The Washington DC Commercial Real Estate Market

Shanti Ryle

September 13, 2024

A downtown street view lined with American flags in Washington DC

Washington DC has experienced fast-paced growth and opportunity in the last decade and represents a healthy market for commercial real estate investments. As the center of the US federal government and an international hub, Washington DC property attracts investors and national tenants due to its plentiful development and rising population.

Crexi connects parties interested in Washington DC commercial real estate to hundreds of viable properties and the tools needed to research, analyze, and acquire the perfect fit.

Brokers in Washington DC and those representing Washington DC property for sale also rely on Crexi to manage leads, list assets, and navigate more deals to closing, all while saving time. As of this writing, Crexi's commercial real estate tools have assisted brokers in closing more than $610 billion in commercial property value and marketing over $7 trillion in overall assets.

Crexi proudly supports Washington DC, Alexandria, Arlington, Capitol Heights, Bethesda, and the surrounding areas as the market's fastest-growing online CRE platform.

A view of the Capitol building in Washington DC

The State of Washington DC Commercial Real Estate

The District of Columbia, Maryland, and Virginia (known as the DMV) comprise a diverse region in the Mid-Atlantic United States.

Washington DC anchors the area, while Northern Virginia hosts some of the most affluent suburbs and is a key hub for defense contractors and technology firms, especially in Arlington and Fairfax County.

Economically, there is significant growth in government, technology, healthcare, and education sectors. The region attracts a steady stream of professionals thanks to the presence of numerous federal agencies, prestigious universities, and major corporations.

Washington DC Regional Breakdown

The region continues to experience steady population growth, driven by its thriving job market and quality-of-life offerings. Urban areas such as Washington DC and Northern Virginia have seen a surge in young professionals and families attracted to the region's diverse opportunities and amenities. Meanwhile, suburban Maryland is also witnessing moderate growth, benefiting from improved connectivity and expanding residential developments.

The population of the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area is nearly 6.4 million, according to information on CensusReporter.org.
The resident population has grown by more than 15% since 2010, based on research by the St. Louis Fed.
The median age in the metropolitan area is 38.2, about the same figure as in the US.
The per capita income is $59,366, and the median household income is $117,432, which is about 1.45 times the amount in the US.
Median household incomes increased by nearly 8% year-over-year, with 25% of households earning more than $200,000 annually.

The front of Washington DC's Capitol building

Washington DC Job Market

The region is home to leading employers like Amazon, which has established its HQ2 in Arlington, Virginia, and Johns Hopkins University, Maryland.

Washington DC remains a hotspot for federal agencies and nonprofits, contributing significantly to the job market.

Additionally, regional initiatives like Maryland's Innovation Economy Strategy and Virginia's Technology and Innovation Roadmap are designed to foster economic growth and attract high-tech industries.

Regional GDP is nearly $662 billion, increasing by almost 25% over the past 10 years.
Home to an employed population of nearly 3.4 million, the workforce has grown by nearly 0.3% over the past year.
The unemployment rate is down to 2.7% (May 2024), one of the lowest rates since 1991, according to data from the St. Louis Fed.
The industries with the highest employment rates are professional, scientific, and technical services, public administration, health care and social assistance, educational services, and retail trade.
The largest public employers in the DMV metropolitan area are the US Department of Defense, Department of Homeland Security, US Navy, United States Department of Justice, and the USDA.
Largest private companies in the District of Columbia, Maryland, and Northern Virginia region include Freddie Mac, General Dynamics, Capital One Financial, Fannie Mae, Danaher Corporation, Lockheed Martin, and Discovery Communications.
WalletHub ranked the metropolitan area among the best cities for jobs in 2024 and one of the best cities for STEM professionals based on criteria including job opportunities, employment growth, and average starting salary.
The Urban Land Institute (ULI) and PwC Emerging Trends in Real Estate® 2024 rank Washington, DC – Northern Virginia among the best markets for overall real estate prospects and the third best for homebuilding prospects.
Notable real estate projects in the Washington, DC area include the Capitol Crossing development, which is transforming a five-block section of the city with new office, retail, and residential spaces; the CityCenterDC, a mixed-use development that includes luxury shopping, dining, and residences, and the Wharf waterfront redevelopment.
Maryland has seen a surge in new businesses, particularly in Prince George’s County, driven by corporate relocations and federal government activities.
Additionally, Fairfax County properties have been recognized for top real estate deals, highlighted by major mixed-use developments.
The redevelopment of the St. Elizabeths East Campus into a technology and innovation hub is another significant project that will revitalize the area and attract new businesses.
The region is home to some of the nation's most renowned academic institutions, including Georgetown Universityand George Washington University in D.C., Johns Hopkins University and the University of Maryland in Maryland, and George Mason University in Northern Virginia.
Nearly 55% of residents in the metropolitan area hold a bachelor’s degree or an advanced degree, about 1.5 times the rate in the US.
The DMV region boasts an extensive transportation infrastructure, with major interstates like I-95 and I-66, key highways such as the Beltway (I-495), three major airports (Reagan National, Dulles International, and BWI Marshall), and proximity to other major metropolitan areas like Philadelphia and New York City.
The Port of Baltimore is a major shipping port in the region, known for its significant cargo volume and role in international trade. Additionally, the Port of Virginia, including facilities in Norfolk and Newport News, is another crucial maritime hub nearby that supports substantial commercial shipping activity.

Washington DC Industrial Market

The industrial market in the District of Columbia, Maryland, and Virginia region is experiencing a slight uptick in vacancy rates, due to slowing demand and newly delivered vacant spaces. Developers are becoming more cautious, which has led to a contraction in the construction pipeline to the lowest level in 10 quarters at 3.8 million square feet. Excluding data centers, only 2.3 million square feet are under construction and available, which helps mitigate the risk of oversupply in the market.

Market overview (Savills Washington D.C. Q1 2024 Industrial Market Report)

Inventory: 143,400,000 SF
Vacancy rate: 5.4%
Under construction: 3,800,000 SF
Deliveries: 500,000 SF
Net absorption: 300,000 SF
Key leases by tenant: DHL Ecommerce, Above Air, Orcana Biotech, Gilbane Building Company
Key submarkets: Crystal City, Rosslyn, Alexandria West End, Springfield/Alexandria

Crexi Insights

These are the most recent DMV industrial lease and sales trends from Crexi Insights (as of July 2024):

For Lease (active)

Asking rate/SqFt (median): $23 per year
Median SqFt/listing: 2,776
Days on market: 103
Total listings on Crexi: 19 spaces

For Sale (active)

Median asking price: $1.9 million
Price/SqFt: $436
Days on market: 103
Total listings on Crexi: 4

Sales Comps (past 12 months)

Median sold price: $1.45 million
Sold price/SqFt: $306
Total sales volume: $10.9 million
Median SqFt sold/transaction: 4,638
Total SqFt sold: 51,000
Days on market (median): 80

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A downtown view with the Washington Monument in the background

Washington DC Office Market

The DMV office market is facing significant challenges, with all three major metro areas—Washington DC CBD, Arlington, and Alexandria—experiencing net negative demand, leading to an increase in the overall vacancy rate.

Despite negative net absorption and a higher vacancy rate, notable developments such as 1701 Duke Street in Alexandria and The Parks at Walter Reed in Washington, DC, suggest investors remain optimistic about the region's long-term growth potential.

Market overview (Cushman & Wakefield Q2 2024 Washington, D.C. Market Office Reports)

Inventory: 305,459,089 SF
Average vacancy rate: 22.1%
Net absorption: -1,846,321 SF (YTD)
Under construction: 620,562 SF
Leasing activity: 3,671,526 SF (YTD)
Key lease transactions by tenant: Northrop Grumman, KBR, Westat, Abt Associates, GSA – Federal Housing Finance Agency, DC Department of General Services, U.S. Commodity Futures Trading Commission
Largest submarkets: East End, DC Central Business District, Pike Corridor, Bethesda/Chevy Chase, Reston/Herndon, Tysons Corner

Crexi Insights

For the latest updates on the DMV office market, turn to Crexi Insights. Here is the detailed information on leasing and sales trends in the District of Columbia, Maryland, and Virginia as of July 2024:

For Lease (active)

Asking rate/SqFt (median): $39 per year
Median SqFt/listing: 2,867 SF
Days on market: 630
Total listings on Crexi: 1,442 spaces

For Sale (active)

Median asking price: $1.79 million
Price/SqFt: $341
Asking cap rate: 7.5%
Days on market: 169
Total listings on Crexi: 46

Sales Comps (past 12 months)

Median sold price: $3.75 million
Sold price/SqFt: $249
Total sales volume: $1.56 billion
Sold cap rate: 5.7%
Median SqFt sold/transaction: 6,700 SF
Days on market (median): 700

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Washington DC Retail Market

Despite challenges in downtown markets like the CBD and East End due to high office vacancies and evolving hybrid work models, the overall retail landscape is buoyant, showcasing adaptability in the face of shifting consumer behaviors.

Suburban areas such as Tysons, the Rosslyn-Ballston Corridor in Virginia, and Bethesda in Maryland have capitalized on the hybrid and remote working trends, leading to significant retail openings and thriving commercial environments. These regions have become attractive options for both established retailers and new entrants, spurred by lower operating costs compared to central DC.

Despite a general slowdown in property sales, investors continue to show interest in retail properties, particularly those anchored by grocery stores and quick-service restaurants.

Market overview (Cushman & Wakefield U.S. Shopping Center Reports Q2 2024)

Inventory: 124,080,365 SF
Vacancy rate: 4.4%
Under construction: 603,844 SF
Deliveries: 129,167 SF (YTD)
Net absorption: 152,103 SF (YTD)
Key submarkets: Crystal City, Old Town Alexandria, Rosslyn, Ballston

Crexi Insights

DMV retail lease and sales trends from Crexi Insights (as of July 2024):

For Lease (active)

Asking rate/SqFt (median): $39 per year
Median SqFt/listing: 2,438 SF
Days on market: 314
Total listings on Crexi: 663 spaces

For Sale (active)

Median asking price: $3.24 million
Price/SqFt: $687
Asking cap rate: 6.0%
Days on market: 140
Total listings on Crexi: 51

Sales Comps (past 12 months)

Median sold price: $1.09 million
Sold price/SqFt: $380
Total sales volume: $307 million
Sold cap rate: 5.7%
Median SqFt sold/transaction: 2,880 SF
Days on market (median): 134

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Apartment and multifamily homes in Washington DC with cars that match the buildings' colors out front

Washington DC Multifamily Market

The DMV multifamily market is thriving, driven by strong employment growth and rising interest rates, which make multifamily units an attractive option for those priced out of the single-family home market.

Occupancy rates in the market remain high, exceeding 94%, with the Washington, D.C. metro area boasting over 680,000 units and achieving the highest effective rents in the region. Additionally, significant inventory growth is anticipated through 2025, suggesting a sustained demand for multifamily living despite regional variations in housing dynamics.