After Attracting Several Big-Name Tenants, Northern Virginia's Office Market Tops Others in the 'DMV'

Northern Virginia has a diverse office market, with tenants in sectors including professional services (especially IT and software companies), finance, healthcare and information services. As a result, tenants such as the mortgage financing giant Fannie Mae and government contracting firm Leidos feel right at home here, with both signing large leases earlier this year. Fannie Mae agreed to an 850,000-square-foot lease at Boston Properties’ Reston Gateway, while Leidos will occupy 276,000 square feet at Boston Properties’ 17Fifty office tower in Reston Town Center when the building completes in 2020.

Tysons Corner

Tysons, for its part, has attracted new tenants while retaining old ones. For example, after considering moving its headquarters to D.C., the business analytics firmMicroStrategy renewed its lease in Tysons and announced that it would add 300 jobs. Cvent, a company that provides software services to manage events, also announced an expansion in Tysons. Earlier this year, the company said it would add 500 employees and increase the size of its Tysons headquarters by 68,000 square feet.

Office gains in Tysons have often times been detrimental to neighboring D.C. submarkets. In mid-April, Appian announced that it was bringing its 600 current employees from Reston to Tysons and planning to hire an additional 600. The provider of a platform to manage business processes plans to move from roughly 130,000 square feet at 11955 Democracy Dr. in Reston to 204,547 square feet at the 707,052-square-foot, 12-story building formerly home to the headquarters of USA Today parent company, Gannett.

The news hasn’t all been cheery in Tysons, though. In the past year, satellite data services provider Spacenet Inc. and contracting firm SAIC gave back a combined 430,000 square feet, hitting the submarket especially hard. More recently, public affairs consulting group Interel announced it was leaving Tysons for D.C.'s East End submarket.

Reston

Despite the loss of Appian, Reston has done well for itself. As previously mentioned, the submarket scored big wins with leases from Fannie Mae and Leidos. Construction at Reston Gateway, where Fannie Mae will occupy 850,000 square feet, is anticipated to begin next year. Leidos, a government contractor, is consolidating from three nearby buildings and will occupy all of Boston Properties’ 17Fifty as its new headquarters.

Furthermore, Google is rumored to be considering a 100,000 square foot lease at Comstock Companies 1900 Reston Metro Plaza at Reston Station. The real estate services firm received more good news recently, when drug store giant CVS agreed to take roughly 8,300 square feet at 1906 Reston Metro Plaza, also at Reston Station.

Much of Reston's office demand has been driven by public transit, specifically the creation of Metrorail's Silver Line and its coming expansion. The expansion, paired with relatively affordable rents, has sparked interest from tenants and caused vacancies to fall below the metropolitan average.

While vacancies in many northern Virginia submarkets remain at or near historical peaks, several submarkets have started showing positive signs. In the absence of construction, if these population-dense nodes can continue attracting large-footprint tenants, the region may eventually be able to erase its label as a lagging office market.