Northern Virginia Quarterly Market Report - Commercial real … · 2019-08-02 · Overall Market...

Quarterly Market Report

2nd Quarter 2019

Northern Virginia

lpcwashingtondc.com

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Table of Contents

Metropolitan D.C. Market Overview .....................................3

Northern Virginia Quarterly Overview .................................5

Northern Virginia Top Ten Leases ........................................ 8

Northern Virginia Sales Transactions................................... 9

Market Spotlight, 2Q 2019:

Northern Virginia .................................................................. 11

Alexandria ............................................................................. 13

Crystal City ........................................................................... 15

Fairfax .................................................................................... 17

Loudoun County ................................................................. 19

Merrifield ............................................................................... 21

Old Town Alexandria / Eisenhower Avenue .............. 23

Reston - Herndon .............................................................. 25

Rosslyn - Ballston Corridor ..............................................27

Route 28 North ................................................................... 29

Route 28 South.................................................................... 31

Springfield ............................................................................ 33

Tysons Corner ..................................................................... 35r

13

Neil Alt Senior Vice President

[email protected] | 703.284.5868

Doug McLearn Senior Vice President


Gary Cook Senior Vice President


Chris Dyson Senior Vice President


Eamon McCrann Senior Vice President


Jae LeeSenior Vice President


Stoddie Nibley Vice President


Correll Caulfield Vice President


Jed Prossner Vice President


Jack Redmond Senior Associate


Brenda SosaLeasing Associate


Ben HickeyLeasing Associate


Ben Gallucci Market Research Associate


Sarah CasserlyMarket Research Associate


Northern Virginia Leasing & Market Research

Overall Market Summary

Metropolitan D.C. Market Overview 2nd Quarter 2019

The Washington, DC Metropolitan commercial real estate market is comprised of approximately 424.6 million square feet of rentable office space located in the District of Columbia, Northern Virginia, and Suburban Maryland.

The total vacancy rate remained flat at 14.0% at the end of the second quarter, while the market recorded 1,814,303 square feet of net absorption. Washington, DC posted the largest amount of net absorption with approximately 1.0 million square feet absorbed in the second quarter.

Leasing activity for the quarter totaled 7,720,934 square feet. The largest lease executed was a renewal by the Securities and Exchange Commission (SEC) for approximately 1.3 million square feet at Station Place I, II & III in the District.

At the end of the quarter, there was 9,272,085 square feet under construction, with 65% of the space pre-leased. Nine buildings, totaling 1,761,304

square feet, broke ground; while three buildings, totaling 1,324,552 square feet, delivered. The largest addition was 655 New York Avenue, NW delivering 756,000 square feet (73% leased) in DC’s East End.

There were twenty-two sale transactions in the second quarter, totaling $949.77 million. The largest sale was in the District with 1701 Rhode Island Avenue, NW trading for $105,652,551 ($1,037 psf).

Average asking rental rates increased $0.06 to $38.21 per square foot, Full Service.

From May 2018 - May 2019 the Washington, DC Metropolitan area had a net increase of 25,000 jobs (23,600 private sector, 1,400 government) representing 0.8% growth YOY, while the unemployment rate decreased to 3.1%.

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DC VA MDMetro Area (YTD)

Direct Vacancy (2Q 2019) 10.6% 13.5% 13.2% 13.3%

Total Vacancy (2Q 2019) 11.5% 14.1% 13.8% 14.0%

Total Net Absorption(YTD 2019) 706,940 1,150,776 -113,475 1.7 M SF

Leasing Activity (YTD 2019) 6,249,134 6,019,136 2,354,641 14.6 M SF

Outlook

Metropolitan D.C. Market Overview 2nd Quarter 2019


National Landing BID (Business Improvement District) is being discussed. Coworking operators, (WeWork especially), continue to lease large blocks of space, not only in DC, but pre-leasing space at new developments in Northern Virginia and Suburban Maryland as well. In DC, large projects such as The Wharf Phase II (Southwest) and The Yards (Capitol Riverfront) broke ground in second quarter, and have already experienced strong pre-leasing. As it concerns Government leasing, the GSA will continue reducing the federal real estate footprint and begin to execute longer lease terms (15-20 year terms) while minimizing/eliminating short-term extensions to reduce costs. Proximity to Amazon and the new Metro stations for Phase II of the Silver Line in Virginia and the Purple Line in Maryland should continue to be a catalyst for demand (leasing and sales).

The Metropolitan Washington, DC office market posted a strong second quarter with market fundamentals trending in a positive direction. All three jurisdictions posted positive net absorption for the quarter and strong leasing velocity. DC had an impressive quarter with approximately 1.0 million square feet absorbed and edged out Northern Virginia in leasing with approximately 3.7 million square feet leased. Regional employment gains were solid as the DC Metro area experienced 0.8% of job growth YOY, while the unemployment rate ticked down to 3.1% (the national average is 3.6%). The DC Metro ranked 20th nationally for unemployment in metro areas with populations over 1 million.

Amazon continues to have a positive influence on Northern Virginia as the creation of a new

5lpcwashingtondc.com101 Constitution Ave., Suite 325 East | Washington D.C. | 202.513.67004300 Wilson Blvd., Suite 200 | Arlington, VA | 703.522.46008120 Woodmont Ave., Suite 560 | Bethesda, MD | 301.304.8300

Market Summary

Northern Virginia 2nd Quarter 2019

The Northern Virginia office market consists of 1,536 buildings over 25,000 square feet, totaling approximately 188.8 million square feet of rentable space.

The largest non-GSA lease signed during the second quarter was a 268,240-square-foot relet by Amazon Web Services at South Lake At Dulles Corner - 13820 Sunrise Valley Drive. The largest lease signed by the GSA was a 77,454-square-foot renewal for the GSA-Customs and Border Protection at Crystal Mall Office 4 - 1901 S. Bell Street.

Building sales volume totaled over $510,320,000 during the second quarter. The largest transaction was the sale of Presidential Tower - 2550 S. Clark Street in the Crystal City submarket. Starwood/Vanderbilt acquired the building from Beacon Capital Partners for $123,230,000 ($353 psf). The building was 95.2% occupied at the time of sale. The second largest sale was of the Fair Lakes Portfolio - 12450, 12500, 12600 & 12700 Fair Lakes Circle in the Fairfax submarket. Radix acquired the buildings from C-III for $78,500,000 ($168 psf). The buildings were 88.0% occupied at the time of sale and traded at a 10.00% Cap Rate. The third largest sale was of Parkridge V - 10780-17090 Parkridge Boulevard in the Reston-Herndon submarket. Sunwater Capital acquired the building from Atlantic Realty Companies for $56,250,000 ($278 psf). The building was 95.9% occupied at the time of sale and traded at a 6.25% Cap Rate.

Inside the Beltway, there were 40 buildings marketing 50,000 square feet or greater of contiguous space available at the end of the second quarter 2019, compared to 42 from the first quarter 2019. Outside the Beltway, there were 82 buildings marketing 50,000 square feet or greater of contiguous space available at the end of the second quarter 2019, compared to 78 from the first quarter 2019.

2Q 2019 1Q 2019 2Q 2018

Direct Vacancy 13.5% 14.3% 14.9%

Total Vacancy 14.1% 14.9% 15.8%

NetAbsorption (YTD)

1,150,776 SF 472,834 SF 125,261 SF

Leasing Activity (YTD)

6.0 M SF 2.9 M SF 7.3 M SF

Under Construction 3.2 M SF 2.6 M SF 2.3 M SF

Deliveries (YTD)

484,171 SF

438,169 SF

175,000 SF

Rental Rates $33.11 PSF

$33.02 PSF

$33.18PSF

U/C Percent Pre-Leased 71.1% 75.0% 75.9%


Deliveries vs. Under Construction

Deliveries | Net Absorption | Vacancy Rate

Absorption & Gross LeasingNorthern Virginia recorded 1,150,776 square feet of net absorption in the second quarter of 2019. Significant contributors to the positive absorption were a 62,241-square-foot move-in by iTG at Presidential Tower - 2550 S. Clark Street and a 57,140-square-foot move-in by National Industries for the Blind at 3000 Potomac Avenue.

Leasing activity at the end of the second quarter 2019 totaled 3,090,281 square feet bringing the year-to-date total to 6.0 million square feet, representing a 107% increase from the 2.9 million square feet leased through the first quarter of 2019. Eight of the top ten leases signed in the second quarter were by private sector tenants.

The ten largest leases signed during the first quarter ranged in size from 268,240 square feet to 53,589 square feet, three of these largest transactions were renewals.

The Crystal City submarket recorded the strongest absorption of the quarter with 203,548 square feet absorbed. The positive absorption for the quarter was driven by a 62,241-square-foot move-in by iTG at Presidential Tower - 2550 S. Clark Street.

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Vacancy Rate (%

)Northern Virginia 2nd Quarter 2019

Vacancy RateTotal vacancy in Northern Virginia decreased from 14.9% in the first quarter 2019 to 14.1% in the second quarter 2019, and has decreased from 15.8% since second quarter 2018. At the end of the second quarter 2019, 26.4 million square feet was vacant and available.

Direct vacancy decreased from 14.3% in the first quarter 2019 to 13.5% in the second quarter 2019, and has decreased from 14.9% since second quarter 2018. At the end of the second quarter 2019, 25.2 million square feet was vacant and available for direct lease.

The sublet vacancy rate in Northern Virginia remained flat at 0.7% from the first quarter 2019 to second quarter 2019, and has increased from 0.6% since second quarter 2018. At the end of the second quarter 2019, 1.2 million square feet was vacant and available for sublease.

Total vacancy for Class A product in Northern Virginia was 16.2% while Class B product was 12.5% for the quarter. Class A vacancy decreased from 16.4% in the first quarter 2019, while Class B vacancy remained flat at 12.5% from the first quarter 2019.

Vacancy by Building Class

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A total of thirteen buildings were under construction in Northern Virginia at the end of the second quarter, totaling approximately 3.2 million square feet.

44921 George Washington Boulevard delivered this quarter in Loudoun. The 46,002-square-foot building is 23.4% occupied. Boro Loft - 1640 Boro Place in the Tysons Corner submarket is scheduled to deliver in 3Q 2019. The building is 82.1% pre-leased to Whole Foods and Spaces.

Buildings scheduled to deliver in 2020 include, Reston Station - Phase II - 1906 Reston Metro Plaza, 6595 Springfield Center Drive, a 634,000-square-foot building, that is 100% pre-leased to GSA-TSA, and 4040 Wilson Boulevard, a 240,000-square-foot building that is 51.3% pre-leased to Avalon Bay and Vita Fitness. Penrose II - 14401 Penrose Place and 17Fifty - 1750 Presidents Street are also projected to deliver next year. Two buildings that broke ground this quarter are Phase - II Broderick One at Loudoun Gateway - 22365 Broderick drive and General Dynamics HQ - 11011 Sunset Hills Road. Both are projected to deliver in 2020. Currently under renovation is the Loft Office at Market Common - 1650 Edgewood Street which is 19.8% pre-leased to Equinox. Buildings scheduled to deliver in 2021 include, Alexandria Gateway O2 - 4600 King Street, APTA Centennial Center - 3030 Potomac Avenue, and Reston Station - Phase III - 1902 Reston Metro Plaza. Reston Station - Phase III broke ground this quarter. Lastly, Office Bldg A - Sunset Hills Road @ Town Center Boulevard is expected to deliver 2022.

The second quarter 2019 was dominated by the private sector. Eight of the top ten leases signed were by private sector tenants.

The Northern Virginia region has experienced strong positive absorption this quarter, registering 677,942 square feet of net move-ins. Several notable move-ins contributed to this level of absorption during the quarter. iTG moved into 62,241 square feet at Presidential Tower - 2550 S. Clark Street and National Industries for the Blind moved into 57,140 square feet at 3000 Potomac Avenue. As a result of vacancy rates continuing to decline, asking rates are steadily increasing throughout the region.

Coworking has continued to expand across the Northern Virginia region as WeWork took 61,528 square feet at The Corporate Office Centre @ Tysons II - 1775 Tysons Boulevard and 29,379 square feet at Arlington Gateway - 901 N. Glebe Road this quarter. As well as, Spaces, who leased 51,422 square feet at Boro Loft - 1640 Boro Place.

The Northern Virginia region gained 19,000 net new jobs from May 2018 - May 2019, representing 1.3% growth YOY. Professional & Business Services had the most with 8,600 new jobs. The Government added 4,700 jobs. As of May 2019, the unemployment rate for Northern Virgina remained flat from the previous year at 2.4%. The national unemployment rate decreased to 3.7%.

OutlookConstruction



Top Ten LeasesIncluded in the top ten leases of the second quarter 2019 were six relets, three renewals, and one new lease. The largest lease transaction of the quarter was a 268,240-square-foot relet signed by Amazon Web Services at South Lake at Dulles Corner - 13820 Sunrise Valley Drive in the Reston-Herndon submarket. The second largest lease of the quarter was a 163,000-square-foot relet by Perspecta at Plaza East I & II - 14295 & 14291 Park Meadow Drive in the Route 28 South submarket. The third largest lease of the quarter was a 151,949-square-foot relet by Freddie Mac at 1550 Westbranch Drive in the Tysons Corner submarket. Also, a 111,412-square-foot new lease was signed by Google at 1900 Reston Metro Plaza in the Reston-Herndon submarket. Constellis leased 106,737 square feet at Dulles Executive Plaza I - 13530 Dulles Technology Drive in the Reston-Herndon submarket. Additionally, the GSA-US Customs and Border Protection renewed for 77,454 square feet at Crystal Mall Office 4 - 1901 S. Bell Street and Accenture renewed for 63,324 square feet at Reston Metro Center Two - 12180 Sunrise Valley Drive in the Reston-Herndon submarket. WeWork also signed for 61,528 square feet at Corporate Office Centre @ Tysons II - 1775 Tysons Boulevard in the Tysons Corner submarket. Capital Caring signed for 53,812 square feet at 80 At Fairview - 3180 Fairview Park Drive in the Merrifield submarket. Lastly, GSA-US Federal Highway Administration renewed for 53,589 square feet at 21400 Ridgetop Circle in the Route 28 North submarket.

South Lake at Dulles Corner

13820 Sunrise Valley Drive

Tenant Amazon Web Services

Size 268,240 SF

Type Relet

21400 Ridgetop Circle

TenantGSA- US Federal Highway Administration

Size 53,589 SF

Type Renewal

Crystal Mall Office 4 1901 S. Bell Street

TenantGSA-US Customs and Border Protection

Size 77,454 SF

Type Renewal

Reston Metro Center Two


Tenant Accenture

Size 63,324 SF

Type Renewal

Corporate Office Centre @ Tysons II

1775 Tysons Boulevard

Tenant WeWork

Size 61,528 SF

Type Relet

1550 Westbranch Drive

Tenant Freddie Mac

Size 151,949 SF

Type Relet

Dulles Executive Plaza I

13530 Dulles Technology Drive

Tenant Constellis

Size 106,737 SF

Type Relet

1900 Reston Metro Plaza

Tenant Google

Size 111,412 SF

Type New

80 At Fairview 3180 Fairview Park Drive

Tenant Capital Caring

Size 53,812 SF

Type Relet

Plaza East I & II 14295 & 14291 Park Meadow Drive

Tenant Perspecta

Size 163,000 SF

Type Relet


Northern Virginia Sales Transactions


Parkridge V10780-10790 Parkridge Boulevard

Submarket Reston-Herndon

Date Sold April-2019

Price $56,250,000($278 psf)

Buyer Sunwater Capital

Seller Atlantic Realty Companies

RBA 202,107 SF

Class A

Occupancy 95.9%

Cap Rate 6.25%

Presidential Tower 2550 S. Clark Street

Submarket Crystal City

Date Sold May-2019

Price $123,230,000($353 psf)

Buyer Starwood / Vanderbilt

Seller Beacon Capital Partners

RBA 349,303 SF

Class A

Occupancy 95.2%

Victory Center I 5001 Eisenhower Avenue

Submarket Alexandria

Date Sold May-2019

Price $43,000,000($71 psf)

Buyer Stonebridge Associates

Seller PGIM Real Estate

RBA 606,921 SF

Class A

Occupancy 0.0%

The Junction 11493 Sunset Hills Road

Submarket Reston-Herndon


Price $42,440,000($237 psf)

Buyer Carahsoft Technologies

Seller Rubenstein Partners

RBA 179,152 SF

Class A

Occupancy 60.4%

Fair Lakes Portfolio12450, 12500, 12600, & 12700 Fair Lakes Circle

Submarket Fairfax


Price $78,500,000($168 psf)

Buyer Radix

Seller C-III

RBA 468,458 SF

Class A

Occupancy 88.0%

Cap Rate 10.00%

201 N. Union Street

Submarket Old Town & Eisenhower Ave

Date Sold June-2019

Price $39,000,000($375 psf)

Buyer Boundary Companies

SellerRealco Group Asset Management

RBA 104,000 SF

Class A

Occupancy 75.0%

Village at Leesburg 1602 Village Market Boulevard

Submarket Loudoun

Date Sold May-2019

Price $25,900,000($216 psf)

Buyer The Seligman Group

Seller The Carlyle Group

RBA 120,132 SF

Class A

Occupancy 93.4%

Cap Rate 7.50%

Tysons Office Center

8133 Leesburg Pike

Submarket Tysons Corner

Date Sold June-2019

Price $30,250,000($204 psf)

Buyer David Schaeffer

SellerGarrett Development Corporation

RBA 148,482 SF

Class B

Occupancy 89.2%

Cap Rate 7.60%


Northern Virginia Sales Transactions


Dulles Trail Office Park I & II

22630 & 22636 Davis Drive

Submarket Route 28 North


Price $10,750,000($72 psf)

Buyer Interra Properties

Seller New Boston Fund, Inc.

RBA 149,510 SF

Class A

Occupancy 34.0%

4401 Village Drive

Submarket Fairfax

Date Sold May-2019

Price $11,000,000($171 psf)

Buyer Marc-Jac Foundation

Seller Mavi Consulting

RBA 64,242 SF

Class B

Occupancy 100.0%

One Steeplechase 21700 Atlantic Boulevard


Date Sold May-2019

Price $16,960,000($151 psf)

Buyer Turnbridge Equities

Seller UBS Realty Investors

RBA 112,593 SF

Class A

Occupancy 100.0%

Cap Rate 9.50%

Two & Three Vintage Park

45365 Vintage Park Plaza & 22894 Pacific Boulevard


Date Sold May-2019

Price $16,500,000($100 psf)

Buyer Trust Realty

Seller Lerner Corporation

RBA 164,693 SF

Class A

Occupancy 50.0%

Belmont Executive Center Bldg A

19775 Belmont Executive Plaza

Submarket Loudoun


Price $16,540,000($138 psf)

Buyer Rooney Properties

Seller Toll Brothers

RBA 119,619 SF

Class A

Occupancy 91.7%


HighlightsTotal vacancy in Northern Virginia decreased from 14.9% in the first quarter 2019 to 14.1% in the second quarter 2019, and has decreased from 15.8% since second quarter 2018. Direct vacancy has decreased from 14.3% in the first quarter 2019 to 13.5% in the second quarter 2019, and has decreased from 14.9% since second quarter 2018.

Northern Virginia recorded 677,942 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 1,150,776 square feet. Significant contributors to the positive absorption were a 62,241-square-foot move-in by iTG at Presidential Tower - 2550 S. Clark Street and a 57,140-square-foot move-in by National Industries for the Blind at 3000 Potomac Avenue.

Leasing activity at the end of the second quarter 2019 totaled 6.0 million square feet, representing a 17.8% decrease from the 7.3 million square feet leased through the second quarter of 2018. Eight of the top ten leases signed in the second quarter were by private sector tenants.

Inside the Beltway, there were 40 buildings marketing 50,000 square feet or greater of contiguous space available at the end of the second quarter 2019, compared to 42 from the first quarter 2019. Outside the Beltway, there were 82 buildings marketing 50,000 square feet or greater of contiguous space available at the end of the second quarter 2019, compared to 78 from the first quarter 2019.

10 Year Averages (2009 - 2018)

Total Absorption 845,679 SF / Year

Deliveries (SF) 1.6 M SF / Year

Leasing Activity 12.8 M SF / Year

Market Stats

Inventory 188.8 M SF

Direct Vacancy 13.5%

Total Vacancy 14.1%

YTD 2019 Absorption 1,150,776 SF

YTD Leasing Activity 6.0 M SF

Under Construction 3.2 M SF

Percent Pre-Leased 71.1%

YTD 2019 Deliveries 484,171 SF

Asking Rental Rates (Full Service)

2009: $30.32

PSF

2018: $33.00

PSF

YTD 2019: $33.11

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Market Spotlight

2nd Quarter 2019Northern Virginia


Under Construction

Market Spotlight

2nd Quarter 2019Northern Virginia

Property Submarket Building Size Available Pre-Leased Delivery Date Developer Major Tenants

Boro Loft1640 Boro Place Tysons Corner 143,606 SF 25,711 SF 82.1% 3Q 2019 Meridian

Whole Foods, Spaces

4040 Wilson Boulevard RB Corridor 240,000 SF 116,979 SF 51.3% 1Q 2020 ShooshanAvalon Bay & Vida Fitness

Reston Station - Phase II1906 Reston Metro Plaza Reston-Herndon 186,457 SF 175,780 SF 5.7% 2Q 2020 Comstock None

6595 Springfield Center Drive Springfield 634,000 SF 0 SF 100.0% 1Q 2020 Boston Properties GSA-TSA

Loft Office at Market Common 1650 Edgewood Street RB Corridor 138,871 SF 111,317 SF 19.8% 1Q 2020 Regency Centers Equinox

Phase - II Broderick One at Loudoun Gateway22365 Broderick Drive

Route 28 North 56,025 SF 56,025 SF 0.0% 1Q 2020 LGV Group None

Penrose II 14401 Penrose Place Route 28 South 125,000 SF 125,000 SF 0.0% 2Q 2020

Zumot Real Estate Management

None

17Fifty 1750 Presidents Street Reston-Herndon 276,000 SF 0 SF 100.0% 2Q 2020 Boston Properties Leidos

General Dynamics HQ11011 Sunset Hills Road Reston-Herndon 160,000 SF 0 SF 100.0% 2Q 2020 General Dynamics

General Dynamics

Alexandria Gateway 024600 King Street Alexandria 58,460 SF 53,632 SF 8.3% 1Q 2021 Weingarten Silver Diner

APTA Centennial Center - 3030 Potomac Avenue Crystal City 115,000 SF 0 SF 100.0% 1Q 2021

Meany & Oliver Companies

American Physical Therapy Association

Reston Station - Phase III1902 Reston Metro Plaza Reston-Herndon 260,000 SF 260,000 SF 0.0% 3Q 2021 Comstock None

Reston Gateway Office Sunset Hills Road @ Town Center Boulevard

Reston-Herndon 800,000 SF 0 SF 100.0% 1Q 2022 Boston Properties Fannie Mae

Totals

Broke Ground 2Q 2019 476,025 SF

Total Under Construction 3,193,419 SF

% Preleased (Does not include condos)

71.1%

2nd Quarter Start




Deliveries (SF) 251,419 SF / Year

Leasing Activity 774,678 SF / Year


2009: $33.37

PSF

2018: $33.87

PSF

YTD 2019: $34.72

PSF

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Market Spotlight

2nd Quarter 2019Alexandria

Market Stats

Inventory 18.1 M SF


Total Vacancy 14.8%

YTD 2019 Absorption 252,375 SF

YTD Leasing Activity 286,177 SF

Under Construction 58,460 SF


YTD 2019 Deliveries 0 SF

HighlightsDirect vacancy in Alexandria decreased from 14.6% in the first quarter 2019 to 14.3% in the second quarter 2019, and has decreased from 14.7% since second quarter 2018. Total vacancy decreased from 14.9% in the first quarter 2019 to 14.8% in the second quarter 2019, and has decreased from 15.1% since second quarter 2018.

The Alexandria submarket recorded 189,519 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 252,375 square feet. Positive absorption was driven by a 57,140-square-foot move-in by National Industries for the Blind at 3000 Potomac Avenue and a 25,000-square-foot move-in by ALX Community at the Torpedo Factory Office Building - 201 N. Union Street. Two sales transactions occurred in the Alexandria submarket during the second quarter 2019. 5001 Eisenhower Avenue was purchased by Stonebridge Associates from PGIM Real Estate for $43,000,000 ($71 psf). The building was vacant at the time of sale. 201 N. Union Street was sold to Boundary Companies from Realco Group Asset Management for $39,000,000 ($375 psf). The building was 75.0% occupied at the time of sale.

The largest lease signed in the Alexandria submarket in the second quarter was a 45,000-square-foot relet by Oliff & Berridge at Canal Center 3 - 11 Canal Center Plaza. Also contributing to leasing activity this quarter was a 27,193-square-foot relet by Cotton & Company at Carlyle Gateway I - 333 John Carlyle Street.


Major Leases

Under Construction

Sales

Market Spotlight

2nd Quarter 2019Alexandria

Property Submarket Building Size Available Pre-leased Delivery Date Developer Major Tenants

Alexandria Gateway O24600 King Street Alexandria 58,460 53,632 8.3% 1Q 2021 Weingarten Silver Diner

Carlyle Center 1925 Ballenger Avenue

Tenant Travel Leaders Group

Size 23,600 SF

Type Relet

Carlyle Overlook 2318 Mill Road

Tenant LeClairRyan

Size 24,655 SF

Type Renewal

Canal Center 3 11 Canal Center Plaza

Tenant Oliff & Berridge

Size 45,000 SF

Type Relet

Shirlington Tower 2900 S. Quincy Street

TenantNational Alcoholic Beverage Control Association, Inc

Size 16,340 SF

Type Relet

Property Submarket Date Sold Price Buyer Seller Class Occupancy Comments

Victory Center 5001 Eisenhower Avenue Alexandria May 2019

$43,000,000($71 psf)

Stonebridge Associates

PGIM Real Estate

A 0.0%

201 N. Union Street Old Town & Eisenhower Ave

June 2019$39,000,000 ($375 psf)

Boundary Companies

Realco Group Asset Management

A 75.0%

Carlyle Gateway I 333 John Carlyle Street

Tenant Cotton & Company

Size 27,193 SF

Type Relet

Torpedo Factory Office Building 201 N. Union Street

Tenant ALX Community

Size 25,000 SF

Type Relet


HighlightsDirect vacancy in Crystal City decreased from 14.5% in the first quarter 2019 to 13.2% in the second quarter 2019, and has decreased from 16.9% since second quarter 2018. Total vacancy decreased from 14.6% in the first quarter 2019 to 13.6% in the second quarter 2019, and has decreased from 17.2% since second quarter 2018.

The Crystal City submarket recorded 203,548 square feet of net absorption during the second quarter of 2019, bringing the year-to-date absorption to 189,284 square feet. The positive absorption for the quarter was driven by a 62,241-square-foot move-in by iTG at Presidential Tower - 2550 S. Clark Street. One sales transaction occurred in the Crystal City submarket during the second quarter 2019. 2550 S. Clark Street was purchased by Starwood/Vanderbilt from Beacon Capital for $123,230,000 ($353 psf). The building was 95.2% occupied at the time of sale.

The largest lease signed in the Crystal City submarket in the second quarter was a 77,454-square-foot renewal by GSA-US Customs and Border Protection at Crystal Mall Office 4 - 1901 S. Bell Street. Also contributing to leasing activity this quarter was a 47,512-square-foot relet by Amazon at Crystal Park 4 - 2345 Crystal Drive, a 21,948-square-foot renewal by DACA at Crystal Square 2 - 1550 Crystal Drive, and an 18,322-square-foot sublease by Venesco at Potomac Gateway South - 2900 Crystal Drive.

10 Year Averages (2009- 2018)

Total Absorption -5,945 SF / Year




2009: $38.21

PSF

2018: $37.87

PSF

YTD 2019: $38.48

PSF

0.000

0.125

0.250

0.375

0.500

YTD '19'18'17 '16'15'14'13'12'11'10'09

SF (M

illio

ns)


0

4

8

12

16

20

24

28

32

YTD '19'18'17'16'15'14'13'12'11'10'09


Vaca

ncy

Rat

e (%

) Asking Rate ($)

0

6

12

18

24

30

36

42

48

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

YTD '19'18'17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


Market Spotlight

2nd Quarter 2019Crystal City

Market Stats

Inventory 11.5 M SF


Total Vacancy 13.6%







Major Leases

Sales

Market Spotlight

2nd Quarter 2019Crystal City


Presidential Tower 2550 S. Clark Street Crystal City May 2019

$123,230,000($353 psf)

Starwood/Vanderbilt

Beacon Capital Partners

A 95.2%Low vacancy

Under ConstructionProperty Submarket Building Size Available Pre-leased Delivery Date Developer Major Tenants

APTA Centennial Center 3030 Potomac Avenue Crystal City 115,000 0 100.0% 1Q 2021

Meany & Oliver Companies

American Physical Therapy Association

Crystal Square 2 1550 Crystal Drive

Tenant DACA

Size 21,948 SF

Type Renewal

Crystal Mall Office 4 1901 S. Bell Street

Tenant GSA-US Customs and Border Protection

Size 77,454 SF

Type Renewal

Crystal Park 4 2345 Crystal Drive

Tenant Amazon

Size 47,512 SF

Type Relet

Potomac Gateway South 2900 Crystal Drive

Tenant Venesco

Size 18,322 SF

Type Sublease

Jefferson Plaza 1401 S. Clark Street

Tenant Deloitte

Size 14,786 SF

Type Extension


HighlightsDirect vacancy in Fairfax has decreased from 18.2% in the first quarter 2019 to 17.9% in the second quarter 2019, and has decreased from 18.9% since second quarter 2018. Total vacancy decreased from 19.1% in the first quarter 2019 to 18.7% in the second quarter 2019, and has decreased from 19.5% since second quarter 2018.

The Fairfax submarket recorded 53,239 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 41,370 square feet. The positive absorption for the quarter was driven by a 47,293-square-foot move-in by University of North America at Fair Lakes 5 - 12750 Fair Lakes Circle.

The second largest sales transaction in the second quarter occurred in the Fairfax submarket. The Fairlakes Portfolio - 12450, 12500, 12600, & 12700 Fair Lakes Circle - was purchased by Radix from C-III for $78,500,000 ($168 psf). The buildings were 88% occupied at the time of sale and traded at a 10.00% Cap Rate.

The largest lease signed in the Fairfax submarket was an 18,120-square-foot relet/expansion by Hazen and Sawyer, D.P.C. at Crown Ridge at Fair Oaks - 4035 Ridge Top Road. Also contributing to leasing activity this quarter was a 15,500-square-foot relet by All Native at WillowWood Plaza Building I - 10300 Eaton Place and a 10,205-square-foot relet by Everybody Fitness Center at 3903 Fair Ridge Drive.






2009: $26.56

PSF

2018: $27.08

PSF

YTD 2019: $27.04

PSF

0.00

0.04

0.08

0.12

0.16

0.20

YTD '19'18'17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


0

4

8

12

16

20

24

YTD '19'18'17'16'15'14'13'12'11'10'09


Vaca

ncy

Rat

e (%

) Asking Rate ($)

0

5

10

15

20

25

30

-0.5

0.0

0.5

1.0

1.5

YTD '19'18'17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


Market Spotlight

Market Stats

Inventory 12.5 M SF


Total Vacancy 18.7%



Under Construction 0 SF



2nd Quarter 2019

Fairfax (Fairfax Center, Fairfax City, Oakton)


Major Leases

Under Construction

Sales

Market Spotlight

2nd Quarter 2019

Fairfax (Fairfax Center, Fairfax City, Oakton)


No new construction reported this quarter

Fairfax N/A N/A N/A N/A N/A N/A

Crown Ridge at Fair Oaks

4035 Ridge Top Road

Tenant Hazen and Sawyer, D.P.C.

Size 18,120 SF

Type Relet/Expansion

Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate

Fair Lakes Portfolio 12450, 12500, 12600, & 12700 Fair Lakes Circle

Fairfax April 2019$78,500,000($168 psf)

Radix C-III A 88.0% 10.00%

4401 Village Drive Fairfax May 2019$11,000,000 ($171 psf)

Marc-Jac Foundation

Mavi Consulting

B 100.0% N/A

WillowWood Plaza Building I 10300 Eaton Place

Tenant All Native

Size 15,500 SF

Type Relet

3903 Fair Ridge Drive

Tenant Everybody Fitness Center

Size 10,205 SF

Type Relet


HighlightsDirect vacancy in Loudoun County decreased from 9.8% in the first quarter 2019 to 9.5% in the second quarter 2019, and has increased from 9.0% since second quarter 2018. Total vacancy has decreased from 9.9% in the first quarter 2019 to 9.6% in the second quarter 2019, and has decreased from 9.8% since second quarter 2018.

Loudoun County recorded 40,133 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 13,726 square feet. The positive absorption for the quarter was driven by multiple tenant move-ins.

One of the top sales in the Loudoun submarket was the purchase of The Village at Leesburg - 1602 Village Market Boulevard - by The Seligman Group from The Carlyle Group for $25,900,000 ($216 psf). The building was 93.4% occupied at time of sale and traded at a 7.50% Cap Rate. The largest lease signed in the Loudoun submarket was a 53,589-square-foot renewal by GSA-US Federal Highway Administration at 21400 Ridgetop Circle. Another top lease was a 31,565-square-foot renewal by Toll Brothers at Belmont Plaza I - 19775 Belmont Executive Plaza.

Phase II of Broderick One at Loudoun Gateway - 22365 Broderick Drive broke ground this quarter. The 56,025-square-foot building is projected to deliver first quarter 2020. 44921 George Washington Boulevard delivered this quarter. The 46,002-square-foot building is 23.4% leased by multiple retailers on the 1st floor.






2009: $26.48

PSF

2018: $25.73

PSF

YTD 2019: $25.77

PSF

0.000

0.125

0.250

0.375

0.500

0.625

0.750

0.875

1.000

YTD '19'18 '17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


0

4

8

12

16

20

24

YTD '19'18 '17'16'15'14'13'12'11'10'09


Vaca

ncy

Rat

e (%

) Asking Rate ($)

0

5

10

15

20

25

30

-0.25

0.40

1.05

1.70

2.35

3.00

YTD '19'18'17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


Market Spotlight

2nd Quarter 2019Loudoun County

Market Stats

Inventory 15.9 M SF

Direct Vacancy 9.5%

Total Vacancy 9.6%







Major Leases

Deliveries

Sales

Market Spotlight

2nd Quarter 2019

Loudoun County


44921 George Washington Boulevard Loudoun 46,002 SF 35,258 SF 23.4% 2Q 2019

Clarke-Hook Corporation

None


Village at Leesburg 1602 Village Market Boulevard Loudoun May 2019

$25,900,000 ($216 PSF)

The Seligman Group

The Carlyle Group

A 93.4% 7.50%

Belmont Executive Center Building A 19775 Belmont Executive Plaza Loudoun April 2019

$16,540,000 ($138 PSF)

Rooney Properties

Toll Brothers

A 91.7% N/A


Tenant GSA-US Federal Highway Administration

Size 53,589 SF

Type Renewal

45610 Woodland Road

Tenant Reinforced Earth

Size 29,637 SF

Type Relet

The Corporate Office Park @ Dulles Town Center

21000 Atlantic Boulevard

Tenant Sallie Mae

Size 27,256 SF

Type Relet


Phase II at Broderick One at Loudoun Gateway 22365 Broderick Drive

Loudoun 56,025 SF 56,025 SF 0.0% 1Q 2020 LGV Group None

Belmont Plaza I 19775 Belmont Executive Plaza

Tenant Toll Brothers

Size 31,565 SF

Type Renewal


HighlightsDirect vacancy in Merrifield decreased from 13.1% in the first quarter 2019 to 11.8% in the second quarter 2019, and has increased from 11.3% since second quarter 2018. Total vacancy has decreased from 13.9% in the first quarter 2019 to 12.5% in the second quarter 2019, and has increased from 12.0% since second quarter 2018.

The Merrifield submarket recorded 63,348 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 37,745 square feet. The positive absorption was driven by a 16,584-square-foot move-in by Pinkston Group at Fairview Park - 3110 Fairview Park Drive.

The largest lease signed in the Merrifield submarket this quarter was a 53,812-square-foot relet by Capital Caring at 80 At Fairview - 3180 Fairview Park Drive. Also contributing to leasing activity this quarter was a 20,095-square-foot relet by Fairfax Radiological Consultants PC at Willow Oaks I - 8260 Willow Oaks Corporate Drive and an 18,516-square-foot relet by Evans Inc at 3110 Fairview Park Drive.






2009: $34.57

PSF

2018: $30.41

PSF

YTD 2019: $31.40

PSF

0.00

0.05

0.10

0.15

0.20

0.25

0.30

YTD '19'18 '17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


0

2

4

6

8

10

12

14

16

18

YTD '19'18'17'16'15'14'13'12'11'10'09


Vaca

ncy

Rat

e (%

) Asking Rate ($)

0

5

10

15

20

25

30

35

40

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

YTD '19'18 '17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


Market Spotlight

2nd Quarter 2019Merrifield

Market Stats

Inventory 9.6 M SF


Total Vacancy 12.5%




Percent Pre-Leased 0%



Major Leases

Market Spotlight

2nd Quarter 2019Merrifield

Under Construction

Sales


No new construction reported this quarter

Merrifield N/A N/A N/A N/A N/A N/A

Willow Oaks 1 8260 Willow Oaks Corporate Drive

Tenant Fairfax Radiological Consultants

Size 20,095 SF

Type Relet


No new sales reported during the quarter Merrifield N/A N/A N/A N/A N/A N/A N/A

80 At Fairview 3180 Fairview Park Drive

Tenant Capital Caring

Size 53,812 SF

Type Relet

3110 Fairview Park Drive

Tenant Evans Inc

Size 18,516 SF

Type Renewal


HighlightsDirect vacancy in the Old Town Alexandria and Eisenhower Ave submarket decreased from 10.0% in the first quarter 2019 to 9.5% in the second quarter 2019, and has stayed consistent with second quarter 2018. Total vacancy decreased from 10.5% in the first quarter 2019 to 10.2% in the second quarter 2019, and has increased from 10.0% since second quarter 2018.

The Old Town Alexandria and Eisenhower Ave submarket recorded 85,863 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 132,347 square feet. Positive absorption was driven by a 25,000-square-foot move-in by ALX Community at the Torpedo Factory Office Building - 201 N. Union Street. One sales transaction occurred in the Old Town Alexandria and Eisenhower Ave submarket during the second quarter 2019. 201 N. Union Street was purchased by Boundary Companies from Realco Group Asset Management for $39,000,000 ($375 psf). The building was 75.0% occupied at the time of sale

The largest lease signed in the Old Town Alexandria and Eisenhower Ave submarket was a 45,000-square-foot relet by Oliff & Berridge at Canal Center 3 - 11 Canal Center Plaza. Also contributing to leasing activity was a 27,193-square-foot relet by Cotton & Company at Carlyle Gateway I - 333 John Carlyle Street.





Market Stats

Inventory 12.4 M SF

Direct Vacancy 9.5%

Total Vacancy 10.2%







2009: $34.03

PSF

2018: $36.22

PSF

YTD 2019: $36.77

PSF

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

YTD '19'18 '17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


0

4

8

12

16

20

YTD '19'18'17'16'15'14'13'12'11'10'09


Vaca

ncy

Rat

e (%

) Asking Rate ($)

0

8

16

24

32

40

-1.0

-0.5

0.0

0.5

1.0

YTD '19'18 '17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


Market Spotlight

2nd Quarter 2019Old Town/Eisenhower Ave


Market Spotlight

2nd Quarter 2019Old Town/Eisenhower Ave

Major Leases

Under Construction

Sales


201 N. Union Street Old Town & Eisenhower Ave

June 2019$39,000,000($375 psf)

Boundary Companies

Realco Group Asset Management

A 75.0%


No new construction reported during the quarter

Old Town & Eisenhower Ave

N/A N/A N/A N/A N/A N/A

Canal Center 3 11 Canal Center Plaza

Tenant Oliff & Berridge

Size 45,00 SF

Type Relet

Carlyle Overlook 2318 Mill Road

Tenant LeClairRyan

Size 24,655 SF

Type Renewal

Carlyle Center 1925 Ballenger Avenue

Tenant Travel Leaders Group

Size 23,600 SF

Type Renewal

1920 Ballenger Avenue

Tenant OrthoVirginia

Size 16,496 SF

Type Relet

Carlyle Gateway I 333 John Carlyle Street

Tenant Cotton & Company

Size 27,193 SF

Type Relet

Torpedo Factory Office Building 201 N. Union Street

Tenant ALX Community

Size 25,000 SF

Type Relet


HighlightsDirect vacancy decreased from 13.3% in the first quarter 2019 to 11.1% the second quarter 2019, and has decreased from 12.3% since second quarter 2018. Total vacancy has decreased from 14.1% in the first quarter 2019 to 12.0% the second quarter 2019, and has decreased from 13.4% since second quarter 2018. Year-to-date direct vacancy for Reston was 10.5% and total vacancy was 11.2%. Year-to-date direct vacancy for Herndon was 12.2% and total vacancy was 13.2%.

The Reston-Herndon submarket recorded -170,154 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to -46,108 square feet. The negative absorption for the quarter was driven by a 99,474-square-foot move-out by Lockheed Martin at Dulles Executive Plaza I - 13530 Dulles Technology Drive.

The third largest sale transaction of Northern Virginia for the second quarter 2019 was in the Reston-Herndon submarket. Sunwater Capital acquired Parkridge V - 10780-10790 Parkridge Boulevard, from Atlantic Realty Companies for $56,250,000 ($278 psf). The building was 95.9% occupied at the time of sale and traded at a 6.25% Cap Rate. The largest lease signed in Northern Virginia this quarter was a 268,240-square-foot relet by Amazon Web Ser-vices at South Lake at Dulles Corner - 13820 Sunrise Val-ley Drive.

Reston Station - Phase III - 1902 Reston Metro Plaza broke ground this quarter. The 260,000-square-foot building is 0.0% pre-leased. General Dynamics HQ - 11011 Sunset Hills Road also broke ground this quarter. The 160,000 square foot building is 100.0% pre-leased by General Dynamics.






2009: $28.07

PSF

2018: $31.60

PSF

YTD 2019: $32.26

PSF

0.0

0.4

0.8

1.2

1.6

2.0

YTD '19 '18'17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


0

5

10

15

20

25

YTD '19'18'17'16'15'14'13'12'11'10'09


Vaca

ncy

Rat

e (%

) Asking Rate ($)

0

7

14

21

28

35

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

YTD '19'18 '17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


Market Spotlight

2nd Quarter 2019Reston-Herndon

Market Stats

Inventory 31.7 M SF


Total Vacancy 12.0%

YTD 2019 Absorption -46,108 SF

YTD Leasing Activity 1.2 M SF

Under Construction 1,807,457 SF




Under Construction

Sales

Market Spotlight

2nd Quarter 2019Reston-Herndon


Parkridge V 10780-10790 Parkridge Boulevard

Reston-Herndon April 2019$56,250,000 ($278psf) Sunwater Capital

Atlantic Realty Companies

A 95.9% 6.25%

The Junction 11493 Sunset Hills Road

Reston-Herndon April 2019$42,440,000 ($237psf)

Carahsoft Technologies

Rubenstein Partners

A 60.4% N/A


Reston Station - Phase II1906 Reston Metro Plaza

Reston-Herndon 186,457 SF 175,780 SF 5.7% 2Q 2020 Comstock None

17Fifty - 1750 Presidents Street Reston-Herndon 276,000 SF 0 SF 100.0% 2Q 2020Boston Properties

Leidos

General Dynamics HQ11011 Sunset Hills Road

Reston-Herndon 160,000 SF 0 SF 100.0% 2Q 2020General Dynamics

General Dynamics

Reston Station - Phase III 1902 Reston Metro Plaza Reston-Herndon 260,000 SF 260,000 SF 0.0% 3Q 2021 Comstock None

Reston Gateway Office Bldg A - Sunset Hills Road @ Town Center Boulevard

Reston-Herndon 800,000 SF 0 SF 100.0% 1Q 2022Boston Properties

Fannie Mae

Major Leases

Two Halley Rise 12018 Sunrise Valley Drive

Tenant Accenture

Size 63,324 SF

Type Renewal

1900 Reston Metro Plaza

Tenant Google

Size 111,412 SF

Type New

South Lake at Dulles Corner


Tenant Amazon Web Services

Size 268,240 SF

Type Relet

Dulles Executive Plaza I

13530 Dulles Technology Drive

Tenant Constellis

Size 106,737 SF

Type Relet


HighlightsDirect vacancy in the Rosslyn-Ballston Corridor decreased from 17.0% in the first quarter 2019 to 16.6% in the second quarter 2019, and has decreased from 18.1% since second quarter 2018. Total vacancy decreased from 18.5% in the first quarter 2019 to 17.9% in the second quarter 2019, and has decreased from 19.6% since second quarter 2018.

The Rosslyn-Ballston Corridor recorded 137,480 square feet of net absorption during the second quarter of 2019, bringing the year-to-date absorption to 76,219 square feet. The primary driver for positive absorption was an 83,294-square-foot move-in by WeWork at Central Place - 1201 Wilson Boulevard.

The largest lease signed in the Rosslyn-Ballston Corridor submarket was a 41,130-square-foot renewal by PAE at 1320 N. Courthouse Road. Other top leases include a 30,366-square-foot renewal by National Telecommunications Cooperative Association at Ballston Exchange II - 4121 Wilson Boulevard and a 29,379-square-foot relet by WeWork at Arlington Gateway - 901 N. Glebe Road.

The Loft Office at Market Common - 1650 Edgewood Street, is currently under renovation. The 138,871-square-foot property is expected to deliver 1Q 2020 and is currently 19.8% pre-leased. Another building currently under construction is 4040 Wilson Boulevard. The 240,000-square-foot building is also expected to deliver 1Q 2020 and is 51.3% pre-leased.



Deliveries (SF) 269,242 M SF / Year



2009: $40.68

PSF

2018: $42.73

PSF

YTD 2019: $43.04

PSF

0.0

0.2

0.4

0.6

0.8

1.0

1.2

YTD '19 '18 '17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


0

3

6

9

12

15

18

21

24

27

YTD '19 '18'17'16'15'14'13'12'11'10'09


Vaca

ncy

Rat

e (%

) Asking Rate ($)

0

5

10

15

20

25

30

35

40

45

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

YTD '19 '18'17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


Market Spotlight

2nd Quarter 2019Rosslyn-Ballston Corridor

Market Stats

Inventory 25.4 M SF


Total Vacancy 17.9%







Major Leases

Under Construction

Sales

Market Spotlight

2nd Quarter 2019

Rosslyn-Ballston Corridor


4040 Wilson Boulevard RB Corridor 240,000 SF 116,979 SF 51.3% 1Q 2020 Shooshan Avalon Bay & Vida Fitness

Loft Office at Market Common - 1650 Edgewood Street

RB Corridor 138,871 SF 111,317 SF 19.8% 1Q 2020Regency Centers

Equinox


No new sales reported during the quarter RB Corridor N/A N/A N/A N/A N/A N/A N/A

Ballston Exchange II 4121 Wilson Boulevard

TenantNational Telecommunications Cooperative Assoc.

Size 30,366 SF

Type Renewal

2311 Wilson Boulevard

Tenant Industrious

Size 25,063 SF

Type New

1320 N. Courthouse Road

Tenant PAE

Size 41,130 SF

Type Renewal

Colonial Place III 2107 Wilson Boulevard

Tenant EJF Capital

Size 22,184 SF

Type Renewal

Two Liberty Center 4075 Wilson Boulevard

Tenant Raytheon

Size 20,742 SF

Type Renewal

Arlington Gateway 901 N. Glebe Road

Tenant WeWork

Size 29,379 SF

Type Relet


HighlightsDirect vacancy in the Route 28 North submarket decreased from 12.1% in the first quarter 2019 to 11.0% in the second quarter 2019, and has decreased from 11.3% since second quarter 2018. Total vacancy decreased from 12.3% in the first quarter 2019 to 11.2% in the second quarter 2019, and has decreased from 12.2% since second quarter 2018.

The Route 28 North submarket recorded 4,763 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to -37,187. Positive absorption was driven by multiple tenant move-ins.

One Steeplechase - 21700 Atlantic Boulevard was acquired by Turnbridge Equities from UBS Realty Advisors for $16,960,000 ($151 psf). The building was fully occupied at the time of sale and traded at a 9.50% Cap Rate. Two & Three Vintage Park - 45365 Vintage Park Plaza & 22894 Pacific Boulevard were purchased by Trust Realty from Lerner Corporation for $16,500,00 ($100 psf). The buildings were 50.0% occupied at the time of sale.

The largest lease signed in the Route 28 North submarket this quarter was a 52,589-square-foot renewal by GSA-US Federal Highway Administration at 21400 Ridgetop Circle.

Phase II - Broderick One at Loudoun Gateway - 22365 Broderick Drive broke ground this quarter. The 56,025-square-foot building is 0.0% pre-leased.






2009: $25.15

PSF

2018: $25.26

PSF

YTD 2019: $25.35

PSF

0.0

0.1

0.2

0.3

0.4

0.5

0.6

YTD '19 '18 '17'16'15'14'13'12'11'10'09

SF (M

illio

ns)


0

5

10

15

20

25

YTD '19'18'17'16'15'14'13'12'11'10'09


Vaca

ncy

Rat

e (%

) Asking Rate ($)

0

6

12

18

24

30

-0.25

0.40

1.05

1.70

2.35

3.00

YTD '19 '18 '17'16'15'13'13'12'11'10'09

SF (M

illio

ns)


Market Spotlight

2nd Quarter 2019Route 28 North

Market Stats

Inventory 9.6 M SF


Total Vacancy 11.2%

YTD 2019 Absorption -37,187 SF






Market Spotlight

2nd Quarter 2019Route 28 North


Phase II - Broderick One at Loudoun Gateway22365 Broderick Drive

Rt 28 North 56,025 SF 56,025 SF 0.0% 1Q 2020 LGV Group None

Major Leases

SalesProperty Submarket Date Sold Price Buyer Seller Class Occupancy

Cap Rate

One Steeplechase21700 Atlantic Boulevard Rt 28 North May 2019

$16,960,000($151 psf)

Turnbridge Equities

UBS Realty Advisors

A 100.0% 9.50%

Two & Three Vintage Park45365 Vintage Park Plaza & 22894 Pacific Boulevard

Rt 28 North May 2019$16,500,000($100 psf)

Trust RealtyLerner Corporation

A 50.0% N/A

Dulles Trail Office Park I & II22630 & 22636 Davis Drive

Rt 28 North April 2019$10,750,000($72 psf)

Interra PropertiesNew Boston Fund, Inc.

A 34.0% N/A



Tenant Alpha Corporation

Size 16,316 SF

Type Relet



Tenant Sallie Mae

Size 27,256 SF

Type Relet


Tenant GSA-US Federal Highway Administration

Size 52,589 SF

Type Renewal

45610 Woodland Road

Tenant Reinforced Earth

Size 29,637 SF

Type Relet


HighlightsDirect vacancy in the Route 28 South submarket has decreased from 14.3% in the first quarter 2019 to 13.8% in the second quarter 2019, and has decreased from 14.4% in the second quarter 2018. Total vacancy has decreased from 15.1% in the first quarter 2019 to 14.0% the second quarter 2019, and has decreased from 15.6% since second quarter 2018.

The Route 28 South submarket recorded 62,306 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 68,730 square feet. Positive absorption was driven by a 20,020-square-foot move-in by Tetra Tech at Newbrook I - 14151 Newbrook Drive.

The second largest lease signed in Northern Virginia this this quarter was a 163,000-square-foot relet by Perspecta at Plaza East I & II - 14295 & 14291 Park Meadow Drive. Also contributing to leasing activity this quarter was a 48,811 square-foot sublease by CACI at Lincoln Park II - 3080 Centreville Drive, a 42,700 -square-foot relet by Novetta Solutions at Lincoln Park I - 13900 Lincoln Park Drive, and a 39,335-square-foot relet by AT&T Services at Ridgewood 1 - 14800 Conference Center Drive.

Penrose II - 14401 Penrose Place, is currently under construction. The 125,000-square-foot property is expected to deliver 2Q 2020.






2009: $26.81

PSF

2018: $26.61

PSF

YTD 2019: $26.49

PSF

0.0

0.2

0.4

0.6

0.8

1.0

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10

15

20

25

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24

30

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1.5

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Market Spotlight

2nd Quarter 2019Route 28 South

Market Stats

Inventory 13.7 M SF


Total Vacancy 14.0%







Major Leases

Market Spotlight

2nd Quarter 2019Route 28 South

Ridgewood 1 14800 Conference Center Drive

Tenant AT&T Services

Size 39,335 SF

Type Relet

Lincoln Park I 13900 Lincoln Park Drive

Tenant Novetta Solutions

Size 42,700 SF

Type Relet

Hallmark Building 13873 Park Center Road

Tenant Israel Aerospace Industries - North Am

Size 30,000 SF

Type Relet

Under Construction

SalesProperty Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate

No new sales reported during the quarter Rt 28 South N/A N/A N/A N/A N/A N/A N/A


Penrose II - 14401 Penrose Place Route 28 South 125,000 SF 125,000 SF 0.0% 2Q 2020Zumot Real Estate Management

None

Trinity Centre 1 5870 Trinity Parkway

Tenant Riverside Research Institute

Size 13,429 SF

Type Relet/Expansion

Lincoln Park II 3080 Centreville Road

Tenant CACI

Size 48,811 SF

Type Sublease

Ridgewood 1 14800 Conference Center Drive

Tenant Northrop Grumman

Size 23,702 SF

Type Relet

Lincoln Park I 13900 Lincoln Park Drive

Tenant Raytheon

Size 18,644 SF

Type Extension

Plaza East I & II 14295 & 14291 Park Meadow Drive

Tenant Perspecta

Size 163,000 SF

Type Relet


Highlights

Direct vacancy in the Springfield submarket remained flat at 19.1% in the first quarter 2019 to the second quarter 2019, and has decreased from 21.5% since second quarter 2018. Total vacancy remained flat at 19.3% in the first quarter 2019 to the second quarter 2019, and has decreased from 21.8% since second quarter 2018.

The Springfield submarket recorded 33,137 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 25,978 square feet. The positive absorption was driven primarily by multiple tenant move-ins.

6595 Springfield Center Drive is currently under construction. The Boston Properties 634,000-square-foot building is fully pre-leased to the GSA-TSA.






2009: $28.20

PSF

2018: $29.33

PSF

YTD 2019: $29.38

PSF

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35

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Market Spotlight

2nd Quarter 2019Springfield

Market Stats

Inventory 5.7 M SF


Total Vacancy 19.3%







Major Leases

Market Spotlight

2nd Quarter 2019Springfield

Major Leases

Under Construction

Sales


6595 Springfield Center Drive Springfield 634,000 SF 0 SF 100.0% 1Q 2020Boston Properties

GSA-TSA


No new sales reported during the quarter Springfield N/A N/A N/A N/A N/A N/A N/A

No major leases this quarter

Tenant N/A

Size N/A

Type N/A


HighlightsDirect vacancy in the Tysons Corner submarket decreased from 12.3% in the first quarter 2019 to 11.5% in the second quarter 2019, and has decreased from 15.2% the second quarter 2018. Total vacancy decreased from 12.9% in the first quarter 2019 to 12.0% in the second quarter 2019, and has decreased from 15.8% the second quarter 2018.

The Tysons Corner submarket recorded 65,386 square feet of net absorption in the second quarter of 2019, bringing the year-to-date absorption to 491,457 square feet. A significant contributor to the positive absorption was a 44,517-square-foot move-in by Hogan Lovells at Boro Tower - 8350 Broad Street.

Tysons Office Center - 8133 Leesburg Pike was acquired by David Schaeffer from Garrett Development Corporation for $30,250,000 ($204 psf). The building was 89.2% occupied at the time of sale and traded at a 7.60% Cap Rate.

The largest lease signed in the Tysons Corner submarket this quarter was a 151,949-square-foot relet by Freddie Mac at Centerstone at Tysons - 1550 Westbranch Drive. Also contributing to leasing activity this quarter was a 61,528-square-foot relet signed by WeWork at The Corporate Office Centre @ Tysons II - 1775 Tysons Boulevard and a 51,422-square-foot pre-lease by Spaces at Boro Loft - 1640 Boro Place.






2009: $29.75

PSF

2018: $35.87

PSF

YTD 2019: $34.71

PSF

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Market Spotlight

2nd Quarter 2019Tysons Corner

Market Stats

Inventory 29.5 M SF


Total Vacancy 12.0%







Major Leases

Market Spotlight

2nd Quarter 2019Tysons Corner

Under Construction

Sales


Boro Loft1640 Boro Place Tysons Corner 143,606 SF 25,711 SF 82.1% 3Q 2019 Meridian Whole Foods


Tysons Office Center8133 Leesburg Pike Tysons Corner June 2019

$30,250,000 ($204 psf)

David Schaeffer

GarrettDevelopment Corporation

B 89.2% 7.60%

Boro Loft 1640 Boro Place

Tenant Spaces

Size 51,422 SF

Type Pre-Lease

Centerstone at Tysons 1550 Westbranch Drive

Tenant Freddie Mac

Size 151,949 SF

Type Relet

7925 Jones Branch Drive

Tenant Preferred Systems

Size 21,966 SF

Type Renewal

Spring Hill Metro Place 1577 Spring Hill Road

Tenant JDM Title

Size 15,334 SF

Type Renewal

Towers Crescent/A 8000 Towers Crescent Drive

Tenant Offit Kurman

Size 21,201 SF

Type Renewal

Highline 2 8405 Greensboro Drive

Tenant CollabraLink Technologies, Inc.

Size 22,416 SF

Type Renewal

8150 Leesburg Pike

Tenant Next Tier Concepts, Inc.

Size 15,024 SF

Type Relet

The Corporate Office Centre @ Tysons II 1775 Tysons Boulevard

Tenant WeWork

Size 61,528 SF

Type Relet

Northern Virginia Quarterly Market Report - Commercial real … · 2019-08-02 · Overall Market...

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