Strong Q4, Despite Sluggish Year
The District of Columbia weakened throughout the year with 1.5 million SF of negative net absorption. However, there was a positive upswing in net absorption, 552,000 SF in the last quarter of the year. Job growth rebounded throughout the year as there was a 4.7% growth in jobs. This shows a confidence in the recovery of the DC market which may experience a slight obstacle in the current wave of the Omicron variant as a number of companies delay their return to work and therefore real estate decisions.
Asking Rents Edge Up in 2021
The average asking rental rate for all classes of office space in the District of Columbia rose 1.9%% in 2021, averaging $53.81 PSF from $52.77 PSF at year-end 2020. The office prime average rent at year-end 2021 is $78.62 PSF, which is an increase from year end 2020 which totaled $78.55 PSF.
The vacancy rate increased by 120-basis points to 12.9% at year end 2021.
Office Investment Slowly Rebounding
Office investment volume in the District of Columbia totaled $1.4 billion in 2021, accounting for 56% of the total real estate investment dollars for all property types in the year. This compares to 71% of total investment dollars spent over the past five years.
Office net prime yields have trended downward since reaching 7.0% in 2009 but saw a slight increase to 5% in 2021.