Washington, D.C. Retail Market Report

Bifurcated performance likely to continue. Retail fundamentals in the Virginia suburbs of Washington, D.C., remained resilient last year, with asking rent growth averaging roughly 5 percent annually over the past two years. Arlington and Alexandria have been particularly bright spots. Vacancy and rent growth in suburban Maryland have been weaker but largely steady, supported by population growth that should continue to underpin retail sales in the near term. By contrast, performance within the District of Columbia has lagged. Net absorption has been negative in seven of the past eight quarters, pushing vacancy to a historic high of 6.3 percent entering 2026. Restaurant closures reached a record level in 2025, driven by rising labor costs, softer consumer spending, federal workforce reductions, and weaker tourism. These pressures are likely to persist into 2026, though planned activities such as America250 events could help restore foot traffic and support tenant demand.