DC Office Space For Rent
As the capital of the United States and the seat of the federal government, it’s no surprise that D.C. office space naturally attracts agencies, lobbying firms, think tanks, and nonprofits that want to be close to the federal government. The federal government itself is the largest employer in the metro area. However, the private sector in Washington, D.C. is continuously diversifying, and the area is home to a variety of big and small businesses engaged in healthcare, technology, media, tourism, education, business management, and scientific research.
D.C.’s hiring pool is filled with seasoned and educated professionals, and the numerous colleges and universities in the area guarantee a regular flow of new talent. The historical and cultural attractions in the area provide a backdrop for the dynamic food, music, sports, and outdoor scenes that make Washington, D.C. office space an attractive options to businesses of all kinds.
Office Space | D.C. Lease Data & Trends
According to publicly available commercial real estate data, the D.C. office space inventory is spread fairly evenly between DC proper, Northern Virginia, and Suburban Maryland. D.C. proper has more than 120 million square feet of office space inventory with another 1.5 million under construction, while Northern Virginia and Suburban Maryland have nearly 150 million and 70 million square feet of commercial real estate assets, respectively. Nearly half of D.C. office space is in Class A buildings, and all 1.5 million under construction is classified as Class A.
The DC metro’s combined 330 million square feet of office space make it the second largest commercial real estate market in the US, behind New York City and ahead of Chicago, Los Angeles, Dallas–Fort Worth, and Houston.
Washington, D.C. Office Space | Average Asking Rents per Square Foot
|Submarket||Class A||Class B|
|Northern VA Total||$38||$30|
|Suburban MD Total||$33||$26|
DC Office Space | Market Sentiment
Based on recent commercial real estate lease data, the average D.C. office space for rent costs $60 per square foot. Tenants in Class A buildings pay closer to $68 per square foot, and Class B office space leases for $50 per square foot. Tenants looking for office space in Northern Virginia should expect to pay around $34 per square foot, while the Maryland suburbs offer even cheaper office spaces for rent, averaging slightly below $30 per square foot.
Large office space options are becoming increasingly popular across Washington, D.C. The number of office spaces larger than 20,000 has increased 40% over the pat two years, with an additional dozen buildings with large units set to come onto the market by the end of 2018.
Continued job growth in the area have driven a steady increase in demand for mixed-use non-core submarkets, including Georgetown, West End, Dupont-Logan-Shaw, Ballpark, and NoMa. Most new DC office space construction is in these neighborhoods. For now, the increase in supply has reached a point where it exceeds demand. The cost of renting Class A office space should decline due to the excess supply, while prices for Class B office space will increase around 5%.
Given that only 46% of new constructions have pre-lease commitments, many real estate professionals expect Class A vacancy in DC to rise toward 20% over the next two years. In the DC urban core, only 36% of the 1.5 million s.f. under construction is pre-leased, and more than a half-million square feet of recently delivered office space remains vacant. With limited Class A+ demand in the near-term, landlord concessions will continue to rise and rents will drop by 10% in cases. In contrast, the Class B market in the core and Class A market in non-core submarkets will continue to see momentum build.
Recent notable leases include Baker Bots leasing 103,317 square feet at 700 K Street, NW and 800 K Street, WeWork leasing 54,277 at 777 6th Street, NW, and the United States Agency for International Development leasing 348,173 square feet at 500 D Street, SW.
Office Space for Rent in D.C. | Popular Neighborhoods
Capitol Hill is the largest business center in D.C. The neighborhood is bordered by the Anacostia River, H Street corridor, Washington Navy Yard, and the National Mall. Capitol Hill’s five million square feet of office space is often rented by government relations firms and agencies, at the highest prices for Class A property in D.C. The Orange, Red, Silver, and Yellow lines all stop in Capitol Hill, as well as plenty of bus routes.
There is more than 5 million square feet of office space in Capitol Hill, renting for an average of nearly $66 per square foot. Class A office space in Capitol Hill costs around $70 per square foot, compared to slightly less than $52 per square foot for Class B space.
Washington D.C.’s Central Business District is in the northwest quadrant of D.C. and extends approximately six blocks north, west, and east of the White House. Plenty of boutique law firms, government contractors, non-profits, and business management consultants rent office space in Downtown D.C., as well as a rising number of software and media companies. The presence of George Washington University provides employers with a talented young hiring pool. The Red, Blue, Orange, and Silver lines all connect at the Metro Center, located just a few blocks from the White House.
There is more than 31 million square feet of Downtown DC office space, with a vacancy rate nearing 11%. Office space in Class A buildings cost around $73 per square foot to lease, compared to around $50 in Class B buildings. An additional 2 million square feet of additional Class A office space is under development.
Dupont-Logan-Shaw is a primarily residential district that combines the historic charm of Dupont Circle and Logan Circle with the more modern and up-and-coming Shaw neighborhood. No Class A inventory is available in this district. Dupont Circle has the largest concentration of international embassies in D.C. and attracts companies with global interests. Other commercial tenants in the area also include business management and sales consultants, real estate offices, nonprofits, and software companies. Four metro stations and a dozen buses service the area.
East End is also referred to as Old Downtown and includes Penn Quarter, Chinatown, Judiciary Square, and Mount Vernon Square. The neighborhood offers the third most expensive selection of Class A properties in D.C., which is often rented by companies in the asset management, insurance, investment, healthcare, and legal sectors.
Verizon Center is located in East End and has revitalized the area into an art and entertainment hub. All six metro lines stop in the area, and commuters have their pick of bus lines as well as the DC Circulator. In addition to the nearly 44 million square feet in the neighborhood, there is 2.6 million square feet of new construction underway.
Georgetown is located around the intersection of M Street and Wisconsin Avenue. Many companies in the architecture, design, communications, media, and tech sectors rent office space in Georgetown and businesses in the area employ around 13,000 people. Georgetown office space is in high demand due to its low inventory and waterfront location. Three metro stations are located within one mile of Georgetown, and the 30-series, D-series, and G2 buses have routes through the neighborhood. Drivers can take the Whitehurst Freeway along Georgetown’s southern border, or commute from Arlington via the Francis Scott Key Bridge.
Market District encompasses D.C.’s oldest public marketplace, Eastern Market. The neighborhood has a 50% vacancy in Class A inventory, partly due to higher-than-average rents. Eastern Market attracts small family-owned businesses, restaurateurs, and artists. Market District is easily accessible via the Blue, Orange, and Silver Lines.
NoMa stands for “North of Massachusetts Avenue” and stretches just over a mile north of Union Station. NoMa is home to the Union Market food hall, NPR, Amazon’s D.C. headquarters, and the most affordable Class A prices. NoMa’s working population is close to 54,000 people, and the majority walk, bike, or take public transit to work. The presence of Union Station provides employees from outside D.C. with an easy commute. NoMa is also served by the Red Line and about a dozen buses and is one of the most bike-friendly districts with a protected cycle track and eight Capital Bikeshare stations.
Five different neighborhoods compose the southwestern and smallest quadrant of DC: the Southwest Federal Center, the Southwest Waterfront, Buzzard Point, Joint Base Anacostia-Boiling, and Bellevue. Despite its small size, Southwest has over 12 million square feet of inventory at prices well below the city average. Many federal executive branch office buildings are concentrated in Southwest Federal Center. The Blue, Orange, Silver, Green and Yellow lines all stop at Southwest stations.
An affluent residential neighborhood, Upper Northwest offers only Class B and Class C properties. Over 25% of Class B property is vacant at an average of $43 per square foot, which attracts many law offices, business management consultants, and tax consultants. The neighborhood includes Glover Park, Cleveland Park, Tenleytown and Friendship Heights. Upper Northwest is accessible by the Red Line, eight bus routes, and a variety of ride shares.
Home to Nationals Park baseball park, the Ballpark district is located south of Capitol Hill and between Interstate 395 and the Anacostia River. Nationals Park stimulated further development in the neighborhood, which is evident in the thriving Capital Riverfront area that has nearly 6.2 million square feet of private office space and attracts tenants in the media and creative industries. With average Class A prices around $20 less than Capitol Hill, Ballpark office space is perfect for companies wanting immediate access to DC at affordable prices. The Green-Line runs to the Navy Yard-Ballpark Station.
Located in D.C.’s northwest quadrant, the West End is defined by K Street, Rock Creek Park, and New Hampshire Avenue. West End office space attracts lobbyists, special interest groups, federal contractors, and financial advisors as well as the energy and technology industries. The Blue and Orange Lines run along Eye Street, and commuters can also choose from a handful of bus lines.
Arlington is a short commute away from the DC Central Business District, and features significantly lower office space rental prices (the average is around $40 per square foot). Notable tenants include Rosetta Stone, Interstate Hotels & Resorts, The Nature Conservancy, Nestle, and PBS.
Getting Around Washington, D.C.
With three major airports, six Metrorail lines, three commuter rail services, nine intercity bus lines, and 350 Metrobus routes, there are never-ending options to getting around Washington, D.C. Public transportation is encouraged, but street and garage parking is available for those who choose to commute via car, although parking tends to fill up quickly. Car rentals, care shares, and taxis are always available.
Washington, D.C. is notorious for its traffic and congestion. Data firm Inrix’s 2017 analysis rated D.C. as the 6th most car-clogged city in the United States (behind Los Angeles, New York, San Francisco, Atlanta, and Miami), and number 15 overall globally, between Mexico City and Istanbul.
According to the analysis, which is based on anonymous, real-time GPS data, local commuters spend more than 60 hours per year stuck in traffic congestion. During rush hour, about 20 percent of motorists’ time is spent idling. This congestion costs each D.C. driver nearly $1,700 per year, and nearly $3 billion to the region’s economy as a whole. A supplemental analysis led by the District Department of Transportation found evening rush hour to be the worst time to drive. The report found that the percentage of roadways seeing significant slowdowns is five times higher during the evening commute than during the morning commute.
Thankfully, employees will find the heart of most neighborhoods very easy to navigate on foot. The D.C. area is very bike friendly, with off-street trails and on-street bike routes all around the city and more than 350 Capital Bikeshare stations. D.C., Alexandria, Arlington, Bethesda, and Silver Spring are all rated as extremely walkable by WalkScore. Washington, D.C. is rated as the 7th most walkable US city, and Dupont Circle, U-Street, and Downtown-Chinatown are considered the most walkable areas.
Many DC residents commute by bike, but though it is mostly convenient to get from Point A to Point B, there is still limited bike infrastructure and nearly 30 bike fatalities per year.
About the Author
Graham Shorr is the Chief of Staff at SquareFoot. In addition to supporting the executive team on corporate strategy and operations, Graham leads North America Market Research & Analysis. Graham is an alumnus of Carnegie Mellon University.