CBRE report finds healthy growth in D.C.-area office markets
Office markets in downtown Washington, D.C., and suburban areas showed healthy growth in demand during the second quarter, according to the commercial real estate firm CBRE.
The downtown market absorbed 1.2 million square feet of office space, in large part because of tenants moving into six new buildings, according to the report.
The Virginia and Maryland suburbs posted a combined occupancy gain of 630,000 square feet of space, the report said
“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.” Wei Xie, research manager of CBRE Washington/Baltimore, said in a statement. “However, we expect vacancy rates to inch up in the next 18 months due to the amount of development in the pipeline.”
In downtown Washington, six new buildings totaling 2.4 million square feet allowed move-ins by multiple tenant, resulting in net demand of 1.2 million square feet in the second quarter, the highest quarterly absorption volume since the recession, CBRE said.
Among the major drivers was the 770,000-square-foot move-in by Fannie Mae at Midtown Center.
With 546,000 square feet of tenant demand, Northern Virginia saw its fourth consecutive quarter of positive absorption, recording 979,000 square feet in occupancy gain during the past 12 months, CBRE said.
Most of that occupancy gain was concentrated in submarkets outside the Capital Beltway. As a result, the vacancy rate declined 20 basis points to 20.7 percent.
In suburban Maryland, CBRE found that submarkets in the I-270 corridor spurred occupancy gains. The second-quarter total of 84,000 square feet marked the 11th consecutive quarter of occupancy gain and brought the year-to-date total to 265,000 square feet.