D.C. office vacancy rate up, office rental rates up
The first-quarter office vacancy rate for the District of Columbia was 11.7 percent, unchanged from the end of 2009 but an increase of 1.8 percentage points from one year ago. Some areas of D.C. have had a much greater increase in vacancy than others. The downtown D.C. office market has fared well with a first-quarter vacancy rate of 10.1 percent, compared with the emerging areas of NOMA and the Capitol Riverfront, which ended the quarter at 18 percent. At 8.7 percent, the Georgetown/Uptown Market had the lowest vacancy rate during the first quarter.
While average office rental rates have plunged in most major U.S. cities, office rents in D.C. have held up relatively well. Over the 12 months ended in March, average asking rates actually increased in the District. At an average of $47.60 per square foot, they slightly surpassed the previous high watermark set during the fourth quarter of 2008. But because vacancies remain high, landlords are competing for tenants by offering free months' rent and tenant improvement allowances, so effective rents remain under pressure.