Dtz Va Survey 2q15

Market Report Northern Virginia | 2nd Quarter 2015

DTZ | 2

DC Metropolitan Area Oveview...................................................................................................3

Northern Virginia & Map...........................................................................................................4-6

Alexandria ...................................................... ..................................................................................7

Arlington ................................................ ...........................................................................................8

Tysons Corner ............................................. ....................................................................................9

Reston/Herndon ...........................................................................................................................10

50/66 ................................................................................................................................................11

Springfriend/Newington...............................................................................................................12Route 28 South.................................................................................................................................13

Loudoun County ............................................................................................................................14

Appendix............................................................................................................................................15Tables...........................................................................................................................................15-24Methodology & Definitions.........................................................................................................25About DTZ......................................................................................................................................26

Contents

www.dtz.com | 3

Washington, DC Metropolitan Area

WASHINGTON, DC METRO

Economic IndicatorsQ2 14 Q2 15 12-Month Forecast

DC Metro Employment 3.11M 3.18M

DC Metro Unemployment 5.0% 4.6%

U.S. Unemployment 6.1% 5.3%

Market IndicatorsQ2 14 Q2 15 12-Month Forecast

Overall Vacancy 15.6% 16.1%

Net Absorption 154K 666K

Under Construction 3.9M 5.8M

Deliveries 2.1K 567K

Average Asking Rent (FS) $35.91 $35.29

DC Metro Region Rises off the Bottom

After a lackluster performance in 2014, by midyear 2015 it was clear that the DC Metro economy is back on track. Job growth in 2014 was below average with just over 19,000 new nonfarm payroll jobs for the year; in fact the DC Metro Region was last among major metropolitan regions in job growth in 2014. Compare that to June 2015: over-the-year employment in the region was 64,000 net new jobs well above the historical average of 35,000 jobs per year. Adding to the good news is the return of office-using job growth to the region. Overall office-using employment (including federal government employment) in the DC Region shrank by 12,000 jobs in 2014. At midyear 2015, office-using employment had turned positive, driven by a surge of over 20,000 jobs in the high- paying Professional and Business Services sector since June of 2014. A closer examination of that very important sector shows that consulting has been leading the way in employment growth, adding 9,500 jobs from since June 2014, administrative jobs adding 8,100 positions and an even a modest growth in executive level management and legal services in the region.

Major regional demand drivers are at an inflection point. After being a drag on the local economy for the last four years, the Federal Government has reached stabilization both in terms of spending and employment. The federal contracting community that is an integral part of the suburban office landscape is estimated to be about 65% of the way through its round of downsizing. Finally, about 80% of law firms that account for a third of the District of Columbias downtown core market footprint have transacted deals. While these law firms as a whole have reduced size requirements and returned 1.2 million square feet to the market from 2011-2014, the impact of any future downsizing will be far less dramatic.

In retrospect, it appears that the DC Metro regions office market hit bottom in 2014 and is now poised for positive, if modest, conditions moving forward in the near term. The vacancy rate for the region stands at 16.1%, a 0.1% decrease from its level in the first quarter of 2015. More importantly, the decrease in regional vacancy signals a reversal from 15 straight quarters of flat or rising vacancy. The downtick in vacancy coincides with overall positive absorption of 670,000 sf for the second quarter, bringing the midyear absorption total to 390,000 sf. With this as a backdrop, investment in the region continues unabated. As of midyear 2015, $4 billion in transaction volume had occurred in the office sector signaling another robust year for investors bullish on prospects for the future of the DC Region.

Net Absorption/Asking Rent 4Q TRAILING AVERAGE

Washington, DC Metropolitan Area NET ABSORPTION - DELIVERIES - VACANCY

0%

4%

8%

12%

16%

-4

-2

0

2

4

6

8

10

12

05 06 07 08 09 10 11 12 13 14 YTD15

Vac

ancy

Rat

e

MS

F

Net Absorption Deliveries Vacancy Rate

$33.50

$34.00

$34.50

$35.00

$35.50

$36.00

$36.50

-1.0

0.0

1.0

2.0

2010 2011 2012 2013 2014 2015

Net Absorption, MSF Asking Rent, $ PSF

DTZ | 4

Northern Virginia

Overall Vacancy

Large Blocks of Contiguous Space

Net Absorption/Asking Rent 4Q TRAILING AVERAGE

$28.00

$28.50

$29.00

$29.50

$30.00

$30.50

$31.00

$31.50

$32.00

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2010 2011 2012 2013 2014 2015

Net Absorption, MSF Asking Rent, $ PSF

Market IndicatorsQ2 14 Q2 15 12-Month Forecast

Overall Vacancy 18.1% 18.8%

Net Absorption 130K 370K

Under Construction 1.5M 1.9M

Deliveries 1.2M 308K

Average Asking Rent $31.66 $31.63

10%

12%

14%

16%

18%

20%

2010 2011 2012 2013 2014 2015

Historical Average = 16.2%

0 20 40 60 80

Alexandria

Arlington

Tysons Corner

Reston/Herndon

50/66

Springfield/Newington

Route 28 South

Loudoun County

# of Blocks

25-50k SF

50-100k SF

100-150k SF

150-200k SF

200k+ SF

EconomyThe Washington, DC Metropolitan Regions economy continues to thrive. Second-quarter 2015 data reflects positive job gains and falling unemployment. As of May 2015, the unemployment rate registered 4.6%, a 0.4 percentage point decline from May 2014. Northern Virginias (NoVA) economy has been equally impressive so far in 2015. Through May of this year, NoVAs economy has created 14,900 nonfarm payroll jobs, eclipsing its 2014 total of 12,100 nonfarm jobs. Since the end of the recession, employment gains have largely been concentrated in the surging leisure and hospitality services sector and thus have had no significant impact on office leasing demand. In 2015 though, nearly half of the jobs added year to date have been office-using jobs. The NoVA economy relies heavily both directly and indirectly on the federal government to bolster its economy. The size of the NoVA federal workforce has been contracting since 2011, but there are signs of increasing stability. In the second quarter of 2015, NoVA added 431 positions to federal payrolls. With increased budget authority for fiscal year 2015, federal government spending will increase for major NoVA demand drivers such as the Department of Defense, the National Science Foundation and the Defense Advanced Research Projects Agency. This spending will lead to increased contracting opportunities in the private sector, resulting in increased hiring and demand for office space.

Market OverviewAfter shedding 197,500 square feet (sf) during the first quarter of 2015, the Northern Virginia (NoVA) office market returned to growth during the second quarter of the year. The region registered 370,100 sf of absorption over the quarter, driven primarily by private sector demand. Unlike in the first quarter of the year, demand in NoVA submarkets located outside of the Capital Beltway outpaced that in the interior markets, absorbing 440,300 sf during the second quarter. The largest lease signed during the second quarter of 2015 in all of NoVA was that of Capital One which signed for 136,000 sf at 1750 Tysons Boulevard in Tysons Corner. The Fortune 200 firms expansion in Tysons backfilled space that was vacated by Deloitte in its move to Tysons Tower last year. Other notable leases included that for MC Dean which renewed its lease for 69,000 sf at 22980 Indian Creek Drive, and that for BDO which signed for 53,400 sf at 8401 Greensboro Drive as it relocated in Tysons. Federal contractor downsizing was evident again across the NoVA submarkets during the second quarter. Most notably, Unisys vacated 179,200 sf at 11493 Sunset Hills Road in Reston in a consolidation. Still, increased demand from the financial services and technology sectors offset space reductions from the contracting community.

As of the end of the second quarter of 2015, year-to-date absorption in NoVA registered 172,600 sf. With positive demand, the overall vacancy rate in NoVA dropped 0.2 percentage points from the previous quarter to 18.8%. NoVA still has over 30.5 msf of vacant space which is limiting rent growth in the market. At the end of the second quarter of 2015, average asking rents were $31.63 per square foot (psf) on a full-service basis, an increase of just $0.08 from a year ago. No major construction projects are scheduled to deliver in 2015; consequently vacancy could tighten as existing product captures demand and drives rents upward.

www.dtz.com | 5

Northern Virginia Office SubmarketsNorthern Virginia Office Submarkets

HERNDON

RESTON

LOUDOUN

ALGONKIAN PARKWAY

LOUD

OUN

COUN

TY

FAIR

FAX

COUN

TY

POTOMACRIVER

MARY

LAND

DIST

RICT

OF CO

LUMB

IA

VIRGINIA

VIRGINIA

MARYLAND

WASHINGTONDULLES

INTERNATIONALAIRPORT

395

95

123

123

7

7

29

1

29

29

50

50

50 50

236

28

28

FAIRFAX COUNTYPRINCE WILLIAM COUNTY

ARLIN

GTON

COUN

TY

FAIRF

AX CO

UNTY

VIENNA

RONALDREAGAN

WASHINGTON NATIONALAIRPORT

495

66

metro

metro

metro

metro

metro

6666

metro

PENTAGON

COURT HOUSE

CLARENDON

BALLSTONVIRGINIA SQUARE - GMU

metro

KING STREET

metro

metro

metro

metro

ROSSLYN

metro

metro

metro

286

267

495

metro

metrometrometro

267

267metro

metro

metro

286

metro

WASHINGTON, DC

FAIRFAX COUNTY

LOUDOUN COUNTY

PRINCE WILLIAM COUNTY

ARLINGTON COUNTY

metro

metro

metro

metro

FRANCONIA/SPRINGFIELD

VAN DORNSTREET

EISENHOWERAVENUE

EAST FALLSCHURCH

WEST FALLSCHURCH

DUNN LORING/MERRIFIELD

TYSONSCORNER

SPRINGHILL

WIEHLE - RESTONEAST

RESTON TOWNCENTER

HERNDON

PHASE I

INNOVATIONCENTER

DULLESAIRPORT

ROUTE 606

ROUTE772

PHASE II2016

MCLEANGREENSBORO

NATIONALAIRPORT

MARYLAND

CRYSTAL CITY

OLD TOWNALEXANDRIA

TYSONS

MERRIFIELD

FAIRFAX CENTERROUTE 28 SOUTH

RESTON

HERNDON

LOUDOUN

EISENHOWERAVENUE

SPRINGFIELD/NEWINGTON

I-395 CORRIDOR

R-B CORRIDOR

DTZ | 6

Northern Virginia Office MarketInventory and Vacancy by Submarket, Second Quarter 2015

Top Transactions

Northern Virginia Office MarketNet Absorption - Deliveries - Vacancy, Second Quarter 2015

0%

4%

8%

12%

16%

20%

-4

0

4

8

04 05 06 07 08 09 10 11 12 13 14 YTD15

Vaca

ncy

Rate

MS

F


0%

5%

10%

15%

20%

25%

30%

0

5

10

15

20

25

30

35

40

Alexandria Arlington Tysons Toll Road 50/66 Springfield Route 28South

Loudoun

Vaca

ncy

Rate

MS

F

Leased Vacant Vacancy Rate

Key Sales Transactions 2Q 15

Key Lease Transactions 2Q 15

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

1750 Tysons Boulevard 136,000 Capital One Relet Tysons Corner

22980 Indian Creek Drive 69,000 MC Dean Relet Route 28 North

8401 Greensboro Drive 53,400 BDO USA, LLP Relet Tysons Corner

901 North Glebe Road 45,000 Nixon & Vanderhye Renewal Ballston

3100 Clarendon Boulevard 43,300 Uber New Claredon/Courthouse

12110 Sunset Hills Road 41,500 Uber Relet Reston

13650 Dulles Technology Drive 39,700 Learning Tree Relet Herndon

1400 Crystal Drive 25,000 Allied Telecom New Crystal City

14151 Park Meadow Drive 24,000 Booz Allen Hamilton Renewal Route 28 South

3120 Fairview Park Drie 23,500 Spin Systems New Merrifield

2677 Prosperity Avenue 22,500 ICS Nett Relet Merrifield

PROPERTY SF SELLER/BUYER PRICE SUBMARKET

4121 & 4201 Wilson Boulevard 660,922 Dweck Properties / Jamestown $96,700,000 Ballston

1700 North Moore Street 407,364 Clover Management Corporation / American Real $82,200,000 Rosslyn

2600 Park Tower Drive 234,500 Blackstone Group / Columbia Office Properties Trust $82,100,000 Merrifield

8000 Jones Branch Drive 217,129 Walton Street JV Stonebridge Carras / EPR Properties $53,500,000 Tysons Corner

15040 Conference Center Drive 115,563 Carr Properties / Tritower Financial Gropu $27,500,000 Route 28 South

21345 Ridgetop Circle 101,875 LNR Partners / The Pinkinard Group, Buchanan, & $7,800,000 Route 28 North

www.dtz.com | 7

Alexandria

0%

4%

8%

12%

16%

20%

24%

-1,200

-700

-200

300

800

1,300

1,800

04 05 06 07 08 09 10 11 12 13 14 YTD15

Vaca

ncy

Rat

e

Squ

are

Fee

t, 00

0s


In the second quarter, Alexandria shed 142,800 sf, bringing its midyear absorption total to a negative 217,200 sf. Once again, demand was bifurcated in Alexandria with Old Town and the Eisenhower Avenue Corridor posting positive absorption and the lagging I-395 submarket returning space. The submarket has been hit hard by government and government contractor downsizing since 2011; that trend has continued into the second quarter of 2015. Exelis (fresh off its acquisition by Harris Corp.) vacated 53,000 sf at 2800 Shirlington Road in a consolidation effort. As in the recent past, deals for over 20,000 sf in Alexandria during the second quarter were renewals or rightsizings. Such was the case with HNTB which signed a renewal for 26,700 sf at 2900 South Quincy Streeta reduction of 8,000 sf from its previous space in the same building. With Base Realignment and Closure (BRAC) taking its toll on the I-395 submarket, leasing activity in Old Town and Eisenhower Avenue has been more robust. Unlike the HNTB deal, Sentel signed a new lease for 30,600 sf at 2800 Eisenhower Drive which resulted in 20,300 sf of growth for the market as they relocated from 1101 King Street in Old Town. This type of growth displayed by Sentel has been limited in Alexandria over the past few quarters as tenants have left for cheaper rates in Crystal City and consolidation efforts have negatively impacted the market as a whole.

During the second quarter, vacancy increased 0.7 percentage points from the first quarter to 21.6%. Vacancy in the I-395 submarket rose to an alarming 39.6%, the highest vacancy rate in Northern Virginia. Rents in Alexandria were up $0.29 from the previous quarter to $30.92 psf. Class B rents trailed top- quality Class A rates by $1.33, with Class A rents at $31.95 psf at the end of the second quarter.

Outlook The space efficiency dispute at the National Science

Foundation (NSF) could delay the arrival Alexandrias most highly-awaited tenant. But with GSA conceding more space per worker for the project there could be an increase in demand for Alexandria.

Following in the wake of the NSFs move to the Eisenhower Avenue submarket, another large GSA tenant requiring in excess of 600,000 sf is rumored to be taking a look at the submarketanother potential major demand driver.

Market Indicators*Arrows = Current Qtr Trend

Asking Rent

Net Absorption Deliveries Vacancy

Vacant and Available Space

2.3 2.83.9 3.8 4.3

4.4 4.5

1.5

2.3

1.6 1.5 0.8 0.80.8

0

1

2

3

4

5

6

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q1 15 Q2 15

MS

F

Vacant Marketed Available (not yet vacant)

$25

$27

$29

$31

$33

$35

$37

2009 2010 2011 2012 2013 2014 2015

Ful

l Ser

vice

PS

F

Class A Class B

Asking Rent$30.92 FS

Net Absorption(142,800) SF

Vacancy21.6%

Deliveries0 SF

Under Construction720,000 SF

DTZ | 8

Arlington

0%

4%

8%

12%

16%

20%

24%

28%

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

04 05 06 07 08 09 10 11 12 13 14 YTD15

Vac

ancy

Rat

e

Squ

are

Fee

t, 00

0s


Vacancy in Arlington has remained virtually unchanged from a year ago, rising just 0.1 percentage points from the second quarter of 2014 to 22.9%. Arlington posted 72,600 sf of absorption during the second quarter, but the delivery of newly renovated 3100 Clarendon Boulevard increased the amount of vacant space in the market. The building, which was previously occupied by the Defense Intelligence Agency, underwent a significant renovation and was rewarded when it signed Uber for 39,800 sfone of the largest leases of the quarter. First-generation space was also absorbed in Crystal City during the second quarter. Allied Telecom leased a full floor (25,000 sf) at 1400 Crystal Drive in a move from the District. That same building, which had failed to sign additional tenants since delivering in the third quarter of 2013, has experienced a flurry of leasing activity during 2015. As large as the Uber deal was, it was not the largest deal of the quarter in Arlington. That title belonged to law firm Nixon Vanderhye which renewed for 45,000 sf at 901 North Glebe Road in Ballston. Another notable lease signed during the quarter was that of ICA Language Services which signed for 17,100 sf at 1501 Wilson Boulevard in Rosslyn as it relocated from 1901 N Moore Street. ICAs relocation in Rosslyn is indicative of the leasing landscape in the submarket. Rosslyn has struggled to attract new tenants recently and the majority of leasing activity has been relocations from existing tenants to nearby buildings in the submarket, creating a musical chairs scenario.

Rents in Arlington increased $0.08 from a year ago to $39.76 psf at the end of the second quarter of 2015. Arlington contains 21.5 msf of Class A product which has a relet vacancy rate of 15.8%. With a large supply of Class A space available, Arlington has the highest rates for top-quality product at $41.95 psf. With no additions to inventory until the delivery of the CEB Tower in 2018, existing quality product should capture substantial demand from tenants seeking a location proximate to the District.


Asking Rent



2.74.4

6.17.9 8.1 8.0 8.02.6

2.92.0

1.9 2.13.3 3.3

0

2

4

6

8

10

12

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q1 15 Q2 15

MS

F


$32

$34

$36

$38

$40

$42

$44

$46

2009 2010 2011 2012 2013 2014 2015

Full

Serv

ice P

SF

Class A Class B


Net Absorption72,600 SF

Vacancy22.9%

Deliveries259,300 SF


Outlook Sales activity was robust in Arlington during the second

quarter as both Rosslyn Metro Center and Stafford Place transacted. Investors are obviously still bullish on the interior submarkets that neighbor the District.

Rents could decline in the near term as Arlington landlords lower rates to keep key tenants from relocating to submarkets outside of the Beltway with Metro access or emerging submarkets in the District.

www.dtz.com | 9

Tysons Corner

0%

4%

8%

12%

16%

20%

-1,000

-500

0

500

1,000

1,500

04 05 06 07 08 09 10 11 12 13 14 YTD15

Va

can

cy R

ate

Sq

ua

re F

ee

t, 0

00

s


In the second quarter of 2015, the Tysons Corner submarket absorbed 91,000 sf bringing its midyear absorption total to 73,000 sf. Contractor downsizing was evident during the quarter, most notably in the West Gate minimarket. 7799 Leesburg Pike experienced a spike in vacancy as ManTech returned 54,000 sf to the market and United States Investigations Services shed 29,000 sf due to bankruptcy. Tysons is one the most diverse submarkets in regards to its tenant mix and thus Tysons does not necessarily rely solely on one specific sector to drive demand. This was certainly apparent in the second quarter as reductions by government contractors were offset by growth from financial services firms and technology companies. The largest lease signed in Northern Virginia during the second quarter was that of Capital One which signed for 136,000 sf at 1750 Tysons Boulevard. The Fortune 200 firms expansion in Tysons backfilled space that was vacated by Deloitte as it moved to 7900 Tysons One Place (Tysons Tower) last year. Elsewhere in Tysons, consulting firm BDO relocated from 8405 Greensboro Drive to nearby 8401 Greensboro Drive and signed for 53,400 sf. Another notable lease was that of Transwestern which signed for 13,200 sf at Tysons Tower. Tysons Tower, which delivered in the second quarter of 2014, has captured significant demand and is nearly 80% leased as NoVA tenants have continued to display a preference for top-quality product in locations proximate to Metro.

With positive absorption in the second quarter, vacancy decreased and rents rose, albeit slightly. Rents increased $0.08 from the previous quarter to $31.19 psf. The spread between Class A and B rents in the submarket rose to $6.74 with Class A rents currently at $34.06 psf. Owners of commodity product have lowered rates in an attempt to compete on a pricing basis with higher quality buildings. Vacancy in the submarket slid 0.8 percentage points from the previous quarter to 18.1%. Vacancy could increase in the near term with the delivery of 1775 Tysons Boulevard in the first quarter of 2016 as new product is added to inventory and pulls tenants from existing buildings. But as older buildings are renovated, repositioned or demolished, vacancy should return to equilibrium.


Asking Rent



4.3 4.5 4.1 4.14.9 4.9 4.7

1.8 0.9 1.31.9

1.3 1.3 1.8

0

1

2

3

4

5

6

7

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q1 15 Q2 15

MS

F


$25

$27

$29

$31

$33

$35

$37

$39

2009 2010 2011 2012 2013 2014 2015

Ful

l Ser

vice

PS

F

Class A Class B



Vacancy18.1%

Deliveries0 SF


Outlook The arrival of the Silver Line Metro in Tysons has created

a bifurcated market in which buildings proximate to Metro stations have captured the majority of demand and those farther off Metro have either returned space or lost deals. In an effort to become more competitive, owners of buildings located off Metro will either have to lower rates, build competitive spec suites, or find a way to activate retail in the properties to entice tenants.

DTZ | 10

Reston/Herndon

0%

4%

8%

12%

16%

20%

-500

0

500

1,000

1,500

2,000

2,500

04 05 06 07 08 09 10 11 12 13 14 YTD15

Va

can

cy R

ate

Sq

ua

re F

ee

t, 0

00

s


Demand in the Toll Road submarkets of Reston and Herndon rebounded in the second quarter of 2015; collectively these submarkets posted 115,500 sf of absorption. With positive demand, vacancy fell 0.3 percentage points from the previous quarter to 13.4%. As of the end of the second quarter, Restons premier office parksReston Town Center and Plaza Americahad vacancy rates of just 5.0%. With a shortage of space in these amenity-rich parks, surrounding office parks and buildings further along the Toll Road in Herndon have seen increased leasing activity. The largest lease signed in Reston and Herndon during the quarter was that of Uber which signed for 41,500 sf at 12110 Sunset Hills Road in Reston. Other notable leases during the quarter included Perfect Sense Digital which signed for 20,800 at 12120 Sunset Hills Road and Learning Tree which signed for 38,700 sf at 13650 Dulles Technology Drive in Herndon. Quality product along the Toll Road absorbed 118,500 sf during the quarter while Class B buildings returned space to the market. With Class A space performing well, the spread between Class A and B product rents increased to $7.77 with Class A rents now at $30.01 psf.

So far this year, large blocks have been absorbed along the Toll Road, but nearly every block that has come off the market in Reston has been followed by a larger vacancy coming to the market. In the second quarter, Unisys vacated the entire building at 11493 Sunset Hills Road, returning 179,200 sf to the Reston office market. With large blocks coming on line, vacancy in Reston has struggled to decline in 2015 and is currently 0.2 percentage points above its year-end 2014 level at 14.6%. Herndons vacancy rate is one of the lowest in Northern Virginia at 11.5%; however, the submarkets availability rate is significantly higher at 23.3%. That means several large blocks will likely be coming back to the market and vacancy could increase if demand falters.


Asking Rent



4.8 4.6 4.5 4.0 4.2 4.2 4.0

2.31.2 1.8 2.2

2.7 2.2 2.2

0

1

2

3

4

5

6

7

8

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q1 15 Q2 15

MS

F


$20

$22

$24

$26

$28

$30

$32

2009 2010 2011 2012 2013 2014 2015

Ful

l Ser

vice

PS

F

Class A Class B



Vacancy13.4%

Deliveries0 SF

Under Construction0 SF

Outlook The Toll Road currently has 23.7 msf of Class A product

but only 2.5 msf of that was built after 2006. Construction could be around the corner for the Toll Road as the last completed office project delivered in 2009.

Increased competition for a dwindling supply of quality space in Reston appears to be driving velocity. Tenants now are moving faster to execution on deals in the expectation that the quality space wont be available if they dont act quickly.

www.dtz.com | 11

50/66

0%

4%

8%

12%

16%

20%

-1,000

-800

-600

-400

-200

0

200

400

600

04 05 06 07 08 09 10 11 12 13 14 YTD15

Vaca

ncy

Rate

Square

Feet, 0

00s


Vacancy in the 50/66 Corridor decreased by 0.5 percentage points from the previous quarter to 15.8% as the submarkets of Merrifield, Vienna, Oakton, Fairfax Center and Fairfax City collectively absorbed 89,500 sf. In previous quarters, the Merrifield submarket and particularly the Fairview Park office park lost several large tenants to more urban and Metro-proximate submarkets such as Tysons and Reston, but in the second quarter Merrifield bounced back absorbing 68,900 sf. The largest lease in Merrifield during the second quarter was that of Spin Systems which signed for 23,500 sf of first-generation space at 3120 Fairview Park Drive. That deal left the Merrifield market with only 35,000 sf of new space available for lease. Another noteworthy lease during the quarter was signed by Actionet Inc. which expanded by 11,000 sf at 2600 Park Tower Drive. The Corridor would have posted even larger absorption totals, but contractor downsizing was once again evident in the market. Boeing vacated 20,000 sf at 2650 Park Tower Drive in Merrifield and CGI returned 18,000 sf at 11325 Random Hills Road in Fairfax Center.

The 50/66 Corridor was one of the few markets in which demand for Class B product rivaled that of Class A absorption. During the quarter, 37,300 sf of high-end product was absorbed and legacy B buildings followed closely behind, absorbing 35,300 sf. The absorption of Class B space is not surprising considering its competitive pricing. As of the end of the second quarter, average rent for Class A product was $7.29 ahead of commodity product at $30.78 psf.


Asking Rent



3.1 3.1 2.9 3.0 3.0 3.2 3.2

0.9 0.3 1.21.2 1.1

1.3 1.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q1 15 Q2 15

MS

F


$22

$24

$26

$28

$30

$32

$34

2009 2010 2011 2012 2013 2014 2015

Ful

l Ser

vice

PS

F

Class A Class B



Vacancy15.8%

Deliveries0 SF


Outlook With no construction projects currently underway and

with the success of the Mosaic District, expect future development in the area to place more emphasis on amenities to meet changing tenant preferences. Rumors that the Mosaic District could move on a spec office site to follow on the success of 2905 District Avenue have been whispered.

After four years of increasing uncertainty, contractor-dependent submarkets such as Fairfax City and Fairfax Center could see new requirements as stabilization is occurring in the federal sector both in terms of employment and spending.

DTZ | 12


0%

4%

8%

12%

16%

20%

24%

28%

32%

-300

-200

-100

0

100

200

300

400

500

04 05 06 07 08 09 10 11 12 13 14 YTD15

Va

can

cy R

ate

Sq

ua

re F

ee

t, 0

00

s


Leasing activity in Springfield/Newington was light during the second quarter of 2015. The submarket posted 24,100 sf of absorption during the quarter, bringing midyear absorption to 66,500 sf. Modest leasing caused vacancy to trickle down by 0.4 percentage points from the previous quarter to 26.4%. We could see vacancy in the submarket increase in the near term as Springfields availability rate is an alarming 40.6%. One factor that may limit future vacancy in the submarket is the vacancy rate of new space. At the end of the second quarter, Springfield contained 2.3 msf of Class A space with and a vacancy rate for new space of 24.2%the highest in Northern Virginia. Vacancy should tighten further as tenants continue showing a preference for new quality space and since future construction is limited due to a large amount of existing new product currently being marketed for lease. Vacancy could also decrease if Springfield were chosen as the location for the new FBI headquarters. The submarket was on the shortlist for possible relocation sites last year and is still anxiously awaiting news of a final decision which has the potential for driving additional demand in Springfield.

Rents in Springfield dipped $0.17 from the previous quarter to $31.31 psf. Class A rents are among the highest in Northern Virginia submarkets located outside of the Beltway at $37.61 psf. The delta between A and B product in the submarket is currently $14.34 with Class B rents falling to $23.27 psf. With Class B product offered at a substantial discount, Class B product outpaced high-end space by absorbing nearly double the amount of space during the second quarter of the year.


Asking Rent



0.40.9 0.9

1.5 1.6 1.5 1.50.3

0.4 0.4

0.4 0.4 0.50.7

0.0

0.5

1.0

1.5

2.0

2.5

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q1 15 Q2 15

MS

F


$20

$24

$28

$32

$36

$40

2009 2010 2011 2012 2013 2014 2015

Ful

l Ser

vice

PS

F

Class A Class B



Vacancy26.4%

Deliveries0 SF


Outlook Although government contractors should see a boost

in federal spending during 2015, Springfields emerging healthcare sector could be another source of demand for the contractor-centric submarket.

With the Springfield Malls overhaul and transformation into the Springfield Town Center, there the potential of over 1,000,000 sf of office development on the site. Reston Town Center and the Mosaic District have found success with this model and Springfield could be next as tenant preferences continue to shift away from traditional business parks.

www.dtz.com | 13

Route 28 South

0%

4%

8%

12%

16%

20%

24%

-500

0

500

1,000

1,500

2,000

04 05 06 07 08 09 10 11 12 13 14 YTD15

Va

can

cy R

ate

Sq

ua

re F

ee

t, 0

00

s


Leasing activity increased in the Route 28 South submarket during the second quarter of 2015 as the submarket posted absorption of 38,000 sf. Although that demand total was modest, it appears the submarket could be turning a corner after shedding 63,000 sf during the first quarter of the year. During the second quarter, the submarket was unscathed by large move-outs by federal contractors which have plagued the region. In fact, some growth came from the federal contracting sector. Booz Allen Hamilton renewed its 24,000 sf lease at 14151 Park Meadow Drive and expanded by an additional 10,200 sf. There were also a number of renewals from contractors, proving how resilient the submarket is in retaining tenants. General Dynamics Information Technology Inc. (GDIT) renewed for 20,000 sf at 14151 Newbrook Drive and Blackbird Technologies, which was acquired by Raytheon at the end of 2014, also renewedfor 18,600 sf at 13900 Lincoln Park Drive.

With positive demand, vacancy declined 0.3 percentage points from the previous quarter to 19.9%. Vacancy in the submarket is still elevated from a year ago due to decreased overall demand. Still, with a large supply of quality product and increased federal spending, resurgence in demand is likely. A large portion of the space in the Route 28 South submarket72%is Class A product, so it is not that surprising that the majority of absorption during the quarter was sourced from high-quality buildings. Class A absorption for the quarter totaled 54,900 sf and demand for Class B space was scarce with legacy assets returning 17,000 sf to the market.

The second of COPTs two Stonecroft buildings remains under construction with an anticipated delivery date in the second quarter of 2016. Initially, it was thought the U.S. Government would occupy both 4850 and 4870 Stonecroft Boulevard; while that remains a possibility it now appears that the building will be marketed for lease. Demand for a new quality building proximate to a government tenant will be a good indicator of where the submarket is trending.


Asking Rent



2.31.9 2.1 2.2

2.5 2.7 2.7

0.40.5 0.5

0.91.0 0.8 0.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q1 15 Q2 15

MS

F


$18

$20

$22

$24

$26

$28

$30

2009 2010 2011 2012 2013 2014 2015

Ful

l Ser

vice

PS

F

Class A Class B



Vacancy19.9%

Deliveries0 SF


Outlook Route 28 Souths access to fiber will be substantial

demand driver as increased spending for cloud computing and cybersecurity continues to balloon.

DTZ | 14

Loudoun County

0%

4%

8%

12%

16%

20%

24%

-200-100

0100200300400500600700800

04 05 06 07 08 09 10 11 12 13 14 YTD15

Vaca

ncy

Rate

Square

Feet, 0

00s


Loudoun County absorbed 82,300 sf during the second quarter of 2015, bringing its midyear absorption total to 173,800 sf. With stable demand, vacancy declined 0.3 percentage points from the previous quarter to 16.8%. The Route 7 Corridor experienced the most significant demand during the quarter with 43,600 sf of absorption. The main driver of demand in the submarket was merchant services firm Electronic Transaction System Corporations (ETS) which signed for 27,000 sf at 20135 Lakeview Center Place in Ashburn. ETS was the first tenant to sign a lease in the building, which delivered in 2009. Although ETSs full floor deal was large, the most significant lease signed in the County during the second quarter was that of MC Dean. The government contractor renewed its lease for 69,000 sf at 22980 Indian Creek Drive in the Route 28 North submarket.

The lone delivery during the second quarter outside of the Capital Beltway occurred in the Route 28 North submarket. Loudoun Station, a 49,100 sf project at 43777 Central Station Drive, delivered without any leasing activity, and thus Loudoun Countys Class A inventory increased to 7 msf. Similar to most of Northern Virginias submarkets, top-quality product in the Loudoun County submarkets was also in high demand during the second quarter of 2015. The Loudoun submarkets collectively absorbed 108,400 sf of Class A space during the quarter and returned 25,900 sf of legacy Class B product. Rents in Loudoun County have remained relatively flat over the past few quarters and they dipped slightly during the second quarter. Overall rents averaged $23.41 psf with Class A rents averaging $25.01 psf.


Asking Rent



1.9 2.0 1.9 2.1 2.1 2.0 1.9

0.7 0.60.4

0.40.1 0.3 0.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q1 15 Q2 15

MS

F


$16

$18

$20

$22

$24

$26

$28

2009 2010 2011 2012 2013 2014 2015

Ful

l Ser

vice

PS

F

Class A Class B



Vacancy16.8%

Deliveries49,100 SF


Outlook Loudoun County is one of the fastest growing counties in

the nation. It has struggled to find an appropriate balance between residential developmentwhich is in high demand but takes a heavy toll on public resources (such as roads and schools)and commercial development which generally pays more into the tax base than it draws. Expect to continue to see conditions that require the commercial portions of large developments to be constructed prior to allowing additional residential development.

www.dtz.com | 15

Appendix

Table Summaries

Metro Washington Office Market Summary13

Employment Data13

Office Availability, Vacancy, and Net Absorption14

Trailing 12-Month Data15

Historical Year-End Data16

Market Statistics by Class17-18

Survey of New Office Space by Submarket19-22

Methodology & Definitions23

Metro Washington Current Employment Data

Metro Washington Office Market Summary: Second Quarter 2015p

SOURCE: U.S. Bureau of Labor Statistics (Not seasonally adjusted)* Average per year to datep - preliminary

TotalInventory

Total SpaceVacant

VacancyRate

Q2 2015Absorption

YTDAbsorption

Washington, DC 122,850,343 13,562,737 11.0% 275,133 250,129

Northern Virginia 162,377,414 30,463,789 18.8% 370,078 172,605

Suburban Maryland 72,887,967 13,466,110 18.5% (79,631) 36,624

Regional Totals 358,115,724 57,492,636 16.1% 665,580 459,358

Non Farm Employment

(Jan-June 2014)

Non FarmEmployment

(Jan-June 2015p)

Jobs Added/ Lost* Percent Change

Washington, DC 751,100 761,950 10,850 1.4%

Northern Virginia 1,376,800 1,397,000 20,200 1.5%

Suburban Maryland 956,550 974,250 17,700 1.9%

Regional Totals 3,101,550 3,155,450 53,900 1.7%

DTZ | 16

AppendixO

ffice

Ava

ilabi

lity,

Vac

ancy

, and

Net

Abs

orpt

ion,

Sec

ond

Qua

rter

201

5p

Tota

l In

vent

ory

New

Spa

ce

Vaca

ntR

elet

Spa

ce

Vaca

ntS

uble

t Spa

ce

Vaca

ntTo

tal S

pace

Va

cant

Vaca

ncy

Rat

eN

ew S

pace

A

bsor

ptio

nR

elet

A

bsor

ptio

nS

uble

t A

bsor

ptio

nTo

tal N

et

Abs

orpt

ion

Ros

slyn

8,81

7,40

2 54

6,80

2 2,

036,

477

63,2

72

2,64

6,55

1 30

.0%

19

30,8

36

(12,

567)

18,2

88

Cla

rend

on/C

ourt

-ho

use

4,86

2,81

6 30

7,45

6 60

3,66

9 69

,764

98

0,88

9 20

.2%

39,6

98

(77,

051)

(4,7

91)

(42,

144)

Virg

inia

Squ

are

1,12

0,83

1 0

239,

508

53,8

99

293,

407

26.2

%0

1,61

7 (3

,343

)(1

,726

)

Bal

lsto

n7,

332,

378

74,9

47

1,19

7,12

4 49

,892

1,

321,

963

18.0

%0

51,4

07

2,94

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,352

Cry

stal

City

11,0

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48

441,

774

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0,68

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2,

475,

904

22.4

%18

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38

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10

,985

68

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Pent

agon

City

1,78

1,46

3 0

281,

756

0 28

1,75

6 15

.8%

0 (2

4,90

7)0

(24,

907)

Arli

ngto

n C

ount

y34

,951

,638

1,

370,

979

6,35

9,21

8 27

0,27

3 8,

000,

470

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20

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(6

,771

)72

,593

R/B

Cor

ridor

122

,133

,427

92

9,20

5 4,

076,

778

236,

827

5,24

2,81

0 23

.7%

39,7

17

6,80

9 (1

7,75

6)28

,770

Old

Tow

n8,

059,

172

3,23

7 79

3,87

0 86

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88

4,08

6 11

.0%

0 39

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1,

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86

Eise

nhow

er4,

883,

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332,

937

152,

203

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03

495,

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0 19

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0

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43

I-395

7,91

4,85

5 60

5,99

8 2,

303,

517

227,

601

3,13

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0 (2

00,3

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(3,1

15)

(203

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)

Ale

xand

ria20

,857

,625

94

2,17

2 3,

249,

590

325,

383

4,51

7,14

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240

(141

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)(1

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)(1

42,8

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de th

e B

eltw

ay2

55,8

09,2

63

2,31

3,15

1 9,

608,

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595,

656

12,5

17,6

15

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(1

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(8,4

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(70,

215)

Tyso

ns C

orne

r25

,884

,383

24

9,13

3 4,

029,

891

400,

136

4,67

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180

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(71,

878)

91,0

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ton

18,3

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(58,

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ndon

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34,9

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358,

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35

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113,

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orth

6,16

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4,10

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3,25

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51,4

75

(30,

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te 7

4,29

0,60

7 22

0,45

1 72

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950,

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burg

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0 5,

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11.8

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8 0

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Loud

oun

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nty

11,5

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321,

575

1,51

9,40

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Out

side

the

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tway

210

6,51

7,38

8 1,

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195,

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104,

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69,7

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1 The

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slyn/

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ton

(R/B

) cor

ridor

is co

mpr

ised

of R

ossly

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lare

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/Cou

rtho

use,

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inia

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and

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lston

subm

arke

ts.

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side

the

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ay is

com

prise

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ngto

n Co

unty

and

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xand

ria/O

utsid

e th

e Be

ltway

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of Fa

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and

Loud

oun

Coun

ties

3 Th

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corri

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s com

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ity su

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ce A

vaila

ble

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sed

on b

uild

ings

del

iver

ed 2

005

to p

rese

nt

P - P

relim

inar

y

www.dtz.com | 17

AppendixTr

ailin

g 12

-Mon

th D

ata

Tota

l Offi

ce In

vent

ory

Offi

ce V

acan

cy R

ate

Tota

l Offi

ce A

bsor

ptio

n

3rd

Qtr

201

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h Q

tr 2

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1st Q

tr 2

015

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Qtr

20

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Qtr

20

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h Q

tr

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tr

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Qtr

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898)

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rend

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816

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574)

(18,

880)

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VA S

quar

e1,

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120,

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stal

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agon

City

1,78

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781,

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ton

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ndon

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12

.5%

12.7

%12

.4%

11.5

%(3

6,33

4)(2

5,00

3)40

,964

10

3,51

2

Mer

rifie

ld7,

878,

879

7,87

8,87

97,

878,

879

7,87

8,87

9 15

.6%

15.7

%18

.9%

18.1

%2,

626

(6,6

40)

(205

,930

)68

,851

Vien

na1,

219,

275

1,21

9,27

51,

170,

945

1,17

0,94

5 10

.8%

10.5

%7.

2%7.

2%2,

207

3,11

6 (4

,644

)(9

9)

Oak

ton

1,01

0,26

11,

010,

261

1,01

0,26

11,

010,

261

23.8

%23

.0%

23.1

%23

.4%

7,66

9 7,

584

(800

)(2

,775

)

Fairf

ax C

ente

r6,

538,

055

6,53

8,05

56,

538,

055

6,53

8,05

5 14

.9%

14.8

%15

.0%

14.8

%(8

12)

10,0

12

(13,

442)

12,2

28

Fairf

ax C

ity3,

352,

765

3,35

2,76

53,

352,

765

3,35

2,76

5 13

.7%

13.9

%13

.7%

13.4

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(5

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)5,

522

11,2

49

28 S

outh

13,4

31,2

7313

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13,5

85,1

7313

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16

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18.8

%20

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19.9

%(1

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9)(6

7,67

4)(6

3,04

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Spr

ingfi

eld/

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ingt

on4

5,59

8,64

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598,

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551,

040

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26.8

%26

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(10,

152)

(71,

313)

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27

24,1

20

Fairf

ax C

ount

y95

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95,1

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(22,

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)(2

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358,

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50/6

6319

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19,9

99,2

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43,2

68

8,35

0 (2

19,2

94)

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54

28 N

orth

6,11

1,88

36,

111,

883

6,11

1,88

36,

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982

14.3

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%13

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72,9

49

5,61

6 46

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19

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Rou

te 7

4,29

0,60

74,

290,

607

4,29

0,60

74,

290,

607

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(24,

428)

17,3

35

52,3

99

43,6

31

Lees

burg

1,04

8,94

81,

048,

948

1,04

8,94

81,

048,

948

13.2

%12

.9%

13.7

%11

.8%

2,73

2 2,

246

(7,4

81)

19,0

42

Loud

oun

Cou

nty

11,4

51,4

3811

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,438

11,4

51,4

3811

,500

,537

18

.1%

17.9

%17

.1%

16.8

%51

,253

25

,197

91

,512

82

,262

Out

side

the

Bel

tway

210

6,52

2,20

410

6,61

3,15

910

6,67

1,12

910

6,51

7,38

8 16

.4%

17.1

%17

.3%

16.8

%28

,726

(3

61,6

41)

(166

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)44

0,29

3

Nor

ther

n V

irgin

ia16

2,59

0,83

816

2,68

1,793

162,

739,

763

162,

326,

651

18.4

%18

.8%

19.0

%18

.8%

(34,

964)

(426

,322

)(1

97,4

73)

370,

078

1 The

Ros

slyn/

Balls

ton

(R/B

) cor

ridor

is co

mpr

ised

of R

ossly

n, C

lare

ndon

/Cou

rtho

use,

Virg

inia

Squ

are,

and

Bal

lston

subm

arke

ts.

2

Insid

e th

e Be

ltway

is co

mpr

ised

of A

rling

ton

Coun

ty a

nd A

lexa

ndria

/Out

side

the

Beltw

ay is

com

prise

d of

Fairf

ax a

nd Lo

udou

n Co

untie

s.

3 Th

e 50

/66

corri

dor i

s com

prise

d of

Mer

rifiel

d, V

ienn

a, O

akto

n, Fa

irfax

Cen

ter,

and

Fairf

ax C

ity su

bmar

kets

.

4 Th

e I-3

95 a

nd S

prin

gfiel

d/N

ewin

gton

subm

arke

ts w

ere

upda

ted

in th

e se

cond

qua

rter o

f 201

2 w

ith a

dditi

onal

inve

ntor

y. p-

pre

limin

ary

DTZ | 18

AppendixH

isto

rical

Yea

r-En

d D

ata

Tota

l Inv

ento

ryVa

canc

y R

ate

(%)

Tota

l Ann

ual A

bsor

ptio

n

2013

20

1420

15p

2013

2014

2015

p20

1320

1420

15p

Arli

ngto

n C

ount

y35

,187

,499

35

,160

,246

34,9

51,6

3822

.5%

22.9

%22

.9%

(720

,085

)(8

2,55

3)11

6,19

6

R/B

Cor

ridor

222

,001

,420

22

,133

,427

22,1

33,4

2720

.5%

22.9

%23

.7%

(836

,033

)(3

21,5

01)

85,1

16

Ale

xand

ria4

20,9

08,3

88

20,9

08,3

8820

,857

,625

18.1

%20

.6%

21.7

%14

5,83

7 (1

79,9

00)

(217

,228

)

Insi

de th

e B

eltw

ay1

56,0

95,8

87

56,0

68,6

3455

,809

,263

20.9

%22

.1%

22.4

%(5

74,4

59)

(262

,453

)(1

01,0

32)

Tyso

ns C

orne

r25

,471

,289

26

,087

,223

25,8

84,3

8316

.3%

18.9

%18

.1%

(107

,423

)(1

30,5

77)

73,0

20

Res

ton

18,3

08,2

62

18,3

08,2

6218

,308

,262

14.7

%14

.4%

14.6

%40

0,14

8 33

,134

(2

9,25

8)

Her

ndon

11,7

37,0

88

11,7

37,0

8811

,737

,088

11.2

%12

.7%

11.5

%28

0,78

0 (1

81,3

19)

144,

476

50/6

6320

,063

,883

19

,999

,235

19,9

50,9

0514

.8%

15.1

%15

.8%

(77,

341)

(116

,436

)(1

29,8

40)

28 S

outh

13

,056

,023

13

,431

,273

13,5

85,1

7316

.5%

18.8

%19

.9%

270,

089

217,

655

(25,

082)

Spr

ingfi

eld/

New

ingt

on4

5,55

8,64

0 5,

598,

640

5,55

1,04

027

.2%

28.2

%26

.4%

(239

,973

)(2

7,48

5)66

,547

Fairf

ax C

ount

y94

,195

,185

95

,161

,721

95,0

16,8

5115

.7%

17.0

%16

.9%

526,

280

(205

,028

)99

,863

Loud

oun

Cou

nty

11,3

95,7

57

11,4

51,4

3811

,500

,537

18.0

%17

.9%

16.8

%(1

27,0

22)

87,6

97

173,

774

Out

side

the

Bel

tway

*10

5,59

0,94

2 10

6,61

3,15

9 10

6,51

7,38

8 15

.9%

17.1

%16

.8%

399,

258

(117

,331

)27

3,63

7

Nor

ther

n Vi

rgin

ia16

1,68

6,82

9 16

2,68

1,79

316

2,32

6,65

117

.6%

18.8

%18

.8%

(174

,990

)(3

79,7

84)

172,

605

1 Ins

ide

the

Beltw

ay is

com

prise

d of

Arli

ngto

n Co

unty

and

Ale

xand

ria/O

utsid

e th

e Be

ltway

is co

mpr

ised

of Fa

irfax

and

Loud

oun

Coun

ties

2

The

Ross

lyn/

Balls

ton

(R/B

) cor

ridor

is co

mpr

ised

of R

ossly

n, C

lare

ndon

/Cou

rtho

use,

Virg

inia

Squ

are,

and

Bal

lston

subm

arke

ts.

3

The

50/6

6 co

rrido

r is c

ompr

ised

of M

errifi

eld,

Vie

nna,

Oak

ton,

Fairf

ax C

ente

r, an

d Fa

irfax

City

subm

arke

ts.

4

The

I-395

and

Spr

ingfi

eld/

New

ingt

on su

bmar

kets

wer

e up

date

d in

the

seco

nd q

uarte

r of 2

012

with

add

ition

al in

vent

ory.

www.dtz.com | 19

Northern Virginia 2nd Quarter 2015 Market Statistics

BuildingsTotal

Inventory(SF)

New Vacancy

(%)

Relet Vacancy

(%)

Sublet Vacancy

(%)

Total Vacancy*

(%)

Total Availability

(%)

Net Absorption

Current QTR(SF)

Under Construc-

tion(SF)

Average Asking Rent(FS)

Alexandria

Class

A 77 11,298,198 3.0% 19.6% 0.6% 24.1% 20.6% (4,192) 720,000 $31.95

B 138 8,717,254 0.0% 3.1% 0.4% 18.9% 28.4% (139,288) 0 $30.62

C 36 892,936 0.0% 0.6% 0.0% 3.0% 4.7% 672 0 $24.28

TOTAL 251 20,908,388 2.6% 17.9% 0.6% 21.6% 25.1% (142,808) 720,000 $30.92

Arlington

Class

A 87 21,480,999 6.3% 15.8% 1.1% 23.3% 30.9% 17,446 552,781 $41.95

B 67 11,813,994 0.0% 23.5% 0.2% 23.7% 29.2% 39,235 0 $37.49

C 15 1,656,645 0.0% 9.8% 0.0% 9.8% 49.5% 15,912 0 $34.62

TOTAL 169 34,951,638 3.9% 18.2% 0.8% 22.9% 30.8% 72,593 552,781 $39.76

Tysons Corner

Class

A 76 17,566,187 1.4% 14.7% 1.6% 17.7% 23.8% 123,499 476,913 $34.06

B 89 8,181,552 0.0% 17.3% 1.5% 18.8% 27.4% (32,462) 0 $27.32

C 5 136,644 0.0% 12.5% 0.0% 12.5% 12.8% - 0 $23.23

TOTAL 170 25,884,383 1.1% 15.4% 1.5% 18.1% 24.7% 91,037 476,913 $31.19

Reston/Herndon

Class

A 150 23,736,978 0.2% 10.8% 1.7% 12.8% 20.5% 118,521 0 $30.01

B 151 6,101,108 0.0% 15.8% 0.2% 16.0% 21.0% (8,221) 0 $22.24

C 9 207,264 0.0% 12.5% 0.0% 12.5% 22.9% 5,160 0 $27.94

TOTAL 310 30,045,350 0.2% 11.7% 1.4% 13.4% 20.6% 115,460 0 $28.19

50/66

Class

A 89 12,343,025 0.3% 18.3% 0.6% 19.2% 27.0% 37,269 0 $30.78

B 167 7,109,828 0.0% 10.0% 0.5% 10.5% 16.5% 35,288 0 $23.49

C 29 498,052 0.0% 8.3% 1.1% 9.4% 10.6% 16,897 0 $21.60

TOTAL 285 19,950,905 0.2% 15.1% 0.6% 15.8% 22.8% 89,454 0 $28.69

* Vacancy Current - the vacancy rate is calculated using the combined total of vacant direct, sublease and new space.

Market Statistics

DTZ | 20

Northern Virginia 2nd Quarter 2015 Market Statistics

Market Statistics

BuildingsTotal

Inventory(SF)

New Va-cancy

(%)

Relet Vacancy

(%)

Sublet Vacancy

(%)

Total Vacan-

cy*(%)

Total Availability

(%)

Net Absorption

Current QTR(SF)

Under Construc-

tion(SF)

Average Ask-ing

Rent(FS)


Class

A 19 2,302,487 24.2% 8.8% 5.1% 38.1% 43.2% 8,770 0 $37.61

B 44 3,033,365 0.0% 19.1% 0.3% 19.3% 38.8% 15,350 0 $23.27

C 1 215,188 0.0% 0.0% 0.0% 0.0% 0.0% - 0 $0.00

TOTAL 64 5,551,040 10.0% 14.1% 2.3% 26.4% 28.4% 24,120 0 $31.31

Route 28 South

Class

A 70 9,718,536 1.9% 17.3% 0.2% 19.4% 27.1% 54,944 161,030 $26.33

B 75 3,848,845 0.0% 18.0% 2.8% 20.8% 30.3% (16,984) 0 $21.70

C 3 17,792 0.0% 100.0% 0.0% 100.0% 100.0% - 0 $14.79

TOTAL 148 13,585,173 1.4% 17.6% 0.9% 19.9% 28.1% 37,960 161,030 $24.75

Loudoun County

Class

A 69 6,965,385 3.8% 12.1% 1.2% 17.9% 18.6% 108,419 - $25.01

B 128 4,371,562 0.1% 14.9% 0.1% 15.0% 17.2% (25,944) 20,500 $20.75

C 5 163,590 0.0% 16.4% 0.5% 17.0% 17.8% (213) 0 $19.31

TOTAL 202 11,500,537 2.4% 13.3% 0.8% 16.8% 17.5% 82,262 49,099 $23.41

Northern Virginia

Class

A 637 105,411,795 3.6% 14.9% 1.2% 19.7% 25.8% 464,676 1,910,724 $32.99

B 859 53,076,595 0.0% 15.2% 0.7% 15.9% 24.6% (133,026) 20,500 $29.13

C 103 3,788,111 0.0% 7.8% 0.2% 8.0% 20.5% 38,428 0 $30.89

TOTAL 1,599 162,377,414 2.4% 14.8% 1.0% 18.8% 25.3% 370,078 1,931,224 $31.63

* Vacancy Current - the vacancy rate is calculated using the combined total of vacant direct, sublease and new space.

www.dtz.com | 21

Nor

ther

n Vi

rgin

ia S

urve

y of

Offi

ce S

pace

Und

er C

onst

ruct

ion/

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er R

enov

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cutiv

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1772

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ence

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l 7

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burg

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ILD

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l 2

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DTZ | 22

Nor

ther

n Vi

rgin

ia S

urve

y of

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ce S

pace

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er C

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l 4

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ther

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mar

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2015

DEL

IVER

IES

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0%

2016

DEL

IVER

IES

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637,

943

0

2017

DEL

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IES

720,

000

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0297

%

2018

DEL

IVER

IES

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65%

TOTA

L C

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DER

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er R

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nN

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lect

ric

NT

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lus

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sN

NN

= N

et o

f all

Ope

ratin

g E

xpen

ses

and

Taxe

s

www.dtz.com | 23

Nor

ther

n Vi

rgin

ia S

urve

y of

New

Offi

ce S

pace

2015

Del

iver

ies

BU

ILD

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AD

DR

ESS

OW

NER

/DEV

ELO

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STAT

US

REN

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B

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G A

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CE

AVAI

LAB

LEVA

CAN

CY

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RC

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3100

Cla

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vard

Pied

mon

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enov

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ompl

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2Q

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8.00

-$29

.00

FSC

lare

ndon

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rthou

se25

9,33

119

2,08

474

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%

4377

7 C

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l Sta

tion

Driv

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omst

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ers

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$28.

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29.0

0 FS

Rou

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8 N

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49,0

9949

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0%

4850

Sto

necr

oft B

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vard

Cor

pora

te O

ffice

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N/A

Rou

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8 So

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153,

900

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100%

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30

241

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52

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%

2014

Del

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BU

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1071

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ichm

ond

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I-95

Busi

ness

Par

ks /

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ches

ter L

and

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pany

Del

iver

ed 1

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N/A

Sprin

gfie

ld/N

ewin

gton

40,0

000

0%10

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3001

Was

hing

ton

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With

held

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92,1

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$54.

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lare

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1,17

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524,

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His

toric

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N/A

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375,

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$16.

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44%

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328,

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7940

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321,

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140,

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44%

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Tota

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Expe

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DTZ | 24

Nor

ther

n Vi

rgin

ia S

urve

y of

New

Offi

ce S

pace

2013

Del

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BU

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AD

DR

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REN

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ELIV

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1812

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th M

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onda

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oper

ties

Del

iver

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Q13

$50.

00-$

65.0

0 FS

Ros

slyn

535,

381

535,

381

100%

0%

1400

Cry

stal

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eLo

we

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rpris

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ryst

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ity30

8,89

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1,77

282

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eliv

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4Q

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40

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0%

7951

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1 Lo

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oad

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Partn

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LP

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iver

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With

held

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gfie

ld/N

ewin

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242,

272

221,

316

100%

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5680

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g C

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eH

alle

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iver

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Q13

$34.

50-$

37.5

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ringf

ield

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ingt

on11

0,04

775

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69%

0%

6400

Beu

lah

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ffice

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ulah

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iver

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Q13

$32.

00 F

SSp

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ingt

on35

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7,53

123

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1439

9 Pe

nros

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ace

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eal E

stat

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anag

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2Q

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9.50

FS

Rou

te 2

8 So

uth

104,

000

73,0

0070

%25

%

4801

Sto

necr

oft B

oule

vard

Duk

e R

ealty

Del

iver

ed 2

Q13

N/A

Rou

te 2

8 So

uth

254,

578

00%

100%

Tota

l 1

,922

,260

1

,164

,814

61

%39

%

2012

Del

iver

ies

BU

ILD

ING

AD

DR

ESS

OW

NER

/DEV

ELO

PER

STAT

US

REN

TAL

RAT

ESU

BM

ARK

ETR

ENTA

BLE

B

UIL

DIN

G A

REA

NEW

SPA

CE

AVAI

LAB

LEVA

CAN

CY

RAT

E (A

S O

F C

UR

REN

T Q

UAR

TER

)*PE

RC

ENT

LEAS

ED

UPO

N D

ELIV

ERY

1776

Wils

on B

oule

vard

Skan

ska

Del

iver

ed 4

Q12

$46.

00-$

47.0

0 FS

Ros

slyn

138,

535

11,4

408%

82%

675

Nor

Documents

Dtz Va Survey 2q15