DC Office Leasing Soars with 1.7M SF in Q1, Tech & Media Tenants Take the Lead

In the first quarter of 2024, office leasing in Washington, D.C., showed an upward trend, totaling 1.7 million square feet. Availability levels, however, reached a new high of 22.6 percent, indicating challenges in the market.

Dominance of Technology and Media Tenants

Notably, technology and media tenants played a significant role in leasing activities during this quarter. This shift is noteworthy in a market traditionally dominated by government and legal tenants. The Washington Post's lease at One Franklin Square, spanning nearly 300,000 square feet, exemplifies this trend.

Key Leases

The top leases in the quarter included the Washington Post, the D.C. Department of General Services, and law firm Finnegan, Henderson, Farabow, Garrett & Dunner. These leases underscore the diversity of tenants contributing to the leasing landscape in D.C.

Market Conditions

While leasing volume saw a slight increase, overall market conditions remain challenging. Leasing activity remains below pre-pandemic levels, with availability up by 90 basis points from the previous year. Sublease space is taking longer to lease, indicating a slowdown in market absorption.

Rent Trends

Despite the challenges, rent levels have remained relatively stable. Average asking rents slightly decreased compared to the previous year, both overall and for Class A spaces. However, Class A properties continue to attract tenants despite the overall market conditions.

Leasing Dynamics

Of the top 10 leases in the quarter, none were new to the market, highlighting a trend toward renewals, relocations, and restructuring rather than new entries into the market. This reflects the cautious approach of tenants in the current market environment.

Overall, while there are signs of activity in the office leasing market in Washington, D.C., challenges persist, necessitating a cautious approach from both landlords and tenants.