Northeast & Southeast Washington, DC Submarkets Q1 2019

When it comes to traditional commercial real estate (office and retail), Northeast and Southeast Washington, DC are underwhelming to say the least. Decades of high crime rates coupled with their predominantly lower income demographic have kept developers and investors from investing in these submarkets. Things are changing in the region and Amazon’s announcement to locate its HQ2 in Crystal City (National Landing) will only accelerate the changes already taking place across the district.

Northeast and Southeast’s office markets are tiny in comparison to those of Northwest and Southwest with only 3,000,000 sf of total space and, of that, only 75,000 sf of office space considered to be 4 or 5 Star (all in Southeast). There have been no new deliveries in the past year and only slightly over 50,000 sf are scheduled to deliver in the next year. Combined the submarkets saw negative net absorption last year of about 30,000 sf along with slight declines in rent growth.

The retail market is only slightly larger/better at around 5,700,000 sf with moderate, positive net absorption of about 72,000 sf last year. Still rent growth was negative in both submarkets. Northeast is benefiting from the wave of redevelopment and gentrification from surrounding areas, with over 92,000 sf of new inventory delivering last year with an additional 28,000 sf planned for this year compared to zero for Southeast.

There is a decent sized industrial market in Northeast compared to the rest of the District. At slightly over 9,000,000 sf this submarket contains large areas of space that will eventually be redeveloped. Sales prices seem to defy logic here with an average of $227 per square foot and are indicative of investors’ expectations for the area’s continued gentrification and associated rises in property values across the board.

We may see drastic changes in these submarkets over the next decade though as investors continue to look for “affordable” opportunities in DC. Due to historical issues making these areas “undesirable” they will be the last to undergo gentrification. This is happening currently through residential flips and multi-family investment. Anacostia, particularly, should see exponential growth due to its location along the waterfront and proximity to National Landing (Amazon). The Brightwood/Fort Totten submarket is already seeing steady rent growth and an increase in investment.

With metro access, proximity to the Wharf and National Landing, and being the last “affordable” areas in Washington, DC, Northeast and Southeast should see huge growth in the years to come. These traditionally undesirable areas of the District have the potential to produce astronomical returns to anyone willing to incur some short-term risk. When you have the opportunity to buy in the path of (re)development when prices are low, you take it. You need only hold the property until the time comes when it makes sense to (re)develop it yourself or sell. You make money in real estate when you buy it and Northeast and Southeast Washington, DC are an opportunity unlike any other in the region.

For detailed information on market data, leasing, etc. please contact Ryan Rauner at or 703.943.7079.

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