WASHINGTON, DC-The Washington DC area posted a negative office absorption rate of 873,000 square feet in 2013, according to rough estimates by Jeff Kottmeier, director of Research for CBRE's Mid-Atlantic region. And that number, he tells GlobeSt.com, should be considered "relatively good" given that vacancies have risen in all three submarkets over the year.

Another glass-is-half-full way to view these numbers: the area will see fewer space reductions mandated by the Defense Base Closure and Realignment (BRAC) Commission. In 2012, the DC region posted a negative 2.5 million square feet in absorption, 2 million of which was due to BRAC, Kottmeier says.

It should also be noted that Northern Virginia, the first time in 2013, saw a positive net absorption in Q4, ending the quarter at 54,691 square feet. Submarkets outside the Beltway including Reston, Herndon, and Tysons Corner, all closed 2013 with positive absorption and improved vacancy rates.

There are other reasons to expect the DC area will fare better in 2014, namely that Congress finally agreed on a budget.

As the area moves forward into 2014 it is worth putting 2013 into perspective. Accroding to CBRE's summary of the last quarter and previous year:

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The Washington, DC area's office markets posted a positive net absorption in the fourth quarter of 2013, despite the 16-day government shut down and significant austerity moves by the federal government. Approximately 82 percent of fourth-quarter deals took in the core markets of the CBD and the East End. Submarkets where federal users are most visible--NoMa, Southwest, and Capitol Riverfront-- continued to struggle.

Nonprofits represented 10 of the top 32 fourth-quarter transactions. Despite positive fourth-quarter absorption, the vacancy rate across the board climbed a tenth of a point over the same time last year. Overall, asking rental rates decreased $0.75 over the quarter, continuing a downward trend evident since the first quarter of 2013.

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Northern Virginia's office markets were uncharacteristically slow in 2013: 16 sales over $20 million closed for a total of $962 million, down from 27 transactions totaling $1.6 billion in 2012.

At the same time the area saw the most new deliveries since 2009: four buildings totaling 895,094 square feet delivered in the fourth quarter in Northern Virginia, bringing 2013 deliveries to 2 million square feet. The fourth-quarter office vacancy rate increased slightly to 16.3%.

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Suburban Maryland's 2013 came in at about $332 million, above the 2012 total of $305 million, but still far below $574 million in sales tallied in 2011.

Leasing suffered as tenants seeking less than 10,000 square feet drove the market, accounting for more than 85 percent of the year's transactions.

Suburban Maryland did see a positive fourth-quarter net absorption of 104,881 square feet but that did little to lift an overall flat leasing market and for the year this portion of the state saw negative net absorption rate of 335,324 square feet.

Instant Insights /

DC Area Posts 900,000 SF of Negative Absorption for 2013

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