Research

Lincoln Property Company’s in-house Research department advises clients on the constantly changing commercial real estate environment, helping them make quick market decisions, or plan long-term strategies. Please contact us to receive a copy of our marketing materials, or to discuss the D.C. commercial real estate market today.

Washington D.C.

Inventory (RSF)
143.6 Million SF
Direct Vacancy
10.6%
YTD Absorption
-343,187
Asking Rental Rate (FS)
$52.40 FS
Total Vacancy Rate
11.3%
Download Report
DC1Q2018MarketReport.pdf

The Washington, DC office market currently consists of 778 buildings, over 25,000 square feet, totaling approximately 143.6 million square feet of rentable space. As of February 2018, the unemployment rate for the District of Columbia decreased to 5.7%, while the Washington, DC Metropolitan area remained flat at 3.6%. The national unemployment rate remained flat at 4.1%.

The DC Metropolitan area gained 44,800 net new jobs from February 2017-February 2018, representing 1.4% growth. Professional & Business Services lead the private sector with 16,600 new jobs; while the Government lost 2,900. The largest public sector lease executed this quarter was by the GSA – USAID for 348,173 square feet at 500 D Street, SW – National Square in the Southwest submarket. Lincoln Property Company represented the owner, Goddard Investment Group. Wilmer Hale signed the largest private sector lease with a 285,000-square-foot pre-lease at 2100 Pennsylvania Avenue, NW in the CBD submarket. There were seven sale transactions in DC, totaling $1,042,860,000. The largest sale was 900 G Street, NW trading to Corporacion Masaveu S.A. for $144,000,000 ($1,278 psf).

Northern Virginia

Inventory (RSF)
186.6 Million SF
Direct Vacancy
15.1%
YTD Absorption
467,607 SF
Asking Rental Rate (FS)
$33.20 FS
Total Vacancy Rate
16.0%
Download Report
VA1Q2018MarketReport.pdf

The Northern Virginia office market consists of 1,531 buildings over 25,000 square feet, totaling approximately 186.6 million square feet of rentable space. The largest non-GSA lease signed during the first quarter was an 850,000-square-foot pre-lease by Fannie Mae at Reston Gateway – Sunset Hills Rd @ Town Center Boulevard in the Reston-Herndon submarket. The largest lease signed by the GSA was a 445,000-square-foot relet for Customs and Border Protection at Quantum Park – 22001 Loudoun County Parkway.

Building sales volume totaled $871,725,000 during the first quarter. The largest transaction was the sale of Arlington Tower – 1300 N. 17th Street. Washington REIT acquired the building from Tishman Speyer for $250 million ($629 psf). The building was 88.0% occupied at the time of sale, and traded at a 6.25% Cap Rate. The second largest sale was of One Dulles Tower – 13200 Woodland Park Road. Harbour Group acquired the building from Federal Capital Partners for $226 million ($560 psf). The building was fully occupied by Amazon at the time of sale, and traded at a 5.46% Cap Rate. The third largest sale was Braddock Metro Center – 1310-1340 Braddock Place in the Alexandria submarket. Kawa Capital acquired the four buildings from Washington REIT for $93 million ($260 psf). The buildings were 92.3% occupied at the time of sale, and traded at a 7.60% Cap Rate. Inside the Beltway, there were 49 buildings marketing 50,000 square feet or greater of contiguous space available at the end of the first quarter 2018, compared to 51 from the fourth quarter 2017. Outside the Beltway, there were 76 buildings marketing 50,000 square feet or greater of contiguous space available at the end of the first quarter 2018, compared to 78 from the fourth quarter 2017.

Suburban Maryland

Inventory (RSF)
87.7 Million SF
Direct Vacancy
14.1%
YTD Absorption
247,208 SF
Asking Rental Rate (FS)
$27.12 FS
Total Vacancy Rate
14.7%
Download Report
MD1Q2018MarketReport.pdf

The Suburban Maryland office market, which encompasses Montgomery and Prince George’s Counties, totals approximately 87.8 million square feet of rentable space in 885 office buildings of 25,000 square feet and greater. The market recorded an increase in net absorption in the first quarter of 2018 with 247,208 square feet absorbed, up from the 31,359 square feet absorbed in the previous quarter. Direct vacancy decreased to 14.1%, down from 14.2% and total vacancy decreased to 14.7% from 14.9%.

There was one sale transaction in Suburban Maryland this quarter. 6720-A and 6720-B Rockledge Drive, in the North Bethesda / Potomac submarket, sold to Bridge Commercial Real Estate for $38.4 million and $48.6 million, respectively. Both properties were a part of a larger portfolio sale of 13 buildings, totaling $335 million. There were no substantial leases executed by the public sector this quarter. The largest private sector lease was a 118,834 square-foot lease signed by Supernus Pharmaceuticals at 700 Quince Orchard Road in the Gaithersburg – Germantown submarket. The year-over-year unemployment rate in Suburban Maryland increased to 3.7% in January 2018, up from 3.4% in January 2017. From January 2017 to January 2018 employment in Suburban Maryland had a net increase of 757 new jobs, representing 0.1% growth. Sectors with the greatest amount of job growth were the Education and Health Services with 3,300 jobs, Mining, Logging, and Construction with 2,000 and Financial Activities with 600 jobs. The Government increased by 200 jobs.