The vacancy rate for the Washington, DC MSA fell slightly to 15.6% in Q4 2018. Vacancy has been slowly decreasing since 2015 however the region remains well above rates seen before the Global Financial Crisis (~10%). Structural oversupply of outdated suburban office space will make significant reductions to overall vacancy difficult. Despite suburban oversupply, demand for high-quality space in dense urban submarkets has fueled widespread in-fill development/construction activity. New construction has helped to push rents upward, measuring $37.27/SF in Q4 (+0.72 YoY). Despite rent growth, tenant favorable conditions are expected to persist in most submarkets across the region as increased rents are offset by generous concession packages.