Construction In D.C. Plummets To 15-Year Low Point
Shovels went into the ground for just 3.6M SF of new construction in the District of Columbia during 2025, marking the slowest period in at least a decade and a half.
The new data, released last week in the Washington DC Economic Partnership’s annual development report, shows that groundbreakings across all property sectors last year declined by 27% from 2024, which itself was a slow year for construction starts.
The amount of development that got underway during 2025 was down 68% from the pandemic-era peak in 2022, the year the Federal Reserve began raising interest rates. And it was the lowest level of construction starts since at least 2010, the first year in WDCEP's data.
Construction starts in the office, hospitality and “quality of life” — education, medical and community amenities — sectors were down, while housing and retail starts were up.
The 1,933 residential units that broke ground last year represented an increase from the 1,362 in 2024, but each year was less than half of the level reached in every other year over the last decade. WDCEP's report last year showed that rental housing starts fell by 79%.
WDCEP’s report describes 2025’s residential activity as “well below the average number of starts in prior years.” It notes that because projects from the previous busier years completed, the number of units under construction at the end of 2025 represented a 19% dip from one year earlier.
“It's not a flood of new projects by any stretch of the imagination,” Will Rich, a managing director of advisory services for Cavalry Real Estate Advisors who worked with WDCEP on the report, told Bisnow.
“The interest rates are slightly lower, construction costs continue to be elevated, and so a lot of projects that have been on the planning stages for quite some time are still delayed because of the macroeconomic factors that haven't really changed much,” he added.
The residential projects that did get started during the year were overwhelmingly conversions from other uses rather than ground-up developments.
The first recipients of D.C.’s Housing In Downtown 20-year tax abatement were awarded in 2024, and as of the end of 2025, there were 14 conversion projects underway totaling over 1,900 units.
Office-to-residential conversions that started last year include Stonebridge and Bernstein Cos.’ 435-unit project at 1999 Eye Street, Duball’s 160-unit conversion of 1201 Connecticut Ave. NW, and Henderson Park and Lowe’s 428-unit conversion of 1250 Maryland Ave. in Southwest.
This year, Post Brothers started construction on The Geneva, a 525-unit conversion of two massive office buildings on Connecticut Avenue in Dupont Circle. The project is the largest office conversion in D.C.’s history.
Meanwhile, just 300K SF of office space broke ground in 2025, half of the prior year’s volume. The 136K SF of retail that began construction last year was up from 47K SF the year before.
Hospitality starts were down, with the 1,319 hotel rooms that broke ground amounting to 280 fewer than the year prior. Starts on quality-of-life projects plummeted from 685K SF in 2024 to 186K SF this past year.
Rich said he expects multifamily starts in D.C. to experience a modest increase in 2026. He said many project sites that have been on the boards but have been stalled due to financing challenges have been selling to developers with new plans for them.
“[It] might not have as many units, might not be as tall, but it is able to move forward,” he said. “And so I think we might see more of that happening in the months and years to come.”
