Q2 2012 Suburban Virginia, Virginia Office Property Sales Analysis

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Q2 2012 Suburban Virginia, Virginia Office Property Sales Analysis

Metro Volume and Pricing

After Reis reported 25 sales totaling $1.4 billion in 2011, the second quarter of 2012 turned in eight transactions totaling $198.9 million at a mean price of $253 psf. Second quarter activity is more or less in keeping with the quarterly deal totals that have prevailed here the past few years. The largest monetary deal of the quarter was the $52.3 million ($355 psf) sale of the Fairgate at Ballston, at 1005 N. Glebe Road in Reis’ Ballston/Clarendon submarket. The buyer was Washington Real Estate Investment Trust (WRIT).

Top Submarkets

The Reston submarket had the largest transaction volume for the past 12 months at $285 million, Reis reports, followed by the Rosslyn/Courthouse submarket at $269 million. Rosslyn/Courthouse had the highest price per-square-foot at $471 psf, followed by Ballston Clarendon, at $414 psf. While leading in transaction volume, Reston posted a moderate $303 psf.

Cap Rate Comparisons and Forecasts

At 7.5%, the second quarter average cap rate for Northern Virginia office transactions is up a slight 20 basis points over the quarter, and the same as one year earlier. The average cap rate ended 2011 at low a 6.0%, after spending the middle of the year in the 7.0% range, where it is now. Cap rates may be steadying as buyers and sellers are finding common ground on the worth of properties. Reis reports a 12 month rolling cap rate of 7.2%, in line with earlier readings and forecast to show gradual declines through 2016.