Market Report
Washington, D.C. Retail Market Report
3Q 2026
Retail Fundamentals Remain Resilient
While Job Market Slowdown Drives Bifurcation
Local economic headwinds had limited impact on retail properties. Despite federal government layoffs, more retail space was leased than vacated in 2025, in contrast to the half of major U.S. metros that recorded net space relinquishment during that period. As the supply pipeline contracts this year, the metrowide vacancy rate should remain near its long-term average of 4.8 percent. Retail sales growth in 2025 and 2026 is expected to modestly trail the national rate, while leasing activity in the last 12 months declined 20 percent year-over-year. Tenant demand could begin to improve as the local economy continues to stabilize, with the 100-basis-point year-over-year decline in office vacancy as of June offering an early sign of improvement.
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