The Suburban Maryland office market wrapped up the fourth quarter of 2024 on a positive trajectory, rebounding from a turbulent Q3. During Q4, the market experienced an occupancy gain of 184,000 sq. ft., marking only the fifth quarter of positive absorption since March 2020. This uptick helped reduce the overall vacancy rate by 40 basis points (bps) from the previous quarter, bringing it down to 21.0%.
Annual Performance Overview
Despite the gains in Q4, total absorption for the year remained negative, with a net loss of 719,000 sq. ft. of office space occupancy in 2024. The market faced significant challenges earlier in the year, but the latest quarter’s performance indicates a potential shift in momentum heading into 2025.
Leasing Activity Insights
Tenants leased over 500,000 sq. ft. of office space during Q4, bringing the total annual leasing volume to 2.74 million sq. ft., closely aligning with the 2023 leasing levels. Notably, leasing activity among private sector tenants surpassed the previous year’s levels by 14%, highlighting a growing demand from commercial enterprises.
Looking Ahead
The recent positive absorption and consistent leasing activity suggest cautious optimism for the Suburban Maryland office market. While the overall annual absorption remains in the red, the Q4 results signal potential stabilization. Should leasing momentum continue, 2025 could see further improvements in occupancy and vacancy rates.
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