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The Washington, DC office market currently consists of 818 buildings, over 25,000 square feet, totaling approximately 160.0 million square feet of rentable space. As of August 2023, the unemployment rate for the District of Columbia decreased to 5.0%, while unemployment for the Washington, DC Metropolitan area also decreased to 2.6%. The national unemployment rate slightly increased to 3.8%.
The DC Metropolitan Statistical Area (MSA) added 48,000 jobs from August 2022-August 2023, representing 1.4% growth YOY. Sectors adding the most jobs were Education & Health Services with 23,100, followed by Leisure & Hospitality with 12,300, and Mining, Logging, & Construction gaining 7,100. The largest lease signed in the public sector this quarter was by the U.S. Securities and Exchange Commission (SEC) for 1.0 million square feet at 100 F Street, NE and 600 2nd Street, NE (Station Place I & II) in the NoMa submarket. This was the largest lease signed in Washington, DC this quarter.
The Northern Virginia office market consists of 1,491 buildings over 25,000 square feet, totaling approximately 193.1 million square feet of rentable space. Northern Virginia added 24,400 net new jobs from August 2022 – August 2023, representing 1.6% growth YOY. Sectors adding the most jobs were Education & Health Services with 10,400, followed by Mining, Logging, & Construction with 3,700; while the Government added 2,100. At the end of the third quarter, the unemployment rate in Northern Virginia increased to 2.7%, up from 2.4% during the previous quarter; while still outpacing the national unemployment rate of 3.8%.
The Northern Virginia market recorded 423,056 square feet of net absorption in the third quarter. Contributing to the positive net absorption was Capital One taking occupancy of their recently delivered 850,000-square-foot office tower at 1675 Capital One Drive in Tysons. Northern Virginia totaled 1,900,893 square feet of leasing in the third quarter. The largest lease executed this quarter was a 189,764-square-foot extension by Lockheed Martin at 13560 Dulles Technology Drive.
The Suburban Maryland office market, which encompasses Montgomery and Prince George’s Counties, totals approximately 92.3 million square feet of rentable space in 903 office buildings of 25,000 square feet and greater.
Direct vacancy increased to 16.1% in the third quarter, up from 15.8% in the second quarter, and total vacancy increased to 17.2% in the third quarter, up from 16.9% in the second quarter.
The market recorded a decrease in net absorption in the third quarter with -220,006 square feet absorbed, down from the -178,325 square feet absorbed in the previous quarter. Contributing to negative absorption were Microsoft Corporation vacating their 57,560-square-foot space at 5404 Wisconsin Ave, Oil Price Info Service vacating their 36,849-square-foot space at 2099 Gaither Road, and WMATA Lost and Found Office moving from their 35,894-square-foot space at 6505 Belcrest Road to their new headquarters at 4100 Garden City Drive. The largest leases signed this quarter were NIH signing a 153,385-square-foot renewal and a 76,520-squarefoot renewal at 5625 Fishers Lane and 12735 Twinbrook Parkway, respectively.
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