Washington, D.C. Retail Market Report Q3 2026
Q3 Absorption Turns Negative; Vacancy Edges Up to 4.6%
Demand
Washington DC posted net absorption of -186K SF in Q3 2026, against 166K SF in the same quarter last year. Vacancy is 4.6%, 47 bps looser than Q3 2025. Clarke County is the tightest submarket at 0.0% vacancy; Fort Belvoir Army Reserve leads rent growth at +6.1%. Trailing-12-month absorption of -1.03M SF compares with -521K SF a year earlier. Asking rent of $35.39/SF is up 2.6% year over year and a record. Vacancy sits 86 bps below the Q1 2021 peak of 5.5%.
Supply
Washington DC delivered 133K SF in Q3 and 660K SF over the trailing twelve months (+6% versus the prior TTM period). Space under construction equals 0.5% of inventory, concentrated in Gaithersburg at 10.5% of its stock. Annual deliveries peaked at 5.98M SF in 2007. Q3 deliveries were 34% below last year’s 202K SF.
Investment Market
Washington DC recorded $2.4B in sales over the trailing twelve months, +31% against the prior TTM period; Q3 accounted for $545M. The high-water mark in this series is $3.2B in 2015.
Washington DC cap rates average 7.02%, up for 17 straight quarters. Pricing sits at $350/SF, lower for 4 consecutive years. The cap rate is 58 bps above the Q2 2022 low of 6.44%. Price per SF is 6% below the Q2 2022 peak of $371/SF.
Volume
- $2.4B TTM volume (+31% YoY)
- Q3 2026: $545M
Pricing
- Cap rate 7.02%
- Price per SF $350
- Caps expanding 17 quarters running
