For institutional investment, the nation's capital has historically been a pretty safe bet.
D.C., one of the country's six gateway cities for global real estate investors, has benefited not only from housing hundreds of thousands of federal workers and the real estate in which they work but also businesses of all kinds that want to be near the seat of power.
That sentiment, which has drawn institutional investors to the region for decades, is undergoing a shift, commercial real estate experts told Bisnow.
“The general uncertainty environment has, in many respects, chilled D.C. to traditional institutional investors,” said Solitude Cove Capital Managing Principal John Kevill, a longtime D.C. broker who previously led Avison Young's national capital markets team before launching his own advisory firm in 2022.
Bisnow/Jon Banister
The federal government, which has always been a point of attraction, is now turning into the city’s Achilles’ heel as the Trump administration has begun slashing the federal workforce and real estate footprint.
“There was just predictability, stability, and that provided a nice, just stable part of a broader real estate portfolio,” said Matthew Cypher, director of Georgetown University's Steers Center for Global Real Estate, who worked at Invesco between 2005 and 2012.
“That is what really is unnerving, is the reality that this might not be this stable market that it has historically been for literally decades,” he said.
The effects of the pandemic on the office market have slowed institutional interest in the region over the last few years, experts said.
While data on institutional investment in D.C. is sparse, overall U.S. institutional investment in commercial real estate last year was below the sector's long-term average. Institutional investors accounted for 33% of total global commercial real estate investment in 2024, deploying $268B that year, according to Knight Frank's 2025 Wealth Report.
Institutional investors include sovereign wealth funds, U.S. pension funds and life insurance companies. The institutions with the most real estate investment, according to PERE, include Singapore-based GIC Private Ltd., the Abu Dhabi Investment Authority, the Teachers Insurance and Annuity Association of America, Allianz Group, the Qatar Investment Authority and the California Public Employees' Retirement System.
These institutions like stable investments with reliable long-term returns. The pandemic-era office disruption made the sector's future seem murky, and now the Trump administration’s sweeping cuts have exacerbated that uncertainty in the D.C. market.
“All of these trends feel more amplified in D.C. because the shock to the system that we’ve received is an order of magnitude larger than in most places,” Kevill said.
Bisnow/Emily Wishingrad
Solitude Cove Capital's John Kevill, a longtime capital markets broker, is based in downtown D.C.
While the Trump administration is bringing federal employees back to the office five days a week, it is also undertaking a significant reduction of the federal workforce, canceling millions of leased square feet nationwide and potentially selling hundreds of federally owned properties. And all of this has an outsized effect on D.C., where 25% of jobs are federal jobs and where 30% of the city’s office stock is federally leased.
The administration has laid off more than 100,000 employees so far, according to CNN’s analysis. D.C.’s Office of the Chief Financial Officer estimates that D.C. will lose 40,000 federal employees by 2029, a 21% reduction in the city's federal workforce.
The situation has created an inhospitable environment for institutional players that require a clear business plan. They need to project the amount of money they can make from a property, which tenants will roll over, and what revenues will be up until the time they decide to sell.
“Anybody that's raised money with a PowerPoint presentation talking about trends, they can’t do anything right now,” Kevill said.
Office is more difficult everywhere — but the federal situation in D.C. makes it even more of an uncertain bet.
“Institutions in their underwriting are having a very difficult time because of the fact that it’s highly uncertain and it’s fairly early still,” Cypher said. “So it probably results in a circumstance where there’s not much transpiring on the buy from an institutional perspective because it's just very difficult to underwrite the risk.”
If these entities are going to invest in office at all right now, D.C. is likely not the place they will do it.
“New York City is not even fractionally exposed to the federal government like Washington, D.C., is,” Cypher said. “So what has been our strength for decades is really a potential challenge right now, because we're so tied to the federal government.”
In the place of institutional investment, private capital is swooping in — players who are often just getting into the commercial real estate arena for the first time.
“One of the trends you've seen is more often than not, people taking down office assets are new market participants,” Kevill said. “They’re people we don’t know.”
Those new market participants include Taicoon Property Partners, which has bought a pair of office buildings over the last two years in Arlington and downtown D.C. It was founded by Hai Chien Wang, who previously spent 15 years with Sentinel Real Estate in D.C.
New players also include hedge fund investors, family offices and high net worth individuals, Kevill said. For many of them, real estate values have historically been out of their reach, but they have now dropped to an accessible point.
“The private group might say, ‘Look, we are very long-term holders, and we're comfortable feeling as though we're buying this at a very good basis, and we can hold it for as long as we need to,’” Cypher said.
The new dynamic is laying the groundwork for a complete turnover in who owns the city’s real estate.
“When we pick our heads up in five years, we're going to look at the landscape and realize that 75% of the players are different than they were five years ago,” Kevill said.
