{"id":1004665812,"date":"2023-06-22T23:46:00","date_gmt":"2023-06-23T07:46:00","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004665812"},"modified":"2023-06-28T06:57:26","modified_gmt":"2023-06-28T14:57:26","slug":"dc-office-market-slows-down","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/dc-office-market-slows-down\/","title":{"rendered":"DC Office Market Slows Down"},"content":{"rendered":"
\"Washington,<\/a>

Image by Tanarch\/ iStockphoto.com<\/em><\/p><\/div>\n

The Washington, D.C., office market has shown signs of a slowdown across several indicators in the first four months of 2023, coworking being the only sector poised for growth. See below the relevant figures characterizing the metro\u2019s evolution as of April.<\/p>\n

Nearly 3.9 million square feet of office space were under construction in the capital region, representing 1.0 percent of total stock, trailing the national level of 1.8 percent. The metro also lagged behind other gateway markets such as Boston (6.1 percent), San Francisco (5.1 percent), Miami (3.6 percent) and Manhattan (2.1 percent).<\/p>\n

\"\"

Metropolitan Park 6\/7\/8. Rendering courtesy of Amazon<\/em><\/p><\/div>\n

The District\u2019s largest office project, Amazon<\/strong>\u2019s HQ2, came very close to completion in April. The 2.1 million-square-foot Metropolitan Park 6\/7\/8, the first phase of the company\u2019s second headquarters in Arlington, Va., opened for employees in May after Amazon hit the pause button on the campus\u2019 Phase Two; its groundbreaking has been delayed<\/a> until at least 2024.<\/p>\n

Another one of the metro\u2019s developments will mark a first upon its 2024 completion. The 334,000-square-foot 17xM, taking shape in Washington, D.C.\u2019s downtown area, near the Golden Triangle neighborhood, will hold the distinction of being the first SmartScore-certified office building in North America. Skanska<\/strong> topped out<\/a> the 11-story project in March.<\/p>\n

\n

READ ALSO:<\/strong> Property Management\u2019s Role in the Development of New Office Spaces<\/a><\/p>\n

\n

No new project has entered the metro\u2019s pipeline since the beginning of 2023. During the same period of last year, developers had broken ground on some 802,000 square feet.<\/p>\n

Although being one of the top 10 markets for office deliveries<\/a> last year, Washington, D.C., has seen very few additions to supply in 2023; only two developments, totaling some 657,000 square feet, entered the District\u2019s inventory in the first four months of the year. The largest one came online in February as part of the massive Capital One<\/strong> campus in Tysons Corner, Va. Designed by Gensler<\/strong>, the 621,250-square-foot Block A consists of two interconnected towers.<\/p>\n

Leasing activity contracts<\/h2>\n

The District\u2019s office market saw, once again, smaller leasing deals and downsizings, while the vacancy rate has manifested an upward trend since the beginning of the year. After a steady 13.8 percent in January and February, the index jumped 100 basis points to 14.8 in March. Another jump brought April\u2019s vacancy rate to 15.2 percent.<\/p>\n

\n

READ ALSO:<\/strong> A Closer Look at Tech Layoffs\u2019 Impact on Office Leasing<\/a><\/p>\n

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\"Lafayette

Lafayette Tower in Washington, D.C. Image courtesy of Stream Realty Partners<\/em><\/p><\/div>\n

One of the metro\u2019s largest deals year-to-date as of April was a renewal. Fried Frank<\/strong> extended its presence<\/a> at Washington, D.C.\u2019s Lafayette Tower through 2037. The law firm anchors the 325,000-square-foot office building, occupying nearly 103,000 square feet on the fifth through eighth floors.<\/p>\n

In a deal marking both a renewal and a downsize, Pillsbury<\/strong> leased 89,000 square feet at 1200 17th St. for 10 more years while dropping some 17,000 square feet. The law firm first moved into the 169,000-square-foot building, developed by Akridge and Mitsui Fudosan America, upon its delivery in 2014.<\/p>\n

As for new commitments, one of the more significant transactions also involved an East End footprint expansion. The Atlantic Council<\/strong> signed a 79,700-square-foot lease at 1400 L St. NW to relocate from the 43,000-square-foot space it occupied at 1030 15th St. NW.<\/p>\n

Flex office inventory grows<\/h2>\n

At the end of April, Washington, D.C., had nearly 3.8 million square feet of shared office space, representing 1.7 percent of its total rentable inventory. The sector has shown a 13.3 percent growth over the course of four months, as the metro\u2019s coworking inventory was at 1.5 percent of stock at the end of 2022.<\/p>\n

The metro lagged all other important gateway markets such as Miami (3.3 percent of rentable office space), Manhattan (2.8 percent) and Los Angeles (2.2 percent), but also Chicago (1.9 percent) and Boston (1.8 percent).<\/p>\n

\n

READ ALSO:<\/strong> Flex Office Space Shows Continued Gains<\/a><\/p>\n

\n
\"14

14 Ridge Square NW. Image by Maxwell MacKenzie, courtesy of Industrious<\/em><\/p><\/div>\n

WeWork<\/strong> remained the District\u2019s largest coworking operator; its inventory of nearly 958,000 square feet marked a 9 percent growth in square footage when compared to December. Regus<\/strong> followed, with nearly 689,000 square feet of shared office space, while Industrious<\/strong> ranked third, with some 531,000 square feet.<\/p>\n

In February, Industrious opened its seventh Washington, D.C., location, a 40,000-square-foot flex office space<\/a> within City Ridge, a 10-acre mixed-use development by Roadside Development and North America Sekisui House LLC. The coworking space is some 3.5 miles northwest of downtown in the historic neighborhood of Tenleytown.<\/p>\n

Fewer office sales at lower prices<\/h2>\n

Some 2.3 million square feet traded across the metro year-to-date as of April, for a combined $509 million; in the same period of 2022, the transaction volume had reached 6 million square feet and sales totaled $1.09 billion.<\/p>\n

The median sale price per square foot was $249, above the national average of $196 but down 27.4 percent year-over-year. The value was also lower than the ones recorded in the District\u2019s peer markets: Manhattan ($699 per square foot), San Francisco ($520) and Boston ($518).<\/p>\n

The largest property to change hands since the beginning of the year through April was South Lake at Dulles Corner, a 269,873-square-foot office building in Herndon, Va. Vision Properties<\/strong> paid $110 million for the Class A property that was completed in 2007.<\/p>\n

In another significant transaction, Welltower<\/strong> acquired a 159,981-square-foot medical office building located at 2021 K St. NW in the central business district of Washington, D.C. FT Cornerstone<\/strong> sold the Class B asset, that came online in 1971 and was renovated in 1990, for $78.3 million.<\/p>\n","protected":false},"excerpt":{"rendered":"

Here\u2019s how the capital region performed in the first four months of 2023, according to CommercialEdge data.<\/p>\n","protected":false},"author":870,"featured_media":1004650223,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,21747,1615],"tags":[51047,50674],"class_list":["post-1004665812","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-midatlantic","category-office","category-washington-dc","tag-marketupdate","tag-commercialedge"],"acf":[],"yoast_head":"\nDC Office Market Slows Down - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Here are the relevant figures characterizing the evolution of the Washington, D.C., office market as of April, according to CommercialEdge.\" \/>\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\/dc-office-market-slows-down\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DC Office Market Slows Down\" \/>\n<meta property=\"og:description\" content=\"Here are the relevant figures characterizing the evolution of the Washington, D.C., office market as of April, according to CommercialEdge.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/dc-office-market-slows-down\/\" \/>\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=\"2023-06-23T07:46:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-06-28T14:57:26+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/03\/Market-Update-Washington-DC-featured.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"900\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Adriana Marinescu\" \/>\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\/dc-office-market-slows-down\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/dc-office-market-slows-down\/\",\"name\":\"DC Office Market Slows Down - 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