Government and Nonprofits Lead DC Office Leasing in Sluggish Q3


Office leasing activity continued to slacken in the Washington, D.C., region in the third quarter of 2023, as tenants and landlords reorient in the post-pandemic era.

Leasing activity decreased to 1.2 million square feet, compared to 1.4 million square feet in the previous quarter, according to Savills’ latest D.C. office report. The overall availability rate remained unchanged in Q3 from the all-time high of 22.3 percent seen in Q2. 

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Government agencies dominated third-quarter leasing activity primarily through two General Services Administration deals, according to CBRE (CBRE)’s latest market report for Washington, D.C. The GSA deals included the Court of Services & Offender Supervision Agency signing two renewals at 800 N Capitol Street NW, totaling nearly 93,000 square feet; and the Secret Service inking a 15-year renewal at 1100 L Street NW for 79,000 square feet. Overall, seven government tenants signed leases this quarter for a combined 435,000 square feet.

“While there has been progress in return-to-office metrics since the pandemic’s onset, the absence of a definitive return-to-office plan from many federal government agencies is expected to keep availability levels elevated through year end and into the following year,” Tom Fulcher, a mid-Atlantic region lead for Savills, wrote in the report. “This is especially true as commodity and sublease space remains on the market for longer durations.”

Nonprofits are also showing increased leasing activity, per CBRE, which cited American Clean Power Association’s 42,000-square-foot lease at 1299 Pennsylvania Avenue NW as leading the way.

Average asking rents in D.C. came in at $54.73 per square foot this quarter, a slight decrease from the $55.18 per square foot seen at the same time last year. 

“Despite the high availability rate in the market, concession packages such as rental abatement and tenant improvement allowances remain high,” Fulcher wrote. “These concessions are used to incentivize potential tenants and retain existing ones.”

Development activity was scarce in the third quarter, according to CBRE, with just two new buildings delivered, keeping the activity at 30-year lows. The RMR Group’s 440,000-square-foot mixed-use development at 20 Massachusetts Avenue delivered 178,000 square feet on four available floors; and Akelius’ 53,000-square-foot renovation at 1401 Massachusetts Avenue NW was delivered completely vacant.

Keith Loria can be reached at