Slow construction activity<\/h2>\n\n\n\n![\"600](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/05\/600-Fifth-St.-NW.jpg\")
<\/a>Rockefeller Group and Stonebridge topped out the project at 600 Fifth St. NW, the largest development in the metro. Image courtesy of Clark Construction<\/em><\/figcaption><\/figure><\/div>\n\n\nAs of December, D.C.’s office pipeline comprised 1.1 million square feet of space across seven properties, representing 0.3 percent of existing stock\u2014below the national average of 0.8 percent. Among gateway markets, Boston led with 3.4 percent, followed by San Francisco\u2019s 2.3 percent. When adding projects in the planning stages, the figure reached 3.1 percent\u2014exceeding the national average of 2.9 percent and outperforming Chicago\u2019s 2 percent, as well as Manhattan\u2019s and Los Angeles\u2019 3 percent.<\/p>\n\n\n\n
By comparison, at the end of 2023, a total of 3.5 million square feet of office space was under construction in D.C. In December 2024, Boston was the gateway city with the largest under-construction stock (8.7 million square feet), followed by San Francisco (3.8 million square feet). Only Chicago’s pipeline was smaller than the U.S. capital’s, with 870,344 square feet underway.<\/p>\n\n\n\n
The largest office project currently underway remains the 420,000-square-foot 600 Fifth St. NW. Developed by Rockefeller Group and Stonebridge, the $375 million development<\/a> topped out in May, with completion expected by 2026.<\/p>\n\n\n\nConstruction starts included 964,674 square feet across three properties, accounting for 0.2 percent of existing stock, while developers completed 2.4 million square feet across 11 properties, representing 0.6 percent of total stock. Among significant completions in D.C. is Dulles Discovery 5, a 514,000-square-foot office building completed in early 2024 in Herndon, Va. Developed by Peterson Cos., the property is within the company\u2019s Dulles Discovery, a 2.4 million-square-foot mission-critical development.<\/p>\n\n\n\n
D.C.’s sales volume second in the nation<\/h2>\n\n\n\n
At the end of 2024, the metro’s office transactions totaled $2.6 billion, with 104 properties comprising 12.3 million square feet changing hands. Last year\u2019s investment volume rose 19.8 percent year-over-year, propelling the metro to second place among gateway markets, behind Manhattan\u2019s $3.9 billion.<\/p>\n\n\n
\n![\"Exterior](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/01\/1201-Wilson-Blvd-e1738153760197.jpg\")
<\/a>CEB Tower at Central Place is a Class A+ office tower in Arlington, Va., within the Rosslyn submarket of D.C. Image courtesy of CommercialEdge<\/em><\/figcaption><\/figure><\/div>\n\n\nThe first quarter of last year was the busiest in terms of deals, ending with $947.4 million trading, point after which the sales volume decreased until December. Despite this downward trend, Washington, D.C.’s investment activity in 2024 picked up, compared to 2023, when 9.9 million square feet traded for $1.9 billion.<\/p>\n\n\n\n
Significant transactions include CoStar Group\u2019s $373 million acquisition of CEB Tower at Central place, a 560,000-square-foot office building in Arlington, Va. A joint venture between PGIM Real Estate and JBG Smith sold the Class A+ property at 1201 Wilson Blvd. in February.<\/p>\n\n\n\n
Another notable deal was MRP Realty\u2019s $225.7 million purchase of Gallery Place at 616 H St. NW, a 297,002-square-foot property in D.C.\u2019s Seventh Street Corridor submarket. In joint venture with Global Fund Investments, MRP bought the asset after its previous owner defaulted on a $179 million loan backed by the mid-rise building.<\/p>\n\n\n\n
Office properties traded at an average sale price of $211 per square foot\u2014above the national figure of $175 per square foot. Across similar markets, Miami emerged as the priciest metro, with $400 per square foot, while the lowest sale prices were recorded in Chicago ($85 per square foot).<\/p>\n\n\n\n
Vacancy rate continued to climb<\/h2>\n\n\n\n![\"Exterior](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/01\/One-Franklin-Square-e1738154089910.jpg\")
<\/a>The 12-story office building known as One Franklin Square in downtown D.C came online in 1989. Image courtesy of CommercialEdge<\/em><\/figcaption><\/figure><\/div>\n\n\nWashington, D.C.\u2019s office vacancy rate clocked in at 18.5 percent as of December\u2014slightly below the national figure of 19.8 percent and marking a 60-basis-point increase year-over-year. The metro’s rate was higher than in Miami (15 percent), Manhattan (16.6 percent) and Boston (17 percent). The highest vacancy rate was recorded in San Francisco, at 28.8 percent.<\/p>\n\n\n\n
Significant leases in 2024 include Washington Post\u2019s 300,000-square-foot extension<\/a> at One Franklin Square. The property totals 612,189 square feet and is owned by Hines and General Motors Pension Fund.<\/p>\n\n\n\nAdditionally, Fannie Mae signed a long-term commitment of 340,000 square feet at Midtown Center<\/a> in downtown D.C. Carr Properties and IGIS Asset Management are the owners of the 867,000-square-foot building.<\/p>\n\n\n\nHigh potential for office-to-residential makeovers<\/h2>\n\n\n\n
As vacancies increased in most markets, office-to-residential conversions remained an attractive option for property owners. CommercialEdge launched the Conversion Feasibility Index<\/a>, a new tool that highlights markets with strong office-to-residential repositioning potential, using a set of property-level scores. Powered by Yardi, the CFI score has three tiers, with Tier I assets being the most suitable candidates.<\/p>\n\n\n
<\/a>As of December, D.C.’s office pipeline comprised 1.1 million square feet of space across seven properties, representing 0.3 percent of existing stock\u2014below the national average of 0.8 percent. Among gateway markets, Boston led with 3.4 percent, followed by San Francisco\u2019s 2.3 percent. When adding projects in the planning stages, the figure reached 3.1 percent\u2014exceeding the national average of 2.9 percent and outperforming Chicago\u2019s 2 percent, as well as Manhattan\u2019s and Los Angeles\u2019 3 percent.<\/p>\n\n\n\n
By comparison, at the end of 2023, a total of 3.5 million square feet of office space was under construction in D.C. In December 2024, Boston was the gateway city with the largest under-construction stock (8.7 million square feet), followed by San Francisco (3.8 million square feet). Only Chicago’s pipeline was smaller than the U.S. capital’s, with 870,344 square feet underway.<\/p>\n\n\n\n
The largest office project currently underway remains the 420,000-square-foot 600 Fifth St. NW. Developed by Rockefeller Group and Stonebridge, the $375 million development<\/a> topped out in May, with completion expected by 2026.<\/p>\n\n\n\n Construction starts included 964,674 square feet across three properties, accounting for 0.2 percent of existing stock, while developers completed 2.4 million square feet across 11 properties, representing 0.6 percent of total stock. Among significant completions in D.C. is Dulles Discovery 5, a 514,000-square-foot office building completed in early 2024 in Herndon, Va. Developed by Peterson Cos., the property is within the company\u2019s Dulles Discovery, a 2.4 million-square-foot mission-critical development.<\/p>\n\n\n\n At the end of 2024, the metro’s office transactions totaled $2.6 billion, with 104 properties comprising 12.3 million square feet changing hands. Last year\u2019s investment volume rose 19.8 percent year-over-year, propelling the metro to second place among gateway markets, behind Manhattan\u2019s $3.9 billion.<\/p>\n\n\n The first quarter of last year was the busiest in terms of deals, ending with $947.4 million trading, point after which the sales volume decreased until December. Despite this downward trend, Washington, D.C.’s investment activity in 2024 picked up, compared to 2023, when 9.9 million square feet traded for $1.9 billion.<\/p>\n\n\n\n Significant transactions include CoStar Group\u2019s $373 million acquisition of CEB Tower at Central place, a 560,000-square-foot office building in Arlington, Va. A joint venture between PGIM Real Estate and JBG Smith sold the Class A+ property at 1201 Wilson Blvd. in February.<\/p>\n\n\n\n Another notable deal was MRP Realty\u2019s $225.7 million purchase of Gallery Place at 616 H St. NW, a 297,002-square-foot property in D.C.\u2019s Seventh Street Corridor submarket. In joint venture with Global Fund Investments, MRP bought the asset after its previous owner defaulted on a $179 million loan backed by the mid-rise building.<\/p>\n\n\n\n Office properties traded at an average sale price of $211 per square foot\u2014above the national figure of $175 per square foot. Across similar markets, Miami emerged as the priciest metro, with $400 per square foot, while the lowest sale prices were recorded in Chicago ($85 per square foot).<\/p>\n\n\n\n Washington, D.C.\u2019s office vacancy rate clocked in at 18.5 percent as of December\u2014slightly below the national figure of 19.8 percent and marking a 60-basis-point increase year-over-year. The metro’s rate was higher than in Miami (15 percent), Manhattan (16.6 percent) and Boston (17 percent). The highest vacancy rate was recorded in San Francisco, at 28.8 percent.<\/p>\n\n\n\n Significant leases in 2024 include Washington Post\u2019s 300,000-square-foot extension<\/a> at One Franklin Square. The property totals 612,189 square feet and is owned by Hines and General Motors Pension Fund.<\/p>\n\n\n\n Additionally, Fannie Mae signed a long-term commitment of 340,000 square feet at Midtown Center<\/a> in downtown D.C. Carr Properties and IGIS Asset Management are the owners of the 867,000-square-foot building.<\/p>\n\n\n\n As vacancies increased in most markets, office-to-residential conversions remained an attractive option for property owners. CommercialEdge launched the Conversion Feasibility Index<\/a>, a new tool that highlights markets with strong office-to-residential repositioning potential, using a set of property-level scores. Powered by Yardi, the CFI score has three tiers, with Tier I assets being the most suitable candidates.<\/p>\n\n\nD.C.’s sales volume second in the nation<\/h2>\n\n\n\n
<\/a>Vacancy rate continued to climb<\/h2>\n\n\n
<\/a>High potential for office-to-residential makeovers<\/h2>\n\n\n\n
![\"1901](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/01\/1901-N.-Fort-Myer-Drive-e1738154420379.jpg\")
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