Close-in: Arlington, Rosslyn/Courthouse
- For its 10,536,000-square-foot Rosslyn/Courthouse submarket, Reis reports a vacancy rate of 6.1%, down 90 basis points year-over-year, but up 80 basis points over the quarter.
- The average asking and effective rents, recorded at $42.41 psf and $35.84 psf, were up 0.4% and 0.3%, respectively, for the quarter, and each up 0.6% year-over-year. For all of 2012, Reis forecasts modest rental gains 1.2% and 1.1%, asking and effective.
- Reis reports the 1776 Wilson Boulevard completing in August 2012. The project is listed at 108,000 square feet.
- “While the majority of the submarkets remained relatively flat, the Rosslyn-Ballston Corridor (RBC) submarket paced Northern Virginia with positive absorption of 241,137 square feet,” according to Colliers. This source reports a total vacancy rate of 11.7% and a weighted average asking lease rate of $41.80 psf.
- “The Rosslyn-Ballston (RB) Corridor turned the corner into positive net absorption, thanks in large part to The Defense Advance Research Projects Agency (DARPA) move to 675 North Randolph Street. The 355,530-square-foot Class A property was completed at the end of last year, and is expected to achieve LEED Platinum designation,” according to Cushman & Wakefield
Close-in: Arlington, Ballston/Clarendon
- For the Ballston/Clarendon submarket, Reis reports a second quarter vacancy rate of 8.9%, up 60 basis points for the quarter but down 80 year-over-year. The 283,000-square-foot office component of the 800 N. Glebe Road mixed-use project finished in May, Reis reports.
- For asking and effective rents, Reis reports rates of $36.64 psf and $31.06 psf, respectively, both up 0.6% for the quarter and up 2.8% and 3.4% year-over-year.
- Reis forecasts vacancy in Ballston/Clarendon to finish 2012 at 9.7%, and asking and effective rents to post annual gains of 1.6% and 2.0%.
- In Clarendon, Penzance Properties has broken ground at a project located at 3001 Washington Boulevard. The 210,196-square-foot office property is scheduled for delivery in early 2014, according to Cushman & Wakefield.
- According to Colliers, a “noteworthy transaction” in the second quarter was TA Associate’s sale of 1005 N. Glebe Road to Washington Real Estate Investment Trust (WRIT). This sale is covered in the Transaction Analytics section of this report.
Close-in: Arlington County, Crystal City
- For the second quarter, Reis reports Crystal City net absorption was negative 186,000 square feet, bringing the year-to-date total to minus 458,000 square feet. Vacancy in the 10,894,000-square-foot Crystal City submarket finished the second quarter at 12.6%, up from 10.9% the quarter prior and up 180 basis points over 12 months.
- Reis reports average asking and effective rents of $41.02 psf and $36.60 psf, down 0.3% and 0.4% for the quarter but up 0.8% and 1.0% year-over-year. Vacancy is forecast to finish the year at 11.6% while rents will post annual gains of approximately 1.0%.
- BRAC. Crystal City and Alexandria submarkets are vulnerable to office closings under the steadily accelerating BRAC program. According to Colliers, “Office space in Arlington County continued to take a hit during the second quarter, highlighted by the Crystal/Pentagon Cities submarket experiencing negative 452,481 square feet of absorption. The Crystal/Pentagon Cities submarket had the largest negative absorption total by any single submarket, largely due to BRAC and the Federal Government moving out of their fully-occupied buildings in Crystal City.”
- According to Studley, Inc.’s second quarter report on the D.C. office market, the Department of Defense leased 72,799 square feet at 251 18th Street in Crystal City.
- For its Crystal City/Pentagon Cities submarket, Colliers reports a total vacancy rate of 18.5%, and a weighted average asking lease rate of $39.90 psf.
- According to Cushman & Wakefield, “While space returned to the market spanned the region, Crystal City once again bore the brunt of vacancies, as move-outs related to BRAC continued.” Newly vacated blocks included: 220,000 square feet at 400 Army Navy Drive in Crystal City (Department of Defense Inspector General).”
Close-in: Southeastern Fairfax County, Alexandria
- For its 6,128,000-square-foot Springfield/Southern Fairfax County submarket, Reis reports a vacancy rate of 19.1%, up from 18.3% one quarter earlier, and average asking and effective rents of $26.69 psf and $21.72 psf, up 0.8% and 1.0% year-over-year but both down 0.4% for the quarter.
- Phase I of the Patriot Ridge Business Park, at 240,000 square feet, completed in June in the Springfield/Southeastern Fairfax County submarket, Reis reports.
- As noted in previous Observer coverage of this market, many of the Defense Department relocations from Crystal City and elsewhere are destined for Fort Belvoir and Alexandria’s Mark Center.
- According to Cushman & Wakefield, the City of Alexandria has an overall vacancy rate of 18.6%, an overall weighted average rent of $32.49 psf. The weighted Class A average is $36.38 psf.
- For its Springfield/Annandale/Baileys submarket, Cushman & Wakefield reports an overall vacancy rate of 24.4%, an overall direct weighted average of $33.39 psf, and a direct weighted Class A average of $41.39 psf.
Fairfax County: Dulles Corridor South, Herndon, Reston
- Herndon and Reston, similar in size and with similar trends, are often regarded as a single submarket. Reis reports on them separately. No competitive space has delivered to the Herndon or Reston submarkets in several years.
- After posting 197,000 square feet of negative net absorption in 2011, Herndon recorded 184,000 square feet of positive demand in the first half of 2012, Reis reports. Reston saw 156,000 square feet of net absorption in 2011, and 92,000 square feet in the first half of 2012.
- Respective vacancy rates for second quarter were 14.3% for Reston and 16.0% for Herndon, Reis reports. Reston’s rate is unchanged over the quarter and down 160 basis points year-over-year. Herndon’s rate is down 40 basis points for the quarter and down 100 year-over-year.
- Reis reports average asking and effective rents of $31.19 psf and $25.61 psf for Reston, and $29.68 psf and $23.45 psf for Herndon. Average asking and effective rents are up 0.1% for the quarter in Reston, and unchanged in Herndon.
- Reston posted 14,564 square feet of negative net absorption in the second quarter, Colliers reported. Herndon posted plus 21,373. Total vacancy in Herndon was 14.0%; the weighted average asking lease rate was $26.88 psf. Total vacancy in Reston was 18.7%; the weighted average asking lease rate was $27.72 psf according to this source.
Fairfax County: Dulles Corridor South, Chantilly/Centerville
- The 7,690,000-square-foot Chantilly/Centerville submarket has seen no new completions since 2008. Reis reports second quarter vacancy at 21.6%, down from 22.1% in the first quarter, down 440 basis points year-over-year.
- Reis reports average asking and effective rents of $26.11 psf and $20.93 psf, both unchanged over the quarter and up 0.4% and 0.6%, respectively, year-over-year. Reis forecasts a vacancy rate decline to 21.0% and average asking and effective rent increases of 1.1% and 2.4%, respectively, in 2012.
- For Route 28/South Chantilly, Cushman & Wakefield reports overall vacancy at 16.4% and an overall weighted asking rent of $27.26 psf. The direct weighted Class A rental rate is $29.03 psf.
Loudoun County: Dulles Corridor North, Leesburg/Route 7/Route 28 Corridor
- Reis tracks two Loudoun County submarkets—Leesburg/Route 7/Route 28 Corridor (1,686,000 square feet) and Sterling (5,279,000 square feet). Vacancy ended the second quarter at 28.3% in Leesburg, and 35.2% in Sterling.
- For Leesburg, second quarter average asking and effective rents finished the second quarter at $21.97 psf and $17.67 psf, unchanged and down 0.1% for the quarter and up 0.7% and 0.8% year-over-year. For Sterling, the rates were $23.43 psf and $17.49 psf, down 0.3% and 0.4% for the quarter and down 0.6% and 0.8% year-over-year.
- The Dulles Highpoint and the Dulles World Center are planned for Sterling, totaling 4.7 million square feet. Reis reports three buildings under construction at One Loudoun in the Leesburg/Route 7 submarket, totaling 147,000 square feet. Second quarter net absorption was 4,000 square feet in Leesburg, and negative 114,000 square feet in Sterling.
- Vacancy in Sterling is forecast to decrease to 34.0% by year-end 2012. For the Leesburg/Route 7 submarket, the rate will finish the year at 28.5%, Reis predicts.
- Net absorption has finally turned around in Tysons Corner. The total for 2011 was negative 262,000 square feet and the first quarter was negative 143,000 square feet, but second quarter rebounded with positive 294,000 square feet. Second quarter vacancy was 14.9%, down 50 basis points for the quarter and down 10 year-over-year.
- Average asking and effective rents finished second quarter at $32.21 psf and $26.76 psf. Both rates are unchanged over the quarter, and both are up 1.4% year-over year.
- Reis reports the 60,000-square-foot first phase of the Mosaic at Merrifield in Merrifield (in the Tysons Corner/Vienna submarket) still under construction for delivery in 2012.
- According to Cushman & Wakefield, “Science Applications International Corp. (SAIC) announced it will be moving some jobs from its San Diego office to it Tysons Corner Headquarters.”
- Colliers reports that Palantir, a software and technology company, expanded their space in Tysons Corner by 50,000 square feet in the second quarter. This source reports a total vacancy rate of 16.5% and a weighted average asking lease rate of $29.65 psf.