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Market Report

Washington, D.C. Office Market Report

2023 Investment Forecast

Technology and Life Science Firms Expand in the
DMV Metro Amid Macroeconomic Uncertainty

Flight-to-quality results in net space returned to the market. Despite a strong recovery in office-using employment in the nation’s capital, tenant demand for space continues to lag behind pre-pandemic norms. Although net absorption returned to positive territory in 2022, this figure trailed new deliveries by more than 4.5 million square feet, resulting in vacancy increasing for the third consecutive year. Tenants in both the private and public sector are pushing for more space efficiency, seeking out smaller floor plans in highly-amenitized buildings, contributing to the rise in overall availability. However, firms like T-Mobile, Hughes Network Systems, In-Q-Tel, ManTech and Tetracore, Inc. are expanding their footprints, providing signs of encouragement for the local office market. Furthermore, the delivery of Amazon’s HQ2 this year could create spillover demand from other tech-related firms for Class A space in high-density submarkets inside the Beltway. Several office conversions to other property types are being planned as well. While many of these projects may not come to fruition in the near term, the potential impact on vacancy could be significant, as the rate was at an all-time high entering 2023.
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