The D.C. office market was just starting to stabilize when the federal government threw a wrench in the plan, fueling a new sense of uncertainty across the city. But the top echelon of the market is facing a vastly different reality, new data shows.
The market for trophy office space is getting tighter every quarter. With the construction pipeline nearly dry, it is only getting more constrained, and tenants vying for the limited available space are pushing rents to new highs.
While the overall vacancy rate in the District was 22.6% at the end of last quarter, trophy office vacancy stood at 12.2%, according to CBRE.
“It’s the space that’s in demand right now,” CBRE mid-Atlantic Research Director Stephanie Jennings told Bisnow. “The industries that prefer that level of space are doing well — it’s law firms, government affairs, it’s top business services, some tech. It’s just a preference for top-quality space. And there’s just not that much of it.”
Meanwhile, the segment is largely safe from the federal government’s cuts to its leased portfolio because agencies don’t lease space at the highest rent levels, Jennings said.
Asking rents in the trophy segment averaged $91.21 per SF in D.C. last quarter, up from $89.85 the quarter prior and $86.74 in Q1 of last year.
Achieved rents for trophy space in D.C. averaged $96.10 per SF last quarter, a 9.1% year-over-year increase, according to CBRE.
