According to CBRE’s data, Washington D.C.’s office vacancy rate has reached a new high of 22.4% in Q2, up from 21.6% in Q1. This increase can be attributed to significant contractions, such as the downsizing of the Commodity Futures Trading Commission (CFTC). The D.C. market saw over 500,000 square feet of negative absorption due to tenants reducing their space in response to hybrid work arrangements.
In H1 2024 alone, there have been more office foreclosures than all of last year combined due to increasing vacancies and debt maturities. Market distress is limiting sales for Class A,B,and C buildings.Government entities dominated leasing activity in Q2 with a majority share of 54%, including notable renewals by the Federal Housing Finance Agency and D.C.Departmentof Human Services.The legal sector continues stable long-term leasing activity despite overall challenges.In terms of new developments,Skanska USA’s1700 M St.NW was the only building delivered during this quarter.
