Washington, DC Economic Overview
Located between Virginia and Maryland, Washington, D.C. (also known as D.C., Washington or The District) is the capital of the United States. The District itself is home to 680,000 people. However, when you add the total number of people living in the Washington Metropolitan Area - which includes The District, Suburban Maryland and Northern Virginia - you have the 9th largest urban center in the U.S., with over six million residents.
While government is responsible for about one third of the economy, there is an ever-growing number of professional and business service jobs. Investors from around the world are attracted to the Washington, D.C. commercial market because of its general stability and predictable long-term performance.
The Washington Metropolitan Area is the sixth-largest metropolitan economy in the U.S., with an annual gross product of $435 billion. The Metro Area has the country's most educated workforce, and the unemployment rate is the second-lowest in the nation, coming in at barely 6.2%. Investors are drawn to the Washington commercial real estate market because of the strong presence of the federal government, making the market virtually immune to any economic downturn. Numerous organizations serving the federal government are headquartered in the Washington MSA, and The District has a consistently growing number of businesses not directly related to government, such as education, finance, public policy and scientific research.
Washington, DC Commercial Real Estate Market
While the federal government accounts for 29% of the commercial activity in Washington, the DC MSA is also home to 18 Fortune 500 companies and receives significant amounts of international direct investment from the United Kingdom, Canada and Western Europe. Countries with the most companies operating in Washington include Japan, India, Israel and South Korea. Add to this the ever-increasing number of non-government related business operating in the energy, aerospace, defense, security, intelligence, biotech, information and communications technologies industries and it's easy to understand why the demand for commercial real estate in Washington remains strong year after year.
Washington boasts both the highest real income and the highest discretionary spending power of any major U.S. metro area. The retail market in The District is a prime reflection of that. Retail space in D.C. tops 280 million square feet, with the submarkets of Georgetown and East End / Penn Quarter booking full service annualized rents per square foot of $170 and $210 respectively.
The office market in the Washington Metropolitan Area is the third-largest in the U.S., just behind New York City and Chicago, with over 360 million square feet of office space. Within The District, the submarkets with the greatest amount of office space are East End, with over 47 million square feet, and the D.C. Central Business District, with just over 44 million square feet. Absorption in these top two submarkets remains positive and, as pf mid-2017, there is a combined three million square feet of new product coming online in the near future. There is nearly 200 million square feet of industrial space in Washington, located mainly along the I-95 north-south corridor, the Capital Beltway, the I-270, the I-81 corridor and also near Dulles International Airport. CAP rates, rents, absorption and vacancy rates all continue to inch upward. Roughly 3.8 million square feet of investment quality product has hit the market over the last couple of years and, as of mid-2017, approximately 2.5 million square feet are in the development pipeline.
Washington, DC Office Sales Volume
Data provided by Yardi Matrix, for properties larger than 50K SF, which sold at over $5M.
Washington, DC Office Transactions
Data provided by Yardi Matrix, for properties larger than 50K SF, which sold at over $5M.
Washington, DC Commercial Inventory Breakdown
Total: 147,221,183 SF
By square footage range:
- 50k to 100k SF: 7,318,582 SF / 4.97% of total office
- 100k to 500k SF: 107,929,484 SF / 73.31% of total office
- 500k to 1M SF: 24,792,529 SF / 16.84% of total office
- > 1M SF: 7,180,588 SF / 4.88% of total office
- Class A+: 16,570,293 SF / 11.26% of total office
- Class A: 80,384,198 SF / 54.6% of total office
- Class B: 35,520,431 SF / 24.13% of total office
Employment in Washington, DC
At 6.2%, the Washington Metropolitan Area has one of the lowest unemployment rates in the entire country, along with the best educated workforce. According to the U.S. Bureau of Economic Analysis, Washington has the highest per capita income in the country at $75,596, which is over 50% higher than the national average.
While the federal government remains the largest employer in Washington, the economy is becoming increasingly diversified, with job growth generated from industries like professional and business services, energy, aerospace, security and intelligence, technology, biotech, healthcare, education, public policy and scientific and medical research. The tourism industry holds the #2 position for employment in the Washington Metropolitan Area.
Excluding the federal government, the top 10 Washington employers are:
- MedStar Health, with 16,500 employees;
- INOVA Health, with 15,000 workers;
- Marriott International, with 15,300 employees;
- University of Maryland, with 14,000 people;
- Booze Allen Hamilton Consulting, with 11,000 employees;
- Verizon Communications, with 11,000 people;
- Giant Food groceries, with 10,600 employees;
- Safeway groceries, with 9,000 workers;
- Lockheed Martin Corp., with 9,000 employees;
- Deloitte professional services and accounting, with 8,000 workers.
The District's population and job growth is forecasted to continue increasing for decades to come and both national institutional and international investors will be attracted by the region's demand for retail, office and industrial space in Washington.
Education in Washington, DC
Washington holds claim to the best educated workforce in the U.S. Private colleges and universities in The District include American University, George Washington University, Georgetown University, Johns Hopkins University School of Advanced International Studies, and medical research institutions such as Washington Hospital Center, Children's National Medical Center and the National Institutes of Health in Bethesda, Md .
The District of Columbia Public Schools operates 123 public schools in the city and has recently begun incorporating the use of private education firms to aid in the development of educational infrastructure and materials.
Commuting Time in Washington, DC
Although locals will say that commute times are much worse than this, according to the U.S. Census Bureau, the average commute time in Washington is a little over 32 minutes each way, making Washington's commute time the second-worst in the U.S. It takes mass transit users almost 50 minutes each way to commute, but at least they have the advantage of being able to get some work done along the way. Over 37% of the workforce uses some type of mass transit daily, making it the second-highest use rate in the country.
- There are over 1,500 miles of streets, parkways and avenues in Washington, but no freeway goes through The District, leaving commuters to rely on surface streets;
- The Washington Metro rapid transit system, the Metrobus and the DC Circulator bus system all connect The District with the suburbs. The Metro is the second-busiest rapid transit system in the U.S. and serves over 1 million riders each weekday;
- The Washington Metropolitan Area is served by three airports: Ronald Reagan Washington National Airport handles mainly domestic flights, Washington Dulles International Airport receives mainly international flights, with additional air traffic handled by Baltimore-Washington International Thurgood Marshall Airport.
- Total Population672,391
- Male Population(47.4 %) 319,046
- Female Population(52.6 %) 353,345
- Median Age33.90
- Average Household Income$116,090
- Median Household Income$77,649
- Median Income Under 25$32,149
- Median Income 25-44$92,441
- Median Income 45-64$78,333
- Median Income Over 65$52,254
- Adams Morgan Demographics
- Anacostia Demographics
- Capitol Hill Demographics
- Chinatown Demographics
- Downtown Washington Demographics
- Dupont Circle Demographics
- Foggy Bottom Demographics
- Forest Hills Demographics
- Friendship Heights Demographics
- Gallaudet Demographics
- Georgetown Demographics
- Glover Park Demographics
- H Street Washington Demographics
- Judiciary Square Demographics
- Logan Circle Demographics
- McLean Gardens Demographics
- Mt Vernon Triangle Washington Demographics
- Navy Yard Demographics
- Near Northeast Demographics
- North Capitol Street Demographics
- Penn Quarter Demographics
- Shaw Demographics
- Southwest Waterfront Demographics
- Takoma Dc Washington Demographics
- Washington Hospital Center Demographics
- Waterfront Washington Demographics
- Wesley Heights Demographics
- West End Washington Demographics
Residential Rents in Washington, DC
When choosing the best place for a business, location research is very important – not only for the office, but also for the employees’ convenience.
Washington has become the #1 most popular destination for millennials, but it is also the fifth-most expensive U.S. city to live in, meaning that home ownership is often delayed and the demand for residential rental housing in Washington keeps going up, as do the rents. Rental prices have increased by nearly 4% in 2016 alone and are forecasted to keep doing so, despite the amount of new product coming onto the market. One-bedroom rentals average over $2,000 per month and two-bedroom units clock in at almost $3,000 per month.
Washington, DC Average Rental Price, May 2019
- $ 2,091/mo
- Studio: $ 1,656
- 1 Bedroom: $ 2,028
- 2 Bedrooms: $ 2,542
Washington, DC Rent Trends
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