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)
144.6 Million SF
Direct Vacancy
10.2%
YTD Absorption
170,044 SF
Asking Rental Rate (FS)
$51.74 FS
Total Vacancy Rate
10.9%
Download Report
DC1Q2017MarketReport.pdf

The Washington, D.C. office market consists of 779 buildings over 25,000 square feet, totaling approximately 142.2 million square feet of rentable space. As of December 2014, the unemployment rate for the Washington, D.C. region was 4.5%, and 7.4% for the District only. The national unemployment rate was 5.6%, with 787,000 new jobs created in the fourth quarter. The largest private sector lease signed this quarter was a renewal executed by law firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP for 252,000 square feet at 901 New York Avenue, NW.

 

The GSA signed the largest public sector transaction of the quarter with a 115,024-square-foot renewal for the U.S. Department of Education at 1990 K Street, NW. Eight office buildings sold this quarter, totaling approximately $1.2 billion. The largest sale was 800 17th Street, NW, in the CBD submarket, for approximately $392 million ($1,075 psf). One building broke ground this quarter, 800 Maine Avenue, SW, part of The Wharf development in the Southwest submarket. No buildings delivered, however.

Northern Virginia

Inventory (RSF)
182.0 Million SF
Direct Vacancy
15.8%
YTD Absorption
475,772 SF
Asking Rental Rate (FS)
$32.19 FS
Total Vacancy Rate
16.5%
Download Report
VA1Q2017MarketReport.pdf

The Northern Virginia office market consists of 1,535 build­ings over 25,000 square feet, totaling approximately 181.8 million square feet of rentable space. The largest non-GSA lease signed during the fourth quarter was a pre-lease of a 146,000-square-foot build-to-suit in Loudoun County by K2M, a medical tech company. The de­velopment of this property will serve as the new company headquarters and will include a R&D facility. Proximity to Dull­es International Airport coupled with incentives offered by lo­cal jurisdictions and state funding helped to retain the quickly growing company within the submarket. The largest government lease signed during the fourth quar­ter was a renewal by the GSA – Financial Crimes Enforce­ment Network for 124,990 square feet in the Tysons Corner submarket at Tycon Courthouse – 2070 Chain Bridge Road. FinCEN gave back approximately 44,000 square feet in the renewal. This transaction is consistent with the leasing fun­damentals adopted by federal agencies and contractors alike throughout the metropolitan area. Building sales volume totaled approximately $1.04 billion dur­ing the fourth quarter. The most notable transaction to occur was the sale of 3003 Washington Boulevard in the RB-Corri­dor. The 211,170-square-foot building delivered in late 2014 and upon purchase was 95% leased to tenants such as The C.N.A. Corporation. KBS bought the property from Penzance and Invesco for $149,100,000 or $706 psf, and it traded at a 5.5% cap rate. This transaction, as well as the sale of 1776 Wilson Boulevard during the third quarter 2014, exemplifies the attractiveness of new product situated in amenity rich, transit-oriented markets. Both buildings were over 80% leased at time of purchase and traded for over $650 psf. At the end of the fourth quarter 2014 the Northern Virginia of­fice market recorded 95 buildings outside of the Beltway with 50,000 square feet of contiguous space available; compared to only 59 buildings inside the Beltway.

Suburban Maryland

Inventory (RSF)
86.6 Million SF
Direct Vacancy
14.6%
YTD Absorption
749,605 SF
Asking Rental Rate (FS)
$26.49 FS
Total Vacancy Rate
15.2%
Download Report
MD1Q2017MarketReport.pdf

The Suburban Maryland office market, consisting of Montgomery and Prince George’s Counties, totals approximately 86.9 million square feet of office space in 889 office buildings of 25,000 square feet and greater. On the heels of the third quarter’s relatively disappointing -27,021 square feet net absorption, the Suburban Maryland office market bounced back into positive absorption in the fourth quarter 2014 with 621,847 square feet absorbed. This is the highest quarterly net absorption figure in Suburban Maryland since fourth quarter 2012 when it was 900,533 square feet. However, paired with the negative absorption in the previous quarters, that brings the year to date total to -199,559 square feet. There were two deliveries during the fourth quarter 2014, one being Carr Properties’ speculative project at 4500 East West Highway which delivered approximately 226,352 square feet of Class A space to the Bethesda/Chevy Chase market. The nine story property delivered with nearly 28,000 square feet of space pre-leased to RapidAdvance, which was the top lease of the fourth quarter. Total vacancy fell this quarter to 16.9%, despite the vacancy provided by new deliveries. Direct vacancy was recorded at 16.2%, which is also an improvement from the third quarter when it was 16.6%. However, by comparison this is an increase from the fourth quarter 2013 when the direct vacancy rate was 15.0% and total vacancy was 15.7%. The total average rental rates fell $0.10 from $25.59 Full Service in the third quarter to $25.49 Full Service in the fourth quarter.