Washington, DC

Cassidy & Pinkard Colliers today announced that the Washington, DC metropolitan area office market experienced an overall positive net absorption of 217,900 square feet in the second quarter of 2008 , a significant drop from the 978,700 square feet reported in the first quarter. Vacancy rates increased 60 basis points from 10.1 percent in the first quarter of 2008 to 10.7 percent this quarter. According to Costar, average asking rents in the DC metro rose $1.04 over a year-ago to $35.15.

“The slowdown in absorption is directly related to the slowdown in the overall economy,” remarked Kevin Thorpe, Vice President, Director of Market Research. “Job growth in the DC region is currently expanding at a rate that is 50 percent slower than the average for the past ten years. Likewise, absorption levels are significantly lower.” Mr. Thorpe added, “The renewal phenomenon is upon us, with many tenants opting to stay put and sign short-term leases until they have clearer direction on where the economy and the office market are heading.”

The ten-year average for net absorption is 6.03 million square feet. As of June 30, 2008, the DC region had absorbed only 1.20 million square feet. In terms of supply, there is over 19 million square feet of office space scheduled to deliver in 2008, 2009 and 2010. Currently, only about one-quarter of it is preleased. Washington, DC has 10.2 million square feet delivering in the next few years, preleased at 23.4 percent; Virginia has 6.2 million square feet delivering, preleased at 26.1 percent; and Maryland has 2.8 million delivering, preleased at 25.9 percent.

“The large amount of construction in the pipeline is a concern,” Thorpe says. “But the reality is that you need to dig deeper and look at what is happening in each individual submarket. One pattern is clear”, Thorpe continues, “There is a distinct inside/outside the Beltway story unfolding. Inside the Beltway markets—such as the East End, the Rosslyn-Ballston Corridor, and Bethesda/Chevy Chase—are all experiencing steady vacancy rates and positive absorption. However, outside the Beltway markets--such as Reston-Herndon, South 28, and Prince George’s County—are facing upward pressure on vacancy due to some overbuilding and tepid demand. The good news is: planned construction starts for 2010 have been quiet so far for Virginia and Maryland, so that should give the market time to fill some of the existing space.”

As for second quarter results in the three major markets in the region, net absorption was a positive 281,700 square feet in DC, up from 212,500 square feet in the first quarter; and vacancy rates were 7.9 percent, up from 7.1 percent a year ago. In Northern Virginia, net absorption came in at 90,400 square feet, down from 1,189, 800 in the first quarter; and vacancy rates increased to 12.2 percent, up from 10.7 percent a year ago. Net absorption in suburban Maryland was negative 154,300 square feet, better than the negative 423,600 square feet it experienced in the first quarter; and vacancy rates rose from 10.6 percent in the second quarter of 2007 to 12.1 percent this quarter.

About Cassidy & Pinkard Colliers 
Cassidy & Pinkard Colliers (www.cassidypinkard.com) is the largest locally owned commercial real estate services company in the Washington metropolitan region. In 2007, Cassidy & Pinkard Colliers completed over $4.2 billion in commercial sales, finance and lease transactions, $75 million in project management, and at year-end, managed over 13 million square feet in commercial and retail properties. Cassidy & Pinkard Colliers was recognized in June 2007 by the Washington Business Journal as one of the top five “Best Places to Work in Greater Washington” in the Large Companies with Local Headquarters category. An independently owned and operated business founded in 1981, the company is a member firm of Colliers International, a global affiliation of independently owned and operated commercial real estate firms. 

About Colliers International

Colliers International is a global affiliation of independently owned commercial real estate firms. The organization's 10,092 employees span the world in 267 offices in 57 countries. On a worldwide basis, Colliers manages 672,945,918 square feet, and has revenue of $US 1,620,958,349.

Contact Information

Maureen Wheeler
Vice President, Corporate Communications
202-463-2100
Maureen.Wheeler@cassidypinkard.com

 back to top