Federal Spending Cuts Weigh on DC Office Demand

The first half of 2025 was disrupted by steep federal cutbacks in jobs, contracts, and grants.
Roughly 6,000 federal jobs were lost, alongside a 12% reduction in contract and grant spending.
The government is accelerating its portfolio contraction, weakening office demand.
Macroeconomic volatility compounds uncertainty, keeping leasing activity subdued.
Still, stabilizing trends and growing optimism for 2026 suggest a gradual recovery.