CBRE

FIGURES|WASHINGTON,D.C.OFFICE|Q42025

VacancyisFlatteningandisIncreasingly

ConcentratedinClassBProperties

22.5%

VacancyRate

Note:Arrowsindicatechangefrompreviousquarter.

(404,164)

Q4SFNetAbsorption

0

SFUnderConstruction

$58.78

AverageGrossAskingRate

FIGURE1:HistoricalSupply&DemandDynamics

MSF

43210(1)

(2)

(3)

Washington,DCexperiencedoccupancylossinQ4thatpushedvacancyupwards10basis-points(bps)to

22.5%.OccupancylosswasoverwhelminglyconcentratedintheClassBmarket,wherevacancyincreased

25

20

15

10

250bpsinQ4.Overall,thecity’svacancyrateended2025flatyear-over-year,aidedbyinventoryremovalforredevelopmentorconversiontoalternativeuse,aswellasaslowdowninfederalgovernmentlease

contractionsinthesecondhalfoftheyear.

Tenantsleased7.1millionsq.ft.ofofficespacein2025,10%belowtheten-yearhistoricalaveragebut

reflectingresiliencydespitesignificantregionaleconomicuncertainty.TheClassA+segmentofthe

marketperformedwell,withnotableleasesincludingBracewell’s53,250sq.ft.extensionat2001MStreetNW,theNationalCableandTelecommunicationsAgency’s53,000sq.ft.renewalat25Massachusetts

AvenueNW,andBuchananIngersoll’s52,760sq.ft.renewalandexpansionat1700KStreetNW.

AmorestableeconomicoutlookshouldbenefitD.C.in2026.Amongprivatesectortenantsactively

5

0

lookingforspace,thereis474,000SFofexpectedoccupancygain,aidedbyseveralnew-to-markettenantsandsignificantplannedexpansions.WithTrophyvacancyremaininglowat10.7%,additionalprivatesectorgrowthshouldtrickledownintoClassA+andwell-capitalizedCommodityAproperties.

20152016201720182019202020212022202320242025

6005thStreetNW,RockefellerGroupandStonebridge’sTrophyredevelopmentoftheformerWMATA

Deliveries(L)NetAbsorption(L)Vacancy(R)

headquarters,deliveredinQ42025andishalf-leasedtoCrowell&Moring.Thisrepresentedthefirst

Source:CBRE

officedeliveryinWashington,D.C.sinceSkanska’s17xMinQ22024,whichisnow90%leased.

1CBRERESEARCH?2025CBRE,INC.

FIGURES|WASHINGTON,D.C.OFFICE|Q42025

2CBRERESEARCH?2025CBRE,INC.

SectorSnapshot

Legal

Lawfirmsaccountedfor30%ofleasevolumein2025,thesecond-leadingshareofanysector,slightlybehindthegovernment.Law

firmleasevolumegrewfromtheprioryear,drivenbyseverallargedealsfornewdevelopment.Thesectorhasshiftedtowards

incrementalgrowth,with62%offirmsthattransactedin2025eithergrowingormaintainingastablefootprint.Moderatelawfirm

footprintgrowthisexpectedin2026,withahandfuloffirmsexpectedtogrowsubstantially.

Government

Thegovernmentsectoraccountedfortheleadingshareofleasingin2025.Volumewasskewedupwardsbyseverallarge,short-term

extensions,includingthoseat470-490L’EnfantPlaza(National

TransportationSafetyBoard),4505thStreetNW(Departmentof

Justice),and1750PennsylvaniaAvenue(DepartmentofTreasury).Aslowdowninfederalgovernmentleasecontractionshelpedthemarketstabilizeinthesecondhalfof2025.Contractionsinthefirsthalfoftheyeardrovethebulkofthecity’s2025occupancyloss.

BusinessandFinancialServices

Businessandfinancialservicesfirmsaccountedfor14%ofthecity’sleasevolumein2025,thethird-highestshareamongsectors.

Notably,thesectorconsistentlyprovidesasourceofincrementalgrowth,with86%offirmseithergrowingormaintainastable

footprintin2025.NotableQ4dealsincludeRaymondJames’

relocationto1899PennsylvaniaAvenue,ChaosCapital’sexpansionattheBankBuilding,andKKR’sfirstD.C.leaseattheMillsBuilding.

FIGURE2:SelectNotableQ42025LeaseTransactions

Tenant

Industry

Address

Submarket

SF

LeaseType

MarketEffect

SidleyAustin

Legal

2100MStNW

CBD

234,000

NewLease

Contraction

GSA-NationalTransportationSafetyBoard

Government

470-490L’EnfantPlzSW

Southwest

163,538

Renewal

Flat

GSA-DepartmentofTreasury

Government

1750PennsylvaniaAveNW

CBD

120,000

Renewal

Flat

Bracewell

Legal

2001MStNW

CBD

53,250

Renewal

Flat

NationalCableandTelecommunicationsAssociation

Nonprofit

25MassachusettsAveNW

NoMa

53,000

Renewal

Flat

BuchananIngersoll

Legal

1700KStNW

CBD

52,764

Renewal

Growth

AmericanMedicalAssociation

Nonprofit

200MassachusettsAveNW

CapitolHill

36,886

NewLease

Flat

AmericanSocietyofNephrology

Nonprofit

1401HStNW

EastEnd

34,197

Renewal

Flat

CampaignforTobaccoFreeKids

Nonprofit

1400IStNW

EastEnd

31,557

Renewal

Flat

MunicipalSecuritiesRulemakingBoard

Nonprofit

1101KStNW

EastEnd

30,407

NewLease

Contraction

Source:CBRE

FIGURE3:2025GrossLeasingbySector(SharebySF)

FIGURE4:2025NetAbsorptionbySector(SF,000’s)

Business&FinancialServices

Legal

Nonprofits

Government

3%2%4%

4%

30%

13%

14%

30%

Government

Legal

Business&FinancialServices

Nonprofit

Technology

Education

Creative

Other

(1,000)(500)0500

Source:CBRE

Source:CBRE

FIGURES|WASHINGTON,D.C.OFFICE|Q42025

3CBRERESEARCH?2025CBRE,INC.

DevelopmentActivity

RockefellerandStonebridge’sTrophyredevelopmentprojectat6005thStreetNWdeliveredinQ42025.BXP’stwoplanneddevelopmentsat72512thStreetNWand2100MStreetNWaretheonlybuildingsinthecurrentpipeline.BothdevelopmentsarepreleasedtoAmLaw25lawfirms.

Lookingahead,largetenantsthatarewillingtopaythehighrents

necessarytoanchornewdevelopmentsmustcontendwithsignificant

roadblocks.Manypotentiallandlordpartnersareunwillingtodevelop

newofficeassets,andmanyofthebest-locateddevelopmentsiteslackaclearpathtocontrol.Likewise,marketsforofficeconstructionequityanddebtremaintight,limitingnewdevelopmenttothosefirmswhocanself-fundprojects.Thesefactorswillplacefurtherupwardpressureonnew

developmentrents,whilealsopushinglargetenantstoenterthemarketearliertomaximizeflexibility.

$300

$250

$200

$150

$100

$50

$0

Pricing

Askingrentsremainflatquarter-over-quarter,increasingjust0.05%inQ4to$58.78persq.ft.perannumonafull-servicebasis.Concessionsare

downslightlyin2025to$245persq.ft,thoughthisslightpullbackhasbeensignificantlyaidedbytighterdealsforTrophyspace.

RedevelopmenttoAlternativeUse

Lowvaluationsforcommodityofficepropertiescombinedwithresilientmultifamilyandhotelfundamentalshavemadeoffice-to-alternativeuseredevelopmentprojectsmoreviable.Eightoffice-to-residentialorhotelprojectsarecurrentlyunderwayinDC,withmoreexpectedtobegin

constructioninthecomingquarter.

FIGURE5:DevelopmentPipeline

ExpectedDelivery

Address

Submarket

SF

Preleased(%)

Developer(s)

2029

72512thStNW

EastEnd

320,223

94%

BXP

2031

2100MStNW

CBD

300,000

75%

BXP

Source:CBRE

FIGURE6:TotalConcessionPackages

FIGURE7:AskingRentChangesbyAssetClass

AssetClass

GrossRentPerSF

Quarterover

QuarterChange

Trophy

$96.22

0.43%

ClassA

$61.29

1.34%

ClassB

$47.45

-0.77%

Overall

$58.78

0.05%

Source:CBRE

*Analysisincludesnon-GSAleasessized10,000SF+intheCBD,EastEndandCapitolHill.ConcessionsweightedbySFandnormalizedfor12-yearterm.

Source:CBRE

FIGURES|WASHINGTON,D.C.OFFICE|Q42025

4CBRERESEARCH?2025CBRE,INC.

EconomicOutlook

TheU.S.economyissendingsomemixedsignals.Financialmarketsarefocusedontheupside,particularlyAI’ssizablecontributionto

growthinrecentquarters.Someindicatorsofbusinessactivity,suchascapitalgoodsorders,areimproving,andstrengtheningcredit

marketsarehelpingtousherrealestateintoanewcycle.

Thepicturegetsmoremelancholywhenlookingathouseholds.

Consumerconfidenceremainsweak,withspendingreportedly

drivenbyasmallersegmentofaffluenthouseholds.ThismosaicofdatasuggeststhatannualaverageGDPgrowthwillbesteadyin2026,at2%,butatouchsofterthanin2025.Akeycatalystisa

softerlabormarket,ascompaniesare‘slowtohire,slowtofire’—atrendthatislikelytolastafewquarters.Aconsequenceofthis

outlookissofterinflationandlong-termbondyieldstrendingjustbelow4%byH22026.

Mining,Logging,andConstruction

EducationandHealthServicesOtherServices

LeisureandHospitalityFinancialActivities TotalNonfarmManufacturing

Trade,Transportation,andUtilitiesInformation

ProfessionalandBusinessServicesGovernment

FIGURE8:EmploymentGrowthbyIndustry,12-MonthPercentChange

-4%-2%0%2%4%6%8%10%

Source:BLS

FIGURE9:UnemploymentRate

9%8%7%6%5%4%3%2%1%0%

UnitedStatesWashington,DCMetro

Source:BLS

FIGURE10:ConsumerPriceIndex,12-MonthPercentChange

10%9%8%7%6%5%4%3%2%1%0%-1%

UnitedStatesWashington,D.C.Metro

Source:BLS

FIGURES|WASHINGTON,D.C.OFFICE|Q42025

FIGURE11:KeyMarketStatistics

Numberof

Buildings

Inventory(SF)

Overall

Vacancy

Rate(%)

Q42025Net

Absorption(SF)

2025Net

Absorption(SF)

GrossAsking

Rent($/SF)

Under

Construction(SF)

CapitolHill

27

5,106,394

20.4

161,302

143,473

75.64

-

CapitolRiverfront

14

3,311,678

28.6

(18,677)

(19,426)

57.61

-

CBD

210

38,998,348

25.2

(39,363)

(214,256)

59.22

-

EastEnd

184

41,745,488

23.3

(185,399)

(170,655)

60.83

-

Georgetown

17

2,015,779

28.7

(20,116)

41,589

54.86

-

NoMA

42

11,744,127

17.9

(165,318)

(359,166)

52.11

-

Southwest

35

11,837,192

15.8

(99,480)

(284,167)

51.04

-

Uptown

53

4,590,234

17.1

(48,969)

(70,908)

44.61

-

WestEnd

14

2,618,514

21.6

11,856

(3,710)

53.54

-

Trophy4814,164,31610.7273,833818,25496.22-

ClassA+*5316,459,65021.1(135,371)253,95875.50-

ClassA28776,412,08022.3(298,222)(998,440)61.26-

ClassB22529,149,21428.9(361,806)(733,556)47.45-

ClassC362,242,14420.8(17,969)(23,484)45.48-

Overall596121,967,75422.5(404,164)(937,226)58.78-

Source:CBRE*Buildingsachievingtop25%oftakingrents,manyrecentlyrenovated

CBREMid-AtlanticResearchbeganusingaproprietarydatabaseforofficepropertiesin