Northern Virginia

The Northern Virginia office market consists of 1,535 build­ings over 25,000 square feet, totaling approximately 181.8 million square feet of rentable space. The largest non-GSA lease signed during the fourth quarter was a pre-lease of a 146,000-square-foot build-to-suit in Loudoun County by K2M, a medical tech company. The de­velopment of this property will serve as the new company headquarters and will include a R&D facility. Proximity to Dull­es International Airport coupled with incentives offered by lo­cal jurisdictions and state funding helped to retain the quickly growing company within the submarket. The largest government lease signed during the fourth quar­ter was a renewal by the GSA – Financial Crimes Enforce­ment Network for 124,990 square feet in the Tysons Corner submarket at Tycon Courthouse – 2070 Chain Bridge Road. FinCEN gave back approximately 44,000 square feet in the renewal. This transaction is consistent with the leasing fun­damentals adopted by federal agencies and contractors alike throughout the metropolitan area. Building sales volume totaled approximately $1.04 billion dur­ing the fourth quarter. The most notable transaction to occur was the sale of 3003 Washington Boulevard in the RB-Corri­dor. The 211,170-square-foot building delivered in late 2014 and upon purchase was 95% leased to tenants such as The C.N.A. Corporation. KBS bought the property from Penzance and Invesco for $149,100,000 or $706 psf, and it traded at a 5.5% cap rate. This transaction, as well as the sale of 1776 Wilson Boulevard during the third quarter 2014, exemplifies the attractiveness of new product situated in amenity rich, transit-oriented markets. Both buildings were over 80% leased at time of purchase and traded for over $650 psf. At the end of the fourth quarter 2014 the Northern Virginia of­fice market recorded 95 buildings outside of the Beltway with 50,000 square feet of contiguous space available; compared to only 59 buildings inside the Beltway.