DC’s Emerging Submarkets Q4 2019

Wharf video.gif


  • RBA: 12,422,074 SF
  • Vacancy Rate: 11.0%
  • 12 Month Net Absorption: 663,000 SF
  • Average Asking Rent: $50.94
  • 12 Month Rent Growth: 0.3%

The Southwest submarket offers brand-new, trophy space at a discount, which has created a shift in demand away from DC’s downtown submarkets. There is almost a direct, inverse relationship between the submarkets’ fundamentals. Both are delivering significant new supply which puts upward pressure on vacancy rates and suppresses rent growth; however, in Southwest demand has surpassed the increase in supply with 663,000 SF of positive absorption leading to a 3.9% decrease in vacancy over the past 12 months. The submarket’s 11% vacancy rate is the 2nd highest in DC, behind only the East End, but this is misleadingly high due to the 22% vacancy rate amongst 3-Star properties. Even this metric should see improvement with WMATA recently leasing nearly 150,000 SF of 3-Star space. The 2nd phase of the Wharf is underway and will deliver an additional half-mile and 1,250,000 SF of new development over the next 3 years, which will consist of a mix of office and multi-family with ground level retail; creating a work-live-play environment. Despite supply-side pressures, demand and strong preleasing should continue to put downward pressure on vacancy rates and upward pressure on rents.


  • RBA: 11,573,181 SF
  • Vacancy Rate: 7.5%
  • 12 Month Net Absorption: 614,000 SF
  • Average Asking Rent: $51.30
  • 12 Month Rent Growth: 0.6%

Despite nearly 523,000 SF delivering in the past 12 months, the NoMa submarket saw a 1.2% decrease in vacancy and a 0.6% increase in rents resulting from 614,000 SF of positive absorption. Affordable rates compared to downtown DC and an abundant supply of green, 4 & 5-Star buildings have attracted federal tenants which have accounted for over 50% of the leasing since 2014. New supply is scheduled to deliver in the coming years but fundamentals should not suffer because one of the two buildings under construction is 100% preleased to the Department of Justice and the other is a build-to-suit for the FCC.

Capitol Riverfront

  • RBA: 4,170,351 SF
  • Vacancy Rate: 7.5%
  • 12 Month Net Absorption: 3,400 SF
  • Average Asking Rent: $50.57
  • 12 Month Rent Growth: 1.8%

Capitol Riverfront is a small submarket but despite its size it led the DC metro in rent growth in the first quarter of this year at 4% and has the highest occupancy levels of any submarket with average rents over $50/SF. Like NoMa and Southwest, Capitol Riverfront has affordable rents compared to the East End and CBD which has led to increased demand as evidence by strong preleasing. Recent development has been characterized by converting aging/vacant office properties to multi-family; however, the submarket should continue to evolve around Buzzard Point with the 2nd phase of The Yard which is proposed to deliver nearly 2,000,000 SF of office, 400,000 SF of retail, and more than 3,000 multi-family units. Capitol Riverfront’s fundamentals should remain strong for years to come due to the submarket’s metro accessibility, convenient location, and growing retail scene, which combined make it the perfect work-live-play environment.

Buzzard Point video

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