Demand: Leasing Activity Holds Steady
Suburban Maryland posted 395,500 square feet (sf) of gross leasing in Q3 2026, consisting of 192,250 sf of new leases and 203,250 sf of renewals. Gross leasing totaled 1.4 million square feet (msf) year-to-date (YTD), with new leasing accounting for 922,400 sf and renewals totaling 519,000 sf.
Montgomery County led new leasing activity with 140,000 sf signed in Q3, representing 73% of total new leasing. Activity was concentrated in I-270/Rockville which recorded 48,400 sf after MacroGenics subleased 30,500 sf at 77 Upper Rock Cir. Bethesda/Chevy Chase netted 38,850 sf, driven primarily by smaller healthcare-related tenants, while new leasing in Rock Spring Park was buoyed by Grossberg Company’s 18,600-sf lease at 6550 Rock Spring Dr. Montgomery County also led renewal activity, totaling 121,100 sf in Q3. In Rock Spring Park, Signal Financial renewed 16,500 sf and The Henry M. Jackson Foundation renewed 12,300 sf, both at 6720 Rockledge Dr. In Germantown, Rodgers Consulting renewed 16,100 sf at 19846 Century Blvd, while in I-270/Rockville, BDO USA renewed in 15,200 sf at 12505 Park Potomac Ave.
Supply: Vacancy Drops With Large Move-Ins
The market recorded 98,400 sf of positive absorption in Q3, the second straight quarter of gains. Absorption was driven largely by X-Energy's 120,000-sf move-in at 9801 Washingtonian Blvd and DRB Company's 56,900-sf move into 9711 Washingtonian Blvd, both in I-270/Rockville. Montgomery County netted 122,000 sf of positive absorption, while Prince George's County yielded negative 23,600 sf. This brings YTD absorption to 211,400 sf.
Overall vacancy ended the quarter at 22.3%, down 20 basis points (bps) year-over-year (YOY), as Class A vacancy fell 60 bps YOY to 24.2% while Class B rose 40 bps YOY to 21.2%. Bethesda/Chevy Chase remains the most oversupplied submarket, accounting for nearly 2.0 msf of vacant Class A space out of a market-wide 8.0 msf. Some of this obsolete office stock is being repositioned or redeveloped, which should gradually reduce competitive supply over time
Pricing: Rental Rates Up Slightly Yoy
Average asking rent rose $0.46 psf YOY to $31.86 on a full-service basis. Bethesda/Chevy Chase remains the priciest submarket at $43.65 psf, followed by Rock Spring Park at $32.20 psf.
