Companies looking for new or more office space in the Washington, D.C. area may have a bit more from which to choose, but depending on the property and location, they may also pay more for it than a year ago.
A quarterly report on the Washington metro office market from Delta Associates shows total net absorption in the first quarter was 385,000 square feet, less than half the 894,000 square feet in the final quarter of 2018.
The District and Northern Virginia led positive net absorption, but it remained negative in suburban Maryland.
“After declining for the first time in nearly two years during Q4 2018, the Washington region’s office vacancy rate again trended upward during Q1 2019,” the report said.
The overall direct vacancy rate was 12.9 percent in the first quarter, up from 12.3 percent a year ago.
The average effective office rent for the Washington metro in the first quarter was $33.94 per square foot, up 2.9 percent from March 2018.
The District had the greatest year-over-year increase in office rent, up an average of 4.5 percent. Rents were up 1.5 percent in Northern Virginia, and 0.7 percent in suburban Maryland.
Delta Associates says tenant activity in the region followed familiar patterns:
- Government contractors and tech firms signed the biggest deals in Virginia.
- The District saw the most activity from startups, coworking firms and law firms.
- Biotechnology and life sciences companies accounted for the majority of new leases in suburban Maryland.
There were no federal government GSA leases in the first quarter, which Delta Associates said might have been related to the partial government shutdown.
As of the end of the third quarter, there was 7.9 million square feet of new office space under construction across the Washington region.