Contents
Southwest/Capitol Riverfront/Southeast.................................................................................11
Uptown......................................................................................................................................................12
Appendix...................................................................................................................................................13
Tables..................................................................................................................................................13-22
Methodology & Definitions..................................................................................................................23
About DTZ...............................................................................................................................................24
DTZ | 2
WASHINGTON, DC METRO
Economic Indicators
that the DC Metro economy is back on track. Job growth in 2014 was
Q2 14
Q2 15
below average with just over 19,000 new nonfarm payroll jobs for the
DC Metro Employment
3.11M
3.18M
year; in fact the DC Metro Region was last among major metropolitan
DC Metro Unemployment
5.0%
4.6%
U.S. Unemployment
6.1%
5.3%
Q2 14
Q2 15
Overall Vacancy
15.6%
16.1%
Net Absorption
154K
666K
Under Construction
3.9M
5.8M
Deliveries
2.1K
567K
$35.91
$35.29
12-Month
Forecast
employment in the region was 64,000 net new jobs well above the
the return of office-using job growth to the region. Overall office-using
employment (including federal government employment) in the DC
Region shrank by 12,000 jobs in 2014. At midyear 2015, office-using
employment had turned positive, driven by a surge of over 20,000 jobs
in the high- paying Professional and Business Services sector since June
of 2014. A closer examination of that very important sector shows that
consulting has been leading the way in employment growth, adding 9,500
jobs from since June 2014, administrative jobs adding 8,100 positions
and an even a modest growth in executive level management and legal
services in the region.
Market Indicators
12-Month
Forecast
$36.50
$36.00
1.0
$35.50
$35.00
0.0
$34.50
$34.00
-1.0
requirements and returned 1.2 million square feet to the market from
2010
2011
2015
$33.50
10
MSF
12
at 16.1%, a 0.1% decrease from its level in the first quarter of 2015. More
16%
12%
8%
-2
signaling another robust year for investors bullish on prospects for the
-4
2014
moving forward in the near term. The vacancy rate for the region stands
quarter, bringing the midyear absorption total to 390,000 sf. With this as
2013
2011-2014, the impact of any future downsizing will be far less dramatic.
In retrospect, it appears that the DC Metro regions office market hit
2012
Vacancy Rate
historical average of 35,000 jobs per year. Adding to the good news is
4%
05
06
07
08
Net Absorption
09
10
11
Deliveries
12
13
14
Vacancy Rate
YTD
15
0%
www.dtz.com | 3
Washington, DC
It is clear that after a lackluster year in 2014, the Washington, DC
Metropolitan Regions economy has returned to above average
conditions. The DC Metro continues to register one of the lowest
unemployment rates among major metros in the United States4.6%.
Since May of 2014, the region has added 59,000 non-farm payroll jobs,
15,400 of them in the office-using sectors of Professional and Business
Services, Information, Financial Activities, and Federal Government. This
is quite impressive considering about 35,000 net new jobs are added in
a typical year and in 2014, the region lost approximately 12,000 officeusing jobs. In the District of Columbia (DC), the unemployment rate
dropped 40 basis points from 7.7% in January 2015 to 7.3% in May of this
year while nonfarm job growth is up over 13,000 jobs compared to a year
ago. The Federal Government, which accounts for over 25% of nonfarm
payrolls in DC, has continued to stabilize after four years of contraction,
adding 1,400 jobs from May 2014 to May 2015 while Professional and
Business Services employment is up nearly 5,000 jobs.
Market Overview
After a modest start to the year, the District of Columbia experienced
strong positive demand in the second quarter of 2015, driven by the
two core downtown submarkets: the Central Business District (CBD)
and East End. In fact, these two submarkets captured 69% of the
demand across Washington DC during the quarter. The CBD boasted
the strongest demand with 125,400 sf of positive absorption, while the
East End registered 64,300 sf. The divergence of the East End and CBD
that began in the first quarter of the year seemed to take a halt during
the second quarter. The majority of deals signedboth new deals and
relocationswere for space in the same submarkets where tenants
leases were previously.
After three straight quarters of rising vacancy, the District of
Columbias vacancy rate ticked downward 30 basis points to 11.0%.
Vacancy in the CBD dropped below 10% for the first time since the
end of 2008. Leasing activity in the second quarter was dominated
by larger deals in new construction or renovated buildings. Kirkland
& Ellis signed a prelease for 186,000 sf at 1301 Pennsylvania Avenue,
NW in the East End. As is the case with several other large law firms,
Kirkland & Ellis will downsize by more than 60,000 sf upon delivery of
the Pennsylvania Avenue building in 2018. Another large lease in new
construction was that signed by Bracewell Giuliani at 2001 M Street,
NW currently undergoing a complete renovation. Following on the
heels of its successful renovation of 799 9th Street which delivered
in 2014 leased to two major law firms, Brookfields 2001 M Street,
NW, has seen the most interest among all other major renovations
throughout the District of Columbia. It is expected to deliver in 2016.
Office buildings that are currently under construction are over 60%
leased in the District of Columbia.
GSA activity was relatively light throughout the first half of the year,
but is expected to pick up in the near future. A staggering 13 million
square feet of federal leases are set to expire through 2019 in the
District of Columbia and owners that can deliver large blocks of space
that fit federal lease requirements are set to benefit. This activity could
only have modest impacts on the overall vacancy rate in the District
as most large prospectus level leases in the queue at this time are
targeting space efficiencies in the 10 20% range with one for the
Department of Education targeting a 42% space reduction.
Market Indicators
Q2 14
Q2 15
Overall Vacancy
11.2%
11.0%
Net Absorption
(321K)
275K
1.5M
3.1M
Under Construction
Deliveries
Average Asking Rent
12-Month
Forecast
274K
$50.35
$50.12
Economy
10.1
8.7
7.6
11.7
10.5
9.6
9.6
8.5
10.7
10.1
8.4
7.8
8.4
7.7
6.6
4.5
4
2
0
00
01
02
03
04
05
06
07
08
CBD
West End/Georgetown
Southwest/Southeast
09
10
11
12
13
14
Q2
15
East End
Capitol Hill/NoMa
Uptown
10.5%
10.0%
9.5%
9.0%
2010
2011
2012
2013
2014
2015
25k to 50k
50k to 100k
100k to 150k
150k to 200k
200k +
West End/
Georgetown
East End
CBD
0
10
20
30
40
50
# of Blocks
60
70
80
DTZ | 4
Washington, DC Submarkets
Submarkets
UPTOWN
WEST END/
GEORGETOWN
50
CBD
EAST END
NOMA
29
CAPITOL HILL
66
50
395
DI
ST
R
395
IC
SOUTHWEST
TO
VIR F
GI CO
L
NI
A UM
BI
A
395
395
CAPITOL RIVERFRONT/
SOUTHWEST
295
www.dtz.com | 5
Top Transactions
Key Lease Transactions 2Q 15
PROPERTY
SF
TENANT
TRANSACTION TYPE
SUBMARKET
186,000
Prelease
East End
70,482
Undisclosed Tenant
New
CBD
56,500
APCO
New
East End
2001 M Street, NW
55,000
Bracewell Giuliani
New
CBD
2450 N Street, NW
43,100
Cogent Communications
New
West End
1001 G Street, NW
42,844
Renewal
East End
34,000
Veracity Engineering
New
Southwest
900 G Street, NW
33,216
New
East End
SELLER/BUYER
PRICE
SUBMARKET
1101 K Street, NW
291,500
$260,000,000
East End
431,600
$200,000,000
East End
1750 K Street, NW
165,800
$115,000,000
CBD
645 H Street, NE
84,700
$51,400,000
Capitol Hill
71,100
AREP / Rockrose
$40,500,000
CBD
16%
12%
8%
4%
45
15%
40
14%
35
13%
12%
30
11%
25
MSF
Vacancy Rate
5
MSF
10%
20
9%
15
8%
10
7%
-1
05
06
07
08
Net Absorption
09
10
11
Deliveries
12
13
14
Vacancy Rate
YTD
15
0%
Vacancy Rate
PROPERTY
6%
CBD
East End
Class A
Class B
Class C
Southwest/
Southeast
Vacancy %
Uptown
5%
DC Overall Vacancy
DTZ | 6
East End
Net Absorption
Under Construction
64,365 SF
932,300 SF
After a dismal first quarter of 2015, the East End experienced positive
demand and stronger leasing conditions throughout the second quarter.
The submarket registered nearly 65,000 sf of net absorption and its
vacancy rate declined slightly to 11.5%. The most demand was for Class
B product with 120,000 sf of positive absorption, while Class A space
actually posted negative absorption of 56,200 sf. Asking rents continued
to diverge between Class A and B product and may now be affecting
tenant preferences. The East End has traditionally been the main focus
for DCs most credit worthy tenants as it was developed later; offering
generally newer product than the Central Business District (CBD) and
its proximity to both the Capitol and the White House is unparalleled
throughout the District of Columbia. But over the past year or so the
consistent trend has been tenants moving towards the CBD and into new
or renovated product.
Although the submarket saw improvement during the second quarter,
a further spike in vacancy may be in the cards as the availability rate is
currently hovering at 21%. The spread is the widest among all submarkets
in the District of Columbia and, with an inventory of nearly 40 million
square feet, has led to a city-wide vacancy rate that is well above the
historical average of 9%.
As has been the case over the last two years, new construction
outperformed the rest of the market, registering 35,500 sf of absorption
in the second quarter and accounted for over 50% of demand. The only
delivery in the District through the first half of 2015, 900 G Street, NW,
continued to see increased activity with the American Legacy Foundation
signing for nearly 33,200 sf. Other large deals across the submarket
were Kirkland & Ellis signing a 130,000 sf prelease at 1301 Pennsylvania
Avenue, NW, and APCO signing for 56,500 sf at 1299 Pennsylvania
Avenue, NW.
Asking Rent
Deliveries
$54.51 FS
0 SF
16%
1.5
12%
1.0
0.5
8%
0.0
4%
-0.5
-1.0
05
06
07
08
09
Net Absorption
10
11
Deliveries
12
13
14
Vacancy Rate
YTD
2015
Vacancy Rate
Vacancy
11.5%
MSF
0%
Market Indicators
5
4
1.5
2.6
3.7
4.1
3.5
Q4 11
Q4 12
Q4 13
1.9
1.5
3.6
Q4 10
4.3
3.8
4.2
4.6
Q4 14
Q2 15
3
2
1
0
Vacant
Outlook
Asking Rent
$65
$60
Full Service PSF
$55
$50
$45
$40
$35
2009
2010
2011
Class A
2012
2013
2014
2015
Class B, $ PSF
www.dtz.com | 7
Under Construction
Deliveries
Asking Rent
125,400 SF
541,000 SF
0 SF
$50.67 FS
1.50
1.25
MSF
Vacancy
9.9%
1.9
1.9
5
MSF
MSF
Market Indicators
1.6
1.7
2.0
4
3
2
1.7
4.8
4.8
4.8
4.6
4.2
3.8
Q4 10
Q4 11
Q4 12
Q4 13
Q4 14
Q2 15
1
0
Vacant
Asking Rent
$65
$60
Outlook
$55
$50
$45
$40
$35
2009
2010
2011
Class A
2012
2013
2014
2015
Class B, $ PSF
DTZ | 8
West End/Georgetown
Net Absorption
Under Construction
Deliveries
Asking Rent
28,700 SF
0 SF
0 SF
$47.82 FS
West End/Georgetown saw a strong start to the year in the first quarter
of 2015one of the few positive quarters of demand in the submarket
over the last ten years. But demand remained flat throughout the
second quarter of 2015, registering only 3,200 sf of absorption. The
West End, largely composed of smaller office product, is vulnerable
to large-scale move-outs driving vacancy rates upward. After a spike
in vacancy in 2014, from 5.7% to 12.4%, the rate ticked back down
by 0.5 percentage points down to 11.9% year-to date. Fortunately, the
availability rate has declined consistently over the last three quarters,
a solid sign that the submarket may have already endured the worst.
Typically the West End is dominated by smaller sized leases with
fewer large blocks being marketed as available. Surprisingly, the fifth
largest lease transaction in the second quarter for the entire District of
Columbia was that of Cogent Communications which signed a new deal
at 2450 N Street, NW. Previously owner-occupied by the Association
of American Medical Colleges, Cogent was the first private-sector
lease to be signed as it took nearly half of the 88,000 sf building.
The development pipeline continues to be bleak for the near future
with no projects currently under construction and very little proposed
looking out to 2018. Any development in the near term will likely be
redevelopment of existing assets, possibly to other uses as will likely be
the case with The Salvation Army Capitol Region headquarters at 2626
Pennsylvania Avenue, NW. This will continue to drive the demand in
the land constrained submarket, likely resulting in a drop in the vacancy
rate over the near term.
16%
200
100
12%
0
-100
8%
-200
-300
4%
-400
Vacancy Rate
Vacancy
11.9%
-500
-600
05
06
07
08
09
Net Absorption
10
11
Deliveries
12
13
14 YTD
2015
0%
Vacancy Rate
0.8
MSF
Market Indicators
0.2
0.4
0.1
0.6
0.6
0.4
0.7
0.6
0.6
0.2
0
0.1
0.7
0.7
Q4 14
Q2 15
0.3
Q4 10
Q4 11
Vacant
Q4 12
Q4 13
Asking Rent
$52
With the huge uptick in vacancy over the past year, expect
fierce competition for a limited number of tenants in 2015
as concession packages continue to reach record levels.
$50
Full Service PSF
Outlook
$48
$46
$44
$42
$40
$38
2009
2010
2011
Class A
2012
2013
2014
2015
Class B, $ PSF
www.dtz.com | 9
Capitol Hill/NoMa
Net Absorption
Under Construction
Deliveries
Asking Rent
85,500 SF
1,166,900 SF
0 SF
$50.68 FS
On its own, NoMa has experienced high vacancy rates recently due to
a number of large speculative projects that have been developed in the
submarket. Over the last three years, both Sentinel Square and Three
Constitution Square have delivered fully vacant on a speculative basis,
and that has caused vacancy to spike. But as the market continues
to experience government agency right-sizing, these buildings may
become less expensive alternatives for the GSA than space in the
CBD and East End. Another speculative building currently under
construction is 660 North Capitol Street, also known as Republic
Square II. The property signed its first two tenants, the National League
of Cities and the National Association of Counties, which together will
be taking roughly 81,000 sfnearly half the building. Another positive
development: the availability rate in NoMa is currently 15.6%, a solid
sign for the submarket as the spread between availability and vacancy
is the smallest among major submarkets in the District of Columbia.
There is little room for the vacancy rate to increase and so the worst
may be over. Expect the spec properties to garner more attention from
government tenants and NoMa to see a drop in vacancy in the near
future.
A notable project that broke ground in the second quarter was
Capital Crossing, backed by Property Group Partners. The project
aims to connect the East End with Capitol Hill/NoMa while building
a platform over I-395. There will be nearly one million sf developed
over the course of the landmark project, adding a new aspect to the
District of Columbia market. Property Group Partners goal is to create
a new vibrant neighborhood with 63,000 sf of retail, restaurants and
amenities to complement the office and residential portions of the
project. A truly groundbreaking project, Capitol Crossing will bring a
new excitement to Capitol Hill/NoMa when the project is completed
in 2018.
Outlook
16%
1.25
12%
1.00
0.75
8%
0.50
0.25
Vacancy Rate
MSF
Vacancy
12.5%
4%
0.00
-0.25
05
06
07
08
09
Net Absorption
10
11
Deliveries
12
13
14 YTD
2015
Vacancy Rate
0%
0.6
1.7
0.5
0.0
Q4 10
1.2
1.2
Q4 11
Q4 12
Vacant
0.6
0.4
0.5
2.0
1.9
1.9
Q4 13
Q4 14
Q2 15
0.9
0.6
1.5
1.0
Asking Rent
$55
$50
Full Service PSF
Market Indicators
$45
$40
$35
$30
$25
2009
2010
2011
Class A
2012
2013
2014
2015
Class B, $ PSF
DTZ | 10
Southwest/Capitol Riverfront/Southeast
Net Absorption
Under Construction
Deliveries
Asking Rent
35,000 SF
553,900 SF
0 SF
$45.08 FS
24%
20%
16%
12%
8%
Vacancy Rate
Vacancy
10.0%
MSF
4%
-1
05
06
07
08
09
Net Absorption
10
11
Deliveries
12
13
14
Vacancy Rate
YTD
2015
0%
Market Indicators
1.5
0.0
0.1
0.6
0.9
2.0
1.8
1.7
Q4 13
Q4 14
Q2 15
0.5
1.0
0.5
0.6
0.7
1.6
1.8
Q4 11
Q4 12
1.3
Q4 10
Vacant
Asking Rent
Outlook
$55
$50
$45
$40
$35
2009
2010
2011
Class A
2012
2013
2014
2015
Class B, $ PSF
www.dtz.com | 11
Uptown
Net Absorption
Under Construction
(38,400) SF
0 SF
16%
100
12%
0
-100
8%
-200
4%
-300
-400
05
06
07
08
09
Net Absorption
10
11
Deliveries
12
13
14 YTD
2015
Vacancy Rate
0%
1
0.8
0.2
0.7
0.6
0.5
0.5
Q4 10
Q4 11
Q4 12
Q4 13
0.4
0.2
0.4
0.3
0.9
0.9
Q4 14
Q2 15
0.8
0.1
0.6
Vacant
2010
2011
Asking Rent
$50
$40.82 FS
200
Outlook
Uptowns year-end 2014 vacancy rate of 13.0% is
significantly elevated from the submarkets ten-year
average vacancy of 7.5%. With vacancy up across all of
the District of Columbia submarkets, its likely this will be
the new normal for Uptown. However, most of the large
blocks of available space in Uptown are already vacant,
the submarket inventory is only 6.6 msf and there are no
buildings under construction. Because of these conditions,
even a few moderate-sized leases over the next year will
allow vacancy to trend back downward toward its long
term average.
Asking Rent
0 SF
Deliveries
Vacancy Rate
Vacancy
14.1%
MSF
Market Indicators
$45
$40
$35
$30
$25
2009
Class A
2012
2013
2014
2015
Class B, $ PSF
DTZ | 12
Appendix
Table Summaries
Metro Washington Office
Market Summary
13
Employment Data
13
Office Availability, Vacancy,
and Net Absorption
14
Total Space
Vacant
Vacancy
Rate
Q2 2015
Absorption
YTD
Absorption
Washington, DC
122,850,343
13,562,737
11.0%
275,133
250,129
Northern Virginia
162,377,414
30,463,789
18.8%
370,078
172,605
Suburban Maryland
72,887,967
13,466,110
18.5%
(79,631)
36,624
Regional Totals
358,115,724
57,492,636
16.1%
665,580
459,358
Non Farm
Employment
(Jan-June 2015p)
Jobs Added/
Lost*
Percent Change
Washington, DC
751,100
761,950
10,850
1.4%
Northern Virginia
1,376,800
1,397,000
20,200
1.5%
956,550
974,250
17,700
1.9%
3,101,550
3,155,450
53,900
1.7%
Suburban Maryland
Regional Totals
www.dtz.com | 13
39,812,897
5,921,127
4,642,579
10,289,374
13,382,559
3,736,758
6,564,289
122,850,343
East End
West End/
Georgetown
Capitol Hill
NoMa
Southwest
Capitol
Riverfront/
Southeast
Uptown
TOTAL
p - preliminary
38,500,760
CBD
Total
Inventory
1,347,347
219,320
122,042
724,310
72,067
73,176
136,432
New Space
Vacant
11,437,285
859,457
175,093
1,152,276
672,262
352,003
680,977
4,154,902
3,390,315
Relet Space
Vacant
778,105
62,886
10,800
36,638
30,999
10,866
25,905
333,515
266,496
Sublet
Space
Vacant
13,562,737
922,343
405,213
1,310,956
1,427,571
434,936
706,882
4,561,593
3,793,243
Total Space
Vacant
11.0%
14.1%
10.8%
9.8%
13.9%
9.4%
11.9%
11.5%
9.9%
Vacancy
Rate (%)
126,268
38,339
50,548
25,932
3,600
7,849
New Space
Absorption
179,932
(29,438)
(3,624)
(4,035)
(13,909)
(513)
10,504
119,636
101,311
Relet Space
Absorption
(31,067)
(8,959)
9,799
(5,464)
5,325
18,108
(7,290)
(58,871)
16,285
Sublet
Space
Absorption
275,133
(38,397)
44,514
(9,499)
41,964
43,527
3,214
64,365
125,445
Total
Absorption
Appendix
DTZ | 14
39,708,356
6,019,052
4,642,579
10,289,374
13,382,559
3,736,758
6,517,701
122,941,139
East End
West End/
Georgetown
Capitol Hill
NoMa
Southwest
Capitol Riverfront/
Southeast
Uptown
TOTAL
p - preliminary
38,644,760
CBD
3rd Qtr
2014
122,889,802
6,564,289
3,736,758
13,382,559
10,289,374
4,642,579
5,921,127
39,708,356
38,644,760
4th Qtr
2014
122,850,343
6,564,289
3,736,758
13,382,559
10,289,374
4,642,579
5,921,127
39,812,897
38,500,760
1st Qtr
2015p
Total Inventory
122,850,343
6,564,289
3,736,758
13,382,559
10,289,374
4,642,579
5,921,127
39,812,897
38,500,760
2nd Qtr
2015p
11.5%
13.3%
13.2%
10.2%
14.1%
10.8%
13.8%
11.0%
10.9%
3rd Qtr
2014
11.2%
13.0%
12.4%
10.1%
13.9%
10.8%
12.4%
10.7%
10.9%
4th Qtr
2014
11.3%
13.5%
12.0%
9.7%
14.3%
10.3%
12.0%
11.6%
10.2%
1st Qtr
2015p
11.0%
14.1%
10.8%
9.8%
13.9%
9.4%
11.9%
11.5%
9.9%
2nd Qtr
2015p
(255,763)
9,499
(14,532)
16,555
68,069
(193,596)
(140,575)
(77,640)
76,457
3rd Qtr
2014
197,943
41,706
18,180
10,105
13,454
(1,011)
(14,688)
121,711
8,486
4th Qtr
2014
(25,004)
(22,760)
12,882
54,501
(43,179)
24,583
25,466
(296,022)
219,525
1st Qtr
2015
Total Absorption
275,133
(38,397)
44,514
(9,499)
41,964
43,527
3,214
64,365
125,445
2nd Qtr
2015
Appendix
www.dtz.com | 15
39,225,153
6,019,052
4,504,027
9,636,850
13,907,238
3,736,758
6,408,307
122,155,805
East End
West End/
Georgetown
Capitol Hill
NoMa
Southwest
Uptown
TOTAL
p - preliminary
38,718,420
CBD
2012
122,183,159
6,489,940
3,736,758
13,516,238
10,289,374
4,642,579
6,019,052
38,522,051
38,967,167
2013
122,889,802
6,564,289
3,736,758
13,382,559
10,289,374
4,642,579
5,921,127
39,708,356
38,644,760
2014
Total Inventory
122,850,343
6,564,289
3,736,758
13,382,559
10,289,374
4,642,579
5,921,127
39,812,897
38,500,760
2015p
10.6%
7.4%
17.6%
8.1%
10.0%
5.2%
10.2%
10.4%
12.3%
2012
10.6%
7.2%
18.6%
9.8%
16.2%
6.3%
5.7%
9.1%
11.8%
2013
11.2%
13.0%
12.4%
10.1%
13.9%
10.8%
12.4%
10.7%
10.9%
2014
11.0%
14.1%
10.8%
9.8%
13.9%
9.4%
11.9%
11.5%
9.9%
2015p
(95,156)
109,221
(36,363)
(206,657)
39,153
183,514
5,912
(411,536)
221,600
2012
550,914
51,902
(41,373)
(223,402)
175
88,177
152,871
175,785
346,779
2013
(489,588)
(373,697)
219,686
(149,719)
127,212
(208,225)
(515,786)
136,495
274,446
2014
Total Absorption
250,129
(61,157)
57,396
45,002
(1,215)
68,110
28,680
(231,657)
344,970
2015p
Appendix
DTZ | 16
Market Statistics
Washington, DC 2nd Quarter 2015 Market Statistics
Buildings
Total
Inventory
(SF)
New
Vacancy
(%)
Relet
Vacancy
(%)
Sublet
Vacancy
(%)
Total
Vacancy*
(%)
Total
Availability
(%)
Net Absorption
Current QTR
(SF)
Under
Construction
(SF)
Average
Asking
Rent
(FS)
102
22,620,478
0.6%
9.1%
0.7%
10.4%
15.1%
136,999
405,225
$55.10
128
15,002,584
0.0%
8.7%
0.7%
9.4%
13.1%
3,081
135,798
$42.96
20
877,698
0.0%
5.1%
0.0%
5.1%
3.7%
-14,635
$37.43
TOTAL
250
38,500,760
0.4%
8.9%
0.7%
9.9%
14.3%
125,445
541,023
$50.25
116
30,908,031
0.2%
10.8%
0.9%
11.9%
21.3%
(56,189)
932,371
$57.43
65
7,921,789
0.0%
9.9%
0.7%
10.6%
18.1%
120,066
$43.76
22
983,077
0.0%
3.4%
1.0%
4.4%
8.1%
488
$48.96
TOTAL
203
39,812,897
0.2%
10.4%
0.8%
11.5%
21.0%
64,365
932,371
$54.51
CBD
Class
East End
Class
West End/Georgetown
Class
A
23
3,886,159
0.0%
13.8%
0.7%
14.5%
17.9%
1,244
$50.00
29
1,942,755
0.0%
7.4%
0.0%
7.4%
11.4%
(5,086)
$41.01
92,213
0.0%
0.0%
0.0%
0.0%
n/a
7,056
n/a
TOTAL
58
5,921,127
0.0%
11.5%
0.4%
11.9%
15.7%
3,214
$47.76
13
2,865,971
2.5%
8.1%
0.3%
10.9%
16.9%
54,049
966,917
$58.29
17
1,364,132
0.0%
6.2%
0.2%
6.4%
17.6%
(8,772)
$42.15
14
412,476
0.0%
8.3%
0.0%
8.3%
8.0%
-1,750
$44.90
TOTAL
44
4,642,579
1.6%
7.6%
0.2%
9.4%
14.9%
43,527
966,917
$53.72
32
9,497,067
7.6%
4.5%
0.2%
12.3%
15.1%
54,319
200,000
$52.04
730,545
0.0%
26.7%
1.0%
27.7%
19.6%
2,275
$29.25
61,762
0.0%
88.1%
0.0%
88.1%
23.4%
-14,630
$24.01
TOTAL
39
10,289,374
7.0%
6.5%
0.3%
13.9%
15.8%
41,964
200,000
$47.60
Capitol Hill
Class
NoMa
Class
* Total Vacancy - the vacancy rate is calculated using the combined total of relet, sublet and new vacant space.
www.dtz.com | 17
Market Statistics
Washington, DC 2nd Quarter 2015 Market Statistics
Buildings
Total
Inventory
(SF)
New
Vacancy
(%)
Relet
Vacancy
(%)
Sublet
Vacancy
(%)
Total
Vacancy*
(%)
Total
Availability
(%)
Net Absorption
Current QTR
(SF)
Under
Construction
(SF)
Average
Asking
Rent
(FS)
Southwest
Class
A
23
10,099,177
1.2%
7.1%
0.4%
8.6%
13.1%
(35,449)
553,879
$47.72
11
3,283,382
0.0%
13.4%
0.0%
13.4%
23.9%
25,950
$40.43
TOTAL
34
13,382,559
0.9%
8.6%
0.3%
9.8%
14.9%
(9,499)
553,879
$45.75
Capitol Riverfront/Southeast
Class
A
11
3,736,758
5.9%
4.7%
0.3%
10.8%
16.2%
44,514
$41.94
TOTAL
11
3,736,758
5.9%
4.7%
0.3%
10.8%
16.7%
44,514
$42.32
12
2,126,653
0.0%
2.9%
2.1%
4.9%
8.2%
(26,393)
$40.90
55
3,603,081
0.0%
21.7%
0.2%
22.0%
26.6%
(23,692)
$40.95
31
834,555
0.0%
2.0%
1.2%
3.2%
3.2%
11,688
$37.25
TOTAL
98
6,564,289
0.0%
13.1%
1.0%
14.1%
18.6%
(38,397)
$40.82
Uptown
Class
Washington, DC
Class
A
332
85,740,294
1.6%
8.8%
0.7%
11.0%
17.2%
173,094
3,058,392
$54.33
310
33,848,268
0.0%
11.0%
0.5%
11.6%
17.1%
113,822
135,798
$41.82
95
3,261,781
0.0%
5.6%
0.6%
6.2%
6.3%
(11,783)
$40.42
TOTAL
737
122,850,343
1.1%
9.3%
0.6%
11.0%
17.0%
275,133
3,194,190
$50.35
* Total Vacancy - the vacancy rate is calculated using the combined total of relet, sublet and new vacant space.
DTZ | 18
www.dtz.com | 19
2001 M Street, NW
Douglas Development
Gould Property Company
1000 F Street, NW
$44.00-$51.00 NNN
FS
N
Status
Total
Withheld
RENTAL RATE
OWNER/DEVELOPER
U/C
U/C
STATUS
U/C
U/R
U/C
STATUS
U/C
U/C
STATUS
BUILDING ADDRESS
Total
$54.00 NNN
Boston Properties
RENTAL RATE
OWNER/DEVELOPER
BUILDING ADDRESS
East End
Total
RENTAL RATE
OWNER/DEVELOPER
BUILDING ADDRESS
CBD
1Q18
1Q16
DELIVERY
DATE
3Q16
3Q16
4Q15
DELIVERY
DATE
1Q16
1Q16
1Q16
DELIVERY
DATE
1,166,917
966,917
200,000
RENTABLE
BUILDING
AREA
932,371
364,962
94,655
472,754
RENTABLE
BUILDING
AREA
542,523
135,798
284,000
122,725
RENTABLE
BUILDING
AREA
1,166,917
966,917
200,000
AVAILABLE
SPACE
287,769
123,659
86,572
77,538
AVAILABLE
SPACE
303,994
37,664
234,000
32,330
AVAILABLE
SPACE
0%
0%
0%
PERCENT
PRELEASED
69%
66%
9%
84%
PERCENT
PRELEASED
44%
72%
18%
74%
PERCENT
PRELEASED
N/A
N/A
MAJOR TENANTS
Venable
N/A
MAJOR TENANTS
Bracewell Giuliani
MAJOR TENANTS
DTZ | 20
N
NNN = Net of all Operating Expenses and Taxes
FS
3,195,690
966,917
2018 DELIVERIES
Status
212,596
2017 DELIVERIES
1,202,140
AVAILABLE
SPACE
RENTABLE
BUILDING
AREA
2,312,557
966,917
212,596
714,225
418,819
553,877
212,596
341,281
AVAILABLE
SPACE
553,879
212,596
341,283
RENTABLE
BUILDING
AREA
2016 DELIVERIES
3Q17
3Q15
DELIVERY
DATE
814,037
U/C
U/C
STATUS
2015 DELIVERIES
Washington, DC Summary
Total
RENTAL RATE
OWNER/DEVELOPER
BUILDING ADDRESS
Southwest/Capitol Riverfront/Southeast
28%
0%
0%
41%
49%
PERCENT
PRELEASED
0%
0%
0%
PERCENT
PRELEASED
N/A
N/A
MAJOR TENANTS
www.dtz.com | 21
Furioso Development
Perseus Realty
Brookfield Office Properties
Akridge
Hines
Union Investments
Hines
AAMC
655 K Street, NW
CityCenter DC
North and South Towers
800/850 10th Street, NW
FS
Total
OWNER/DEVELOPER
BUILDING ADDRESS
2014 Deliveries
$46.50 FS
N/A
RENTAL RATE
$47.00-$53.00 NNN
RENTAL RATE
Withheld
$54.00-$57.00 NNN
$50.00-$57.00 NNN
East End
East End
East End
CBD
East End
Uptown
Uptown
SUBMARKET
East End
SUBMARKET
1,473,976
531,652
221,659
273,454
168,837
204,025
27,761
46,588
RENTABLE
BUILDING
AREA
104,541
104,541
RENTABLE
BUILDING
AREA
165,130
1,328
24,845
28,122
67,613
43,222
NEW SPACE
AVAILABLE
26,869
26,869
NEW SPACE
AVAILABLE
*Vacancy rate for new office space- does not include relet or sublet space available
Delivered 1Q14
Renovation
$44.00-$48.00 NNN
Completed 1Q14
Delivered 2Q14
Delivered 3Q14
Renovation
$47.00-$53.00 NNN
Completed 3Q14
Delivered 3Q14
Delivered 4Q14
STATUS
Delivered 1Q15
900 G Street, NW
Total
STATUS
OWNER/DEVELOPER
BUILDING ADDRESS
2015 Deliveries
11%
0%
11%
10%
40%
21%
0%
0%
VACANCY RATE
(AS OF CURRENT
QUARTER)*
26%
26%
VACANCY RATE
(AS OF CURRENT
QUARTER)*
97%
85%
79%
60%
73%
100%
100%
40%
DTZ | 22
Renovation
$48.00-$52.00 FS
Completed 3Q13
Renovation
Low-Mid $40's FS
Completed 2Q13
Delivered 1Q13
Carr Properties
First Potomac Realty Trust / The
Lenkin Company Management
Douglas Development Corporation
Angelo Gordon / Monument Realty /
Verizon Communications
Douglas Development Corporation
2055 L Street, NW
Arch Square
801-803 7th Street, NW
Boston Properties
FS
Total
OWNER/DEVELOPER
BUILDING ADDRESS
2012 Deliveries
Total
Delivered 4Q13
Uptown
Capitol Hill
SUBMARKET
East End
CBD
Uptown
Capitol Hill
CBD
NoMa
N/A
$44.00-$48.00 NNN
RENTAL RATE
N/A
N/A
$55.00 NNN
$52.00-$55.00 FS
NoMa
SUBMARKET
715,373
385,791
98,243
231,339
RENTABLE
BUILDING
AREA
1,145,399
25,000
126,760
81,633
137,495
121,987
289,524
363,000
RENTABLE
BUILDING
AREA
29,457
12,896
16,561
NEW SPACE
AVAILABLE
709,234
53,586
3,124
289,524
363,000
NEW SPACE
AVAILABLE
*Vacancy rate for new office space- does not include relet or sublet space available
Delivered 2Q12
Delivered 4Q12
Delivered 4Q12
STATUS
Delivered 1Q13
Delivered 4Q13
$30.00's NNN
Delivered 4Q13
StonebridgeCarras
RENTAL RATE
STATUS
OWNER/DEVELOPER
BUILDING ADDRESS
2013 Deliveries
4%
3%
0%
7%
VACANCY RATE
(AS OF CURRENT
QUARTER)*
62%
0%
0%
0%
39%
3%
100%
100%
VACANCY RATE
(AS OF CURRENT
QUARTER)*
83%
52%
82%
76%
74%
0%
14%
78%
0%
0%
Explanation of Terms
Disclaimer
This report and other research materials may be found on our website at www.dtz.com. This is a research document of DTZ in Washington, DC. Questions related to
information herein should be directed to the Research Department at 202-463-2100. Information contained herein has been obtained from sources deemed reliable and no
representation is made as to the accuracy thereof.
About DTZ
DTZ is a global leader in commercial real estate services providing occupiers, tenants and investors around the world with a full spectrum of property solutions. The companys
core capabilities include agency leasing, tenant representation, corporate and global occupier services, property management, facilities management, facility services, capital
markets, investment and asset management, valuation, research, consulting, and project and development management. DTZ provides property management for 1.9 billion
square feet, or 171 million square meters, and facilities management for 1.3 billion square feet, or 124 million square meters. The company completed $63 billion in transaction
volume globally in 2014 on behalf of institutional, corporate, government and private clients. Headquartered in Chicago, DTZ has more than 28,000 employees who operate
across more than 260 offices in 50 countries and represent the companys culture of excellence, client advocacy, integrity and collaboration.
DTZ announced an agreement to merge with Cushman & Wakefield in a May 11 press release. The new company, which will operate under the Cushman & Wakefield brand,
will have revenues over $5.5 billion, over 43,000 employees and will manage more than 4 billion square feet globally on behalf of institutional, corporate and private clients.
The agreement is subject to customary closing conditions and is expected to close before the end of 2015. For further information, visit: www.dtz.com or follow us on Twitter
@DTZ.
www.dtz.com | 23
About DTZ
DTZ is a global leader in commercial real estate services providing occupiers, tenants and investors
around the world with a full spectrum of property solutions. The companys core capabilities include
agency leasing, tenant representation, corporate and global occupier services, property management,
facilities management, facility services, capital markets, investment and asset management, valuation,
research, consulting, and project and development management. DTZ provides property management
for 1.9 billion square feet, or 171 million square meters, and facilities management for 1.3 billion square
feet, or 124 million square meters. The company completed $63 billion in transaction volume globally
in 2014 on behalf of institutional, corporate, government and private clients. Headquartered in Chicago,
DTZ has more than 28,000 employees who operate across more than 260 offices in 50 countries and
represent the companys culture of excellence, client advocacy, integrity and collaboration.
DTZ announced an agreement to merge with Cushman & Wakefield in a May 11 press release. The
new company, which will operate under the Cushman & Wakefield brand, will have revenues over $5.5
billion, over 43,000 employees and will manage more than 4 billion square feet globally on behalf of
institutional, corporate and private clients. The agreement is subject to customary closing conditions
and is expected to close before the end of 2015. For further information, visit: www.dtz.com or follow us
on Twitter @DTZ.
Publication date: 7.30.15
Copyright 2015 DTZ. All rights reserved.
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Capital Markets
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