Cushman & Wakefield today released third quarter 2018 office market statistics for the Washington, DC Metropolitan area. These stats reflect the major transactions and trends that influenced the commercial real estate market.
- Click Here for DC Third Quarter Market Beats
- Click Here for Northern Virginia Third Quarter Market Beats
- Click Here for Suburban Maryland Third Quarter Market Beats
Developers bullish on suburban submarkets such as Reston and Bethesda are being rewarded with large users and rents that are rivaling Class-A space downtown. Large tenant demand is outpacing existing large block supply in key suburban submarkets. There are only a handful of quality options in the RB Corridor, Tysons, Reston/Herndon and Montgomery County that can accommodate a near-term 200,000 SF + requirement.
“Between the sky-high rents being achieved in new construction in Bethesda, significant pre-lease activity in Reston, a general lack of quality large blocks, and small and midsize tenants in key industry sectors finally starting to expand, there is clearly tightening occurring in key suburban submarkets,” said Nate Edwards, Senior Director of Cushman & Wakefield’s Washington, DC Region Research team.
In addition to expanding government contractors and technology firms, the federal government completed significant transactions. The government’s trend to relocate large operations from leased to owned space continued in the 3rd quarter of 2018 as the GSA Office of Regional Administrator and the Office of the Comptroller of the Currency moved out of leased space in the East End and Southwest submarkets, respectively.
“While the private sector appears to be starting to rebound, the federal government is still trending to value-oriented transactions, both in terms of location and downsizing,” said Edwards. “The upcoming midterm elections will be telling as to whether the status quo continues or complete gridlock returns.”
Law firm M&A activity continued to put stress on the downtown market as Hunton & Williams and Norton Rose Fulbright’s consolidations with Andrews Kurth and Chadbourne Park, respectively, put over 100,000 SF of previously occupied space back on the market. In addition, Wilmer Hale downsized by approximately 150,000 SF in anticipation of its move to 2100 Pennsylvania Avenue, NW in 2022.
“We continue to expect upward pressure on vacancy for the next 36 months in the core downtown submarkets,” said Edwards. “Record supply will deliver, most with additional leasing to achieve and with the main demand driver, namely the Legal sector, still in a defensive posturing,” said Edwards.
About Cushman & Wakefield
Cushman & Wakefield (CWK) is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, advisory and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
