Halfway through the year, the Washington area office market has little to celebrate.
Although the region is enjoying job growth and the local economy is growing, analysts say that the improvements haven’t translated to growth for the region’s office sector.
About 100,000 square feet more space was vacated than leased during the second quarter, according to researchers from Cassidy Turley. During a typical quarter in the Washington area, about 900,000 square feet more space is leased than vacated.
Nathan Edwards, director of research for Cassidy in Washington, attributed the shrinkage to sequestration-related federal spending cuts and larger trends that are forcing companies to downsize, from technology to more efficient floor plans.
The market has endured such a slide in Northern Virginia that the vacancy rate there rose to 16.2 percent, the highest since it reached 16 percent in 2002, according to CBRE. One of the only silver linings in the Virginia suburbs is the arrival of some new technology companies in need of space.
Another bright spot is the interest that foreign investors are taking an increasing interest in downtown office buildings, having purchased or contracted to purchase nearly $1.9 billion in Washington office properties so far this year, according to Jones Lang LaSalle.