The recovery of the office market in Washington, D.C. is manifesting primarily in the premium segment. According to Savills, office letting volume in D.C. reached approximately 2 million square feet in the second quarter, the highest quarterly volume since 2024. Law firms alone leased about 600,000 square feet. Although some major tenants have completed transactions, the broader market continues to be hampered by empty office space and decreasing government leases.
Office tenants in D.C. are making long-term commitments, but are opting almost exclusively for so-called 'trophy assets', i.e. new or recently refurbished buildings. This is leading to a clear segmentation of the market. The availability of Class A buildings in D.C. stood at 10 percent after the second quarter, while the city's overall availability rate rose to 24.2 percent. This increase occurred despite 4 million square feet of space being removed from the market through repurposing last year.
Rent Price Development and Significant Deals
Average asking rents increased by 2.9 percent compared to the second quarter of 2025. Rent prices for Class A properties rose by more than 5 percent over the same period to $62.29 per square foot per annum. This underscores the strong demand and price elasticity in the premium segment.
The law firm White & Case signed the largest lease of the quarter, moving into nearly 196,000 square feet of space at 1701 Pennsylvania Avenue NW. Other firms such as Steptoe, O'Melveny, and Wilkinson Barker Knauer extended their long-term leases. Technology companies also contributed to the upturn. Palantir extended and expanded its space in Georgetown to 150,000 square feet, while Thomson Reuters leased nearly 33,000 square feet in the East End.
Outlook and Market Forecasts
Savills expects letting momentum to continue in the second half of the year, as several deals, including leases from Google and the U.S. Navy, are nearing completion. Savills also predicts that projects converting offices to residential buildings will continue to contribute to reducing inventory, especially given the current low level of new construction activity.
- —White & Case: approx. 196,000 sq ft at 1701 Pennsylvania Avenue NW
- —Palantir: Expansion to 150,000 sq ft in Georgetown
- —Thomson Reuters: approx. 33,000 sq ft in the East End
- —Numerous long-term extensions by law firms
