Mid-Atlantic Research Reflections 2024: Business & Financial Services

With nearly 1,000,000 employees across Greater Washington, business and financial services companies employ more people across the region than any other sector, including the government. These sectors are a source of stability in the region, recording 12% growth in employment over the past decade while public sector employment grew by just 5%. As the federal government continues shrinking its office footprint, private sector tenants will increasingly serve as a prominent source of office demand.

Business and financial services tenants leased the most office space both by square footage and by number of transactions so far this year, with transactions totaling more than 3.5 million sq. ft. and accounting for 26% of all leasing activity in the region. Among these leases are six transactions larger than 100,000 sq. ft. Washington D.C.’s Central Business District (CBD) and Northern Virginia's Tysons submarkets were the most popular destinations for these tenants, together capturing 36% of activity.

Despite favorable leasing figures, many business and financial services leases were results of rightsizing. The sector contributed more to negative net absorption than any other sector, recording 1.6 million sq. ft. of occupancy loss. This is a sharp increase from just over 1 million sq. ft. in 2023 and accounts for 37% of all negative absorption throughout the region.