The Washington, D.C. office sector is seeing modest improvement, driven by conversions and the private sector.
A report from CBRE found that asking rents increased by 0.2 percent from the previous three months to $58.78 per square foot per annum. Trophy assets posted the highest gains, with a one percent climb to $95.81 per square foot.
Vacancy dropped by 20 basis points to 22.4 percent. Trophy assets again stood out, with their 130 basis point decline to 10.2 percent.
Also, absorption is improving. The positive 58,817 square feet in the third quarter lowered the negative year-to-date total to -502,646 square feet.
"A resilient private sector, continued conversion and redevelopment activity, and lack of federal government lease termination notices combined to improve market fundamentals," CBRE highlighted.
Meanwhile, CBRE did note that 5.1 million square feet in signings in the year-to-date lags slightly behind the periodic historical average. The legal industry accounted for 32 percent of the volume in 2025, which is the highest among all sectors in Washington, D.C. In fact, in the second quarter, two of the top three biggest leases occurred among legal companies: Keller Heckman and Manatt Phelps & Phillips, which took 61,000 square feet and 55,074 square feet in new deals, respectively. Meanwhile, government agency, the Department of Justice, landed the biggest deal in Washington D.C. in the second quarter, thanks to its 470,000 square foot renewal.
Nearly 400,000 square feet of office product is under construction in Washington, D.C, with all of it occurring in the East End submarket. Also, nine office-to-alternative use developments are underway, with another 25 in the planning stages.
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