Renewals and early restructures dominated the leasing landscape during the second quarter and tenants continued to return space to the market. These factors have translated into myriad opportunities for tenants to restructure existing leases or lock in generous concessions to relocate to space that better fits their culture and way of working.

1. Savills Studley Report
Washington, DC office sector Q2 2016
Savills Studley Research
Washington, DC
SUMMARY
Market Highlights
WASHINGTON, DC
The District’s office market improved slightly
in the second quarter, posting a total of 1.95
msf of leasing activity. This uptick in leasing
coincided with a glut of space returning to
market, resulting in a 40 basis point increase in
the overall availability rate. Landlords remain
eager to capture tenants and continue to offer
ample concession packages to do so.
NORTHERN VIRGINIA
The Virginia suburbs saw an uptick in overall
leasing activity during the second quarter due
to several large renewals by federal agencies.
While overall deal volume increased, net
absorption remained subdued, and as a result,
the region saw little change in availability and
asking rents increased by less than 1.0%
relative to the first quarter.
SUBURBAN MARYLAND
The Maryland Suburbs experienced significant
net growth during the second quarter as several
tenants expanded their footprint during the
period. However, all of the net growth was
concentrated in Montgomery County as Prince
George’s County posted less than 55,000 SF in
total leasing activity.
“Renewals and early restructures
dominated the leasing landscape during the
second quarter and tenants continued to
return space to the market. These factors
have translated into myriad opportunities
for tenants to restructure existing leases or
lock in generous concessions to relocate to
space that better fits their culture and way
of working.”
Tom Fulcher,Executive Vice President,
Co-Regional Manager

2. 02
Savills Studley Report | Washington, DC
Lackluster Performance
Ensures Tenant-Favorable
Conditions Persist in DC
Washington, DC’s office market has thus far
failed to reach the heights of 2015’s robust
leasing environment, which posted over
6.5 msf of activity after two quarters. This
year, leasing activity totals just 3.5 msf at
the end of the second quarter – a 46.1%
decrease year-over-year. The very top end
of Class A product, especially space in newly
constructed and trophy quality buildings,
remains in demand but the rest of the market
is lagging. Owners of non-trophy Class A and
B buildings are attempting to bridge the gap
via several routes. They are making substantial
capital improvements to their properties and
offering abated rent periods and improvement
allowances. So far, these escalating efforts
have not had a significant positive impact on
the overall market. This works to the advantage
of tenants. They can capitalize on a soft
market, often moving to a new location that
makes more financial sense and better suits
their way of working, or they can restructure
their existing deal and reduce their footprint.
Tenants have been giving back space at an
unprecedented rate, resulting in an availability
rate that rose 0.4 pp from last quarter to 12.9%
- the equivalent of nearly 600,000 sf of space.
The District’s downtown core accounted for
the majority of the market’s leasing once again,
totaling over 1.4 msf between the CBD and
East End/Convention Center submarkets. The
CBD was the site of Washington, DC’s largest
lease of the quarter – a deal by the Board of
Governors of the Federal Reserve System
for 218,552 sf at International Square. New
construction in fringe markets has sparked
interest in areas outside of the core, especially
in Southwest where the International Spy
Museum inked a deal for 140,000 sf at a new
building at 900 L’Enfant Plaza, SW.
Despite Some Signs of Growth,
Northern Virginia Fundamentals
Remain Largely Unchanged
After a sluggish start to 2016, total leasing
activity in the Virginia suburbs rebounded in
the second quarter, rising by 60.0% relative
to the first quarter. The increase in leasing
activity did not translate into meaningful net new
growth as a significant portion of the region’s
leasing volume continued to come in the form
of renewals and early restructures. As a result,
the region’s over-all availability rate remained
largely unchanged inching down by just 0.1 pp
relative to the first quarter. Average asking rents
posted a slight quarter-on-quarter increase but
remain just 0.5% above the levels seen one
year ago. With nearly 36.0 million square feet
of space available in Northern Virginia, leasing
fundamentals remain extremely tenant favorable
Source: Bureau of Labor Statistics
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
0.68
0.70
0.72
0.74
0.76
0.78
0.80
Millions
WDC. Office Emp. WDC. (% Annual Change) U.S. (% Annual Change)
Office-Using Employment Trends
$56.58
$51.35
$32.75
$30.75
$27.20$27.33
$10
$20
$30
$40
$50
$60
$70
2Q162Q152Q142Q132Q122Q11
($/sf) Class A Rental Rate Trends
Washington, DC Virginia Maryland
Class A Asking Rent Trends
13.2%
10.6%
22.9%
18.7%
21.8%
0%
5%
10%
15%
20%
25%
30%
2Q162Q152Q142Q132Q122Q11
(%) Class A Availability Rate Trends
Washington, DC Virginia Maryland
Class A Availability Rate Trends

3. savills-studley.com/research 03
Q2 2016
Tenant Sq Feet Address Market Area
GSA - Transportation Security Administration 551,916 601 & 701 S 12th St Arlington County
United States Nuclear Regulatory Commission* 347,922 11545 Rockville Pike Montgomery County
Board of Governors of the Federal Reserve System* 218,552 1850 K St NW, 1825 & 1875 Eye St NW Central Business District
Abt Associates Inc. 154,951 6130 Executive Blvd Montgomery County
Novavax, Inc 147,051 1201 Clopper Rd Montgomery County
International Spy Museum 140,000 900 L'enfant Plz SW Southwest
Wellstat Management Company LLC 115,255 14200 Shady Grove Rd Montgomery County
EY 107,825 1101 New York Ave NW East End/Convention Center
GSA - Customs & Border Protection 106,000 7799 Leesburg Pike Fairfax County
Grant Thornton LLP 76,000 1000 Wilson Blvd Arlington County
Sum of Top 10 Leases 1,965,472 Sum of 2nd Quarter Leasing Activity 5.7 MSF
*Savills Studley Deal
as landlords continue to offer generous
concession packages in order to attract tenants.
Suburban Maryland Availability
Declines in Response to Significant
Net New Growth
Overall availability in the Maryland Suburbs
decreased sharply during the second quarter,
ending the period at 18.2%, the lowest
availability rate since the first quarter of 2013.
Several tenants signed leases that represented
significant growth for the region including Abt
Associates full-building lease totaling 154,951
SF at 6130 Executive Blvd in North Bethesda.
Abt Associates will relocate from 4550
Montgomery Ave in Downtown Bethesda and
will expand their footprint by nearly 25,000 SF.
Novavax also signed a full-building lease totaling
147,051 SF at 1201 Clopper Rd in Gaithersburg.
University Research Company expanded during
the second quarter as well, signing a lease for
53,490 SF at 5404 Wisconsin Ave in Chevy
Chase.
Submarket Focus
Despite being one of Washington DC’s premier
office submarkets, East End/Convention Center
is saddled with one of the highest availability
rates in the District (16.4%), leaving plenty of
quality opportunities for tenants seeking a move
to the downtown core. Quarterly leasing in the
East End increased by 15.7%, totaling nearly
757,000 sf, but that figure is 28.0% lower than
the same period last year and year-to-date
leasing activity of 1.4 msf is less than half of the
total during the first half of 2015. East End’s
largest lease of the quarter was completed by
EY for 107,825 sf at 1101 New York Ave, NW,
which was a reduction of approximately 20,000
sf. Other notable leases include Thomson
Reuters’ consolidation into 49,206 sf at 1333 H
St NW and Clark Hill’s sublease for 38,640 sf at
1001 Pennsylvania Ave, NW.
Arlington County posted 984,954 SF in overall
leasing activity during the second quarter,
more than doubling the total from the previous
quarter. On the surface this may seem like
an encouraging sign for Arlington, however,
more than half of the County’s quarterly
leasing volume can be attributed to the TSA’s
short-term renewal in Pentagon City. Supply
continued to outpace demand, sustaining
the historically high levels of availability seen
throughout the submarket. As of the end of the
second quarter, Arlington County had a total of
8.1M SF of available space; two thirds of which
was comprised of Class A space. Limited net
demand and a growing inventory of available
space combined to put downward pressure
on average rental rates with the Class A rate
posting the sharpest decline; a 0.4% quarter-
over quarter decrease.
North Bethesda/Potomac tallied 613,309 SF
in total leasing activity this quarter, accounting
for 37.0% of Suburban Maryland’s overall
leasing volume. The submarket landed the
largest Suburban Maryland transaction of the
second quarter when the Nuclear Regulatory
Commission completed an early lease
restructure for 347,922 SF at Two White Flint.
Outlook
The District’s office market showed little
positive movement to indicate that the tenant-
friendly environment is fading. Many firms are
still seeking early renewals and restructures
and landlords are more than happy to oblige.
Owners of underperforming product throughout
Washington, DC are being forced to spend
substantial amounts of cash up front to bring
their buildings up to the standard expected in
a Class A building – deals are not materializing
at the rate seen in the last two or three years
though, compelling landlords to be aggressive in
their pursuit of new tenants.
Northern Virginia’s office leasing environment
will remain tenant-friendly for the foreseeable
future. Despite some signs of net new growth
during the second quarter, there remains 36.0M
SF of office space available throughout the
region. Early lease restructures and renewals
continue to make up a significant portion of
leasing activity, doing little to precipitate a
significant decrease in availability. Asking rents
are expected to increase slightly; however,
effective rents will continue to decline as a result
of the record-high concessions currently offered
by landlords.
While Suburban Maryland has experienced
moderate growth in 2016, tenant-favorable
conditions are expected to persist for the near
to mid-term. Prince George’s County, which only
registered 54,500 SF in total leasing activity,
is expected to continue to lag behind the rest
of the region, putting upward pressure on
availability and downward pressure on asking
rents. Long-term, Suburban Maryland is likely to
benefit from new, mixed-use development along
the region’s planned Purple Line.
Availability Rate Comparison Rental Rate Comparison
Major Transactions
$58.53
$56.13
$54.08
$52.06
$51.36
$47.45
$47.25
$42.94
$41.35
$40.81
$38.80
$33.06
$32.83
$30.90
$28.49
$28.00
$26.37
$23.26
$21.65
$0 $10 $20 $30 $40 $50 $60
Capitol Hill
E End/Cnv Ctr
West End
CBD
Washington, DC
NoMa
Southwest
Georgetown
Capitol Riverfront
Uptown
Arlington County
US Index
Alexandria
Northern Virginia
Montgomery Cty
Fairfax County
Suburban MD
Ldn/Stffrd/Pr Wm
Pr George's Cty
($/sf)
Overall Rental Rate Comparison
9.0%
9.3%
9.8%
10.1%
10.3%
12.9%
13.4%
16.4%
16.5%
16.7%
17.0%
17.8%
18.2%
19.2%
19.3%
21.4%
21.7%
21.8%
22.7%
0% 5% 10% 15% 20% 25%
Capitol Hill
Southwest
Georgetown
CBD
NoMa
Washington, DC
West End
E End/Cnv Ctr
Ldn/Stffrd/Pr Wm
Montgomery Cty
US Index
Uptown
Suburban MD
Capitol Riverfront
Pr George's Cty
Northern Virginia
Fairfax County
Arlington County
Alexandria
(%)
Availability Rate Comparison

4. Savills Studley Report | Washington, DC
04
Submarket Total
SF
(1000's)
Last
12 Months
5 Year
Average
This
Quarter
%
Change
from
Last Qtr.
Last
Quarter
Year
Ago
This
Quarter
pp
Change
from
Last Qtr. (1)
Last
Quarter
Year
Ago
This
Quarter
%
Change
from
Last Qtr.
Last
Quarter
Year
Ago
Capitol Hill 5,776 332 325 518 -23.7% 522 717 9.0% -2.8% 9.0% 12.4% $58.53 1.8% $57.75 $53.99
Capitol Hill - Class A 2,136 232 162 344 16.9% 295 342 16.1% 2.3% 13.8% 16.0% $60.86 0.9% $60.27 $59.07
Capitol Riverfront 5,343 110 M/A 1,024 1.9% 1,029 784 19.2% 0.4% 19.2% 14.7% $41.35 -0.4% $40.98 $40.94
Capitol Riverfront - Class A 4,088 110 M/A 608 3.2% 613 564 14.9% 0.5% 15.0% 13.8% $44.01 -0.9% $43.19 $42.32
NoMa 12,001 1,116 M/A 1,231 11.0% 1,016 1,469 10.3% 1.0% 8.5% 12.2% $47.45 1.6% $45.89 $45.82
NoMa - Class A 9,661 1,023 M/A 825 12.2% 689 1,010 8.5% 0.9% 7.1% 10.5% $52.60 1.9% $51.04 $51.76
East End/Convention Center 42,972 4,565 3,572 7,044 7.6% 6,548 7,006 16.4% 1.2% 15.2% 16.3% $56.13 0.3% $54.70 $53.45
East End/Convention Center - Class A 29,821 3,516 2,653 4,903 4.2% 4,825 4,953 16.4% 0.7% 16.2% 16.6% $60.89 0.9% $59.02 $57.64
Central Business District 38,664 3,284 3,055 3,915 0.4% 4,060 4,712 10.1% 0.0% 10.5% 12.2% $52.06 0.8% $50.89 $50.52
Central Business District - Class A 14,572 2,371 1,665 1,509 -1.4% 1,634 2,177 10.4% -0.1% 11.2% 14.9% $57.65 0.6% $57.22 $57.16
West End 3,863 151 131 516 10.2% 535 632 13.4% 1.2% 13.8% 16.4% $54.08 0.0% $53.09 $52.24
West End - Class A 2,646 76 106 516 10.2% 535 534 19.5% 1.8% 20.2% 20.2% $54.08 0.0% $53.09 $52.24
Georgetown 2,743 160 202 269 19.1% 216 245 9.8% 1.6% 7.9% 8.9% $42.94 1.8% $40.82 $39.57
Georgetown - Class A 1,190 20 83 112 98.3% 47 52 9.4% 4.7% 3.9% 4.4% $45.72 -1.1% $45.75 $44.78
Southwest 12,852 1,109 932 1,201 -3.4% 1,240 1,579 9.3% -0.3% 9.6% 12.3% $47.25 -0.2% $47.31 $46.90
Southwest - Class A 8,813 573 544 801 -3.4% 828 931 9.1% -0.3% 9.4% 10.6% $48.60 -0.2% $49.06 $49.00
Uptown 6,303 172 379 1,119 3.5% 1,168 1,132 17.8% 0.6% 18.5% 18.0% $40.81 -1.6% $40.80 $40.87
Uptown - Class A 602 8 44 88 4.0% 9,661 18 14.6% 0.6% 12.2% 3.0% $40.11 0.0% $39.79 $44.40
Fairfax County 100,889 4,710 6,307 21,885 -1.5% 22,463 22,100 21.7% -0.3% 22.3% 21.9% $28.00 0.9% $27.96 $27.96
Fairfax County - Class A 60,660 3,412 4,450 14,315 -0.1% 14,869 14,502 23.6% 0.0% 24.5% 23.9% $30.03 0.6% $29.97 $30.15
Alexandria 15,495 983 922 3,520 3.1% 3,863 3,407 22.7% 0.7% 21.6% 22.0% $32.83 3.0% $31.84 $31.12
Alexandria - Class A 7,868 174 449 1,348 8.7% 1,242 1,265 17.1% 1.4% 15.8% 16.1% $32.77 7.0% $30.40 $29.28
Arlington County 37,176 3,387 2,624 8,122 -3.7% 8,687 9,001 21.8% -0.8% 23.4% 24.2% $38.80 -0.1% $38.80 $38.54
Arlington County - Class A 22,364 1,445 1,633 5,182 0.1% 5,129 5,337 23.2% 0.0% 22.9% 23.9% $40.19 -0.2% $40.05 $39.83
Loudoun/Stafford/Prince William 14,993 1,188 686 2,469 11.8% 2,246 2,323 16.5% 1.7% 15.0% 15.5% $23.26 -0.1% $23.69 $23.22
Loudoun/Stafford/Prince William - Class A 6,202 980 481 1,374 13.5% 1,258 1,218 22.2% 2.6% 20.3% 19.6% $25.19 -0.6% $25.81 $25.48
Montgomery County 60,026 3,363 3,298 10,020 -3.8% 10,300 9,980 16.7% -0.7% 17.2% 16.6% $28.49 1.5% $28.43 $27.90
Montgomery County - Class A 31,570 2,195 2,275 5,908 -4.8% 6,051 5,775 18.7% -1.0% 19.2% 18.3% $29.82 1.2% $29.51 $29.73
Prince George's County 23,802 939 919 4,583 -1.7% 4,760 4,811 19.3% -0.3% 20.0% 20.2% $21.65 1.0% $22.00 $20.60
Prince George's County - Class A 11,534 544 624 2,871 -4.3% 3,031 3,132 24.9% -1.1% 26.3% 27.2% $21.58 0.4% $21.75 $20.62
Washington D.C. Total 130,518 10,945 9,504 16,837 3.6% 16,333 18,276 12.9% 0.4% 12.5% 14.0% $51.36 0.3% $50.37 $49.79
Washington D.C. Total - Class A 73,527 7,929 6,082 9,706 4.5% 9,539 10,580 13.2% 0.6% 13.0% 14.4% $56.58 0.5% $55.66 $55.05
Northern Virginia Total 168,582 10,267 10,539 35,996 -0.8% 36,742 36,831 21.4% -0.2% 21.8% 21.8% $30.90 0.9% $30.81 $30.74
Northern Virginia Total - Class A 97,094 6,011 7,012 22,219 1.2% 22,498 22,322 22.9% 0.3% 23.2% 23.0% $32.75 1.2% $32.41 $32.52
Suburban Maryland Total 80,299 4,302 4,241 14,603 -3.1% 15,060 14,792 18.2% -0.6% 18.8% 18.4% $26.37 1.2% $26.47 $25.49
Suburban Maryland Total - Class A 40,215 2,739 2,923 8,779 -4.7% 9,082 8,907 21.8% -1.1% 22.6% 22.1% $27.20 0.7% $27.11 $26.53
Greater Washington D.C. Total 379,399 25,514 24,284 67,436 -0.2% 68,135 69,898 17.8% 0.0% 18.0% 18.4% $35.50 1.0% $35.15 $34.85
Greater Washington D.C. Total - Class A 210,836 16,680 16,017 40,704 0.6% 41,119 41,809 19.3% 0.1% 19.5% 19.8% $37.62 0.9% $37.38 $37.15
Leasing
Activity
Available
SF
Availability
Rate
Asking Rents
Per SF
@SavillsStudleywww.savills-studley.com
Please contact us for further information
(1) Percentage point change for availability rates.
Unless otherwise noted, all rents quoted throughout this report are average asking gross (full service) rents psf.
Statistics are calculated using both direct and sublease information.
Short-term sublet spaces (terms under two years) were excluded.
The information in this report is obtained from sources deemed reliable, but no representation
is made as to the accuracy thereof. Statistics compiled with the support of The CoStar Group.
Copyright © 2016 Savills Studley
Savills Studley
Washington, DC
1201 F Street, N.W.,
Suite 500
Washington, DC 20004-1225
(202) 628-6000
Washington, DC Region Co-Branch Managers
Thomas M. Fulcher Jr., EVP - tfulcher@savills-studley.com
Lois A. Zambo, Vice Chairman - lzambo@savills-studley.com
Richard P. Rome, EVP - rrome@savills-studley.com
David Lipson, EVP - dlipson@savills-studley.com
William P. Quinby, EVP - bquinby@savills-studley.com
Gary Stein, EVP - gstein@savills-studley.com
Savills Studley
Suburban Washington
1600 Tysons Blvd.
Suite 200
McLean, VA 22102-4865
(703) 442-9000