Washington Metro Area Market Report

Office space demand in the Washington metro area was negative overall during the third quarter and down from the previous quarter. Market activity remained slow due to limited movement during the ongoing pandemic, which forced many tenants to continue remote work; however, some tenants returned to offices, and jobs lost during the early months of the pandemic continued to come back. The third quarter saw negative 780,728 square feet of net absorption in the region, with all three substate areas registering negative totals, led by the District of Columbia with negative 518,401 square feet. Net absorption registered negative 219,117 square feet in Suburban Maryland and negative 43,210 square feet in Northern Virginia. At 16.6%, the region’s overall vacancy rate was up 10 basis points from the previous quarter and up 50 basis points from the rate recorded one year ago. Based on current economic conditions and office market fundamentals, Newmark expects the region-wide office market vacancy rate to rise to approximately 18.2% by the end of third-quarter 2022.

3Q20-Washington-Metro-Area-Economy-Offic.

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