WASHINGTON, DC—The Washington DC market posted a strong, at least compared to its recent performance, second quarter for leasing, swinging into positive net absorption with gains of 411,700 square feet, according to JLL.

However, it is not time to pop open the Champaign, cautions JLL's Scott Homa, who points to the still subdued demand in the area for office space. The region's one saving grace, at least from the perspective of landlords, is that supply is also still constrained with only 4.4 million square feet under construction, two-thirds below average. Typically the region has about 11.4 million square feet under construction and 7.8 million square feet delivering each year. All in all, Homa tells GlobeSt.com, it was a decent quarter for the market.

"It is well preleased and overall the pipeline is well aligned with the levels of tenant demand," he says.

The bigger takeaway from the numbers, Homa says, is that the DC market is coming into balance. "There is some parity out there," he says, "and while the dominant sectors of tenant base, such as federal agencies, contractors and law firms remain stalled, we are increasingly seeing the non traditional segments like creative industries, health care and education helping to fill that gap."

That said, Homa continues, the underlying fundamentals in DC's leasing market remain choppy; net effective rents are still down from peak years and concession packages are still at record high. "I don't expect to see growth for net effective rents until vacancy rates dip down from where there are right now," he says.

Meanwhile, investment sales and office values are at post-recession highs. But that is another story. Please come back tomorrow to read it.

Instant Insights /

DC Swings into Positive Net Absorption for Q2

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