October 30, 2018
Washington – In the third quarter of 2018, the Washington, D.C., office construction pipeline decreased to 5.2 million square feet with 57 percent of that preleased. However, it remains above the five-year average of 4.5 million square feet at 42 percent preleased, according to Transwestern’s third-quarter 2018 outlook report. The bulk of the pipeline – 1.36 million square feet – is concentrated in the Central Business District (CBD).
“The robust pipeline for new deliveries in the Central Business District is a result of a shift in demand toward the West End, which is going to further impact second-generation, Class A space in the East End,” said Transwestern Executive Vice President George Vogelei. “Demand from nonprofit organizations was strong in the third quarter and is expected to continue through 2019. With that in mind, property owners need to cater properties to users with more social space, conference rooms and a bit of an edge design-wise.”
The District’s office market gained momentum during the third quarter of 2018 from positive absorption in both the Class A and B space. Some additional highlights from the report include:
- Net absorption totaled 76,000 square feet due to several lease transactions in the CBD, East End and NoMa submarkets.
- Class A space accounted for positive 32,000 square feet, while Class B and C space accounted for positive 44,000 square feet.
- The direct vacancy rate decreased 60 basis points to 9.1 percent compared to last quarter.
- Asking rents achieved a 0.3 percent boost in the third quarter to $52.40 per square foot (full service).
Transwestern also released third-quarter reports for Northern Virginia, Suburban Maryland, and Baltimore, available here.
Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Asset Services, Occupier Solutions, Capital Markets and Research, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Transwestern has 35 U.S. offices and assists clients from more than 221 offices in 37 countries through strategic alliances with France-based BNP Paribas Real Estate and Canada-based Devencore. Experience Extraordinary at transwestern.com and @Transwestern.
Emily (Laird) Conrad