Washington Region Office Market Is Still on Top

WASHINGTON, DC-The metropolitan region–the Mid-Atlantic market that consists of the nation’s capital and the surrounding Northern Virginia and suburban Maryland cities–has begun the new year holding on to its position as one of the top office markets in the country. In terms of the lowest vacancy rates, the region is second in line behind Manhattan and ahead of Dallas/Fort Worth. Advantis Real Estate Services Co.’s recently released Year-End 2004 Office Market Report verifies the region’s long held status as a leading office market and indicates that there is, seemingly, no end in sight to the good times for the foreseeable future.

The numbers tell the story. The region’s direct vacancy rate, currently at 8.2%, is down all around, with the District reporting a low 5% vacancy. The figure in suburban Maryland is 10.3% and in Northern Virginia vacancies are at 9.7%. All three areas of the region have shown a marked improvement over the year-end 2003 numbers of 5.9%, 11.2% and 12.7%, respectively. Additionally, positive net absorption for the year totaled about 7.4 million sf; deliveries totaled 6.9 million sf. With demand on the upswing, the region’s average class A office leasing rate increased from $27.50 in the fourth quarter of 2003 to $29.25 in the fourth quarter of 2004; class B numbers remained relatively stable, declining slightly from $26.75 to $26.50.

An increasingly strong job market appears to be the backbone of the region’s office market success. The federal government has continued to take on office space as it enhances homeland security and defense efforts, leaving the region in a better position than most other areas across the country during the last few years national economic strife. And private sector demand for space is picking up, as well.