D.C. Office Market On Par to Start 2025, Bracing for DOGE Fallout: Savills

The Trump administration’s cuts to the federal real estate portfolio haven’t hit Washington, D.C. too hard just yet, according to a new report from Savills, with office leasing activity remaining par for the course so far this year.

D.C.’s office fundamentals in the first quarter of 2025 haven’t changed much from the end of last year, or even from the first quarter of 2024, according to Savills’ report. The District’s availability rate hit 23.5 percent, a 20 basis point improvement quarter-over-quarter, but up 90 basis points year-over-year, while rents largely stayed the same at $54.71 per square foot. Leasing activity was also consistent with the five-year average at 1.7 million square feet, mostly driven by renewals. 

Just three of those leases exceeded 100,000 square feet, two of which were renewals from the D.C. Department of General Services: a 136,819-square-foot lease at 1015 Half Street SE and a separate 101,982-square-foot deal at 250 E Street SW. 

The other six-figure lease came, unsurprisingly, by way of a law firm expanding its trophy office space in the District. Carr Properties in February signed law firm Freshfields to a 117,000-square-foot at its Midtown Center complex, at 1100 15th Street NW, a relocation from the firm’s former digs at 700 13th Street NW. Freshfields’s new lease follows fellow firm ArentFox Schiff’s 120,000-square-foot relocation deal to Midtown Center last October.

Yet the Trump administration’s moves to downsize the federal government — an effort led by Elon Musk’s Department of Government Efficiency — are likely to have ripple effects for the D.C. office market in particular, Savills predicted in the report. The government owns or leases approximately 90 million square feet in D.C. alone, and extensive property sales, lease terminations and workforce reductions could drive down demand in a city already reeling from sky-high office vacancy.

DOGE claims to have cut 676 leases so far since Trump took office in late January, according to its website. It has also cut thousands of federal grants and contracts, a fact that could further reduce demand for office space in D.C. as opportunities for government work dry up, per Savills. 

Yet those reductions are unlikely to affect the District’s trophy office market, per Savills, which has seen robust activity from law firms as they re-engage with in-office work. The report noted that government property trades could offer opportunities for redevelopment as well. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.