{"id":1004268965,"date":"2018-10-02T04:12:25","date_gmt":"2018-10-02T12:12:25","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004268965"},"modified":"2022-12-05T11:03:55","modified_gmt":"2022-12-05T19:03:55","slug":"big-leases-coworking-power-metro-dcs-office-market","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/big-leases-coworking-power-metro-dcs-office-market\/","title":{"rendered":"Big Leases, Coworking Power Metro DC\u2019s Office Market"},"content":{"rendered":"

By Scott Baltic, Contributing Editor <\/em><\/p>\n

\"Wei<\/a>

Wei Xie, research manager of CBRE\u2019s Washington\/Baltimore region<\/p><\/div>\n

The highlights of CBRE\u2019s just-released Washington, D.C., office market report for the third quarter of 2018 focus on the largest recent leases, including three of more than 400,000 square feet each, and on the individually small spaces that are driving the metro\u2019s rapidly expanding coworking sector.<\/p>\n

Coworking first: The sector has become the D.C. metro area\u2019s fastest-growing tenant category, having tripled its footprint over the past five years to 3 million square feet. The third quarter built on this trend, with six leases signed for new locations totaling 178,000 square feet.<\/p>\n

Emerging models included hotel-style shared space and coworking options offered directly by building owners.<\/p>\n

\u201cWhile its overall share of the market remains relatively small, the coworking industry\u2019s rapid and continued expansion in D.C. has been a notable growth driver for the office sector. The high density of young and educated workforce led to concentrated growth in downtown D.C., as well as in transit-oriented urban cores of suburban markets such as Bethesda, Tysons and Ballston<\/em>,\u201d Wei Xie, research manager of CBRE\u2019s Washington\/Baltimore region, said in a prepared statement.<\/p>\n

A Cushman & Wakefield report in August tallied 3 million square feet of new coworking space<\/a> that came online nationwide in the first half of this year.<\/p>\n

As to big spaces, the three largest third quarter leases totaled about 1.7 million square feet. Private K-12 school Whittle School & Studios signed for 666,000 square feet at 4000 Connecticut Ave. NW, taking Intelsat\u2019s former space.<\/p>\n

The Federal Communications Commission extended its lease for 602,000 square feet at 445 12th St. SW for three years, and the U.S. Attorney\u2019s Office for the District of Columbia renewed for a total of 416,000 square feet at 555 Fourth St. NW and 501 Third St. NW.<\/p>\n

Deals like this helped pull the District\u2019s overall office vacancy down by 60 basis points, to 13.0 percent, on net absorption of 843,000 square feet in the quarter. The lack of new product in the third quarter was only a brief respite, as 1.7 million square feet are scheduled for delivery in the fourth quarter.<\/p>\n

Further, deliveries aggregating 3.7 million square feet are set to arrive by the end of 2019, and with current preleasing of just 60 percent, the likely result will be a hike in the market\u2019s vacancy in the next year.<\/p>\n

In all, the D.C. region saw 1.1. million square feet of net absorption in the third quarter and 3.6 million square feet of gross leasing activity, the latter being the highest quarterly volume in more than two years. Continuing diversification of tenant mix, including education, coworking, media and business services, was evident in both downtown and suburban markets.<\/p>\n

Mixed news from the suburbs<\/h2>\n

The Northern Virginia market has achieved 1.1 million square feet of net absorption over five consecutive quarters, with 263,000 square feet of positive net absorption in the third quarter.<\/p>\n

Unlike the previous quarter, most third quarter activity was in submarkets inside the Capital Beltway, where vacancy rates dropped 50 basis points, to 22.5 percent. Vacancy outside the Beltway increased by 30 basis points, to 19.3 percent.<\/p>\n

The quarter\u2019s largest lease was when the Drug Enforcement Administration renewed 511,000 square feet in Arlington, the year\u2019s first significant lease in the Pentagon City submarket.<\/p>\n

In suburban Maryland, Class A product saw 150,000 square feet of positive absorption, though the remainder of the market contracted by 182,000 square feet.<\/p>\n

Notably, two large users, Discovery and State Farm, returned a total of 788,000 square feet of Class A space to the market: 550,000 square feet from the sale of Discovery\u2019s headquarters in Silver Spring, and 238,000 square feet from State Farm\u2019s space in Frederick County.<\/p>\n

The life sciences industry has been suburban Maryland\u2019s major growth driver, with three leases of 100,000 square feet or more and a combined 216,000 square feet of net absorption.<\/p>\n

Problematically, the development pipeline comprises a record 2.4 million square feet under construction.<\/p>\n

Image courtesy of CBRE<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

A new CBRE report illustrates the strength that large deals, mostly by governmental entities, and the ongoing surge in coworking space are bringing to the market. <\/p>\n","protected":false},"author":882,"featured_media":1004268995,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21782,21808,11,21742,21747,1615],"tags":[32789,42461],"class_list":["post-1004268965","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-development","category-featured","category-midatlantic","category-latest","category-office","category-washington-dc","tag-cbre","tag-coworking"],"acf":[],"yoast_head":"\nBig Leases, Coworking Power Metro DC\u2019s Office Market - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/big-leases-coworking-power-metro-dcs-office-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Big Leases, Coworking Power Metro DC\u2019s Office Market\" \/>\n<meta property=\"og:description\" content=\"A new CBRE report illustrates the strength that large deals, mostly by governmental entities, and the ongoing surge in coworking space are bringing to the market.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/big-leases-coworking-power-metro-dcs-office-market\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2018-10-02T12:12:25+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-05T19:03:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/10\/Wei-Xie.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/big-leases-coworking-power-metro-dcs-office-market\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/big-leases-coworking-power-metro-dcs-office-market\/\",\"name\":\"Big Leases, Coworking Power Metro DC\u2019s Office Market - 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