DC Leasing Does Well In Q2

WASHINGTON, DC–CBRE reports that both downtown and suburban DC office markets recorded healthy demand growth in the second quarter. The downtown market absorbed 1.2 million square feet of office space, due in large part to the delivery of six buildings totalling 2.4 million square feet that allowed tenant move-ins. The much anticipated 770,000 square-foot move-in by Fannie Mae at Midtown Center was among these buildings.

“Halfway through 2018, we’re seeing some cautious optimism throughout greater Washington’s office markets, prompted by tenant expansions from a variety of industry sectors, including coworking, tech, and business and financial services,” says Wei Xie, Research Manager of CBRE Washington/Baltimore. “However, we expect vacancy rates to inch up in the next 18 months due to the amount of development in the pipeline.”

Other key findings in the CBRE report:

• Seven of the top ten leases were in the coworking, creative industries, tech and nonprofit sectors, while large government and law firm users were quiet during the quarter.
• The amenity race continues to intensify. To retain and attract tenants, office owners and developers are adding upgrades ranging from green roofs to high-end fitness centers and golf simulators.
• Amid ongoing repositioning activity, Class B availabilities in the Central Business District and East End have begun tightening. The vacancy rate for Class B product that is not slated for near-term redevelopment closed the second quarter at 9.1 percent in the downtown core, compared to the overall market vacancy of 13.6 percent. Full-service Class B rents rose $1.80 over the quarter to an average of $49.84 per square foot.