Washington's office vacancy rate remains high
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The pandemic ushered in an era of historic highs in office vacancy throughout the D.C. region, but not all neighborhoods have been impacted equally.
What’s happening: In Q1 of this year, suburban Maryland had the lowest office vacancy at 17.7%, which represents the amount of unleased space. Northern Virginia had the highest at 21.3%. D.C.’s rate is 18.4%.
Context: The factors affecting commercial real estate vary widely. Yes, some companies have let leases expire and shed office space during the pandemic. But Washington’s building boom plays into it, too.
According to CBRE analysis:
- In northern Virginia, Fannie Mae and Volkswagen consolidated office space and moved, which drove up the vacancy rate.
- In suburban Maryland, the completion of the new Avocet Tower in Bethesda, which added 331,000 square feet of vacant office space, led to an increase in the vacancy rate. While suburban Maryland has the lowest rate of the D.C. region overall, Q2’s 17.7% vacancy rate represents a record high for the area.
In the District, there wasn’t a significant spike in office vacancy during the January Omicron surge, according to CBRE. While vacancy was already high, it remained steady from Q4 2021 through Q1 2022.
- And for the second quarter in a row, space leased in D.C. office buildings was greater than the amount of space that's been vacated.
Zoom in: In the District, Southwest and NoMa have the lowest office vacancy rates, and CBRE analysts partially attribute that to leases being signed before developments in these areas were finished.