Local Focus - Lincoln Property Company DC

Transcription

National Presence. Local Focus
Metropolitan DC Market Overview
1Q 2015
Overall Market Summary
The Washington, DC Metropolitan commercial real estate market is comprised of approximately 411.3 million square feet of
rentable office space located in the District of Columbia, Northern Virginia, and Suburban Maryland. The total vacancy rate increased to 15.8% in the first quarter, up from 15.4% at the end of the previous quarter. The market recorded approximately -1.4
million square feet of net absorption in the first quarter, a significant drop from the 903,584 square feet absorbed in the fourth
quarter. Leasing activity totaled 7.2 million square feet in transactions signed during the first quarter, a 50% increase from
last quarter. The largest lease executed was a renewal signed by Inova Health System for 1.2 million square feet in Northern
Virginia. Three buildings completed construction in the first quarter (1 DC, 2 VA, 0 MD), totaling 310,565 square feet and 78%
leased. There were twenty-one sale transactions in the first quarter, comprising of 4.4 million rentable square feet and totaling
$2.1 billion. Average asking rental rates ticked down $0.12 to $35.33 per square foot, Full Service. From February 2014 to
February 2015 employment in the DC Metropolitan area had a net increase of 52,000 jobs representing 1.7% growth, while the
unemployment rate decreased to 4.9%.
Direct Vacancy
Total Vacancy
Total Net Absorption
Leasing Activity
DC
10.4%
11.1%
-105,448 SF
2.9 M SF
VA
16.5%
17.4%
-1.3 M SF
3.7 M SF
MD
16.4%
17.1%
-5,317 SF
0.6 M SF
Metro Area
15.0%
15.8%
-1.4 M SF
7.2 M SF
Arrows reflect differences from 4Q 2014
Arrows reflect differences from YTD 1Q 2014 totals
Outlook
As slow economic and employment growth continues to impact the Washington, DC region, the commercial real estate market
is expected to remain relatively flat in 2015. The private sector should continue to drive employment; while the federal government continues to downsize its workforce. Early renewals are expected to dominate the larger lease transactions, as private
sector tenants leverage the current market conditions. The GSA should continue to execute renewals as well, however, their
primary focus will be on consolidating and downsizing federal office space requirements when possible. To maintain or increase competitiveness in this “tenant’s market”, aggressive landlords will continue to renovate and upgrade amenities to their
buildings. As the GSA and the private sector (as seen with the larger DC law firms) continue to reduce space requirements,
vacancy is expected to tick upward, while net absorption is expected to decline. Although the construction pipeline remains
limited, there will be a modest uptick in inventory with eight new buildings, totaling 1.6 square feet, scheduled to deliver through
the remainder 2015. Sales velocity is expected to remain strong in Northern Virginia, while foreign investors continue to focus
on core assets in DC. The “flight to quality” trend should continue market-wide as tenants (especially DC law firms) desire
well located, new product.
101 Constitution Avenue | Suite 325 East | Washington, DC | 20001 | 202.513.6700
1530 Wilson Boulevard | Suite 200 | Arlington, VA | 22209 | 703.522.4600
1Q 2015
Northern Virginia
Market Summary
The Northern Virginia office market consists of 1,536 buildings over 25,000 square feet, totaling approximately 181.9
million square feet of rentable space.
The largest non-GSA lease signed during the first quarter was
a 117-acre ground lease at One Fairfax - 3225 Gallows Road
in the Merrifield submarket signed by Inova Health System.
The lease included ExxonMobil’s former four-building, 1.2
million-square-foot campus, and grants Inova the first right of
refusal to purchase the property. Inova plans to redevelop the
property into a medical research, education, and treatment
facility that will serve as an expansion of its Fairfax campus.
The largest government lease signed during the first quarter
was a relet/downsize by the GSA – U.S. Marshals Service for
332,964 square feet in the Crystal City submarket at Crystal
Gateway 3 – 1215 South Clark Street. The U.S. Marshals will
shed 41,238 square feet within Crystal City during mid-2016
when the move is completed.
Building sales volume totaled approximately $564 million during the first quarter. The largest transaction to occur was the
sale of the Suffolk Building - 5611 Columbia Pike in the Alexandria submarket. The 258,248-square-foot building delivered in 1964, and was renovated in 2003, and upon purchase
was 100% leased to the GSA - Department of Defense. NGP
bought the property from a JV of Carr Properties and J.P. Morgan for $96,712,497 or $374 psf, and it traded at a 6.9% cap
rate.
At the end of the first quarter 2015 the Northern Virginia office market recorded 95 buildings outside of the Beltway with
50,000 square feet of contiguous space available; compared
to only 63 buildings inside the Beltway.
1Q ‘15
4Q ‘14
1Q ‘14
Direct
Vacancy
16.5%
16.2%
15.2%
Total
Vacancy
17.4%
17.1%
16.2%
-1,287,547 sf
-164,076 sf
-162,408 sf
Leasing
Activity
(YTD)
3.7 M sf
9.7 M sf
1.8 M sf
Under
Construction
3.2 M sf
2.4 M sf
2.3 M sf
Deliveries
(YTD)
199,099 sf
1.8 M sf
305,665 sf
Rental Rates
$31.82 fs
$32.29 fs
$31.91 fs
78.3%
69.3%
53.7%
Net
Absorption
(YTD)
U/C
Percent
Pre-Leased
101 Constitution Avenue | Suite 325 East | Washington, DC | 20001 | 202.513.6700
1530 Wilson Boulevard | Suite 200 | Arlington, VA | 22209 | 703.522.4600
Northern Virginia Quarterly overview
1st Quarter 2015
Vacancy Rate
Direct vacancy has increased from 16.2% in the fourth quarter 2014 to
16.5% in the first quarter 2015, and has increased from 15.2% since the
first quarter 2014. Total vacancy has increased from 17.1% in the fourth
quarter 2014 to 17.4% in the first quarter 2015, and has increased from
16.2% since the first quarter 2014. This is the highest vacancy rate
recorded in Northern Virginia according to historical data.
Deliveries vs. Under Construction
10
Sublet vacancies within the Northern Virginia office market remained
flat at 0.9% from the fourth quarter 2014 through the first quarter 2015.
6
SF (Millions)
Absorption and Gross Leasing
8
4
Leasing activity during the first quarter totaled 3.7 million square feet
leased, which is the highest level of quarterly leasing activity recorded
in Northern Virginia in the last two years. The major leasing activity spike
was primarily driven by Inova’s 1.2 million-square-foot lease at One
Fairfax; other leasing activity in Northern Virginia during the first quarter
amounted to 2.5 million square feet. Even discounting Inova’s lease,
Northern Virginia started 2015 with the highest first quarter leasing activity since the first quarter 2009. Six GSA and government contractor
renewals and consolidations in excess of 90,000 square feet helped to
drive this high level of activity.
0
'05
'06
'07
'08
'09
'10
'11
'12
Deliveries
'13
'14 YTD '15
Under Construction
SF (Millions)
Deliveries | Net Absorption | Vacancy Rate
The ten largest leases signed during the first quarter ranged in size from
1.2 million square feet to 64,250 square feet.
8
20
7
18
6
16
5
14
4
12
3
10
2
8
1
6
0
4
-1
2
-2
'05
'06
'07
Delivery
Construction
One new project broke ground during the first quarter 2015. Capital One
Drive in Tysons Corner, is scheduled to deliver in the second quarter of
2017. Capital One will occupy the entirety of the 975,000-square-foot
building. The building will serve as Capital One’s new headquarters
building, and at 470 feet, it will be the tallest commercial building in
Northern Virginia.
www.lpcwashingtondc.com
'08
'09
'10
Net Absorption
'11
'12
'13
'14
YTD '15
Total Vacancy Rate
0
Vacancy Rate (%)
Northern Virginia recorded negative absorption during the first quarter 2015 totalling -1,287,547 square feet. While there was a handful
of small to medium-sized move-ins, the majority of positive absorption
during the first quarter 2015 was negated by large move-outs. Significant negative absorption was caused by move-outs by Freddie Mac at
8000 Jones Branch Drive, Boeing at Crystal Gateway 3 - 1215 South
Clark Street, the GSA-DIA at 3100 Clarendon Boulevard and 7900 Westpark Drive, The Aerospace Corporation at 15049 Conference Center
Drive and Lockheed Martin at 2245 Monroe Street. Since 2011 negative
absorption in Northern Virginia has totaled over -3 million square feet.
2
Northern Virginia Quarterly overview
1st quarter 2015
Construction (Cont.)
Two buildings delivered during the first quarter for a total of 199,099 square feet. Comstock Partners completed construction on
Loudoun Station – 43777 Central Station Drive, a 49,099-square-foot building, which delivered on a speculative basis. COPT
completed construction on COPT @ Westfields - 4870 Stonecroft Boulevard, a 150,000-square-foot building that is fully leased
to the CIA.
The second half of the COPT @ Westfields development is scheduled to deliver during the second quarter 2015. The
150,000-square-foot 4850 Stonecroft Boulevard is also 100% pre-leased to the CIA.
Outlook
During the first quarter 2015 Northern Virginia witnessed a number of statistical extremes which demonstrate that rental rates
will continue to lower and landlords will continue to offer greater concession packages to fill an increasing amount of vacant
space. Northern Virginia recorded the most negative absorption in a quarter since the second quarter 2001, and the highest
total vacancy rate ever recorded according to historical data. The first quarter 2015 saw the market record an average rental
rate of $31.82, which is lower than the average rental rates recorded in each quarter during 2014. Rental rates will continue to
drop lower as long as vacancy rates continue to increase. Building owners will continue to offer the aggressive and unorthodox
concession packages similar to the ones offered in 2014. For example, Noblis ESI was given $85 psf in tenant improvements
and a full year of free rent for their lease at 2000/2200 Edmund Halley Drive, and Sands Capital Management’s new lease at
1000 Wilson Boulevard included $85 psf in tenant improvements and the construction of a 3,070-square-foot roof deck for
exclusive company use. Vornado and other Crystal City landlords are offering abatement packages that include two to three
years of rental abatement.
The first quarter 2015 saw Northern Virginia record the largest amount of quarterly leasing activity since the third quarter 2010.
However, a large proportion of this activity was generated by renewals or large consolidations by federal agencies or their contractors, with six such deals 90,000 square feet or greater being signed. With no indication that this overall trend will change,
federal agencies and their corroborating contractors will continue to remain in place or decrease their overall footprints in future
quarters.
For More Information, Please Contact:
Neil Alt | [email protected]
Doug McLearn | [email protected]
Chris Dyson | [email protected]
Eamon McCrann | [email protected]
Jed Prossner | [email protected]
Correll Caulfield | [email protected]
Stoddie Nibley | [email protected]
Mary Fitzgerald | [email protected]
Jack Redmond | [email protected]
Tom Colicchio | [email protected]
703.522.4600
Northern Virginia Top Ten Leases
1Q 2015
Six of the top ten leases signed in the first quarter 2015 were over 100,000 square feet. Included in the top leases were three
relets, two relet/downsizes, four renewals, and one ground lease. The largest transaction of the quarter was a 117-acre ground
lease by Inova at One Fairfax - 3225 Gallows Road in Merrifield, including ExxonMobil’s former 1.2 million-square-foot campus.
The second largest transaction of the quarter was a 332,964-square-foot relet/downsize by the GSA - U.S. Marshals at Crystal
Gateway 3 - 1215 South Clark Street in Crystal City. The largest renewal of the year was done by Booz Allen Hamilton, who will
remain in their 222,989-square-foot headquarters at John Marshall II - 8283 Greensboro Drive in the Tysons Corner submarket.
Fannie Mae signed a 186,133-square-foot relet at One Reston Crescent - 12000 Sunrise Valley Drive in the Reston/Herndon submarket. The GSA - EOIR renewed its 169,131-square-foot headquarters located at One Skyline Tower - 5107 Leesburg Pike in the
Alexandria submarket. Also in the Reston/Herndon submarket, Noblis ESI signed a 141,873-square-foot relet at Summit 1 - 2002
Edmund Halley Drive, in addition to a 13,175-square-foot relet at Summit 2 - 2000 Edmund Halley Drive, which will be their new
headquarters. In the Rosslyn-Ballston Corridor submarket, Sands Capital Management signed an 82,167-square-foot relet at Twin
Towers - 1000 Wilson Boulevard. The GSA-ASBCA renewed its 97,000-square-foot headquarters in Six Skyline Place - 5109
Leesburg Pike in the Alexandria submarket. At Twin Towers - 1000 Wilson Boulevard in the Rosslyn-Ballston Corridor submarket,
Sands Capital Managment signed a relet for 82,167 square feet. Also in the Rosslyn-Ballston Corridor, SRI International renewed
its 80,000-square-foot headquarters at Twin Tower - 1100 Wilson Boulevard. Lastly, at 1860 Michael Faraday Drive in the Reston/
Herndon submarket, Carahsoft signed for a new 64,250 square foot headquarters.
One Fairfax
3225 Gallows Road
Tenant: Inova
1.2 million sf
Size:
Ground Lease
Crystal Gateway 3
1215 South Clark Street
John Marshall II
8283 Greensboro Drive
Tenant: GSA-US Marshals
Size:
332,964 sf
Relet/Downsize
Tenant: Booz Allen Hamilton
222,989 sf
Size:
Renewal
Summit 1& 2
2000/2002 Edmund Halley Drive
Tenant: Noblis ESI
Size: 155,048 sf
Relet/Downsize
Six Skyline Place
5109 Leesburg Pike
Tenant: GSA-ASBCA
97,000 sf
Size:
Renewal
One Reston Crescent
12000 Sunrise Valley Drive
Tenant: Fannie Mae
Size: 186,133 sf
Relet
Twin Towers
1100 Wilson Boulevard
Twin Towers
Tenant: Sands Capital Mgmt.
Size: 82,167 sf
Relet
Tenant: SRI International
80,000 sf
Size:
Renewal
One Skyline Tower
5107 Leesburg Pike
Tenant: GSA-EOIR
169,131 sf
Size:
Renewal
1860 Michael Faraday Drive
Tenant: Carahsoft
Size: 64,250 sf
Relet
Northern Virginia Sales Transactions Suffolk Building
5611 Columbia Pike
Date Sold:
Price:
Cap Rate:
Buyer:
Seller:
Class:
Occupancy:
March-2015
$96,712,497 ($374 psf)
6.9%
NGP V Management
Carr Properties/J.P. Morgan
Class B
100%
Reston Corner I-III & Parkridge Center 5
12001, 12005 & 12007 Sunrise Valley Drive &
10780-10790 Parkridge Boulevard
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
1881 At Wiehle Metro
1881 Campus Commons Drive
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Jan-2015
$82,148,887 ($336 psf)
Columbia Property Trust
Spear Street Capital Group
Class A
78.3%
Atrium Building
277 South Washington Street
Date Sold:
Price:
Cap Rate:
Buyer:
Seller:
Class:
Occupancy:
Feb-2015
$53,500,000 ($386 psf)
7.0%
W.C. & A.N. Miller Co.
Carr Properties
Class A
90.0%
Parkridge Center 2
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Jan-2015
$34,250,000 ($358 psf)
Boyd Watterson Asset Management
Garrison Investment Group
Class B
100%
1Q 2015 March-2015
$82,233,576 ($165 psf)
Angelo, Gordon & Co./Atlantic Realty Companies
Class A
52.9%
National Gateway I
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
March-2015
$56,600,000 ($260 psf)
MGP Retail Consulting/Lidl
Meridian Group
Class A
10.3%
Reston International Center
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Jan-2015
$35,000,000 ($195 psf)
American Real Estate Partners
Rockwood Capital
Class A
57.0%
Westwood 8
8619 Westwood Center Drive
Date Sold:
Price:
Cap Rate:
Buyer:
Seller:
Class:
Occupancy:
Feb-2015
$32,000,000 ($345 psf)
6.0%
ESRI
Guardian Realty Investors
Class A
95.5%
Northern Virginia Sales Transactions Virginia Square Plaza
3801 & 3803 North Fairfax Drive
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Jan-2015
$28,500,000 ($407 psf)
Harrison Street Real Estate Capital
ProMed Properties
Class B
91.5%
Parkway One
555 Herndon Parkway
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Feb-2015
$22,588,542 ($257 psf)
Penzance Cos.
Access Property Services
Class B
93.6%
1Q 2015 Madison Place
500 Montgomery Street
Date Sold:
Price:
Cap Rate:
Buyer:
Seller:
Class:
Occupancy:
Feb-2015
$26,900,000 ($248 psf)
5.5%
TA Realty
Aetna/J.P. Morgan
Class A
72.3%
100 North Washington Street, 131& 127 East
Broad Street
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Jan-2015
$13,600,000 ($269 psf)
Insight Property GP/KiddarMetz
Robertson Properties
Class B
91.2%
1Q 2015 Northern Virginia Market Spotlight Vacancy Rate (%)
6
4
2
0
'05
'06
'07
Deliveries
'08
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
36
16
16
32
14
14
28
12
24
10
20
8
16
6
12
2
4
8
0
2
4
-2
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
Total Vacancy Rate
'14 YTD '15
0
Asking Rate
12
10
Asking Rate ($)
SF (Millions)
8
18
SF (Millions)
10
8
6
4
-4
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
Total Absorption: 1.4 Million SF/YR
Total Leasing Activity: 12.5 Million SF/YR
Deliveries: 2.7 Million SF/YR
Inventory: 181.9 Million SF
Direct Vacancy: 16.5%
Total Vacancy: 17.4%
YTD Absorption: -1,287,547 SF
YTD Leasing Activity: 3.7 Million SF
Under Construction: 3.2 Million SF
% Pre-leased: 78.3%
YTD Deliveries: 199,099 SF
Asking Rental Rates
(Full Service)
2005: $29.64 PSF
2014: $32.29 PSF
YTD 2015: $31.82 PSF
Highlights
Direct vacancy has increased from 16.2% in the fourth quarter 2014 to 16.5% in the first quarter 2015, and has increased from
15.2% since the first quarter 2014. Total vacancy has increased from 17.1% in the fourth quarter 2014 to 17.4% in the first
quarter 2015, and has increased from 16.2% since the first quarter 2014. According to historical data, both direct and total
vacancy are at the highest levels ever recorded.
Northern Virginia recorded -1,287,547 square feet of absorption for the first quarter 2015. Significant negative absorption was
caused by move-outs by Freddie Mac at 8000 Jones Branch Drive, Boeing at Crystal Gateway 3 - 1215 South Clark Street, the
GSA-DIA at 3100 Clarendon Boulevard at 7900 Westpark Drive, The Aerospace Corporation at 15049 Conference Center Drive,
and Lockheed Martin at 2245 Monroe Street.
Inside the Beltway, there were 63 buildings marketing 50,000 square feet or greater of contiguous space available at the end of
the first quarter 2015, compared to 59 buildings from the fourth quarter 2014.
Outside the Beltway, there were 95 buildings marketing 50,000 square feet or greater of contiguous space available at the end
of the first quarter 2015, which is the same number recorded during the fourth quarter 2014.
2200 Mill Road was demolished, decreasing the Alexandria submarket’s inventory by 148,000 square feet. The remaining lot is
part of the proposed site of Eisenhower Gateway, a two building, 585,000-square-foot office development.
Neil Alt Correll Caulfield Tom Colicchio Elaine Clancy Chris Dyson Mary Fitzgerald Erin Jones Eamon McCrann Doug McLearn Stoddie Nibley Jed Prossner Jack Redmond
Northern Virginia
Under Construction
1st Quarter 2015
Building Name
Submarket
COPT @ Westfields 4850 Stonecroft Boulevard
1775 Tysons Boulevard
Route 28
South
Building Size
150,000 sf
Available
Pre-Leased Delivery Date
Developer
Major
Tenant(s)
0 sf
100%
2nd qtr ‘15
COPT
CIA
Tysons Corner 476,913 sf
476,913 sf
0%
1st qtr ‘16
Lerner
Enterprises
None
Mitre IV - 7598 Colshire
Drive
0 sf
100%
4th qtr ‘16
Cityline
Mitre
National Science
Foundation HQ - 2401
Eisenhower Avenue
Alexandria
18,034 sf
97.1%
1st qtr ‘17
Lowe
Enterprises
NSF
Capital One Drive
0 sf
100%
2nd qtr ‘17
Captial One
Captial One
CEB Tower - 1201 Wilson
Boulevard
RBC
195,700 sf
64.6%
1st qtr ‘18
JBG
CEB
700,000 sf
552,781 sf
Two buildings delivered during the first quarter for a total of 199,099 square feet. Comstock Partners completed construction on
Loudoun Station – 43777 Central Station Drive, a 49,099-square-foot building, which delivered on a speculative basis. COPT
completed construction on COPT @ Westfields - 4870 Stonecroft Boulevard, a 150,000-square-foot builing that is fully leased
to the CIA.
975,000 sf = 1st Quarter start
Total Under Construction = 3.2 Million sf
78.3% Pre-leased (does not include condos)
1Q 2015 Alexandria Market Spotlight
20
35
16
28
2.0
0.7
SF (Millions)
0.5
21
12
0.4
0.3
1.5
Asking Rate ($)
Vacancy Rate (%)
0.6
1.0
SF (Millions)
0.8
0.5
8
14
4
7
-0.5
0
-1.0
0.0
0.2
0.1
0.0
'05
'06
'07
Deliveries
'08
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
'14
Total Vacancy Rate
YTD '15
Asking Rate
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
Total Absorption: -1,646 SF/YR
Total Leasing Activity: 889,629 SF/YR
Deliveries: 131,384 SF/YR
YTD Absorption: -87,931 SF
YTD Leasing Activity: 175,500 SF
Under Construction: 700,000 SF
% Pre-leased: 97.4%
YTD Deliveries: 0 SF
Asking Rental Rates
(Full Service)
2005: $29.54 PSF
2014: $32.47 PSF
YTD 2015: $32.27 PSF
Highlights
Direct vacancy in Alexandria has decreased from 17.2% in the fourth quarter 2014 to 16.8% in the first quarter 2015, and has decreased from 17.1% since first quarter 2014. Total vacancy decreased from 18.8% in the fourth quarter 2014 to 18.4% in the first
quarter 2015, and has increased from 17.7% since first quarter 2014.
The Alexandria submarket recorded -87,931 square feet of absorption during the first quarter 2015. The majority of this absorption is attributed to a 31,057-square-foot space vacated by the Defense Technology Security Administration, which consolidated to
4800 Mark Center Drive as part of BRAC.
The largest sales transaction executed in Northern Virginia during the first quarter 2015 was the sale of the Suffolk Building – 5611
Columbia Pike in the I-395 Corridor. NGP V Management bought the 258,248-square-foot building from a JV of Carr Properties and
J.P. Morgan for $96.7 million, or $324 psf, with a 6.9% cap rate. The building was fully leased to the GSA-DoD at the time of sale.
Two of the top ten largest lease transactions in Northern Virginia during the first quarter 2015 took place in the I-395 Corridor, both
of which were GSA renewals in excess of 90,000 square feet. This is consistent with the general strategy of the GSA and government contractors in Northern Virginia either holding at their current locations or downsizing to smaller space.
2200 Mill Road was demolished, decreasing the Alexandria submarket’s inventory by 148,000 square feet. The remaining lot is
part of the proposed site of Eisenhower Gateway, a two building, 585,000-square-foot office development.
Neil Alt Correll Caulfield Elaine Clancy Tom Colicchio Chris Dyson Mary Fitzgerald Erin Jones Eamon McCrann Doug McLearn Stoddie Nibley Jed Prossner Jack Redmond
Alexandria
1st Quarter 2015
Major Leases
One Skyline Tower
5107 Leesburg Pike
Six Skyline Place
5109 Leesburg Pike
Tenant: GSA-EOIR
169,131 sf
Size:
Renewal
Tenant: GSA-ASPCA
97,000 sf
Size:
Renewal
Hoffman Town Center
2034 Eisenhower Avenue
Tenant: Evolver Inc.
Size: 14,850 sf
Relet
Carlyle Overlook
2318 Mill Road
Shirlington Tower
2900 South Quincy Street
Tenant: Mandiant
Size:
24,647 sf
Renewal
Tenant: Army Corps of Engineers
Size:
26,758 sf
Relet
Carlyle Center
1901-1931 Ballenger Avenue
Tenant: Bright Horizons
Size: 14,567 sf
Relet
1680 Duke Street
Tenant: NSBA
Size: 19,700 sf
Leaseback
Washington Square
675 North Washington Street
Hoffman Town Center
Tenant: National PACE Assoc.
Size: 11,805 sf
Relet
Tenant: Octo Consulting
Size: 11,717 sf
Relet
Sales
Suffolk Building
5611 Columbia Pike
Date Sold:
Price:
Cap Rate:
Buyer:
Seller:
Class:
Occupancy:
Atrium Building
277 South Washington Street
March-2015
$96,712,497 ($374 psf)
6.9%
NGP V Management
Carr Properties/J.P. Morgan
Class B
100%
Date Sold:
Price:
Cap Rate:
Buyer:
Seller:
Class:
Occupancy:
Madison Place
500 Montgomery Street
Feb-2015
$53,500,000 ($386 psf)
7.0%
W.C. & A.N. Miller Co.
Carr Properties
Class A
90.0%
Under Construction
Date Sold:
Price:
Cap Rate:
Buyer:
Seller:
Class:
Occupancy:
Feb-2015
$26,900,000 ($248 psf)
5.5%
TA Realty
Aetna/J.P. Morgan
Class A
72.3%
NSF HQ
Size:
Prelease:
Delivery:
Developer:
Major Tenant: www.lpcwashingtondc.com
700,000 sf
97.1%
1st Qtr 2017
Lowe Enterprises
National Science Foundation
Crystal City Market Spotlight
1.0
1Q 2015
32
48
2.5
28
42
2.0
24
36
1.5
20
30
1.0
16
24
12
18
0.0
8
12
-0.5
4
6
0.4
0.2
0.0
'05
'06
'07
'08
Deliveries
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
Total Vacancy Rate
'14 YTD '15
0
Asking Rate
SF (Millions)
SF (Millions)
0.6
Asking Rate ($)
Vacancy Rate (%)
0.8
0.5
-1.0
-1.5
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14
YTD '15
Market Stats
10 Year Averages
(2005-2014)
Total Absorption: 53,031 SF/YR
Under Construction: 0 SF
% Pre-leased: 0%
Asking Rental Rates
(Full Service)
2005: $32.92 PSF
2014: $38.79 PSF
YTD 2015: $38.86 PSF
Highlights
Direct vacancy in Crystal City has decreased from 21.8% in the fourth quarter 2014 to 20.6% the first quarter 2015, and has decreased from 23.4% since first quarter 2014. Total vacancy has decreased from 22.3% in the fourth quarter 2014 to 20.9% in the
first quarter 2015, and has decreased from 24.5% since first quarter 2014.
Crystal City recorded -237,226 square feet of absorption during the first quarter 2015. The majority of this negative absorption can
be attributed to Boeing, which vacated 290,229 square feet at Crystal Gateway 3 - 1215 South Clark Street. This move was part of
a long-term consolidation into their recently constructed national headquarters at Monument View in Pentagon City.
The second largest lease transaction in Northern Virginia and the largest relet during the first quarter 2015 was a 332,964-squarefoot deal signed by the GSA - U.S. Marshals at Crystal Gateway 3 - 1215 South Clark Street. Despite its significant size, the deal
will cause the U.S. Marshals to decrease its overall footprint in Crystal City by 41,238 square feet.
Despite vacancy rates in the Crystal City submarket remaining high, there were three deals signed during the first quarter 2015
that will contribute organic growth in the future. After signing for 68,000 square feet at Crystal Park 5 - 2451 Crystal Drive during
the fourth quarter 2014, the American Diabetes Association signed to expand by an additional 10,000 square feet. Additionally,
CAMRIS International signed for 15,266 square feet at Century Two - 2461 South Clark Street. International grocer Lidl purchased
National Gateway I - 3500 South Clark Street, and plans to occupy the entire building next quarter.
Crystal City
1st Quarter 2015
Major Leases
Crystal Gateway 3
Jefferson Plaza
Century Two
Tenant: GSA - U.S. Marshals
Size:
332,964 sf
Relet/Downsize
Tenant: Jacobs Engineering
Size:
21,880 sf
Extension
Tenant: CAMRIS International
Size:
15,266 sf
Relet
Century One
2450 Crystal Drive
Crystal Park 5
2451 Crystal Drive
Crystal Park 5
2451 Crystal Drive
Tenant: GSA - DoD
Size:
19,705 sf
Renewal
Tenant: Navanti
Size:
13,912 sf
Sublet
Tenant: American Diabetes Assoc.
Size:
10,000 sf
Expansion
Sales
National Gateway I
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
March-2015
$56,600,000 ($260 psf)
MGP Retail Consulting/Lidl
Meridian Group
Class A
10.3%
Under Construction
There were no new construction starts in the Crystal City submarket during the first quarter 2015.
1Q 2015 30
1.5
0.25
20
25
1.0
0.20
16
20
0.15
0.10
15
8
10
4
5
0.5
0.0
-0.5
0.05
0.00
12
SF (Millions)
24
Vacancy Rate (%)
0.30
Asking Rate ($)
SF (Millions)
Fairfax Market Spotlight
'05
'06
'07
Deliveries
'08
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
Total Vacancy Rate
'14 YTD '15
0
Asking Rate
-1.0
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
Total Absorption: -19,078 SF/YR
YTD Absorption: 4,340 SF
% Pre-leased: 0%
Asking Rental Rates
(Full Service)
2005: $24.31 PSF
2014: $27.08 PSF
YTD 2015: $27.13 PSF
Highlights
Direct vacancy in Fairfax has increased from 14.5% in the fourth quarter 2014 to 14.6% in the first quarter 2015, and has
increased from 13.7% since first quarter 2014. Total vacancy has increased from 15.0% in the fourth quarter 2014 to 15.1% in
the first quarter 2015, and has increased from 14.3% since first quarter 2014.
The Fairfax submarket recorded 4,340 square feet of absorption at the end of the first quarter 2015 This positive absorption
represents the sum of a handful of smaller occupancies throughout the submarket.
Overall activity in the Fairfax submarket has remained tepid, with the submarket recording first quarter leasing activity nearly five
times lower than the 258,278 square feet recorded in the first quarter 2014. There also has not been an office sale transaction
above $10 million since the second quarter 2014. However, the Fairfax and Merrifield submarkets were the only two submarkets in Northern Virginia during the first quarter 2015 that recorded positive absorption. McLean Mortgage also renewed
its existing 15,418-square-foot space in Bridgewater Corporate Center and expanded by 12,000 square feet, providing some
organic growth for the submarket.
Fairfax
1st Quarter 2015
Major Leases
Bridgewater Corporate Center
11325 Random Hills Road
Tenant: McLean Mortgage
Size: 27,418 sf
Renewal/Expansion
Sales
There were no buildings sold in the Fairfax submarket during the first quarter 2015.
Under Construction
There were no new construction starts in the Fairfax submarket during the first quarter 2015.
Loudoun County Market Spotlight
2.00
1Q 2015
24
30
20
25
16
20
12
15
8
10
4
5
1.75
1.75
1.50
1.50
1.00
0.75
0.50
1.00
0.75
0.50
0.25
0.25
0.00
SF (Millions)
SF (Millions)
1.25
Asking Rate ($)
Vacancy Rate (%)
1.25
'05
'06
'07
Deliveries
'08
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
Total Vacancy Rate
'14 YTD '15
0
Asking Rate
0.00
-0.25
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
Inventory: 15 Million SF
% Pre-leased: 0%
Asking Rental Rates
(Full Service)
2005: $25.36 PSF
2014: $24.31 PSF
YTD 2015: $24.16 PSF
Highlights
Direct vacancy in Loudoun County has decreased from 15.5% in the fourth quarter 2014 to 15.4% in the first quarter
2015, and has decreased from 16.5% since first quarter 2014. Total vacancy has decreased from 16.1% in the fourth
quarter 2014 to 16.0% in the first quarter 2015, and has decreased from 17.1% since first quarter 2014.
Loudoun County experienced -43,083 square feet of negative absorption during the first quarter 2015. The majority of this
negative absorption can be attributed to MC Dean giving back 52,868 square feet at Loudoun Gateway IV – 22980 Indian
Creek Drive.
The Loudoun County submarket saw an increase in future tenant growth due to two leases larger than 20,000 square feet
signed during the first quarter 2015 for new space. Electronic Transaction Systems Corporation signed a new lease at
Lakeview West - 20135 Lakeview Center Place for 27,003 square feet, and will occupy during third quarter 2015. The
building had been in shell condition since being delivered in 2009. Additionally, REI Systems signed for 20,362 square
feet at Two Vintage Park - 45365 Vintage Park Plaza.
Loudoun county
1st Quarter 2015
Major Leases
Lakeview West
20135 Lakeivew Center Place
Tenant: Electronic Transaction Systems Corp.
Size: 27,003 sf
New
Two Vintage Park
45365 Vintage Park Plaza
Tenant: REI Systems
Size:
20,362 sf
Relet
Merritt VI
45999 Center Oak Plaza
Tenant: ABAS
Size:
15,636 sf
Expansion
Loudoun Tech Center - Building A
45925 Horseshoe Drive
Tenant: 4th Wall Media
Size:
13,560 sf
Renewal
Sales
There were no buildings sold in the Loudoun County submarket during the first quarter 2015.
Under Construction
There were no new construction starts in the Loudoun County submarket during the first quarter 2015.
1Q 2015 Merrifield Market Spotlight
0.30
0.25
40
14
35
12
30
1.5
Vacancy Rate (%)
0.10
25
8
20
6
15
4
10
2
5
Asking Rate ($)
0.15
10
0.05
0.00
'05
'06
'07
Deliveries
'08
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
Total Vacancy Rate
'14 YTD '15
0
Asking Rate
SF (Millions)
1.0
0.20
SF (Millions)
16
0.5
0.0
-0.5
-1.0
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
YTD Absorption: 32,195 SF
YTD Leasing Activity: 1.3 Million SF
% Pre-leased: 0%
Asking Rental Rates
(Full Service)
2005: $29.50 PSF
2014: $31.08 PSF
YTD 2015: $31.62 PSF
Highlights
Direct vacancy in Merrifield has decreased from 12.3% in the fourth quarter 2014 to 11.3% in the first quarter 2015, and
has decreased from 11.9% since first quarter 2014. Total vacancy has decreased from 13.2% in the fourth quarter 2014
to 12.0% in the first quarter 2015, and has decreased from 13.9% since first quarter 2014.
Merrifield recorded 32,105 square feet of absorption during the first quarter 2015, which is the sum of a handful of small
move-ins throughout the submarket, the largest of which was Canon Business Services occupying 12,390 square feet
at 3190 Fairview Park Drive. This is a positive shift from -28,942 square feet of absorption recorded during the fourth
quarter 2014.
Merrifield hosted the largest lease transaction of the first quarter 2015 in Northern Virginia, a 117-acre ground lease by
Inova at One Fairfax - 3225 Gallows Road in Merrifield, which encompasses the entirety of ExxonMobil’s former fourbuilding, 1.2 million-square-foot campus. The transaction has pushed the Merrifield submarket’s leasing activity to 1.3
million square feet for the first quarter, the highest level recorded in historical data. The campus is planned to be redeveloped into a research, education, and treatment center for rare diseases. The terms of the lease grant Inova the first right
of refusal to purchase the property. Inova plans on taking possession of the campus in the third quarter 2015.
Merrifield
1st Quarter 2015
Major Leases
One Fairfax
3225 Gallows Road
Tenant: Inova
1.2 million sf
Size:
Ground Lease
Prosperity Metro Plaza
2677 Prosperity Avenue
Tenant: Kforce Gov’t Solutions
23,812 sf
Size:
Relet
Willow Oaks 1
8260 Willow Oaks Corporate Drive
Tenant: Undisclosed
Size: 15,629 sf
Relet
Sales
There were no buildings sold in the Merrifield submarket during the first quarter 2015.
Under Construction
There were no new construction starts in the Merrifield submarket during the first quarter 2015.
1Q 2015 Rosslyn-Ballston Corridor Market Spotlight
2.00
20
4.0
50
3.5
1.75
3.0
1.50
15
SF (Millions)
1.00
40
10
0.75
SF (Millions)
Vacancy Rate (%)
2.5
Asking Rate ($)
1.25
2.0
1.5
1.0
0.5
0.50
5
0.0
0.25
0.00
-0.5
'05
'06
'07
'08
Deliveries
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
'14 YTD '15
Total Vacancy Rate
30
Asking Rate
-1.0
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
% Pre-leased: 64.6%
Asking Rental Rates
(Full Service)
2005: $33.43 PSF
2014: $41.68 PSF
YTD 2015: $41.57 PSF
Highlights
Direct vacancy in the Rosslyn Ballston-Corridor has increased from 18.4% in the fourth quarter 2014 to 19.0% in the first quarter
2015, and has increased from 16.4% since first quarter 2014. Total vacancy has increased from 19.1% in the fourth quarter 2014
to 19.9% in the first quarter 2015, and has increased from 17.2% since first quarter 2014. Both direct and total vacancy are at the
highest levels recorded in the past two decades.
The Rosslyn-Ballston Corridor recorded -137,509 square feet of absorption during the first quarter 2015. Much of this negative
absorption comes from the 238,145-square-foot vacancy by the GSA-DIA at 31000 Clarendon Boulevard, which has consolidated
regional offices in to Patriot’s Park – 12310 & 12300 Sunrise Valley Drive in the Reston-Herndon submarket.
The largest sales transaction in the Rosslyn-Ballston Corridor was the acquisition of the medical offices at Virginia Square Plaza
by Harrison Street Real Estate Capital from ProMed Properties for $28.5 million, or $407 per square foot. This was the highest
price per square foot of any office property sold in Northern Virginia during the quarter.
The largest lease transaction in the Rosslyn-Ballston Corridor was a 82,167-square-foot relet by Sands Capital Management’s new
lease at Twin Towers - 1000 Wilson Boulevard. Sands will occupy the top four floors, and will vacate its 60,000-square-foot space
across the street at 1101 Wilson Boulevard in first quarter 2016.
RB Corridor
1st quarter 2015
Major Leases
Twin Towers
Tenant: Sands Capital Mgmt.
82,167 sf
Size:
Relet
Twin Towers
Tenant: Aerospace Industries Assoc.
18,000 sf
Size:
Renewal
Twin Towers
Tenant: SRI International
80,000 sf
Size:
Renewal
Tenant: ESI International
Size: 49,986 sf
Renewal
3003 Washington Boulevard
Tenant: Keolis
Size:
15,500 sf
New
Clarendon Square
Arlington Gateway
901 North Glebe Road
Tenant: The Common Application
21,969 sf
Size:
Relet
Tenant: Higher Logic
Size: 13,378 sf
Relet
Sales
Virginia Square Plaza
3801 & 3803 North Fairfax Drive
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Jan-2015
$28,500,000 ($407 psf)
Harrison Street Real Estate Capital
ProMed Properties
Class B
91.5%
Under Construction
CEB Tower
Size:
Prelease:
Delivery:
Developer:
Major Tenant:
552,781 sf
64.6%
1st Qtr 2018
JBG
Corporate Executive Board
Clarendon Square
Tenant: Sila Solutions
10,154 sf
Size:
Sublet
1Q 2015 Reston-Herndon Market Spotlight
3.0
25
4.5
35
4.0
Vacancy Rate (%)
SF (Millions)
21
15
1.5
1.0
10
14
5
7
3.0
Asking Rate ($)
2.0
3.5
28
20
2.5
SF (Millions)
2.5
2.0
1.5
1.0
0.5
0.0
0.5
-0.5
-1.0
0.0
'05
'06
'07
'08
Deliveries
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
'14 YTD '15
Total Vacancy Rate
0
Asking Rate
-1.5
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
% Pre-leased: 0%
Asking Rental Rates
(Full Service)
2005: $26.90 PSF
2014: $28.43 PSF
YTD 2015: $28.51 PSF
Highlights
Direct vacancy has remained flat at 11.8% in the fourth quarter 2014 through the first quarter 2015, and has increased from 10.8%
since first quarter 2014. Total vacancy has remained flat at 13.1% in the fourth quarter 2014 through the first quarter 2015, and
has increased from 12.4% since first quarter 2014.
The Reston-Herndon submarket recorded -108,860 square feet of absorption during the first quarter 2015. Major contributions
to the negative absorption recorded come from Rolls Royce, which vacated 39,455 square feet at 1875 Explorer Street in Reston,
Sprint, which vacated 79,495 square feet at 2003 Edmund Halley Drive in Reston, and Lockheed Martin, which vacated 162,276
square feet at 2245 Monroe Street in Herndon.
The Reston-Herndon submarket recorded the most significant leasing activity out of any submarket in Northern Virginia in the first
quarter 2015, with fifteen lease transactions over 10,000 square feet of space. The largest lease transaction in the submarket during the first quarter 2015 was an 186,133-square-foot relet by Fannie Mae, who will move into the building during the third quarter
2015. The second largest lease transaction in the Reston-Herndon submarket was for Noblis ESI’s new headquarters, which will
take up 141,873 square feet in Summit 1 - 2002 Edmund Halley Drive, and 13,175 square feet in Summit 2 - 2000 Edumund Halley
Drive. Noblis will consolidate into its new space during the third quarter 2015, and will vacate its 218,750-square-foot space at
3150 Fairview Park Drive in Falls Church.
Reston-herndon
1st quarter 2015
Major Leases
One Reston Crescent
Summit 1 & 2
2000/2002 Edmund Halley Drive
Tenant: Fannie Mae
Size: 186,133 sf
Relet
Tenant: Size:
Northridge 1
13221 Woodland Park Road
Reston Plaza 1
Tenant: Size: Molina Medical
18,725 sf
Renewal
Tenant: Size: Noblis ESI
155,048 sf
Relet/Downsize
Simulize
17,469 sf
Relet
1860 Michael Faraday Drive
Tenant: Size: Tenant: Size: Carahsoft
64,250 sf
Relet
Bridgestreet
17,300 sf
Relet
CH2M Hill
40,000 sf
Relet
Dulles Corner 1
2411 Dulles Corner Park
Tenant: Size: Dulles Corner 1
Tenant: Size: Sales
Northrop Grumman
16,000 sf
Renewal
Dulles Corner 1
Tenant: Size: Monument II
12950 Worldgate Drive
Tenant: Size: Reston Corner I-III & Parkridge Center 5
12001, 12005 & 12007 Sunrise Valley Drive & 10780-10790
Parkridge Boulevard
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Software AG
14,960 sf
Expansion
Tenant: Size: Applied Security
35,000 sf
Renewal
RTC West I
12100 Sunset Hills Road
Tenant: Size: Clearpath
11,327 sf
Relet
1881 At Wiehle Metro
1881 Campus Commons Drive
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
March-2015
$82,233,576 ($165 psf)
Angelo, Gordon & Co./Atlantic Realty Companies
Class A
52.9%
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
DLT Solutions
40,000 sf
Relet
2100 Reston Parkway
Jan-2015
$82,148,887 ($336 psf)
Columbia Property Trust
Spear Street Capital Group
Class A
78.3%
Parkridge Center 2
Jan-2015
$35,000,000 ($195 psf)
American Real Estate Partners
Rockwood Capital
Class A
57.0%
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Jan-2015
$34,250,000 ($358 psf)
Boyd Watterson Asset Management
Class B
100%
Parkway One
555 Herndon Parkway
Date Sold:
Price:
Buyer:
Seller:
Class:
Occupancy:
Feb-2015
$22,588,542 ($257 psf)
Penzance Cos.
Access Property Services
Class B
93.6%
Under Construction
There were no new construction starts in the Reston-Herndon submarket during the first quarter 2015.
1Q 2015 30
0.4
20
24
0.3
0.2
0.1
0.0
18
15
'05
'06
'07
'08
Deliveries
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
10
12
5
6
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
Total Vacancy Rate
'14 YTD '15
0
Asking Rate
1.25
1.00
0.75
SF (Millions)
25
Vacancy Rate (%)
0.5
Asking Rate ($)
SF (Millions)
Route 28 North Market Spotlight
0.50
0.25
0.00
-0.25
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'13 YTD '15
Market Stats
10 Year Averages
(2005-2014)
% Pre-leased: 0%
Asking Rental Rates
(Full Service)
2005: $23.73 PSF
2014: $23.69 PSF
YTD 2015: $23.82 PSF
Highlights
Direct vacancy in the Route 28 North submarket has increased from 17.5% in the fourth quarter 2014 to 17.8% in the first
quarter 2015, and has decreased from 19.6% since first quarter 2014. Total vacancy has increased from 18.3% in the
fourth quarter 2014 to 18.5% in the first quarter 2015, and has decreased from 20.6% since first quarter 2014.
The Route 28 Corridor North experienced -58,971 square feet of negative absorption during the first quarter 2015. The
majority of this negative absorption is attributable to MC Dean giving back 52,868 square feet at Loudoun Gateway IV –
22980 Indian Creek Drive.
Comstock Partners delivered the 49,099-square-foot Loudoun Station - 43777 Central Station Drive. One of only two
projects to complete construction during the first quarter 2015, Loudoun Station did not have any pre-leasing activity, and
contributed to the vacancy rate increase at the end of the quarter.
Route 28 North
1st quarter 2015
Major Leases
Two Vintage Park
45365 Vintage Park Plaza
Tenant: REI Systems
Size:
20,362 sf
Relet
Merritt VI
45999 Center Oak Plaza
Tenant: ABAS
Size:
15,636 sf
Expansion
Loudoun Tech Center - Building A
45925 Horseshoe Drive
Tenant: 4th Wall Media
Size:
13,560 sf
Renewal
Sales
There were no major sales in the Route 28 North submarket during the first quarter 2015.
Under Construction
There were no new construction starts in the Route 28 North submarket during the first quarter 2015.
1Q 2015 Route 28 South Market Spotlight
2.25
25
30
2.0
20
24
1.5
1.75
Vacancy Rate (%)
SF (Millions)
1.25
1.00
0.75
0.50
15
18
10
12
5
6
Asking Rate ($)
1.50
SF (Millions)
2.00
1.0
0.5
0.0
0.25
0.00
'05
'06
'07
'08
Deliveries
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
Total Vacancy Rate
'14 YTD '15
0
Asking Rate
-0.5
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
% Pre-leased: 100%
Asking Rental Rates
(Full Service)
2005: $24.96 PSF
2014: $25.47 PSF
YTD 2015: $25.06 PSF
Highlights
Direct vacancy in the Route 28 South submarket has increased from 17.2% in the fourth quarter 2014 to 19.6% in the first
quarter 2015, and has increased from 14.3% since first quarter 2014. Total vacancy has increased from 17.9% from the fourth
quarter 2014 to 20.2% in the first quarter 2015, and has increased from 15.0% since first quarter 2014.
The Route 28 Corridor South submarket recorded -232,457 square feet of absorption during the first quarter 2015. Major
contributions to this negative absorption come from a 152,667-square-foot move-out at 15049 Conference Center Drive by
The Aerospace Corporation, which consolidated into their newly-built regional headquarters at 14745 Lee Road. Another major
contribution comes from a 53,279-square-foot vacancy at 15000 Conference Center Drive by CSC.
The largest building to deliver during the first quarter 2015 in Northern Virginia was the 150,000-square-foot 4870 Stonecroft
Boulevard, one of COPT’s two-building Westfields project. The building was fully leased to the CIA upon delivery. The other half
of the project, 4850 Stonecroft Boulevard, is slated for delivery in the second quarter 2015.
Route 28 South
1st quarter 2015
Major Leases
Dulles Gateway Phase 1
13921 Park Center Road
Tenant: Corsec
Size: 13,274 sf
Relet
Sales
There were no buildings sold in the Route 28 South submarket during the first quarter 2015.
Under Construction
COPT @ Westfields
4850 Stonecroft Boulevard
Size:
150,000 sf
Prelease:
100%
Delivery:
2nd Qtr 2015
Developer:COPT
Major Tenant: CIA
1Q 2015 35
1.00
0.4
24
28
0.75
0.3
0.2
0.1
0.0
'05
'06
'07
'08
Deliveries
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
18
21
12
14
6
7
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
Total Vacancy Rate
'14 YTD '15
0
Asking Rate
SF (Millions)
30
Vacancy Rate (%)
0.5
Asking Rate ($)
SF (Millions)
Springfield Market Spotlight 0.50
0.25
0.00
-0.25
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
% Pre-leased: 0%
Asking Rental Rates
(Full Service)
2005: $25.84 PSF
2014: $29.37 PSF
YTD 2015: $29.72 PSF
Highlights
Direct vacancy in the Springfield submarket has decreased from 22.2% in the fourth quarter 2014 to 21.3% in the first quarter
2015, and has decreased from 21.5% since first quarter 2014. Total vacancy has decreased from 25.7% in the fourth quarter
2014 to 24.7% in the first quarter 2015, and has increased from 24.1% since first quarter 2014.
The Springfield submarket recorded -18,929 square feet of absorption during the first quarter 2015. A major contributor to this
negative absorption was a move-out by Inova at 8001 Forbes Place for 11,966 square feet coupled with a handful of vacancies less than 10,000 square feet, throughout the submarket.
The Springfield submarket has started 2015 with a historically strong level of leasing activity. During the first quarter 2015
the submarket recorded 85,989 square feet of leasing activity, which is greater than half the leasing activity shown for the
individual years of 2014, 2013 and 2012 respectively. A large proportion of this activity was driven by a 26,703-square-foot
expansion at Kingstown Building K - 5911 Kingstowne Village Parkway by Accenture.
Springfield
1st quarter 2015
Major Leases
Kingstowne Building K
5911 Kingstowne Village Parkway
Tenant: Accenture
Size: 26,703 sf
Expansion
Kingstowne Ridge
5680 King Centre Drive
Tenant: Regus
Size: 13,560 sf
Relet
Springfield Corporate Center
6225 Brandon Avenue
Tenant: Volkert, Inc.
Size: 12,408 sf
Relet
Sales
There were no buildings sold in the Springfield submarket during the first quarter 2015.
Under Construction
There were no new construction starts in the Springfield submarket during the first quarter 2015.
1Q 2015 Tysons Corner Market Spotlight
4
16
28
3
Vacancy Rate (%)
35
1.0
Asking Rate ($)
SF (Millions)
1.5
20
SF (Millions)
2.0
12
21
8
14
1
4
7
0
0
-1
2
0.5
0.0
'05
'06
'07
'08
Deliveries
'09
'10
'11
'12
'13
'14 YTD '15
Under Construction
0
'05
'06
'07
'08
Direct Vacancy Rate
'09
'10
'11
'12
'13
'14 YTD '15
Total Vacancy Rate
Asking Rate
'05
'06
'07
'08
Leasing Activity
'09
'10
'11
'12
'13
'14 YTD '15
Market Stats
10 Year Averages
(2005-2014)
Total Leasing Activity: 2 Million SF/YR
Under Construction: 1.7 Million SF
% Pre-leased: 73.4%
Asking Rental Rates
(Full Service)
2005: $28.62 PSF
2014: $33.36 PSF
YTD 2015: $32.10 PSF
Highlights
Direct vacancy in the Tysons Corner submarket has increased from 15.5% in the fourth quarter 2014 to 16.9% in the first
quarter 2015, and has increased from 13.9% from the first quarter 2014. Total vacancy has increased from 16.6% from the
fourth quarter 2014 to 17.6% in the first quarter 2015, and has increased from 14.5% since first quarter 2014.
Tysons Corner recorded -449,734 square feet of absorption during the first quarter 2015, the largest single-quarter of negative absorption since the recession first hit in the first quarter of 2003. The majority of this negative absorption can by attributed to the vacancy left at 8000 Jones Branch Drive by Freddie Mac, which vacated the entire 217,129-square-foot building in
a regional consolidation. As well, Hewlett-Packard vacated 74,070 square feet at 8075 Leesburg Pike.
Leasing activity in Tysons Corner finished the first quarter 2015 strong, with nine deals over 11,000 square feet being
completed. The largest renewal of the first quarter 2015 in Northern Virginia was Booz Allen Hamilton’s retention of its
222,989-square-foot headquarters at John Marshall II - 8283 Greensboro Drive.
Construction has begun on Capital One’s new corporate headquarters located on Capital One Drive. The 975,000-square-foot
building will be the second tallest structure in the region after the Washington Monument, and has raised the amount of office
space under construction in the Tysons Corner submarket to over 1.7 million square feet, its highest level recorded since
year-end 2000. The building is slated to deliver during the second quarter 2017.
Neil Alt Correll Caulfield Elaine Clancy Tom Colicchio Chris Dyson Mary Fitzterald Erin Jones Eamon McCrann Doug McLearn Stoddie Nibley Jed Prossner Jack Redmond
Tysons Corner
1st quarter 2015
Major Leases
John Marshall II
Tysons Tower
7900 Tysons One Place
Fairfax Square II
8075 Leesburg Pike
Tenant: Booz Allen Hamilton
222,989 sf
Size:
Renewal
Tenant: Morgan Franklin
Size: 28,553 sf
Sublet
Tenant: Merrill Lynch
Size: 25,000 sf
Renewal
North Tower
7799 Leesburg Pike
Tenant: M&T Bank
Size: 18,177 sf
Renewal
Tysons Dulles Plaza
1430 Spring Hill Road
Tenant: Multivision
Size: 24,917 sf
Relet
Tenant: Media Trust
Size: 14,322 sf
Sublet
Tenant: Greystar
Size: 11,547 sf
Expansion
Tenant: Metro Offices
Size: 21,249 sf
Relet
Westpark Corporate Center Building I
8484 Westpark Drive
Greensboro Corporate Center
1749 Old Meadows Road
Greensboro Station 1
1765 Greensboro Station Place
Tenant: Northwestern Mutual
Size: 11,100 sf
Relet
Sales
Westwood 8
8619 Westwood Center Drive
Date Sold:
Price:
Cap Rate:
Buyer:
Seller:
Class:
Occupancy:
Feb-2015
$32,000,000 ($345 psf)
6.0%
ESRI
Guardian Realty Investors
Class A
95.5%
Under Construction
MITRE 4
7598 Colshire Drive
Size:
Prelease:
Delivery:
Developer:
Major Tenant:
340,000 sf
100%
1st Qtr 2016
Cityline
Mitre
The Corporate Office Centre @ Tysons II
1775 Tysons Boulevard
Size:
Prelease:
Delivery:
Developer:
Major Tenant:
476,913 sf
0.0%
1st Qtr 2016
Lerner Enterprises
None
Capital One Drive
Size:
Prelease:
Delivery:
Developer:
Major Tenant:
975,000 sf
100%
2nd Qtr 2017
Capital One
Capital One

Local Focus - Lincoln Property Company DC

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