Dulles Corridor office building owners struggle with high vacancy rates
September 1, 2010


...Dulles Corridor vacancies are one of the factors keeping vacancy rates in the region up. By the midway point of 2010, the Washington office market had a vacancy rate of 12.8 percent, fourth lowest in the nation but up from the year before, according to Delta Associates, a research firm. Comparatively, vacancy rates in Reston and Herndon ranged between 15 and 18 percent in the second quarter.

The empty buildings also have a dragging effect on the rents that landlords throughout the region can demand because even as they remain empty, the empty properties give tenants with expiring leases powerful leverage to squeeze lower rents and incentive packages for extensions from their current landlords.

Paul Schweitzer, who represents office tenants at the brokerage firm Studley, said clients are being offered rent abatements, help with moving costs and other incentives. Landlords that are not in Reston Town Center or on the Toll Road, he said, are sometimes offering space for less than $25 per square foot, even though asking rents average $29 in Reston and Herndon and $28 in the area along Route 28 South, according to CB Richard Ellis.

"If you're not being aggressive as a landlord right now, you're looking to sit on the sideline right now or you're not going to see very much activity," he said.