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DC Office Hits New Low on Vacancy in Q2
Washington, D.C.’s office market experienced a 6% increase in new leasing activity in Q2 2023, with 907,000 square feet signed. Despite this, the city’s overall office market faced a historic milestone, reaching a 20% vacancy rate for the first time, according to Cushman & Wakefield’s Q2 office report.
Class A properties accounted for 735,000 square feet of new leasing and 362,000 square feet of renewal activity, primarily concentrated in the East End and Central Business District. Class A vacancies rose to 17.8%, Class B dropped to 22.4%, and Class C increased to 25%, resulting in a negative absorption of -154,000 square feet. In response, some developers and property owners are repurposing obsolete office spaces into residential units.
Despite challenges, law firms continue to be significant players, contributing to 25% of gross leasing in Q2 2023, with new deals like Crowell & Moring’s 199,000-square-foot lease at 600 Fifth providing a boost.
- ◦Economy
