Washington D.C Office Market Report – Second Quarter 2019

Economic Overview

The Washington D.C. metropolitan economy continued its steady growth into mid-year 2019, as employers expanded their payrolls by 27,500 new jobs during the prior 12 months (ending June 2019), representing a modest 0.8% annual growth rate. The Professional & Business Services sector, which consistently accounts for the largest portion of annual job growth, once again out-performed all industry sectors with 12,800 jobs added during the prior 12 months. The Leisure & Hospitality (11,100 jobs) and the Education & Health Services (7,400 jobs) industry sectors also contributed to annual job growth. As a result of the modest-but-steady employment gains, the region’s unemployment rate has shrunk to 3.1%, outpacing the national unemployment rate of 3.7%.

The Washington D.C. regional economy is largely driven by the federal government but continues to experience the diversification of industry with a growing private sector. The Professional & Business Services sector remains the job growth leader, but the Leisure & Hospitality sector has experienced a solid 3.2% annual growth rate, outpacing all industry sectors as a result of the metro area’s popular tourism and convention destination.

Even though the Washington D.C. metropolitan economy remains in expansion mode, job growth has decelerated to its slowest pace since 2014. Although the economy continues to grow at a modest pace, there’s widespread concerns about the possible negative impact of trade-related uncertainty and a slowing global economy. However, a possible congressional ratification of the USMCA, a potential trade deal with China, and the Federal Reserve’s likely interest rate cut in late July could give the economy a boost. On the other hand, the continued trade tensions as well as gridlock in Congress with the upcoming 2020 election could derail the longest economic expansion on record. Looking ahead, the D.C. metro area is forecasted to create an average of 28,800 jobs from 2019 to 2021, according to the Center for Regional Analysis at George Mason University.

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