2019-07-02_DTZ戴德梁行_Office_Q1_2019_Northern_Virginia_2页_409kb

Northern Virginia Office Market Summary

Core Content

The Northern Virginia office market experienced positive trends in the first quarter of 2019, with strong job growth, net absorption, and rising rental rates. The region continues to be a key hub for employment and business activity, supported by a tight labor market and robust leasing demand.

Economic Indicators

• D.C. Metro Employment: Remained stable at 3.3 million in both Q1 18 and Q1 19.
• D.C. Metro Unemployment: Declined from 3.7% to 3.3%, marking the lowest rate since April 2008.
• U.S. Unemployment: Continued to decrease, from 4.1% in Q1 18 to 3.8% in Q1 19.

Market Indicators

• Vacancy Rate: Declined by 80 basis points (bps) YOY to 20.3%.
• YTD Net Absorption (sf): Increased to 492,368 sf, a 37.0% rise from Q1 18.
• Under Construction (sf): Decreased slightly from 2.5 million to 1.9 million sf.
• Average Asking Rent: Rose to $33.15 per square foot (psf) on a gross basis, up from $32.63 in Q1 18.

Market Overview

• Positive Absorption: The Northern Virginia office market saw strong net absorption, driven by tech and co-working firms.
• Notable Move-ins: WeWork expanded its presence at Central Place, Deloitte subleased space in Rosslyn, and the Air Line Pilots Association moved into a new space in Tysons Corner.
• Leasing Activity: Total new leasing activity reached 1.5 million sf, with Reston/Herndon and Tysons Corner accounting for nearly half of the total.
• Tech Leases: Major tech firms like Google, Blackboard, and Yext signed significant leases in Reston/Herndon and Tysons Corner.
• Crystal City: Despite a net negative absorption, the submarket saw the largest lease of the quarter with PBS relocating to 1225 S. Clark Street.
• Reston/Herndon: Three of the four new deals over 45,000 sf were signed in this submarket, highlighting strong demand for large blocks of space.
• Development News: Boro Tower, a 446,000-sf building, delivered with 75.0% leased, anchored by KPMG, Hogan Lovells, and Tegna. The Loft, a 140,000-sf building, is set to deliver in Q3 with strong tenant interest.
• Renovations: Marcus Partners completed a full building renovation at 3180 Fairview Park, reflecting efforts to upgrade outdated office spaces.

Outlook

• Flight to Quality: Occupiers continue to favor high-quality office spaces in core submarkets like Tysons, Reston, and Herndon.
• Vacancy Trends: Vacancy is expected to remain concentrated in commodity product, while core submarkets will see tighter conditions and rising rents.
• New Construction: New construction is anticipated to outperform, with proposed developments likely to secure preleasing to begin construction.
• Rental Rates: Direct asking rents are on an upward trend, with increases noted in key submarkets.

Key Lease Transactions Q1 2019

Key Sales Transactions Q1 2019

Contact Information

For more information, contact:

• Michelle Huneke
  Associate Market Director
  Tel: +1 703 847 2736
  Email: michelle.huneke@cushwake.com
  Address: 1800 Tysons Boulevard, Tysons, VA 22102
  Website: cushmanwakefield.com

About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm with approximately 51,000 employees across 400 offices in 70 countries. In 2018, the firm generated $8.2 billion in revenue from core services including property management, leasing, and capital markets. The firm provides comprehensive real estate solutions to both occupiers and owners.

Note: The information in this report is gathered from reliable sources but may contain errors or omissions and is presented without any warranty regarding its accuracy.