DC Office Vacancy Steady at 20-22% Despite Tech Hopes

Washington's commercial real estate market faced ongoing pressure in the first quarter of 2026, with office vacancy rates reported between 20.6% and 22.6% across major analyses. Cresa pegged the rate at 22.0%, flat over recent quarters, while CBRE noted 22.6% and Newmark at 20.6%, reflecting stabilization from office-to-residential conversions in neighborhoods like Capitol Riverfront and NoMa. Negative net absorption ranged from 29,561 square feet at Newmark to 234,546 square feet at Cresa, an improvement from steeper Q4 2025 losses but signaling suspended demand in submarkets such as the Central Business District and Georgetown.

Cybersecurity firms, a key driver of DC's tech boom near Capitol Hill and the East End, leased space but did not reach the reported 300,000 square feet threshold. Large deals remained scarce, with no leases over 100,000 square feet; highlights included Howard University's 94,717-square-foot sublease at 650 Massachusetts Avenue NW and the Washington Commanders' 60,000-square-foot lease at 2200 Pennsylvania Avenue NW in the West End, which posted positive absorption of 110,992 square feet. Trophy assets outperformed, tightening vacancy to 10.9%-16.7%, as tenants favored modern buildings amid flight-to-quality trends.

Average asking rents dipped to $58.71 per square foot, down 0.32% quarter-over-quarter, amid sublease availability rising by 171,000 square feet downtown. No new office construction broke ground, with the pipeline reduced to zero from 7 million square feet in 2018; two planned projects for 2028-2031 are nearly fully preleased, easing supply pressures. Lincoln Property Company reported direct vacancy at 17.9% midway through Q1, underscoring varied metrics but consensus on contraction since 2020's 8 million square feet in occupancy losses.