8/3/2019 Northern VA AMERICAS Market Beat Industrial Q42011

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ECONOMIC OVERVIEW

The economy of Virginia seems to be following

the national trend of slow recovery. The

unemployment rate dropped in 2011, down to

4.2% from 5.3% at the same time last year.

Roughly 13,000 jobs were added to Virginias

work force throughout the year. The biggest gains were in the

Education & Health Services as well as the Professional & Business

Services sector, increasing 1.44 % and 1.42%, respectfully, since last

year. Manufacturing also rose slightly, up 0.7% since last year.

INDICATORS POINT TO SLOW BUT STEADY MARKETThe industrial markets in Northern Virginia remain slow, but

indicators continue to improve slowly. Overall vacancy continued its

downward trend, falling 0.7 percentage points throughout 2011,

ending the fourth quarter at 14.4%. Asking rental rates climbed

slightly throughout the year. At the end of the fourth quarter, the

overall direct net asking rental rate was $9.98 per square foot (psf), a

slight rise of $0.07 psf since the end of 2010.

There were several bright spots throughout the region during the

year that helped boost the health of the overall market. The Flex

sector specifically showed significant improvement throughout 2011.

The overall vacancy rate for the Flex market dropped 1.9 percentage

points from last year down to 16.0%. Additionally, asking rental ratesticked up slightly throughout the year, up $0.16 psf from 2010.

Leasing activity for flex buildings also rose in 2011. With a total of

439,210 sf leased, this was a 2.8% increase from last year.

OVERALL LEASING ACTIVITY SLOWS

Despite an increase in flex building leasing activity, overall leasing

activity was generally slower than 2010. Total leasing activity steadily

declined throughout the year, with the fourth quarter having the

lowest square feet leased at 243,968 sf. Total 2011 leasing activity

ended at 1,298,703 sf, an 11.1% decline from total 2010 figures. The

largest deal of the year the State Departments prelease of 212,500 sf

at 10470 Furnace Road, a project that has yet to break ground. 2011

only saw two other new deals over 100,000 sf. Amazon, Inc. took137,015 sf at Dulles Summit Court and Chantilly BioPharma leased

129,552 sf in two buildings on Concorde Parkway.

Despite the slower leasing, absorption remained significantly positive

this year. A marked change from the previous year, 2011 saw a total

overall absorption of 563,426 sf. This was led by a strong

performance in the flex market at 368,238 sf. With the shortage of

new leasing activity, yet positive absorption, the signs point to a

market that still favors tenants. 2011 was also marked by the sale of

WRITs industrial portfolio. The entire portfolio was approximately

3.1 million square feet (msf) and was purchased in three phases for

approximately $330 million by a joint venture between Area Property

Partners and Adler Realty Services. Of the 56 buildings that made upthe portfolio, Northern Virginia held 40, totaling almost 2.1 msf.

OUTLOOK

In Northern Virginia, several upcoming changes will serve to boost

the economy as well and cause considerable improvements in the

Industrial sector. The BRAC initiative will finalize its move of several

Department of Defense tenants outside the Beltway. Fairfax County

alone stands to gain 20,000 jobs as a result. Large tenants such as the

FBI and the National Geospatial Intelligence Agency (NGA) will

attract new government contractor activity in the Route 28 and

Springfield regions especially. Additionally, the Dulles Metro

extension is a significant improvement in the regions infrastructure

that will likely lead to a boost in construction and leasing activity.Despite a relatively slow year, and a potentially difficult 2012, the

Northern Virginia Industrial market seems poised for a bright long-

term future.

STATS ON THE GO

4Q10 4Q11 Y-O-Y

CHANGE

12 MONTH

FORECAST

Overall Vacancy 15.1% 14.4% -0.7pp

Direct Asking Rents (psf/yr) $9.91 $9.98 0.7%

YTD Leasing Activity (sf) 1,461,218 1,298,703 -11.1%

UNDER CONSTRUCTION VS. COMPLETIONS

OVERALL RENTAL VS. OVERALL VACANCY RATES

0

0.5

1

1.5

2

2007 2008 2009 2010 2011 YTD

msf

UNDER CONSTRUCTION COMPLETIONS

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

2007 2008 2009 2010 4Q11

psf/yr

OVERALL NET RENTAL RATE OVERALL VACANCY RATE

Q4 2011NORTHERN VIRGINIA

INDUSTRIAL SNAPSHOTMARKETBEAT

A Cushman & Wakefield Research Publication

8/3/2019 Northern VA AMERICAS Market Beat Industrial Q42011

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Cushman & Wakefield of Virginia, Inc.1600 Tysons Boulevard, Suite 400McLean, VA 22102

www.cushmanwakefield.com/knowledge

The market terms and definitions in this report are based on NAIOP standards.

No warranty or representation, express or implied, is made to the accuracy or completeness of theinformation contained herein, and same is submitted s ubject to errors, omissions, change of price, rental orother conditions, withdrawal without notice, and to any special listing conditions imposed by our principals.

2012 Cushman & Wakefield, Inc. All rights reserved.

NORTHERN VIRGINIA

SUBMARKET INVENTORY OVERALL

VACANCY

RATE

YTD LEASING

ACTIVITY

YTD USER

SALES

ACTIVITY

UNDER

CONSTRUCTION

YTD

CONSTRUCTION

COMPLETIONS

YTD DIRECT

NET ABSORPTION

YTD OVERALL

NET ABSORPTION

DIRECT WEIGHT

AVERAGE

RENTAL R

HT MF OS W

Springfield/ I-95 17,913,088 13.1% 327,386 0 0 0 (36,025) 16,096 N/A N/A $14.21 $8.

Rt. 28 South 9,510,380 14.9% 319,977 0 0 0 240,188 282,776 N/A N/A $11.81 $8.

FAIRFAXCOUNTY

27,423,468 13.7% 647,363 0 0 0 204,163 298,872 N/A N/A $13.18 $8.

Rt. 28 North 14,585,270 15.0% 438,840 0 350,447 227,938 260,436 168,955 N/A N/A $9.68 $8.

LOUDOUNCOUNTY

14,585,270 15.0% 438,840 0 350,447 227,938 260,436 168,955 N/A N/A $9.68 $8.

Manassas 3,098,934 17.8% 0 0 0 124,800 95,599 95,599 N/A N/A $11.50 $7.

PRINCE WILLIAMCOUNTY

3,098,934 17.8% 0 0 0 124,800 95,599 95,599 N/A N/A $11.50 $7.

TOTALS** 45,107,672 14.4% 1,086,203 0 350,447 352,738 560,198 563,426 N/A N/A $11.67 $8.5

* RENTAL RATES REFLECT ASKING $PSF/YEAR HT= HIGH TECH MF = MANUFACTURING OS = OFFICE SERVICE W/D = WAREHOUSE/DISTRIBUTION

MARKET HIGHLIGHTS

SIGNIFICANT 2011 LEASE TRANSACTIONS SUBMARKET TENANT/BUYER PROPERTY TYPE SQUARE

10470 Furnace Rd (proposed) Springfield/I-95 GSA- State Department Warehouse/Distribution 212,5

22630 Dulles Summit Ct Rt. 28 North Amazon, Inc Warehouse/Distribution 137,0

3701 & 3725 Concorde Parkway Rt. 28 South Chantilly Bio-Pharma Flex 129,5

3900 Stonecroft Blvd* Rt. 28 South GTSI Warehouse/Distribution 96,1

10400 Furnace Road Springfield/ I-95 GSA Flex 54,0

8211 Terminal Road Springfield/ I-95 DRS Incorporated Flex 45,0

45065 Old Ox Road* Rt. 28 North Sears Logistical Services Warehouse/Distribution 41,9

SIGNIFICANT 2011 SALE TRANSACTIONS SUBMARKET BUYER PURCHASE PRICE SQUARE

WRIT Portfolio N/AArea Property Partners & AdlerRealty Services

$232,468,212 2,059,0

7215 Lockport Place Springfield/ I-95 GKE, LLC $3,325,000 28,0

114 Powers Court Rt. 28 North 114 Powers Court, LLC $2,475,000 38,4

SIGNIFICANT 2011 CONSTRUCTIONCOMPLETIONS

SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE

22640 Davis Drive Rt. 28 North Rockwell Collins 4Q11 178,1

10231 Harry J. Parrish Drive Manassas American Tire Distributers 2Q11 124,8

23550 Pebble Run Place Rt. 28 North N/A 4Q11 49,7

SIGNIFICANT PROJECTS UNDER

CONSTRUCTION

SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE

45200 Prologis Plz- Building 7 Rt. 28 North N/A 2Q12 82,4

45190 Prologis Plz- Building 6 Rt. 28 North N/A 2Q12 88,7

Dulles Summit Ct- Building C Rt. 28 North N/A 1Q12 103,4

Dulles Summit Ct- Building E Rt. 28 North N/A 1Q12 75,8

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS