The Suburban Maryland office market struggled to maintain the leasing momentum it saw in the first two quarters. With only a handful of leases signed over 20,000 square feet, overall leasing activity in terms of square footage ended the quarter at its lowest level in 2021. One of the largest leases signed in the third quarter was by venture capital firm Northpond Ventures, where they took the entire 21,514 square foot 8th floor at 7500 Old Georgetown Road in Bethesda. Vacancy rates increased slightly to 17.4% compared to last quarter yet remain 190 basis points higher than pre-pandemic levels.
Average rental rates are continuing to rebound, ending the third quarter at $28.67/SF. Particularly seen in Bethesda, new trophy developments have Class A properties holding their asking rates higher, though inconsistent tenant demand will continue pressuring these rates in the coming quarters. The I-270 corridor continues to be a hotbed for biotech and life sciences demand, with vacancy levels for lab space remaining in the single digits.
Average rental rates are continuing to rebound, ending the third quarter at $28.67/SF. Particularly seen in Bethesda, new trophy developments have Class A properties holding their asking rates higher, though inconsistent tenant demand will continue pressuring these rates in the coming quarters. The I-270 corridor continues to be a hotbed for biotech and life sciences demand, with vacancy levels for lab space remaining in the single digits.