Washington, DC, for practices.

DC is five markets wearing one name

A practice searching "Washington DC" is searching across submarkets that differ by more than four points of vacancy and by a great deal more than that in character. Second quarter 2026 direct vacancy:

Capitol Hill and NoMa — 16.8 percent. The tightest of the major submarkets, and the one closest to the residential density east and north of the Capitol.

West End and Georgetown — 17.9 percent. Established, expensive, and where a lot of DC's private-pay specialty and aesthetics practices want to be. Absorption was slightly negative last quarter, so nothing is loosening quickly.

Central Business District — 18.4 percent. The K Street core. Positive absorption of 109,399 square feet on 711,751 square feet of leasing, driven by law firms rather than by healthcare.

Capitol Riverfront — 21.0 percent. Newer stock, more availability, and the submarket most likely to make a concession package work for a practice that does not need a legacy address.

East End — 21.1 percent. The highest vacancy of the group and the strongest quarterly absorption at 168,939 square feet, which is what a market looks like when it is clearing at a discount.

Across the District, direct vacancy sat at 18.5 percent and total vacancy at 19.3 percent in the second quarter of 2026 — roughly 28.8 million square feet standing empty. Net absorption was positive 164,285 square feet for the quarter but negative 394,395 square feet year to date. This is a market absorbing space in fits and starts, not recovering steadily.

In DC, the class spread is real — and that is unusual here

DC asking rents by class, full service: Trophy at $68.52, Class A at $59.05, Class B at $45.47, with the overall average at $54.89.

That is a $13.58 gap between A and B, and it is worth understanding how different that is from the suburbs. In Bethesda, Class B currently asks slightly more than Class A. In Tysons, the same inversion. In DC the hierarchy still holds, which means a practice moving down a class in the District captures a real, measurable saving rather than the statistical artifact you get across the river.

For a practice, that matters more than it does for a law firm. Very few patients choose a dentist on lobby finishes. If your patients arrive by appointment rather than by walking past, Class B in a good location is frequently the correct answer in DC in a way it is not in Bethesda.

The tiered tax rate, and why building size shows up in your rent

The District taxes commercial property on a graduated scale rather than a flat rate, and almost no tenant knows it.

Class 2 commercial. $1.65 per $100 of assessed value up to $5 million, $1.77 from $5 to $10 million, and $1.89 above $10 million.

Real estate taxes sit inside operating expenses on a full-service lease, so a practice in a large trophy building is carrying a materially higher tax rate per dollar of value than a practice in a small building on the same street. It is not the only reason big buildings cost more, but it is a real component of the operating expense line, and it compounds every year through your escalations.

Two tax rates that should make you check on your landlord

The District also taxes property it considers unproductive at punitive rates: Class 3 vacant property at $5.00 per $100 of assessed value, and Class 4 blighted property at $10.00.

Set that against the $1.89 top commercial rate. A building that tips into a vacant classification is suddenly carrying a tax bill several times what it was underwritten at, and the owner of a struggling half-empty building knows it long before a tenant does.

This is not a reason to avoid DC. It is a reason to ask, before you sign a ten-year lease and put six figures of your own money into a build-out, what the building's tax classification is, what its occupancy actually is, and whether ownership has the capital to keep it out of that category. A landlord with a clean answer gives it quickly.

What is happening to the inventory

Roughly 1.4 million square feet has come out of DC office inventory through conversion so far this year. Vacancy is improving in part because supply is being demolished or converted to residential, not because demand has broadly returned.

The demand that is here is concentrated. The largest new lease of the second quarter was White & Case taking 196,000 square feet at 1701 Pennsylvania Avenue; O'Melveny & Myers renewed 101,739 square feet at 1625 Eye Street. Law firms are expanding nationally — 4.6 million square feet leased in the first quarter of 2026, 31 percent more space than in 2019 — and DC is one of the markets where that is most visible. Several of the other large transactions were renewals with contractions, including GSA-USDA, Amentum and Booz Allen Hamilton.

For a practice, the read is straightforward. The good blocks in the good buildings are being taken by tenants with more leverage than you have, and the space being removed from inventory is not coming back. Timing matters more here than the headline vacancy rate suggests.

What this means for a practice searching now

Nearly a fifth of DC office space is empty, the class discount is real and capturable, the tax line varies by building size in a way nobody will volunteer, and a landlord under pressure has a specific and visible exposure you can ask about.

Those four facts together favour a practice that starts early, looks at Class B in strong locations rather than defaulting to trophy, prices the deal on total occupancy cost rather than the quoted rate, and does real diligence on the ownership before committing capital to a build-out.