COVID-19 stifles demand and Q3 leasing volume drops to the lowest quarterly activity in five years

As the pandemic continues without a clear end in sight, its impact has begun to affect the resilient Suburban Maryland market. Leasing activity was sustained in the first half of the year by deals in progress prior to the pandemic, but as those transactions have closed, transaction volume has fallen. In the third quarter, leasing activity dropped 50% below the five-year quarterly average of 0.8 million square feet (msf) to 0.4 msf. There were ten leases completed above 10,000 square feet (sf) and the top three transactions were all signed by government tenants. Ongoing federal activity has historically sustained leasing volume during times of market volatility, but government transactions alone are not enough to keep the market from weakening. Most tenants are acting cautiously in the current environment and postponing significant lease commitments unless forced to act by an upcoming lease expiration.

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