NoVa Developers On What It Will Take To Build More Trophy Towers
The availability of trophy office space in Northern Virginia is dwindling as construction remains scarce. Real estate experts say it will take the right type of tenant to change that.
To cover skilled labor, materials and other costs, the developer of a new trophy building in Reston would need to set their net leases at $85 per SF per year, Timothy Steffan, chief operating officer of Comstock, said at Bisnow’s Northern Virginia State of the Market on June 3.
The average rental rate in Northern Virginia was $37.50 per SF in the first quarter, according to a CBRE report.
“So, to me, it's a tenant issue, right? It's when the tenant is willing to pay that type of rate, you're going to see the next building come out of the ground in Reston, or anywhere, for that matter,” Steffan said at the JW Marriott Reston Station.
A steady increase of net absorption since the pandemic has lowered the Northern Virginia vacancy rate to 21.8% in the first quarter of the year, 30 basis points lower than the previous quarter and 80 basis points lower than the first quarter of 2025, according to CBRE. Trophy space vacancy fell to 13.9%, 420 basis points lower than the first quarter of 2025.
But new build activity has dropped. Only 35K SF was under construction in the first quarter, down from the 240K SF underway a year prior. And no assets have been delivered in the first quarter of 2026, according to the report.
Meanwhile, demand for quality is growing, particularly with a wave of large-block leases taking over premier properties, according to Avison Young.
Panelists at the event said it will take a specific caliber of tenant to drive any new construction.
“There's going to be a massive corporate user who's going to come into this market … and they're ultimately going to have to pay that number in order for us to execute on a new development,” said Katie Yanushonis, senior vice president of leasing with The Meridian Group.
“It's ultimately a game of chicken because we're not moving off of our numbers, that's just what it has to be, whether it's for the returns that we need, construction costs, all of the things,” she said.
As trophy space continues to tighten, tenants are increasingly choosing the top space in slightly less attractive buildings. Class-A buildings might be the beneficiaries, panelists said.
Not all trophy space is created equal, as some floors are more attractive or have better views than others, said Ryan Lopez, vice president of leasing at Carr Properties.
So tenants may be asking: “Do I want to pay trophy rates to be on the third floor on the back of the building, or do I want to play slightly less and be on the top stack of not as nice of a building but much better space,” Lopez said.
Location matters, too, even if the building is Class-B, according to Anthony Chang, co-founder and managing principal of Silverline Equities. Tenants in Class-B and C buildings can’t afford to move to top-tier space when their own building is being demolished, so they are less concerned about amenities as long as they like the neighborhood and they have a real estate partner that can run the building, he said.
“If you have a trophy location, but a B building, that's beautiful,” Chang said. “B is beautiful in the right spots.”
