How is the Tech Sector Affecting Northern Virginia
The tech industry continues to grow and big time! I’m not talking about the big headliners you see across the news or read in the Wall Street Journal or Wired magazine about this IPO here or that multi-billion dollar valuation there or another unicorn popping up. I am talking about companies you may not have heard of, that may be in cyber-security or in tech or in an older industry that they are now disrupting with their business model, innovation, and technology and what do they share in common…they are moving and expanding into Northern Virginia!
All of this growth is driving demand and leasing activity in Northern Virginia. After a slow 4th quarter in 2016 the leasing pace in Northern Virginia fell 13% below the 5 year average. There were three core submarkets that dominated the activity in the region — the Toll Road area, Tysons, and the Rosslyn-Ballston Corridor. These three submarkets account for less than half of the total inventory but they contributed over 55% of the total lease space in 2016. The market is most active in the $30 — $40 per sq. ft. price range with 75% of all leasing being done at prices above $31.75 per sq. ft.
Over 50% of the deals done were less than 10,000 sq. ft., followed by over 23% of them being in the 10,000–25,000 sq. ft. range. Now, this is the amazing part in 2015 the tech sector accounted for 7% of all leasing activity and in 2016 it went up from 7% to 22% — that is over 3X growth! With Tech firms taking over 400,000 sq. ft. of demand and over 80% of the volume being in Class A office product.
The Governor of Virginia Terry McAuliffe continues to aggressively recruit tech firms and jobs into the state — Thank you Governor McAuliffe!
Your Authority in Commercial Real Estate,
Otto Sevilla is an advisor, investor, and entrepreneur. He has been a dynamic participant in the real estate and finance industry for over 13 years. His knowledge of site selection, leasing, development, investment, acquisition, and acumen in negotiating complex commercial real estate transactions have distinguished him in the field. He has advised local, national, and international companies as well as property owners alike on developing and executing their strategic real estate plans. He has been involved with over $400 million dollars worth of assets and successfully represents more than 1 million square feet of commercial property space.