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COVID-19 Impact on DC's Commercial Real Estate Sectors


Our research team breaks down the effects to commercial real estate sectors to help you understand the impact of COVID-19 specific to the Washington, DC region.

We’ve all been inundated with news about COVID-19 and it has altered the day-to-day lives of people across the globe. As people adopt social distancing, and more states go into lockdown for non-essential services, the way business and real estate is operated has been severely disrupted. The speed at which things have changed already is staggering and we anticipate that this is just the beginning. It is a fluid time as state and federal government mandates are being changed daily. This is our current take on the market given the information now.



In terms of the real estate life cycle, the office sector is going to be one of the last to feel the true impact of the virus. A large portion of office tenants are still able to conduct operations and will be able to cover their rent for the near future. The percentage of tenants that can function in this format is much higher than retail, hospitality and industrial. While many companies in this space are capable of working from home and adjusting to the remote workplace, many will overall see a drop in revenue due to the market dropping dramatically over the last few weeks. Coworking providers during this pandemic will lose tenants, as many month to month leases will not be renewed. The question is whether these providers can withstand this drop in revenue.

  • Initially the most insulated in terms of worker productivity due to remote flexibility.
  • Leasing activity will essentially halt until the virus is under control.
  • Growth will likely be seen in the pockets of biotechnology most notably along the I-270 corridor in Suburban Maryland.
  • The technology sector will benefit as hosting and teleworking become the norm for the foreseeable future.
  • Based on the success or failure of this very unexpected forced teleworking experiment, a shift in office using requirements may be seen.



The impact of COVID-19 on the industrial market will likely be a mixed bag. Industrial space using tenants are under the same pressure to limit their worker interaction. However, warehouse and manufacturing space will continue to need to function. The number of online orders has spiked in recent days. Instacart, Walmart Grocery, and Shipt have all seen their download drastically increase by 218%, 160%, and 124% respectively from February 15th to March 15th according to an article from TechCrunch. Additionally, the executive order for the Defense Production Act may ramp up production for personal protective equipment (PPE) causing some to retrofit their manufacturing buildings to fit the growing demand from hospitals across the country.

  • Some industrial tenants will be negatively affected by the COVID-19 virus while others are poised to gain significant business by producing needed medical equipment.
  • E-commerce related industrial occupiers will need to ramp up their space needs considerably to account for a growing population that needs to stay inside.
  • Expect to see an increase in the need for data centers as a growing number of people will be increasing their online shopping presence in addition to their work from home needs.
  • Flex product will be the most negatively impacted as many contain a high percentage of public-facing stores including breweries and flooring companies.



From the start, no industry has been hit harder than the brick and mortar retail sector. Social distancing has shuttered many stores, and as a lockdown looms, only essential stores will remain open such as grocery and drug stores. Most are taking heed of the dire warnings that are being delivered across the country including retailers who have closed shop. Restaurants are trying to cope with the sudden lack of clientele utilizing drive-thru and delivery services but nearly all are well below their typical sales. DC, Maryland and Virginia have all put restrictions in place to close the dine in sections of restaurants.

  • With margins as tight as they are, even closing for several days can cause havoc and cripple a restaurant. With the potential that the virus effects last longer than 3 months, it is not difficult to imagine a scenario in which many DC mainstays are gone forever.
  • If tenants can weather the storm be it through federal subsidies or revamping their business model, the recovery should be robust.
  • Online retailers will not be hit as hard but with a potential 20%+ unemployment rate expendable income will be low.
  • Some retailers and restaurants have asked people to order gift cards for future services in an effort to alleviate the missing sales.




It is expected that tenants will likely slow their movement between buildings during the pandemic. The newer buildings will have difficulty attracting new tenants to fill up their vacancy while properties that cater to lower-income individuals will be hardest hit in their revenue stream. Larger landlords with diversification will fare better than the landlords that have properties with fewer units. With eviction protections coming during this time and unemployment potentially reaching 20% or more, the fear of paying their mortgages and loans is there. Protections are likely to be set up for this scenario as well.

  • While initially saved from eviction, tenants will struggle to pay rent with a downturn in the economy. However, when protections are lifted the underlying economy could be damaged enough that renters will not be equipped to pay rent in certain situations.
  • With the service industry being most impacted we expect to see the majority of pain for owners in lower-income housing.
  • Permitting for most interior construction projects has been halted however outdoor permits have continued unfettered to this point. This could change rapidly should the Virginia, Maryland and the District mandate stay at home procedures.



Hospitality is the industry that is likely to be hit the second hardest. With the recommendations from the CDC to social distance, events are being canceled or postponed. Restaurants within hotels are shutting down to customers, although many are providing room service and take out options to keep up revenue. According to the President and CEO of the U.S. Travel Association, out of the 56,000 hotels in the US, 25,000 could close in the next few weeks. While many of these are temporary closures, if the lockdowns continue for a while, you will begin to see some of these permanently shut down. Hospitality will not only have a huge drop in business but will likely also be the last of the industries to recover. Smaller boutique hotels with less in cash reserves will feel the brunt of the COVID-19 impact.

  • The travel ban from Europe and Asia has already crushed the hospitality industry and even after the all clear has been given there will be a residual concern based on travel which will affect the hospitality industry greatly.
  • Additionally, the ancillary part of the hotel industry including restaurants and conference facilities will take considerable time to recover.
  • If occupancy dips below 25%-30%, hotels will save money by closing their doors as opposed to operating with limited staff according to a recent USA Today article.
  • To lessen the impact, the hotel industry is looking for a $250 billion bailout package from the Federal government.

Related Experts

Andrew Wellman

Research Analyst

Washington, DC

Andrew Wellman is a commercial real estate professional with more than ten years of experience in leasing, property management, investment sales and construction research.  Prior to joining Colliers in 2011 Andrew worked at Grubb and Ellis, Jones Lang LaSalle and the Costar Group.

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Miles Rodnan

Senior Research Analyst

Tysons Corner

As the senior research analyst, Miles Rodnan assists on all research related tasks. Miles has five years of commerical real estate experience. Prior to joining Colliers International in 2016, Miles worked at the Fairfax County Economic Development Authority. 

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