NORTHERN VIRGINIA OFFICE MARKET

Transcription

1 REAL ESTATE OUTLOOK NORTHERN VIRGINIA OFFICE MARKET Office market fundamentals mixed in Q4 Increases in asking rents accompanied by an uptick in vacancy Northern Virginia office market fundamentals were mixed during the final three months of The area absorbed 169,000 SF of space; however, vacancy ticked up 10 basis points over the previous quarter. Asking rents grew by 20 basis points during the quarter to $30.67 PSF, with slightly greater quarterly rent growth among Class B assets. The area pipeline expanded to 4.4 million SF and is well pre-leased at 64%. ECONOMY Unemployment rate 60 basis points stronger than 10-year average During the 12 months ending November 2016, Northern Virginia payroll employment grew by 31,200 jobs, more than two times the 10-year average of 12,400. The professional/business services sector accounted for nearly half of the new jobs, generating 15,200 positions, or 49% of growth, during the 12 months ending November In second place, the trade/transportation/ utilities sector added 8,300 new jobs, with retail trade accounting for 65% of these additions. Northern Virginia registers the lowest unemployment rate among Washington metro area substates, at 3.5% in October October s figure represents a 10 basis point increase over October 2015 and a 60 basis point improvement over the average 10-year unemployment rate of 4.1%. It also compares favorably to the national rate of 4.9% for October As election year uncertainty begins to subside, we expect business and consumer confidence to increase and robust employment growth to continue in Through 2020, we project average annual job growth of 18,400, representing 42% of new positions created throughout the metro area. We expect the health, technology, construction, and food services industries to fuel job growth in the period ahead. OFFICE AND DEMAND Class A leases fuel net absorption At December 2016, Northern Virginia s direct vacancy rate was 16.2%, a 10-basis-point increase from three months prior and 20 basis points higher than year-end The current vacancy rate is well above the 10-year average of 13.5%. OFFICE TRENDS 10-YEAR TREND OVERALL RENTAL RATES UNDER CONSTRUCTION JOB GROWTH 16.2% Vacancy rate ticks up 169,000 SF Demand weak during 2016 $30.67 PSF Up 20 basis points since Q3 4.4 Million SF Construction pipeline is well leased 31,200 Jobs During 12-months ending November 2016

2 NORTHERN VIRGINIA OFFICE MARKET UNEMPLOYMENT RATE 12% 10% 8% 6% 4% 2% 0% UNITED STATES WASHINGTON METRO AREA NORTHERN VIRGINIA * PAYROLL JOB GROWTH 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% *At October 2016 SOURCE: Bureau of Labor Statistics, Transwestern UNITED STATES WASHINGTON METRO AREA NORTHERN VIRGINIA * *12 months ending November 2016 SOURCE: Bureau of Labor Statistics, Transwestern NORTHERN VIRGINIA OFFICE NET AND Dropping 40 basis points from September 2016, the Class A direct vacancy rate was 13.9% at December Despite this change, December s figures represent an increase from year-end 2015 at 13.2%. The Class B/C direct vacancy rate ticked up slightly during the three months ending December 2016, increasing 30 basis points to 17.4%. Net absorption was positive 169,000 SF for the fourth quarter, as significant leasing activity in select submarkets was offset by large move-outs in others. Class A space drove absorption during the three months to December, at positive 601,000 SF, while Class B/C buildings negatively absorbed 432,000 SF. This balance held true for 2016 overall, with strong Class A net absorption of positive 477,000 SF versus Class B/C net absorption of negative 455,000 SF. Net absorption for 2016 was 21,000 SF, well-below the 10-year annual average of positive 585,000 SF. Reston was the submarket leader for absorption during the three months ending December Major leases signed during the quarter include a 32,436 SF lease signed by Volkswagen at 2003 Edmund Halley Drive. The automobile company is expected to occupy the third floor beginning in mid Nearby, CDW Government signed a 32,481 SF lease at 2001 Edmund Halley Drive. A 340,000 SF delivery for MITRE Corporation at 7598 Colshire Drive positively impacted absorption in the Tysons Corner submarket. Similarly, a pre-leased delivery of 64,800 SF at 309 Kellys Ford Plaza SE for EIT, Inc. contributed significantly to absorption in Loudon County. Other notable lease transactions inked during the quarter include the General Services Administration (GSA), with a 53,062 SF lease at 2511 Jefferson Davis Highway in Crystal City NET IN MILLIONS DIRECT RATE 18% 16% 14% 12% 10% 8% 6% 4% Strong absorption in submarkets such as Reston and the RCB Corridor was offset by several large move-outs. In Fairfax Center, One Fair Oaks sole tenant, CACI International, vacated 218,245 SF of space at 4114 Legato Road. Verizon vacated 207,678 SF of space in two buildings at Loudon County Parkway. In February 2016, the company entered into a sale-leaseback arrangement with the campus s new owners. After vacating their space at 1517 Westbranch Drive several months ago, the GSA s lease expired in September 2016, resulting in negative absorption of 123,382 SF. Combined, the professional/business services and tech industries accounted for 64% of leasing activity during 2016, at 39% and 25%, respectively. The RCB Corridor and Crystal City/Pentagon City submarkets had the greatest leasing activity during the year, each accounting for 19%. Tysons Corner followed closely with 17%. The largest professional/business services lease for fourthquarter 2016, however, was in the Route 28 South/Chantilly submarket, with Cox Communications leasing 41,957 SF at Lincoln Park Drive. Herndon-based VT idirect inked the largest tech industry lease during the fourth quarter. In October 2016, it signed a lease for 37,767 SF at Sunrise Valley Drive. 2 REAL ESTATE OUTLOOK NORTHERN VIRGINIA OFFICE MARKET Q4 2016

3 OFFICE RENTAL RATES Asking rents increase on a quarterly and annual basis Average asking rents ticked up during the fourth quarter of At December 2016, rents for all classes stood at $30.67 PSF, a 20 basis point increase over the third quarter and a 50 basis point bump from year-end For the most recent quarter, Class A office rents averaged $33.51 PSF, while Class B/C rents averaged $28.03 PSF. Concession packages were elevated during 2016, as landlords competed for tenants. For a typical 10-year or greater term for a new lease, tenant improvement allowances averaged around $75 PSF with 12 months of free rent. Concessions are above 2015 levels, which averaged $68 in tenant improvement allowances and 11.9 months in free rent. NORTHERN VIRGINIA CONTIGUOUS BLOCK ANALYSIS NUMBER OF BUILDINGS - Q NUMBER OF BUILDINGS - Q ,000 SF 20,000 SF 50,000 SF 100,000 SF OFFICE SUPPLY AND DEVELOPMENT Tysons Corner and the RCB Corridor home to robust development pipelines During the fourth quarter of 2016, there were three office deliveries, representing 440,500 SF in total. Each building was 100% leased at the time of delivery. The largest of these was Cityline Partners MITRE 4 at 7598 Colshire Drive in Tysons Corner, which was 100% leased to MITRE Corporation when it delivered in December. In December, EIT, Inc. moved into a new 64,800 SF space at 309 Kellys Ford Plaza SE in Loudon County, and Buckeye Development delivered a 35,700 SF building in the county as well. At December 2016, there was approximately 4.4 million SF of Northern Virginia office space under construction. Of this development, 64% is pre-leased, well above the 10- year average pre-lease rate of 46%. Tysons Corner claims the largest pipeline at December 2016, with nearly 1.6 million SF under construction, of which 70% is pre-leased. The RCB Corridor is home to the second largest pipeline, with 1.2 million SF under construction at 46% pre-leased. At 552,781 SF, the new CEB tower at Central Place in Rosslyn is the largest component of the pipeline. When finished, it will be part of a larger mixed-use development featuring retail and residential space, along with public plazas. OFFICE INVESTMENT MARKET Investment activity picks up for Class B/C assets Investment sales volume totaled $227.5 million, or $245 PSF, in Northern Virginia during the three months ending NORTHERN VIRGINIA OFFICE ASKING RENTAL RATES CLASS A CLASS B/C $40 $35 $30 $25 $20 $ NORTHERN VIRGINIA OFFICE DEVELOPMENT PIPELINE MILLION SF COMPLETED UNDER CONSTRUCTION PRE-LEASED UNDER CONSTRUCTION AVAILABLE REAL ESTATE OUTLOOK NORTHERN VIRGINIA OFFICE MARKET Q

4 NORTHERN VIRGINIA OFFICE MARKET December 2016, representing eight investment sales. Notably, Perseus Realty and ELV Associates purchased 901 N. Stuart Street for $69.5 million, or $310 PSF, in the RCB Corridor. Another of the quarter s largest transactions took place at Sunset Hills Road in Reston, which Ritz Banc Group and Lincoln Property Company purchased from Prudential for $58 million, or $297 PSF. For 2016, investment sales totaled $1.9 billion, or $204 PSF, compared to $2.7 billion, or $227 PSF, during Reversing a trend seen in recent years, investors focused slightly more capital on Class B/C assets during These assets accounted for 52% of sales volume for the year, and 62% of transactions took place at properties that were car dependent. This is a switch from 2015, when 45% of capital was focused on walkable to very walkable neighborhoods. OFFICE MARKET OUTLOOK Office market fundamentals improving gradually We anticipate Northern Virginia s office market recovery will continue to be gradual. Strong area job growth will encourage demand for office space. However, in the short-term, this will be offset by densification and consolidation, as well as new buildings coming online. This new inventory will grow area rents; however, vacancy may also remain elevated above historic levels. In certain submarkets, tenants may benefit from elevated concession packages. As a result, progress will likely be slower than in previous recovery cycles. We project the overall Northern Virginia vacancy rate (inclusive of sublease space) to remain relatively flat through year-end 2018, hovering around the high-16% to low-17% range. We expect asking rents will edge up 0.5% to 1.5% during Metrorail s Silver Line will continue to significantly impact Northern Virginia office demand and its pipeline, as employers increasingly seek out transit-oriented, amenitized spaces. These priorities will also result in a growing number of renovations of older assets to Class A product. Investors looking for the greatest value-add opportunities should therefore focus on Class B/C product in superior locations. Already, investor interest in older, value-add assets has increased, even in car-dependent locations, which suggests low, post-recession pricing on suburban assets will start to rise. Overall, a robust pipeline, along with trends towards densification and consolidation, will challenge the Northern Virginia office market over the short-term. However, the area remains one of the strongest job markets in the country, and many of its key industries, such as defense and cybersecurity, are expected to expand rapidly in the coming years. Recovery will be gradual in most submarkets, with accessible areas featuring a smaller pipeline and stable, long-term tenants improving most rapidly. 4 REAL ESTATE OUTLOOK NORTHERN VIRGINIA OFFICE MARKET Q4 2016

5 Northern Virginia Office Market Indicators PROPERTY CLASS INVENTORY UNDER CONSTRUCTION Q4 NET YTD NET DIRECT SUBLEASE SPACE OVERALL AVERAGE RATE PSF Class A 67,733,319 4,319, , , % 1.0% 14.9% $33.51 Class B/C 124,856, ,500 (432,000) (455,000) 17.4% 0.7% 18.1% $28.03 Total 192,590,201 4,447, ,000 21, % 0.8% 17.0% $30.67 Northern Virginia Office Market Notable Lease Transactions TENANT DEAL TYPE ADDRESS SUBMARKET SQUARE FEET Wells Fargo Renewal 1751 Pinnacle Drive Tysons Corner 157,000 GSA New Lease 2511 Jefferson Davis Highway Crystal/Pentagon City 53,100 AECOM Renewal 4800 Westfields Boulevard Rt. 28 South/Chantilly 49,900 Computer Sciences Corporation Renewal 1200 S. Hayes Street Crystal/Pentagon City 42,500 Cox Communications New Lease Lincoln Park Drive Rt. 28 South/Chantilly 42,000 Institute for Humane Studies New Lease 3434 N Washington Boulevard RCB Corridor 38,000 VT idirect, Inc. New Lease Sunrise Valley Drive Herndon 37,800 SOURCE: CoStar, County Newsletters, Washington Business Journal, Washington Post, Transwestern Northern Virginia Office Market Construction Activity SUBMARKET SQUARE FEET UNDER CONSTRUCTION/RENOVATION PERCENT PRE-LEASED RCB Corridor 1,154,548 46% Eisenhower Ave Corridor 700,000 97% Reston 365,000 3% Tysons Corner 1,555,419 70% McLean/Vienna 235, % Fairfax Center 150,000 62% Rt. 28 South/Chantilly 160, % Loudoun County 15,000 0% Prince William County 112,500 55% Total 4,447,467 64% REAL ESTATE OUTLOOK NORTHERN VIRGINIA OFFICE MARKET Q

6 NORTHERN VIRGINIA OFFICE MARKET Northern Virginia Office Market Indicators SUBMARKET INVENTORY UNDER CONSTRUCTION Q4 NET YTD NET DIRECT SUBLEASE SPACE TOTAL AVERAGE RATE PSF RCB Corridor 23,984,926 1,154, , , % 1.0% 20.0% $41.74 Crystal City/Pentagon City 14,098,585 0 (155,000) (242,000) 17.0% 0.3% 17.3% $36.11 Old Town 8,389,063 0 (17,000) (101,000) 11.4% 1.1% 12.5% $32.96 Eisenhower Ave Corridor 9,202, ,000 28,000 (193,000) 23.7% 0.1% 23.8% $32.08 Springfield/Huntington/I-95 8,030,384 0 (40,000) (16,000) 19.0% 0.4% 19.4% $28.51 Bailey's/Falls Church/Annandale 7,382,823 0 (7,000) (59,000) 26.8% 0.5% 27.3% $28.51 Merrifield 9,247, ,000 28, % 1.0% 12.3% $31.32 Reston 18,797, , , , % 1.4% 10.9% $28.29 Herndon 12,253,982 0 (37,000) (539,000) 17.6% 2.8% 20.4% $27.42 Tysons Corner 29,335,138 1,555,419 85, , % 0.4% 15.7% $32.21 McLean/Vienna 2,201, ,000 11,000 (18,000) 6.8% 0.9% 7.7% $34.93 Oakton/Fairfax City 5,840, ,000 (18,000) 14.5% 0.4% 14.9% $23.70 Fairfax Center 7,248, ,000 (167,000) (529,000) 22.6% 1.1% 23.7% $26.05 Rt. 28 South/Chantilly 13,887, ,000 97, , % 0.7% 15.4% $25.23 Loudoun County 16,228,417 15,000 (29,000) 257, % 0.3% 17.0% $23.62 Prince William County 6,462, ,500 (13,000) (32,000) 11.4% 0.5% 11.9% $22.56 Total 192,590,201 4,447, ,000 21, % 0.8% 17.0% $30.67 CONTACT Elizabeth Norton Managing Research Director Mid-Atlantic elizabeth.norton@transwestern.com Claire Whitesell Research Associate Mid-Atlantic claire.whitesell@transwestern.com METHODOLOGY The information in this report is the result of a compilation of information on office properties located in the Northern Virginia area. This report includes single-tenant, multi-tenant and owner-user office properties 15,000 SF and larger, excluding properties owned by a government agency Tysons One Place, Suite 600 McLean, Virginia T Copyright 2016 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to Fourth parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein.

7 REAL ESTATE OUTLOOK NORTHERN VIRGINIA FLEX/INDUSTRIAL MARKET Flex/industrial market shows significant year-over-year improvement Strong demand results in lower vacancy Demand was strong for Northern Virginia flex/industrial space during the fourth quarter of The area s direct vacancy rate declined by 20 basis points from the previous quarter and 10 basis points from year-end 2015 to 7.4%. Quarterly net absorption was positive 211,000 SF, while asking rents declined 0.9% from the previous quarter but were up 2.2% year-over-year. The decrease in asking rents was driven by sizable changes in specific submarkets. For example, in Merrifield, after a large jump in rents for flex/warehouse space during the third quarter of 2016, rents declined by 12.4% to $ FLEX/INDUSTRIAL TRENDS 10-YEAR TREND OVERALL 7.4% Vacancy rate ticks down ECONOMY Unemployment rate 60 basis points stronger than 10-year average During the 12 months ending November 2016, Northern Virginia payroll employment grew by 31,200 jobs, more than two times the 10-year average of 12,400. The professional/business services sector accounted for nearly half of the new jobs, generating 15,200 positions, or 49% of growth, during the 12 months ending November In second place, the trade/transportation/ utilities sector added 8,300 new jobs, with retail trade accounting for 65% of these additions. Northern Virginia registers the lowest unemployment rate among Washington metro area substates, at 3.5% in October October s figure represents a 10 basis point increase over October 2015 and a 60 basis point improvement over the average 10-year unemployment rate of 4.1%. It also compares favorably to the national rate of 4.9% for October RENTAL RATES UNDER CONSTRUCTION 211,000 SF Healthy demand during 2016 $9.26 PSF Asking rents up 2.2% year-over-year 436,886 SF Construction pipeline controlled As election year uncertainty begins to subside, we expect business and consumer confidence to increase and robust employment growth to continue in Through 2020, we project average annual job growth of 18,400, representing 42% of new positions created throughout the metro area. We expect the health, technology, construction, and food services industries to fuel job growth in the period ahead. JOB GROWTH 31,200 Jobs During 12-months ending November 2016 FLEX/INDUSTRIAL AND DEMAND Annual absorption exceeds 10-year average The direct vacancy rate for Northern Virginia flex/industrial buildings declined 20 basis points to 7.4% during the fourth quarter. The most recent quarterly rate

8 NORTHERN VIRGINIA FLEX/INDUSTRIAL MARKET NORTHERN VIRGINIA FLEX/INDUSTRIAL NET AND NET IN MILLIONS DIRECT RATE % 12% 11% 10% 9% 8% 7% 6% 5% 4% is well below the 10-year average of 9.4%. Of the property types, flex/warehouse had the lowest direct vacancy rate, at 7.2% for December For the fourth quarter, net absorption totaled positive 211,000 SF. Flex/warehouse space was the greatest contributor to the total, with net absorption of positive 341,000 SF. For 2016, net absorption totaled 883,000 SF, exceeding the 10-year average of 843,000 SF. Prince William County led Northern Virginia submarkets in quarterly net absorption for the three months ending December, with positive absorption of 151,000 SF. A 73,300 SF lease signed by Conrad Holdings for space at Residency Road was a major contributor to this quarter s figures. NORTHERN VIRGINIA FLEX/INDUSTRIAL ASKING RENTAL RATES $15 $14 $13 $12 $11 $10 $9 $8 $7 $6 NORTHERN VIRGINIA FLEX/INDUSTRIAL DEVELOPMENT PIPELINE MILLION SF BULK WAREHOUSE FLEX/WAREHOUSE FLEX/R&D COMPLETED UNDER CONSTRUCTION PRE-LEASED UNDER CONSTRUCTION AVAILABLE FLEX/INDUSTRIAL RENTAL RATES Asking rents up 2.2% year-over-year Flex/industrial asking rents declined 0.9% from the previous quarter to $9.26 PSF at December This figure, however, is a 2.2% improvement over year-end Bulk warehouse and flex/r&d rents both increased by 1.7% during the past three months, while flex/ warehouse declined by 1.8% over the same period Flex/ warehouse asking rents declined the most in the Merrifield, I-395 Corridor, and Springfield submarkets. In Merrifield, the third quarter represented the highest rents seen this year at $18.81, making the fourth quarter s $16.47 a significant drop. Additionally, all of the space available at present is in Class B/C buildings. Similarly, I-395 Corridor rents expanded significantly during the third quarter to $13.65 to contract to $13.29 during the fourth quarter, still above levels experienced earlier in In Springfield, rents contracted after three quarters of measured growth FLEX/INDUSTRIAL SUPPLY AND DEVELOPMENT Dulles Corridor and Prince William County home to most robust pipelines Two projects delivered during the fourth quarter of 2016, both in Prince William County. The Pruitt Corporation delivered properties at Gateway Boulevard and Gateway Boulevard, with 44,000 SF and 35,200 SF, respectively Gateway Boulevard was 30% leased at the time it was delivered, while Gateway Boulevard was 0% pre-leased. 2 REAL ESTATE OUTLOOK NORTHERN VIRGINIA FLEX/INDUSTRIAL MARKET Q4 2016

9 There was approximately 436,886 SF under construction or renovation at December 2016, of which 38% was pre-leased. The pipeline is split between Prince William County and the Dulles Corridor, with the Corridor accounting for 62% of development. Already expanding with warehouses in Sterling and Gaithersburg, Sterling-based JK Moving is expected to undergo significant growth in One of its primary competitors, Office Movers, rapidly exited the market in December 2016, creating significant opportunities in the office-moving space. FLEX/INDUSTRIAL INVESTMENT MARKET Q4 characterized by light investment sales Two Northern Virginia flex/industrial investment sales took place during the fourth quarter of Notably, AEM, Inc. purchased Powers Court in the Dulles Corridor for $5.3 million, or $87 PSF. For 2016, Northern Virginia investment sale volume totaled $156.7 million, or $116 PSF, which compares to $473 million, or $114 PSF, during During 2016, the majority of investor interest was focused on flex/warehouse space, estimated to account for 71% of sales volume. Bulk warehouse space accounted for 27% of transaction volume. The I-95 Corridor was the most active submarket for 2016, representing 36% of the transaction volume. Following closely, Prince William County saw 29% of investor interest in industrial properties. FLEX/INDUSTRIAL MARKET OUTLOOK Demand to outpace supply, resulting in lower vacancy and higher rents Over the short-term, we expect growth will continue in the Northern Virginia flex/industrial market. We project the overall vacancy rate (inclusive of sublease space) will decline in Northern Virginia from 7.6% today to the mid-6% range by December Demand, driven by retail distribution and housing construction supply, will outpace supply through The resulting declines in vacancy will be accompanied by 3% to 4% increases in rent during The area s limited pipeline will keep its vacancy rate below historic levels in the near-term; however, demand will also likely bring new investors to the market offering upgraded space with a focus on efficient building design and modernized site layouts, including better trailer loading, clear heights, column spacing, and parking. As a result, we expect the investment market to gain momentum in 2017, as investors capitalize on healthy market conditions and growing demand. REAL ESTATE OUTLOOK NORTHERN VIRGINIA FLEX/INDUSTRIAL MARKET Q

10 NORTHERN VIRGINIA FLEX/INDUSTRIAL MARKET Northern Virginia Flex/Industrial Market Indicators PROPERTY CLASS INVENTORY UNDER CONSTRUCTION Q4 NET YTD NET DIRECT SUBLEASE SPACE OVERALL AVERAGE RATE PSF Bulk Warehouse 21,566, ,850 (195,000) 248, % 0.2% 7.5% $7.82 Flex/Warehouse 59,716, , , , % 0.2% 7.4% $9.46 Flex/R&D 4,684, ,000 45, % 0.5% 11.4% $13.25 Total 85,967, , , , % 0.2% 7.6% $9.26 Northern Virginia Flex/Industrial Market Notable Lease Transactions TENANT DEAL TYPE ADDRESS SUBMARKET SQUARE FEET Conrad Holdings New Lease Residency Road Prince William County 73,300 Astor Enterprises New Lease 6315 Bren Mar Drive I-95 Corridor 50,350 ABC Supply New Lease Electronic Drive I-95 Corridor 94,000 AutoBahn New Lease Severn Way Dulles Corridor 33,900 TML Enterprises New Lease 4151 Lafayette Center Drive Dulles Corridor 31,012 GSA New Lease 7001 Newington Road I-95 Corridor 26,250 Windy City Wireless New Lease Severn Way Dulles Corridor 20,400 SOURCE: CoStar, County Newsletters, Washington Business Journal, Washington Post, Transwestern Northern Virginia Flex/Industrial Market Construction Activity SUBMARKET SQUARE FEET UNDER CONSTRUCTION/RENOVATION PERCENT PRE-LEASED Dulles Corridor 269,160 29% Prince William County 167,726 53% Total 436,886 38% 4 REAL ESTATE OUTLOOK NORTHERN VIRGINIA FLEX/INDUSTRIAL MARKET Q4 2016

11 NORTHERN VIRGINIA FLEX/INDUSTRIAL MARKET Northern Virginia Flex/Industrial Market Indicators SUBMARKET INVENTORY UNDER CONSTRUCTION Q4 NET YTD NET DIRECT SUBLEASE SPACE TOTAL AVERAGE RATE PSF Bulk Warehouse 304, , % 0.0% 0.0% N/A Flex/Warehouse 3,180, ,000 20, % 0.0% 3.1% $12.28 Flex/R&D 366, ,000 10, % 0.0% 7.5% $13.28 Beltway (I-495) 3,851, ,000 35, % 0.0% 3.3% $12.39 Bulk Warehouse 5,384,800 0 (75,000) (102,000) 12.6% 0.0% 12.6% $8.25 Flex/Warehouse 19,184, ,000 57, % 0.0% 7.0% $9.00 Flex/R&D 1,210, ,000 46, % 0.0% 11.6% $13.94 I-95 Corridor 25,780,144 0 (51,000) 0 8.4% 0.0% 8.4% $9.08 Bulk Warehouse 70, % 0.0% 0.0% N/A Flex/Warehouse 1,575,134 0 (12,000) (9,000) 9.4% 0.3% 9.7% $14.00 Flex/R&D 592,480 0 (11,000) (24,000) 20.8% 0.0% 20.8% $13.42 Reston/Herndon 2,238,596 0 (22,000) (34,000) 12.1% 0.2% 12.3% $13.84 Bulk Warehouse 10,969,948 60,000 (110,000) 297, % 0.3% 7.2% $7.81 Flex/Warehouse 22,137, , , , % 0.4% 9.6% $10.61 Flex/R&D 2,181, ,000 (9,000) 9.6% 1.1% 10.7% $13.21 Dulles Corridor 35,289, , , , % 0.4% 8.9% $9.90 Bulk Warehouse 4,835, ,850 (10,000) 48, % 0.0% 3.0% $7.37 Flex/Warehouse 13,638,269 63, ,000 99, % 0.1% 4.9% $7.05 Flex/R&D 333, ,000 22, % 0.0% 2.3% $10.66 Prince William County 18,807, , , , % 0.1% 4.4% $7.20 Bulk Warehouse 21,566, ,850 (195,000) 248, % 0.2% 7.5% $7.82 Flex/Warehouse 59,716, , , , % 0.2% 7.4% $9.46 Flex/R&D 4,684, ,000 45, % 0.5% 11.4% $13.25 Northern Virginia Total 85,967, , , , % 0.2% 7.6% $9.26 CONTACT Elizabeth Norton Managing Research Director Mid-Atlantic elizabeth.norton@transwestern.com Claire Whitesell Research Associate Mid-Atlantic claire.whitesell@transwestern.com METHODOLOGY The information in this report is the result of a compilation of information on office properties located in the Northern Virginia area. This report includes single-tenant, multi-tenant and owner-user office properties 15,000 SF and larger, excluding properties owned by a government agency Tysons One Place, Suite 600 McLean, Virginia T Copyright 2016 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to Fourth parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein.