As Federal Employees Stay Home, DC’s Office Leasing Market Survives on Private-Sector Activity

The federal government’s decision to continue to allow its employees to work remotely has had a significant impact on office leasing in the nation’s capital. There has been some private sector activity, though: many companies are eyeing better locations that offer renovated space or owners that deliver concessions even as these tenants look to tighten the square footage they require. 

Overall, the market saw a 30-basis point increase in vacancies during the first quarter of this year, according to a report from Colliers. Yet, that was counteracted by some good news–a bump in the touring activity and number of signed leases—roughly 45 percent more for spaces 10,000 square feet and larger from the previous quarters. However, the caution of employers was evidenced in their stepping in gingerly by signing leases on average smaller spaces and for shorter periods, the Colliers report noted. The federal government played a role in this trend with large consolidations hampering positive demand, according to Colliers.