes that rising asking rents are beginning to price out many government tenants from both the CBD and East End markets. However, it said, this trend has "hit the East End particularly hard" as two of the largest leases of the fourth quarter resulting in the East End losing federal tenants to emerging and non-core submarkets.

The Department of Disability Services signed a lease for 101,980 square feet at 250 E Street, SW. An, of course, the Department of Justice's 839,000-square foot lease at Three and Four Constitution Square will empty out federal agencies from several buildings in the East End. "Expect more federal flight out of the core and into the emerging markets that offer the space efficiency and price point the government desires," DTZ concludes.

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Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.