The overall office vacancy rate in D.C. topped 18% for the first time ever in the third quarter, according to commercial real estate firm CBRE, rising from 17.8% in the second quarter to 18.2% in the quarter ending with September.
CBRE says the higher vacancy rate in the third quarter, and the negative net absorption of 321,000 square feet of office space in D.C. last quarter was a reversal of what had been some positive momentum during the second quarter.
So far in 2021, companies shedding office space have led to a net contraction of 1.9 million square feet.
Company touring activity with brokers, one indication of future leasing activity, fell sharply starting in mid-July, but CBRE reports signs of a post-Labor Day rebound, with 600,000 square feet of pending private-sector leases.
“With new-to-the-market tenants continuing to evaluate the D.C. market, lease executions could increase in the coming months, assuming the Delta variant (of the COVID-19 virus) will subside, CBRE’s third quarter report said.
CBRE reports landlord concessions remained elevated last quarter, as they try to attract tenants for vacant space.
By submarket, Capitol Hill, one of the most expensive office markets based on gross asking rent, had the highest overall office vacancy rate last quarter, at 26.4%. The NoMa submarket had the lowest third quarter office vacancy rate, at 8.2%.
CBRE’s full third quarter D.C. office leasing activity report is posted online.