华盛顿特区办公楼市场快照：2025年第一季度

Office market snapshot | Q1 2025 40.97%Entering Q1 2025, the DC office market started to feel the effects of cancelled GSA leases, most of which were already in holdover or in a soft-term cancellation period. Whilethis did not affect market fundamentals significantly this quarter, the prospect of single agencies or government contractorsdownsizing needs to be tracked closely by investorswith office market exposure. Nevertheless, a consistent highlight in the market is the robust demand for Trophy and Class A properties. Although they make up only 32% of thetotal inventory, they accounted for a remarkable 41% of the quarterly leasing activity this quarter. This trend reflects thecontinued strength of premium assets, furthersupported by the steady increase in FS rental rates. Share of Q1 Trophy and Class Aproperty leasing velocity (sf) out ofall property classes. $273MYTD Investment sales volume. In2024, volume more than tripled the2023 total of$438m. The Trophy and Class A segments of the market make uproughly 32% share of the total inventory of the DC officemarket (138msf) but has punched above its market share inleasing velocity this quarter and througha majority ofthepast few years. Due to the resilience of the DC Trophy market, rents in thissector have been on the rise. Strong tenant demand for highquality space and a constrained office development pipeline,currently at its lowest level in over 20 years, will help maintainupward pressure on rents. 400k sfDC Under Construction officedevelopments. This is the lowestlevel in over 20 years. Washington, DC Office market snapshot | Q1 2025 Washington, DC Office market snapshot | Q1 2025 A quick note ondevelopment A quick note oninvestment sales A quick note onvacancy Asking rents for DC office buildings have increasedincrementally over the last several quarters and thattrend continues in Q1 from Q4. Concessions remainelevated, albeit have shown signs of tapering in thehigher classes of the market. The limited developmentpipeline in DC is a factor in applying upward pressure torents in the Trophy and Class A segments of the market. The DC office development pipelineremainsatits lowestpoint in more than 20 years, driven by factors such aselevated construction costs, high interest rates, anddiminished tenant demand. 600 5thSt NW continues tobe the only under construction property, but 725 12thStNW should begin construction on their project this year. With 2024 investment sales seeing higher transactiontotals than 2023, albeit at much lower bases thanprevious sales, 2025 continues the same trend butcurrently at a slower pace than Q1 of 2024. Early 2024saw higher property class sales mostly made up of PRP’sacquisition of 801 and 701 Pennsylvania Ave NW, as wellas other foreclosure sales. This quarter witnessed moretransactions involving class B and C due to morepredictable interest rates as well as continued interest inresidential conversions among lower-class buildings. Get in touch Washington, DC Henry MurphyMid-Atlantic–Market IntelligenceHenry.Murphy@avisonyoung.com Office market snapshot | Q1 2025