The 2 Office Sectors Fueling New-To-Market Growth In D.C.

The last year in D.C.’s office market was a fight for stability, as the city sought to remain resilient amid massive turbulence. But now, signs indicate 2026 could be a year that brings something the market has long sought: a surge of new companies. 

Despite the perception issues D.C. faced last year — from the federal government’s budget cuts to the National Guard deployment in August — the city’s office market demand remained steady. Year-end market reports show occupancy losses were less severe than the prior year, and the previously rising vacancy rate flatlined just above 20%. 

“There are a lot of indicators that show that the city was incredibly resilient and held its own despite these very rocky news headlines,” JLL Research Director Tammy Shoham said. 

With the landscape stabilized, new seeds of demand are now beginning to bloom.

Private sector tenants looking for space in D.C. are projected to add 474K SF of occupancy gains, according to CBRE’s fourth-quarter report. It attributes that growth to “several new-to-market tenants and significant planned expansions.”

Attracting new-to-market tenants has been an uphill battle for the city for years. But researchers and brokers who spoke with Bisnow said that has started to change — and the trend is expected to continue into 2026. 

“D.C. historically has not been a huge new-to-market office market,” Shoham said. “There's been a lot of musical chairs. We're seeing some more new-to-market here.” 

When looking at where new-to-market demand and expansions are coming from, two sectors rise to the top of the list, brokers and researchers said: technology and higher education. 

“Looking ahead, this resilient market is positioned for growth from specific sectors — namely defense tech and education,” JLL’s Q4 report says.

This demand growth has already started materializing. Shoham told Bisnow that defense tech and education tenants each doubled their leasing volume in 2025 from the year prior. 

Last quarter, artificial intelligence cloud computing firm ServiceNow, which already had two offices in the D.C. metro, took 11,700 SF at The Mills Building next to the White House, according to Cushman & Wakefield’s Q4 report. The publicly traded company based in Silicon Valley had planted a temporary innovation hub at 1717 K St. NW last summer but said it was looking to move into a new space in 2026. 

Also last quarter, Block, the parent company of Square and CashApp, signed an 8K SF lease at Marx Realty’s The Herald, near McPherson Square.

And during Q3, SpaceX expanded at Douglas Development’s 1155 F St. NW, taking 24,100 SF, and AI cloud computing company CoreWeave expanded by 79%, taking 22,600 SF at 1001 Pennsylvania Ave. NW. 

OpenAI reportedly inked a 14,500 SF lease for an office at 901 F St. NW in August, which is expected to open in March. 

And Nvidia is reportedly looking for 30K SF of offices in D.C. The company has an existing office at 1201 New York Ave. NW. 

“We're seeing a lot of growth from Silicon Valley companies opening an office in D.C. and growing significantly,” Shoham said. “And I think with the growing defense budget, but also real focus on nimble innovation in the defense sector, I think we're going to see more of that in ’26.” 

Much of the office demand from tech tenants is for their government relations divisions. 

“The tech sector is what's really growing, when you look at the stock market and everything else, and then, boom, they want to be in D.C. and solidify that legislative portion of their business,” Newmark Senior Managing Director Doug Damron said. “So I think that's where that's coming from and will continue to come from.” 

That tech demand fans out to third-party groups that work with these companies and push for policies on behalf of the sector, which is growing at lightning speed. 

“A lot of that is lobbying groups and AI-adjacent, so a lot of energy and infrastructure groups who have come in,” CBRE Vice President Emily Eppolito said. 

Another source of growth is coming from universities.

“I think there’s certainly an increased velocity of universities looking, particularly those looking to do something significant,” Lincoln Property Co. Vice President Tim Whitebread said. 

In October, the University of Michigan inked an 11,500 SF lease at Skanska’s new trophy building, 17xM. That followed the University of North Carolina at Chapel Hill taking 11K SF at Lincoln Property Co.’s 101 Constitution the quarter prior.

“It does seem like every couple of months you hear about another school wanting to plant a flag here, which is awesome,” Eppolito said. 

JLL data shows that there are eight local and more than 70 out-of-town universities with a presence in the District. Universities use satellite locations in the city to hold government-oriented programs, house students for internships and lobby the nation's lawmakers.

Tech and university leases may not be the biggest deals of the quarter, but when they accumulate, they matter to the market.

“It’s not always going to be a 50K SF new lease,” Whitebread said. “But you add five of them together, 10 of them together, and you've got meaningful absorption.” 

And the new ones that are dipping their toes into the market for the first time are likely to grow with their next lease. 

“Maybe they start small, but they grow, so the fact that those are the two sectors that are growing so much in this market has the potential to be exponential in a way that other sectors have not been,” Shoham said.