Tech, Media Tenants Lead Q1 Uptick in DC Office Leasing
Availability still hits new high of 22.6 percent
By Chava Gourarie April 1, 2024 7:00 am
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Office leasing volume ticked upward in Washington, D.C., in the first quarter of 2024 while availability levels reached a new high of 22.6 percent, according to a report by Savills.
Office leasing totaled 1.7 million square feet in the first quarter, compared with 1.3 million square feet in the final quarter of 2024, and almost double the leasing volume in the first quarter of 2023.
Thanks to the Washington Post’s nearly 300,000-square-foot lease at One Franklin Square, technology and media tenants dominated the quarter’s leasing, something of a rarity in the D.C. market where government and legal tenants usually make up the bulk of the leasing.
That said, neither tenant group was far behind. The second-biggest lease was a 274,122-square-foot deal with the D.C. Department of General Services at 1101 Fourth Street SW, one half of Waterfront Station, due to an early restructuring. Meanwhile, law firm Finnegan, Henderson, Farabow, Garrett & Dunner came in third with a 214,000-square-foot renewal at 901 New York Avenue NW, owned by Boston Properties (BXP), CEO Owen Thomas said during the firm’s fourth-quarter earnings call.
While leasing volume was slightly positive this quarter, the overall fundamentals remain rather dire, per the report. Leasing volume is still well below pre-pandemic averages, and availability hit 22.6 percent, up 90 basis points from the same time last year. Space available for sublease now spends an average of 23 months on the market, which may be indicative of how few spaces are getting leased at all.
Rents, however, have remained relatively flat, with an average asking rent of $54.58 per square foot overall (down from $54.82 in the first quarter of 2023), and $58.05 for Class A space (compared with $58.05 last year). Both represent declines from where they stood in early 2020. And that’s despite the fact that Class A continues to dominate in terms of attracting tenants.
Another thing to note is that of the top 10 leases in the first quarter, starting with the Washington Post and ranging down to a 26,000-square-foot lease from the National Indian Gaming Commission, none were new to the market. There were seven renewals, two relocations, and the previously mentioned restructuring.
Chava Gourarie can be reached at cgoruarie@commrcialobserver.com.
