Downtown DC Submarkets Q2 2019

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Downtown DC is home to the Central Business District (CBD), East End, and West End submarkets, which are the most expensive in the region with average rents over $50/SF. The CBD and East End are also the area’s largest submarkets with an astonishing, combined inventory of over 97 million square feet. Despite weakening fundamentals in all 3 submarkets, Downtown DC still has the reputation as home to the metro’s premier office submarkets with the rents and investment capital to prove it.

Central Business District (CBD)

  • RBA: 45,305,140 SF
  • Vacancy Rate: 9.9%
  • 12 Month Net Absorption: (202,000 SF)
  • Average Asking Rent: $53.70
  • 12 Month Rent Growth: -0.1%

Over 1.5 million square feet is set to deliver in the next 2 years as developers tear down older inventory and replace it with new, trophy buildings. This supply side pressure should keep vacancy rates high and continue to put downward pressure on rents.

East End

  • RBA: 51,756,676 SF
  • Vacancy Rate: 13.4%
  • 12 Month Net Absorption: 137,000 SF
  • Average Asking Rent: $56.82
  • 12 Month Rent Growth: -0.2%

Despite weak fundamentals, the East End is still considered DC’s premier office submarket, as evidenced by continued investment amidst decreasing cap rates/rising prices. Changes in demand from the submarket’s traditional tenants, such as law firms, and over 1.1 million square feet delivering in the past year has lead to a vacancy rate well above the historical average and negative rent growth.

West End

  • RBA: 4,807,645 SF
  • Vacancy Rate: 13.7%
  • 12 Month Net Absorption: (311,000 SF)
  • Average Asking Rent: $50.99
  • 12 Month Rent Growth: -0.9%

The West End saw over 300,000 SF of negative net absorption in the past year due to tenants relocating to other submarkets. An aging inventory with no new deliveries in sight should lead to a continued rise in vacancy and negative rent growth as landlords struggle to attract new tenants.

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