Google Relocation Leads D.C.’s Office Market in Q3

Washington, D.C.’s office market held relatively steady in the third quarter, but the divide between trophy properties and the broader market was extended.

Tenants leased about 1.8 million square feet during the quarter, roughly in line with the market’s five-year quarterly average, but down from the 2 million square feet leased in the second quarter, according to Savills.

Overall availability ticked down to 24 percent, while trophy space availability remained below 10 percent. The average Class A asking rent inched up 2 pennies since the second quarter to $62.31 per square foot per year.

That scarcity in premier space is prompting tenants — mostly law firms and government departments — to make decisions years ahead of lease expirations while encouraging landlords to reposition buildings, according to Savills. Sheppard signed the quarter’s largest law firm deal, relocating to 107,227 square feet at 2033 K Street NW, where the property is slated for an extensive redevelopment. Greenberg Traurig also renewed and expanded to 80,089 square feet at 2101 L Street NW.

Google posted the quarter’s largest lease deal in a 210,000-square-foot consolidation move to 500 North Capitol Street NW. And the local D.C. government renewed for 164,110 square feet at 1050 First Street NE and for 74,924 square feet at 645 H Street NE both ranked among the quarter’s largest deals.

Federal leasing, however, remains a weak spot. Savills said General Services Administration leasing volume is on pace to decline from 2025 with fewer transactions above 100,000 square feet through the first three quarters.

Meanwhile, D.C.’s office inventory declined by 4.7 million square feet compared to the same time last year, falling to 118.1 million square feet, as office-to-resi conversions continue removing space from the market.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.