Data Shows Normal Cycle of Tenant Movement Within Washington D.C. Region
Summary: It is business as usual for private office tenants to move into and out of D.C. and the surrounding suburbs (suburban Maryland and northern Virginia). A number of factors cause this: Some office tenants find the high-cost of D.C. office space prohibitive. Other office tenants find superior value in D.C. because tenants can take advantage of D.C.’s transportation network, location and amenities. The D.C. suburbs offer lower rents than most office submarkets in D.C., and are becoming more attractive office locations due to continued investment in place-making amenities. Some downtown D.C. building owners have addressed the rent differential with deals to attract new tenants and to retain existing ones. In addition, some employers are choosing to move to D.C. to be closer to the Millennial workforce that accounts for much of D.C.’s recent population growth.
All three regional office markets have had both gains and losses with private tenants moving in and out. Though tenants continue to leave D.C. for the suburbs, D.C. is currently attracting more firms to move in from the surrounding area than it did in the early 2000’s. The land value and rent differentials among Virginia, Maryland, and D.C. will continue to affect tenant movement between the three jurisdictions. For 2009 through 2014 the net loss of tenants from D.C. to the suburbs has been much lower than previous years.
About the Data: The DowntownDC BID’s Economic Development Department has collected data on tenants moving into and out of Washington, D.C. from suburban Maryland and Virginia starting in 2001. Our database includes a company’s address before they moved, the address they moved to, the type of business, the move date, and square footage (SF) before and after the move. The SF in our analysis is based on the SF of the new location, not the SF their previous location.
Total Private Tenant Movement: Over the past eight years (2009 through December 2016), a total of 874,000 SF of office tenants have moved into D.C., while 1,027,000 SF have moved out, for a net movement of 153,000 SF out of D.C. This is much lower than the previous eight years (2001 – 2008), where a total of 591,000 SF of office tenants moved into D.C., while 3 million SF of office tenants moved out, for a net total movement of 2.5 million SF out of D.C.
Over the past six years (2009 through December 2014), a total of 874,000 SF of office tenants have moved into D.C., while 974,000 SF have moved out, for a net movement of 100,000 SF out of D.C. This is much lower than the previous eight years (2001 – 2008), where a total of 600,000 SF of office tenants moved into D.C., while 3.5 million SF of office tenants moved out, for a net total movement of 2.9 million SF out of D.C.
- For 2009 through 2016, the total net movement is projected to be 153,000 SF out of D.C. (average 19,000 SF/Year).
- For 2009 through 2014, the total net movement is 165,000 SF out of D.C. (average 28,000 SF/Year).
- For 2001 through 2008, the total net movement was 3 million SF out of D.C. (average 309,000 SF/Year).
- For 2001 through 2014, the total net movement is 2.6 million SF out of D.C. (average 188,000 SF/Year).
- For 2001 through 2016, the total net movement is projected to be 2.6 million SF out of D.C. (average 160,000 SF/Year).
- For 2001 through 2016, 79% of the D.C. tenant movement is to and from Northern Virginia.
Top 10 Office Regional Tenant Moves: The difference between the top 10 tenants to move into D.C. and the top 10 tenants to move out of D.C. was 151,987 SF for 2009 through 2016, down from 932,760 SF for 2001 through 2008. This year, Intelsat’s move from 350,000 SF in D.C. to 188,000 SF in Virginia, contributes to an annual net total loss of 150,000 SF from D.C. Intelsat ranks as the largest tenant move out of D.C. for 2009 through 2016, while Corporate Executive Board’s 2008 move of 625,000 SF out of D.C. ranks as the highest move out of D.C. for 2001 through 2008. The CoStar move of 151,000 SF from Maryland to D.C. in 2010 ranks as the top move into D.C. for 2009 through 2016. The Anteon/Alion Corporation move of 123,000 SF from Virginia to D.C. in 2003 ranks as the top move into D.C. for 2001 through 2008.