Tech tenants have leased 2.2 million square feet of space in the Washington, D.C., region in 2021, representing 18 percent of total leasing activity, according to a new Tech-30 report by CBRE, which examined real estate trends related to technology companies.
Most other industries have reduced their office footprint in the Washington region during the pandemic, while tech firms trail only the federal government in total leased space this year.
“While the pandemic may have initially delayed some transactions in the first half of 2020, the tech sector has continued to grow throughout the pandemic,” Meredith LaPier, a vice chairman at CBRE, and a member of the firm’s tech and media practice group, told Commercial Observer. “It’s also worth noting that individuals and corporations heavily relied on tech products and services during the pandemic, as remote work increased.”
CBRE’s report shows robust tech job growth over the past 12 months in the D.C. area and that tech as an industry is leading an early-stage office market recovery. Big Tech continues to expand in the region, with major firms signing large leases in Northern Virginia.
“The area is also home to the world’s largest data center market, another factor drawing the large tech firms to the region and boosting the local economy with high-paying jobs,” LaPier said. “Across the river in the District of Columbia, several D.C.-based firms have expanded and grown their footprints.”
Of the 20 most recently signed tech leases in D.C., 15 led to net demand growth for the market. In total, tech tenants in D.C. proper have expanded their collective footprint by close to 500,000 square feet since the beginning of last year.
“The D.C. region continues to attract tech tenants through its diverse, highly educated tech talent base,” LaPier said. “As the seat of our federal government, D.C. also offers tech firms access to legislators in an era where they are facing increasing legislation. Our area’s relative affordability compared to other gateway cities shouldn’t be discounted either.”
For the D.C. region, the Tech-30 report reveals a 2 percent decline in office rent growth between the second quarter of 2019 and the second quarter of 2021 compared with the prior two-year period.
Across the U.S., tech companies accounted for 22 percent of office leasing between April and September 2021, up from 17 percent from the same period in 2020. This year, tech companies’ office leasing activity increased by 122 percent on average in the second and third quarters, compared with the first. In addition, more than two thirds of the top 30 North American tech markets registered office-rent growth this year from the second quarter of 2019.
Keith Loria can be reached at Kloria@commercialobserver.com.