Spec suites, favored by smaller tenants in Washington, are now even more in demand post-pandemic. These move-in-ready spaces offer landlords higher rental rates and enable tenants to swiftly become operational, typically within 30-90 days. They particularly attract rapidly growing companies that have outgrown home offices or flexible coworking spaces.
There are over 1.8 msf of spec suites in the Washington market and another 1 msf currently under construction. Nearly half of this inventory is made up of suites under 5,000 sf, and 73% of the inventory is in the core CBD and East End submarkets. An increasingly popular option for landlords is to build spec suites together in a town hall model that features a shared tenant lounge and conference amenity. Currently, more than 241,000 sf of town hall suites are on the market or under construction.
Spec suites offer an opportunity for landlords to achieve higher rents. Class A spec suites command rates nearly $1 psf higher than Class A direct availability, and Class B spec suites surpass Class B prime availability by $3.47 psf. In 2023, spec suites accounted for 79% of all deals under 5,000 sf. The top industries leasing spec suites are nonprofits and associations that have leased over 160,000 sf of spec suites in 2023, followed by law firms that signed over 60,000 sf and consultants that inked over 52,000 sf.