What Makes NoVa Hot
Federal contracting may have slowed down, but it hasn’t cooled the hotness that is Northern Virginia. (Just don't melt our new Silver Line tracks. We're so close.) Bisnow’s Northern Virginia State of the Market event yesterday laid out how this market will be even more robust.
- The Suburbs are Rockin'
Want to know the highest performing market in Northern Virginia between 2010 and 2014? The Route 28 corridor, said JLL research director Scott Homa at the Fairview Park Marriott. It was largely due to secure government installations in the Fairfax County suburb. So Scott says don’t write off the suburbs no matter how much Millennials talk about urban lifestyles. Businesses still need value-oriented space and large campus facilities. Government contracting is still a market driver and once it picks up again, NoVa will be back in a big way, Scott adds.
- But Don't Get Ahead of Yourselves...
BirchGrove president Ray Bjorklund says government contracting is going to get worse before it gets better. The outlook for the rest of this year and next will be steady, but 2016 will dip when contractor addressable spending drops $10B to $15B from $735B. Ray, who consults tech firms selling to the government, says companies will need to think more realistically about their growth potential and develop tech specializations.
- Leases are Happening
Even so, developers and brokers are bullish when they have deals like JBG's just announced 350k SF pact with Corporate Executive Board in Rosslyn (with the mic, JBG's Andy VanHorn). After searching locally and nationally, the company chose JBG’s Central Place (soon to be renamed CEB Tower) for its urban environment and floor plates. Boutique grocers are also taking up space, especially in areas like Vienna and Reston, says Rappaport leasing and brokerage director Susan Bouregeois. But other retailers like Costco and The Container Store haven’t figured out how to be in mixed-use spaces. (Their childhood report cards probably said "does not play well with others.")
- Competition Across the Spectrum
MRP Realty founding principal Fred Rothmeijer says the most competitive markets, where rents are on the rise, are places with multiple amenities and accessibility to public transportation. Tysons will be successful if it gets amenities that create a sense of place. Mill Creek Residential senior managing director Sean Caldwell says he’s seen a positive shift among the jurisdictions from not caring about where mixed-use went, as long as it was mixed-use, to now being more thoughtful about the amount of retail that will survive in these locations.
- But Where is the Growth?
Business growth in the region will come from mid-cap companies, says Cushman & Wakefield EVP Brian McVay (middle). Companies will want higher quality space for recruiting employees, and he predicts that demand for Class-A buildings, especially in Tysons and Rosslyn, will grow. On the right, EagleBank EVP Tony Marquez (right) says lenders view the mixed-use projects as a no-brainer. Why? They’ve got good liquidity on the back end and high density. Thanks to our wonderful moderator on the left, Walsh Colucci associate Andrew Painter.
Among our great sponsors yesterday: Sentry Control Systems (and, standing guard, Bryant Mortimer, Michael Flanagan, and Corey Nash). One of their current activities is to create at Macerich's Tysons Corner Center the parking system we all dream of—sensors and lights guiding you right up to the closest open parking space. (More info.)
Stay tuned for more coverage tomorrow.