Employment strengthens, but remains sluggish
Employment services job growth increased 3.7% in the District of Columbia, which is above the 10-year annual average of 0.4%. However, job gains have yet to completely recover, as the Delta variant creates uncertainty.
The office market showed notably weak demand during the first half of 2021, with negative 1.7 million SF of net absorption. This was due to tenants vacating or reducing space and heightened concerns of COVID-19 in the region causing tenants to pause lease decisions. Job growth will remain slow and uneven during the balance of 2021, as jurisdictions battle rising COVID-19 cases.
Asking rents edge down 0.1% during the first half
The average asking rental rate for all classes of office space in the District of Columbia decreased 0.1% during the first six months of 2021, decreasing to $52.71 PSF from $52.77 PSF at year-end 2020.
The office prime average rent at year-end 2020 was $78.52 PSF, relatively flat compared to year-end 2020.
Office investment slow
Office investment volume in the District of Columbia totaled $542 million during the first half of 2021, accounting for 57% of the total real estate investment dollars for all property types during this period. This compares to 79% of total investment dollars spent over the past five years.
Office net prime yields have trended downward since reaching 7.0% in 2009 and now stand at 4.8% at year-end 2019.
Given limited transactions there is no data to report during 2020 and 2021 so far.