When less is more
April 27, 2012
By: Robert Burke

The desire of tenants to get into new and more efficient space is one of the trends depressing demand in Northern Virginia. Other major drivers include the movement of BRAC-related operations out of close-in suburbs in Northern Virginia and uncertainty over the level of federal spending.

In an area rich with federal contractors, a lot of firms are sitting tight until they know more, says William Quinby, managing director for the Tysons Corner office of Studley, a commercial real estate firm that represents tenants. “There’s a lot of wait and see going on,” he says. “I think there’s a real concern about the government’s contraction and its impact on government contractors.”

Data from Studley’s research for the fourth quarter of 2011 show rents around the Washington region up from the third quarter, to $31.83 per square foot in Northern Virginia, a 1.2 percent increase. However, leasing was down 14.2 percent in Northern Virginia for Class A space in trailing four-quarter data, to 6.1 million square feet. ...

... Vacancies are having one good effect, says Studley’s research manager, Chris Volney. “It’s giving the landlords there a chance to reinvest in the properties [and] they’re beginning to do that now,” he says. ...

... Lower demand for office space makes it a great market for tenants, notes Quinby, and transit access is part of what they want. “They’re looking for amenity-rich areas [and] to be in locations where they can walk to things. They’re looking for access to transit. Those markets that have those attributes will have the higher demand.” ...

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