Northern Virginia’s office market continued to tighten in the third quarter as more demand from artificial intelligence, technology and defense tenants bolstered weaker leasing activity.

The market posted 672,378 square feet of positive net absorption during the quarter, reversing losses from the first half of the year tied to buildings being removed from the market, according to JLL. The National Science Foundation’s 380,000-square-foot move to 401 Dulany Street accounted for much of the gain. 

Northern Virginia’s office vacancy rate fell for a sixth straight quarter to 21.7 percent. Total available space dropped to 33.6 million square feet, its lowest level in a decade, and 25.5 percent below the 45.1 million-square-foot peak in 2023.

Leasing activity slowed to just 1.3 million square feet on the quarter, with no deals of more than 100,000 square feet. AI, technology and defense companies committed to more than 300,000 square feet of net new space. And defense spending and tech investment are expected to continue driving momentum.

Relocations and new leases have accounted for 58 percent of leasing so far in 2026 in a reverse to the renewal era of 2021 through 2023. 

Office supply is beginning to strengthen rents, according to JLL. Class A direct asking rents reached $42.51 per square foot per year, while overall direct asking rents averaged $38.13. JLL’s longer-term data shows asking rents have risen since 2022 for Trophy, Class A and Class B properties, while Class C rents have slipped.

New construction remains virtually nonexistent, with only about 34,000 square feet underway. Meanwhile, more than 10 million square feet of existing office inventory has been proposed for redevelopment, a dynamic JLL expects will continue tightening the lower end of the market while limited Trophy supply pushes demand toward Class A properties.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.