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News release

WASHINGTON, DC

2015 Leasing Activity Up 16 Percent in Washington Region, According to JLL Q2 Market Report

Nonprofits, associations, start-ups and boutique tenants driving activity


WASHINGTON, JULY 1, 2015 – During the first half of 2015, leasing across the Washington region was up by 16 percent, with small and mid-sized deals in Class B and C buildings driving a significant portion of the activity, according to JLL’s Office Insight Report for Q2 2015. 

Northern Virginia, Suburban Maryland and the District of Columbia each recorded positive leasing growth – the first time that has happened in over a year and a half. Total occupancy gains of 1.1 million square feet during the second quarter marked the strongest expansion in the Metro DC office market since the fourth quarter of 2010.

Although the region’s largest tenants – most notably law firms, government contractors and federal agencies – generally continued to rightsize and shed excess space, smaller groups – including nonprofits, associations, start-ups and creative companies – drove a surge in occupancy gains.

“The story of the market through the first half of the year seems to be a resurgence in mid-size leasing activity, particularly at the value side of the quality spectrum,” said Scott Homa, Vice President, Research, JLL. “A general preference for flexible, inexpensive, short-term leases is key for these tenants.

“On the other end of the spectrum, for the groups with the financial wherewithal to sign long-term deals at Trophy buildings, law firms and government affairs groups are upgrading to newer and nicer assets,” Homa said. “Market activity is generally taking a barbell form, with the top and bottom witnessing the most robust demand.”

According to the report:

  • There has been a 62.2 percent increase in leasing activity for blocks between 20,000 and 100,000 square feet in 2015 YTD, relative to a 4.7 percent decline in deals above 100,000 square feet 
  • Among Class B and C buildings, there has been a 62.7 percent increase in leasing activity, relative to just a 0.7 percent increase in Class A leasing activity when comparing the first half of 2015 to the first half of 2014
  • Leasing activity is up over 16 percent year-over-year (covering all locations, classes and deal sizes)
  • Sublease activity is up 23.7 percent year-over-year        

“We are starting to see competition for select class A, B and C space that is well located, has favorable terms and offers amenities such as conference facilities, fitness centers and views,” said Tucker Farman, Vice President, JLL. “While it is not yet a landlord market, there is more balance and some economics have begun to shift.”

In a continuing trend observed in Q1 of 2015, 92.3 percent of all new leases signed so far in 2015 (excluding renewals) were within half a mile of an existing or planned Metro.

“There remains a strong desire among tenants to upgrade their locations to walkable, Metro-served destinations across all industry sectors,” added Farman. “Employers continue to view daytime amenities and mass transit access as essential to recruitment and retention of employees.”

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000.  On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $55.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.​