According to data from CBRE, the office vacancy rate in Washington, D.C., reached a new high of 22.4% in Q2, up from 21.6% in Q1. This increase is largely due to significant contractions, including the Commodity Futures Trading Commission’s (CFTC) downsizing. The D.C. market experienced over 500,000 square feet of negative absorption, marking five consecutive years of negative absorption as tenants reduced space in the hybrid work era.  

Office foreclosures in H1 2024 have already surpassed the total for 2023, driven by rising vacancies and debt maturities. Sales of Class A, B, and C buildings are limited by market distress. Government entities dominated Q2 leasing, accounting for 54% of activity, with notable renewals by the Federal Housing Finance Agency and D.C. Department of Human Services. Despite overall challenges, the legal sector’s long-term leasing activity remains stable. Only one new office building, Skanska USA’s 1700 M St. NW, was delivered in Q2.