Sublease inventory begins to taper off, but overall availability still hits new record high
As the pandemic stretches into its second year, overall availability hit another record-high rate for the market, now at 21.1%. This includes both direct and sublet space combined, however the latter has begun to taper off through the first half of 2021. Of the sublease space that was added to the market since the start of the pandemic, 7.8% has been withdrawn and is no longer being marketed. D.C.’s sublease availability has fallen from a high of 3.4 million square feet (msf) at the end of last year to 3.2 msf as of Q2. While sublease inventory is declining, direct availability continues to surge and has increased by 10.6% through the first two quarters of 2021. Limited demand is a key factor driving oversupply, along with a robust 2.5-msf development pipeline - of which less than 50% is preleased. Notable projects that have seen little-to-no preleasing include 1771 N Street NW, 699 14th Street NW, 1255 Union Street NE, 670 Maine Avenue SW and 2100 M Street NW. Our availability rate includes not only vacant space, but also what could be occupied in the next 12 months, so as these buildings near completion with large blocks unleased, availability pushes higher.