Washington, DC
Over 4.0 million square feet (msf) is set to deliver in Washington, DC this year alone, pushing the overall availability rate to 16.6% - its highest in at least the last 20 years. Tenants are capitalizing on current conditions. Leasing activity held pace from the end of last year, posting nearly 2.3 msf in total for Q1 2018, a 20.7% increase compared to Q1 2017. Asking rents are holding fairly flat, increasing just slightly despite the new product coming to market, but also pushing concessions up to the highest levels on record in the market.
Northern Virginia
With stronger demand seen over the past few quarters, overall availability in Northern Virginia is leveling off some, ending the quarter at 20.8% - a 0.5 percentage point (pp) decrease from this same time last year. Leasing for the quarter totaled 2.7 msf with help from a mega-deal signed by Fannie Mae, taking 850,000 square feet (sf) at Boston Properties’ to-be-developed Reston Gateway site. This quarter’s activity marks a 23.6% increase year-over-year.
Suburban Maryland
Availability remains level in Suburban Maryland, ending the quarter at 16.5% overall – just a 0.1pp decrease from this time last year. The pace of leasing activity declined slightly from 2017’s year-end momentum, but still posted nearly 1.0 msf for the quarter. Supernus Pharmaceuticals signed the largest lease in the Maryland market this quarter, doubling in size and shifting its headquarters from Rockville to Gaithersburg.
“2018 has brought some of the most tenantfavorable office market conditions ever seen across all jurisdictions of the Washington metro region. A preference for efficient and amenitized space has led to the highest amount of new development since the recession, and tenants across all industry sectors are benefiting from unprecedented options, flexibility and concessions as they make real estate decisions in the current cycle.”
Tom Fulcher, Executive Vice President