Leasing activity up 16 percent in Washington region
During the first half of 2015, leasing across the Washington region was up by 16 percent, with small and mid-sized deals in Class B and C buildings driving a significant portion of the activity, according to JLL’s Office Insight Report for Q2 2015.
Northern Virginia, suburban Maryland and the District of Columbia each recorded positive leasing growth – the first time that has happened in more than a year and a half. Total occupancy gains of 1.1 million square feet during the second quarter marked the strongest expansion in the metro D.C. office market since the fourth quarter of 2010.
Although the region’s largest tenants – most notably law firms, government contractors and federal agencies – generally continued to right size and shed excess space, smaller groups – including nonprofits, associations, start-ups and creative companies – drove a surge in occupancy gains.
“The story of the market through the first half of the year seems to be a resurgence in mid-size leasing activity, particularly at the value side of the quality spectrum,” Scott Homa, vice president, research for JLL, said in a statement. “On the other end of the spectrum, for the groups with the financial wherewithal to sign long-term deals at trophy buildings, law firms and government affairs groups are upgrading to newer and nicer assets.”
Homa added, “Market activity is generally taking a barbell form, with the top and bottom witnessing the most robust demand.”
According to JLL's report:
• There has been a 62.2 percent increase in leasing activity for blocks between 20,000 and 100,000 square feet in 2015 year to date, relative to a 4.7 percent decline in deals above 100,000 square feet.
• Among Class B and C buildings, there has been a 62.7 percent increase in leasing activity, relative to just a 0.7 percent increase in Class A leasing activity, when comparing the first half of 2015 to the same time last year.
In a continuing trend observed in Q1 of 2015, 92.3 percent of all new leases signed so far in 2015 (excluding renewals) were within half a mile of an existing or planned Metro station.