Washington, D.C. Industrial Market Report

Market dynamics largely in balance, outside of certain areas. After five years of accelerating construction, openings will fall in 2024 and allow time for tenant demand to catch up to supply. Development has been most pronounced in Hagerstown, where local inventory grew by 46 percent between 2019 and 2023. Volvo, Hitachi Rail, Conair and Walmart have all entered the area within the past two years. Yet, the opening of other speculative projects has led to over 6.6 million vacant square feet here as of this January, 40 percent of the marketwide total. Vacancy entering this year across the rest of the metro, excluding Hagerstown, was 4.7 percent, reflecting a better balance between demand and supply elsewhere in the metro. Frederick County, VA, the Dulles Corridor and the Manassas-Interstate 66 submarket all began 2024 with sub-4 percent vacancy rates. What infill industrial space that exists within the District of Columbia is highly coveted as well. Northern Virginia is also continuing to welcome new data centers, underscoring the market’s strategic position with both the physical and digital highways of the country.