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)
152.1 Million SF
Direct Vacancy
12.0%
YTD Absorption
-792 SF
Asking Rental Rate (FS)
$53.61 FS
Total Vacancy Rate
13.2%
Download Report
DC2Q2020MarketReport.pdf

The Washington, DC office market currently consists of 801 buildings, over 25,000 square feet, totaling approximately 152.1 million square feet of rentable space.

Due to the COVID-19 pandemic, unemployment has spiked across the region. As of May 2020, the unemployment rate for the District of Columbia increased to 8.9%, while the Washington, DC Metropolitan area increased to 9.0%. The national unemployment rate increased to 11.1%.

The DC Metropolitan Statistical Area (MSA) lost 67,200 jobs from May 2019-May 2020, representing a contraction of 8.5% YOY. Leisure & Hospitality contracted the most with 49,600 jobs lost; while the Government gained 2,300.

The largest public sector lease executed this quarter was a renewal by the GSA – Department of Education renewing 290,000 square feet at 550 12th Street, SW – Potomac Center South.

Wiley Rein signed the largest private sector lease with a 166,250-square-foot transaction at recently delivered 2050 M Street, NW in the CBD.

There were three sale transactions in DC, totaling $153,000,000 in sales volume. The largest sale was 3300 Whitehaven Street, NW and 2001 Wisconsin Avenue, NW trading to Grosvenor Americas from Equity Commonwealth for $85,000,000.

Northern Virginia

Inventory (RSF)
188.2 Million SF
Direct Vacancy
13.8%
YTD Absorption
-352,433 SF
Asking Rental Rate (FS)
$33.03 FS
Total Vacancy Rate
14.5%
Download Report
VA2Q2020MarketReport.pdf

The Northern Virginia office market consists of 1,532 buildings over 25,000 square feet, totaling approximately 188.2 million square feet of rentable space.

The largest non-GSA lease signed during the second quarter was a 396,740-square-foot relet by Microsoft Corporation at Two Freedom Square – 11955 Freedom Drive. This requirement represents primarily new growth to the market for Microsoft.

The largest lease signed by the GSA was a 61,256-square-foot renewal at Crystal Park Five – 2451 Crystal Drive.

Building sales volume totaled $175,750,000 during the second quarter 2020. The largest transaction was the sale of 1530 Wilson in the Rosslyn-Ballston Corridor submarket. Velocis acquired the building from Invesco for $71,400,000 ($416.64 psf). The asset was 71.0% occupied at the time of sale. The second largest sale was John Marshall II – 8283 Greensboro Drive in the Tysons Corner submarket. The Meridian Group acquired the building from Washington Real Estate Investment Trust for $57,000,000 ($255.62 psf). The building was 100.0% occupied at the time of sale. The third largest sale was Center for Innovative Technology – 2214 Rock Hill Road in the Reston-Herndon submarket. Origami acquired the building from VA Department of General Services for $47,350,000 ($316.90 psf). The building was 100.0% occupied at the time of sale.

Inside the Beltway, there were 44 buildings marketing 50,000 square feet or greater of contiguous space available at the end of the first and second quarter 2020. Outside the Beltway, there were 81 buildings marketing 50,000 square feet or greater of contiguous space available at the end of the second quarter 2020 compared to 75 from the first quarter 2020.

Suburban Maryland

Inventory (RSF)
89.3 Million SF
Direct Vacancy
13.1%
YTD Absorption
-156,873 SF
Asking Rental Rate (FS)
$27.95 FS
Total Vacancy Rate
14.0%
Download Report
MD2Q2020MarketReport.pdf

The Suburban Maryland office market, which encompasses Montgomery and Prince George’s Counties, totals approximately 89.3 million square feet of rentable space in 896 office buildings of 25,000 square feet and greater.

The market recorded an increase in net absorption in the second quarter of 2020 with 35,852 square feet absorbed, up from the -156,873 square feet absorbed in the previous quarter.

Direct vacancy remained flat at 13.1% in the second quarter 2020, and total vacancy increased slightly to 14.0%.

There were no significant office building sales in Suburban Maryland during the second quarter 2020.

The largest lease signed this quarter was the FDA signing a 93,014-square-foot renewal at 12420 Parklawn Drive in the Rockville submarket. The year-over-year unemployment rate in Suburban Maryland increased to 9.0% in May 2020, up significantly from 2.9% in May 2019. Unemployment in Suburban Maryland remains well below the national unemployment rate of 11.1%.

From May 2019 to May 2020 employment in Suburban Maryland had a net decrease of 63,471 jobs. Sectors with the greatest amount of job loss were Leisure and Hospitality with 25,000 jobs lost, Education and Health Services with 11,300 jobs lost, Trade, Transportation and Utilities with 9,500 jobs lost, and Professional and Business Services with 8,300 jobs lost. Government jobs decreased by 600 jobs year-over-year.

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