8 Stories That Permeated D.C.'s CRE Landscape In 2025

For the commercial real estate sector, 2025 brought a deluge of disruptions, distress and some market-shaking deals to the District of Columbia.

As the year comes to a close, Bisnow D.C. is rewinding the tape on the biggest, most impactful stories of the year — the moments and trends that we’ll remember long into 2026 and beyond. 

The past year saw a new law that overhauled the city’s multifamily regulatory environment, a deal to bring D.C.’s NFL team back to the city after nearly three decades, and a slew of federal actions with impacts that have penetrated nearly every aspect of life in the city. 

It was the year that new trophy office development finally got a jump-start and the year that megaproject The Wharf traded hands. Restaurants closed at a record pace, and while traditional ground-up multifamily construction remained stalled, office-to-residential conversions picked up. 

Here are eight top stories that dominated the discussion in D.C. commercial real estate in 2025:

Law Firms Spurred New Development

Law firm movement remains a key driver of D.C. office leasing. 

This year, law firm leasing activity is set to exceed all sectors — including the federal government. As of the third quarter, law firms accounted for 32% of the year’s leasing volume, according to CBRE.

Demand from law firms for new, better space in an extremely tight trophy market gave way to something that has become a rarity in the city: ground-up office development.

BXP announced it would build two new downtown D.C. office buildings this year, both for law firm anchors. The new Metro Center and West End buildings will be the first ground-up developments to start since Skanska’s 17xM in 2021. 

The REIT first announced in January that it would build a 320K SF office building for McDermott Will & Emery at Metro Center. Cooley later signed on to that project, taking the building to nearly 90% full before construction had even begun. This month, BXP unveiled another such project: a 320K SF office building at 2100 M St. SW for anchor tenant Sidley Austin.

And with some big law firm expirations over the next five years, more could be on the way. 

The Trump Effect

From the moment President Donald Trump came into town for the second time, it was clear the city was in store for some big changes. 

Immediately after he was inaugurated, Trump signed an executive order that directed agencies to bring employees back in person full time and terminate remote work arrangements.

Then, under the direction of Elon Musk’s Department of Government Efficiency, the administration unveiled a deferred resignation program and started undertaking forced layoffs across agencies while gutting nearly all of the U.S. Agency for International Development.

Meanwhile, the federal government’s spending cuts meant money was siphoned from the city’s nonprofits, contractors and research groups. And the administration's swiftly changing leasing and disposition strategies threw the market into confusion. 

The summer concluded with Trump sending the National Guard into town after declaring a “crime emergency.” This fall saw the longest-ever government shutdown dampen business activity in the city. 

Office-To-Residential Conversions Took Off 

D.C. emerged this year as a leader in office-to-residential conversions. 

Foulger Pratt’s The Accolade, a 243-unit conversion at a former Department of Justice building at 1425 New York Ave. NW, delivered in 2025. Meanwhile, Stonebridge and Bernstein Management Cos. started a project to turn the site of a K Street office building into a 435-unit apartment building.

The Housing in Downtown tax abatement has helped spur the city’s strong pipeline. The K Street redevelopment is one of eight projects that have received the incentive, together planned to deliver 1,745 new housing units. 

Developers have already delivered 1.4M SF of office-to-residential conversions, according to Avison Young’s third-quarter report. Another 6.3M SF is either underway, slated for or rumored for conversion, equal to 4.7% of the city’s office stock. That pipeline puts D.C. as second only to Northern Virginia in markets leading the country in percentage of office stock slated for conversion. 

Multifamily Construction Stall Continued

While conversions have moved forward, deals to build new ground-up multifamily projects have been few and far between.

D.C. was far from the only market to see multifamily construction dry up over the year. But along with the headwinds facing the sector nationwide — from tariffs to labor shortages to interest rates — D.C. had to contend with its own unique set of challenges. 

While the issues caused by D.C.’s regulatory environment predated the Trump administration, the president's actions in 2025 have exacerbated the difficulty of financing new projects in the city. 

Investors were increasingly deterred by a slate of new variables this year, including federal funding and workforce cuts, which have weakened the city’s job market, as well as its deployment of the National Guard in August, developers have said in recent months. The government shutdown this fall only fueled the investor fears.

Many sites that had been slated for new multifamily development are coming to the market, Bisnow reported in November, as developers are deciding to give up their plans or being forced by their lenders to do so. 

Bowser, Lawmakers Took On Multifamily Regulations

The Bowser administration made spurring new multifamily development one of its major policy initiatives this year. 

In February, the administration put in gear an overhaul of D.C.’s housing regulatory environment with the Rental Act — legislation aimed at drawing capital to the city's multifamily sector. 

The bill, short for rebalancing expectations for neighborhoods, tenants and landlords, took aim at the 45-year-old Tenant Opportunity to Purchase Act, as well as tenant protections in the eviction process. It garnered widespread support from the city’s major for-profit developers, while some nonprofit developers were more skeptical. 

The D.C. Council passed its revised version of the bill in September, in which it walked back some of Bowser’s initial reforms, and Mayor Muriel Bowser signed that version into law in November. Even given the changes, industry leaders told Bisnow they still believe it will deliver on its mission of spurring new development in the city. 

Commanders Strike Deal To Return To City

This year, Washington’s NFL team inked a deal with the District to return to the city, nearly three decades after moving to Maryland. 

In April, Bowser announced her administration had reached an agreement with the Washington Commanders to build a new $3.8B stadium for the team, as well as an adjacent mixed-use district, at the 174-acre site of the former RFK Stadium. The deal became official in September, when the D.C. Council passed the final terms of the agreement. D.C. is putting up $1.1B for the infrastructure around the 65,000-seat stadium, and the NFL team is putting up the remaining $2.7B. 

Work on the stadium is commencing first, with a projected 2030 delivery. The Commanders have hired three JBG Smith veterans to work on the development: Andy VanHorn as the team’s head of real estate, Matt Haas as its head of construction and Ben Spiritos as the director of development. The team also tapped HKS to lead the design. 

Meanwhile, work on the mixed-use district — envisioned for up to 6,000 housing units, with 30% of them income-restricted, plus hotels, restaurants and retail — will follow, with the master plan process set to commence in February. 

The Wharf Trades Hands

The sale of The Wharf, the mixed-use megaproject on D.C’s southwest waterfront, was by far the largest transaction of the year. 

In April, the developers of the 3.5M SF project, Hoffman & Associates and Madison Marquette, were bought out of their stake by Canadian pension fund PSP Investments in a deal that valued the project at $1.8B.

Bisnow first reported the deal to sell the stake to PSP, a minority investor in the project since 2014, was in the works in March. Bisnow later reported in June that PSP had secured a $1B mortgage for the acquisition from Wells Fargo, Morgan Stanley and Goldman Sachs, and that PSP was putting up nearly $60M in equity to close the deal. 

With its divestment from The Wharf, ​​Hoffman also moved from its 12K SF office at The Wharf to 9K SF at City Ridge in Upper Northwest. 

Restaurants Faced Distress

It was a tough year for the city’s more than 2,600 restaurants. 

A record 92 restaurants closed in the city through November, Axios reported last week, citing data from the Restaurant Association of Metropolitan Washington. It was the third straight year during which that number has risen. 

RAMW sounded the alarm in March when it released a survey on restaurant sentiment. That survey of 200 casual full-service restaurants found that 11% of those restaurants were very likely to close, while 33% said they were somewhat likely to close.

In addition to headwinds like tariffs and inflation, one of the challenges often cited by restaurants as they closed was I-82, the phased tipped minimum wage law that went into effect in May 2023 and slowly ramps up until 2027. The D.C. Council in July voted to slow the pace of the rollout to give restaurants more time to adjust. 

Bisnow reported on the distress in April, when landlords and brokers said deals required more flexibility and tenant improvement allowances to attract and keep restaurant operators as they navigated various obstacles.

But since then, there have been even more challenges thrown in the path of the industry, from the National Guard deployment in August to the Trump administration’s immigration raids, both of which have taken a toll on restaurants’ customer base and staff.