Northern Virginia Office Market Figures Q4 2022

During the fourth quarter, tenants signed leases totaling 2.8 million sq. ft. across Northern Virginia, buoyed by government activity. In the largest lease of the year, GSA renewed 1.6 million sq. ft. of space at 600 Dulany Street in Alexandria on behalf of the U.S. Patent and Trademark Office. The transaction represents a 954,000 sq. ft. space reduction for PTO and served as the main driver of occupancy loss during the fourth quarter.

In total, the Northern Virginia office market recorded 976,000 sq. ft. of negative absorption during the quarter. Consequently, vacancy increased 80 bps over the prior quarter to 21.8%, a new record-high for the market. This is a stark change from Q3, which recorded a decrease in vacancy due to the conversion of several office properties into residential housing.

Overall vacancy increased 120 bps year-over-year and annual gross leasing activity remains 28% lower than pre-pandemic levels. Sublease availability in Northern Virginia pushed higher during the fourth quarter, up 127% from pre-pandemic levels, with more than 5.2 million sq. ft. currently listed across the market. Despite challenging market fundamentals, 52% of all transactions signed during the fourth quarter were relocations and 51% were long-term leases (6+ years).