D.C. Office Market on Track for Healthier Start to 2026

Washington, D.C.’s office market continued to stabilize in the final stretch of 2025, signaling a brighter future for the District even if it comes at a snail’s pace.

Leasing activity totaled 1.9 million square feet in the fourth quarter last year, which brought annual volume to 7.2 million square feet, according to the latest market report from Savills. Fourth-quarter volume was in line with the previous quarter, and annual volume was in line with 2024’s totals, per Savills, indicating that D.C. has managed to staunch its pandemic-era tenant bleed. 

Overall availability also dropped to 23.2 percent by year’s end, a notable, if modest, decline of 50 basis points year-over-year. Availability of trophy assets in D.C., meanwhile, was just 13.7 percent this past quarter, down by roughly 700 basis points from two years ago. With relatively few new developments coming online and as demand for quality space continues, Savills researchers expect Class A activity to spill over into the lower-tier pool. 

Law firm relocations and short-term federal renewals once again led leasing leaderboards in the fourth quarter. Sidley Austin’s 240,000-square-foot deal at BXP’s 2100 M Street NW redevelopment (which the landlord recently acquired for a relative steal) was on top of the charts. The National Transportation Safety Board’s 163,538-square-foot renewal at Blackstone Mortgage Trust’s L’Enfant Plaza came in second, followed by the U.S. Treasury Department’s 120,497-square-foot renewal at John Hancock’s 1750 Pennsylvania Avenue NW.

Short-term deals for federal agencies were a common sight throughout 2025 as government-wide downsizing efforts stifled long-term leasing decisions, per Savills. The most notable deal on that front lately was the Department of Justice’s 477,000-square-foot renewal at Georgetown Company’s 450 Fifth Street in September. 

Yet associations and nonprofits, which have mostly shown lethargic activity in recent years, accounted for more than 300,000 square feet in the final quarter of 2025. Deals like the National Cable & Telecommunications Association’s 53,635-square-foot renewal at Republic Properties’ 25 Massachusetts Avenue NW, and the American Medical Association’s 36,886-square-foot relocation to Property Group Partners’ 200 Massachusetts Avenue NW, signal a sea change, according to Savills. 

All told, the District’s market fundamentals, alongside recent interest rate cuts, indicate a healthy start to the new year compared to the uncertainty in the air at the start of last year.

“Recent interest rate cuts, expected further easing, and attractive pricing alongside solid leasing momentum should support increased resolution of office distress in 2026,” the report said.

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