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Market Report

Washington, D.C., Office Investment Forecast

2020 Outlook

Technology Sector Driving New Leasing; Vacancy Falls To Multiyear Low Despite Increased Construction

Diversifying economy supports office leasing, pushing vacancy closer to cycle low. Washington, D.C.’s economy has long been centered around the federal government, but that focus is beginning to shift. More public agencies are scaling back on space and consolidating offices, while new private organizations are entering the metro, including technology companies such as Amazon. The e-commerce giant is building a campus in National Landing while its Web Services division is expanding its presence in the Dulles Corridor. Consultancies, law firms, and government contractors are also prominent office lessors, supporting an overall improvement in absorption activity this year compared with 2019. The added demand will help tighten the metrowide vacancy rate to 17.1 percent, its lowest level since 2012, despite the largest annual construction pipeline since 2009. More than 2 million square feet will open within the District and in Northern Virginia, especially in Capitol Hill, Reston and along State Route 28.

 

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