- JBG Smith’s same-store apartment occupancy dropped to 90.4% at year-end 2025.
- Net operating income declined 5.1% quarter-over-quarter, more than double the prior period’s decrease.
- Federal job cuts drove weaker multifamily demand in the DC region, but stabilization is expected in 2026.
- The REIT is shifting capital from multifamily sales into discounted office acquisitions.
Federal Cuts Pressure Multifamily Portfolio
According to Bisnow, JBG Smith reported accelerating losses in its multifamily portfolio. Federal workforce reductions continued to weaken demand across Washington, DC, and Northern Virginia.
The REIT’s year-end results showed same-store multifamily occupancy at 90.4%. That figure marked a 1.8% decline from the third quarter. Net operating income fell 5.1% from the prior quarter.
At the same time, average effective rents on new leases dropped 8.1%. The combined declines reflect ongoing pressure in the region’s apartment market.
Market Conditions and Outlook
CEO Matt Kelly attributed the continued softness to job cuts in the federal sector, noting the metro area lost 48,500 jobs from late 2024 to 2025, primarily due to a 52,400-employee drop in federal employment. However, Kelly anticipates stabilization, citing signs of slowed job losses since October, renewed federal funding, and constrained new construction. Only three new multifamily projects totaling 1,083 units broke ground in the last quarter.
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
Strategic Shift to Office Assets
Despite multifamily headwinds, JBG Smith is redeploying capital from multifamily and development site sales to purchase distressed office properties. In 2025, the company acquired Dulles Plaza in Tysons (491.5K SF for $42.3M) and Dulles View in Herndon (360K SF for $31.5M), the latter via joint venture. The strategy mirrors a broader trend among REITs prioritizing leasing momentum and balance sheet flexibility, as seen in recent moves by other office landlords to preserve capital while repositioning portfolios. The REIT also sold an entitled office site at 2100 Crystal Drive for $8M and closed a Potomac Yard land sale to Toll Brothers for $50.7M.
What’s Next
With federal job losses tapering and limited new multifamily supply, JBG Smith expects stabilization in its multifamily portfolio in 2026. The company’s pivot toward opportunistic office acquisitions could reshape its asset mix as the broader DC market adjusts to evolving demand drivers in both sectors.
