Top-Tier Offices Drive Washington Leasing as Broader Market Stays Under Pressure

Washington, D.C., recorded roughly 2 million square feet of office leasing in the second quarter, its strongest quarterly total since 2024, but the recovery is narrowing to the city’s highest-end buildings. According to Commercial Observer, tenants making long-term commitments are largely choosing trophy properties, while the wider market continues to wrestle with empty space and weaker federal leasing.

Law firms were a major driver of activity, accounting for about 600,000 square feet of leasing during the quarter. The largest transaction came from White & Case, which signed a lease for nearly 196,000 square feet at 1701 Pennsylvania Avenue NW. Other legal tenants also extended their commitments, with Steptoe, O'Melveny and Wilkinson Barker Knauer completing long-term renewals.

Technology tenants contributed to the momentum as well. Palantir renewed and expanded to 150,000 square feet in Georgetown, while Thomson Reuters signed for almost 33,000 square feet in the East End.

Key Details

Second-quarter leasing volume reached about 2 million square feet, the highest quarterly level since 2024, based on Savills data cited in the report. Even with that pickup, demand was concentrated in new or recently renovated Class A assets rather than spread evenly across the market.

Availability for Class A office buildings stood at 10 percent after the second quarter, while overall availability in Washington increased to 24.2 percent. That rise came even after 4 million square feet was removed from the market over the past year through conversions.

Pricing trends also reflected the divide between top-tier product and the broader market. Overall asking rents were up 2.9 percent from the second quarter of 2025, while Class A asking rents climbed by more than 5 percent over the same period to $62.29 per square foot annually.

The quarter’s notable lease transactions included:

• White & Case leasing nearly 196,000 square feet at 1701 Pennsylvania Avenue NW
• Palantir renewing and expanding to 150,000 square feet in Georgetown
• Thomson Reuters leasing almost 33,000 square feet in the East End
• Long-term renewals by Steptoe, O'Melveny and Wilkinson Barker Knauer

Savills said leasing momentum is expected to continue into the second half of the year, with deals nearing completion that include Google and the U.S. Navy.

Why It Matters

The latest quarter shows that office demand in Washington is still present, but it is highly selective. For landlords, investors and lenders, that split underscores how strongly tenants are favoring premier, updated space over commodity inventory.

The report also points to office-to-residential conversions as an important force in the market, especially with little new construction in the pipeline. Even so, the increase in overall availability suggests that removing older space alone has not yet solved the city’s broader office imbalance.