Washington DC Office Space Vacancies Rise

The current condition of the Washington DC office space market has a seven percent vacancy rate in the downtown area and a six percent vacancy rate in the suburban areas. On average, office space will sell for thirty-eight dollars per square foot per year in the suburban areas, in the downtown area the price is typically forty dollars. Because of these market conditions people looking for office space have control over their choices and options.

In 2005, the number of available Washington DC office space dropped and the price of available space increased. Law firms and government contractors bought up most of the downtown office space. In 2004, there was a ten percent vacancy rate that fell to nine percent in 2005 and now to seven percent. At the same time thirty dollars was the average price of Washington DC office space in 2004, now the price in near forty dollars. However, the Washington DC area has continued to see strong job growth with an increase in office space purchases of two percent every year. This is nearly double the increase seen in 2004.

In the Southwest and Southeast area of Washington DC, office space vacancy has jumped from ten percent in 2005 to five percent this year. Office space the equivalent of thirteen football fields sits empty in this part of Washington DC. One of the biggest worries for developers in Washington DC is the fact that seven
million square feet of office space is under construction in the district and only half of this space is pre-leased. Most of this unused office space is found in the Southwest, Southeast and East parts of Washington DC. One of the contributing factors is that more and more businesses are moving their business to Maryland and Virginia where there is cheaper office space rents in the suburbs. In addition, more than one million square feet of Washington DC office space that was going to be purchased for federal use may not be purchased by the government.

Whether or not Washington DC office space will continue to fill up or remain empty remains to be seen. However, in the next ten years it is clear that the district will have to fill up close to three million square feet of office space, which is close to thirty percent of the total office space in the city.