- The Washington Times - Thursday, November 6, 2003

The story of Fairfax County’s office market is really best told in two parts.

There is the story of towns along the Dulles Toll Road, where more than one-fifth of office space remains empty and landlords are begging tenants to move in. But there is also the story of the rest of the county, where vacancy rates are on par with some sections of Washington and lower than most parts of suburban Maryland.

A midyear real estate survey released this week by the Fairfax County Economic Development Authority (FCEDA) shows that when it comes to the quality of the county’s office market, there is a lingering gap between Toll Road submarkets, such as Reston, Herndon, Sterling and Tysons Corner, and the rest of the county.

Consider: The vacancy rate in submarkets along the Toll Road was 15 percent at midyear. The rest of the county reported a vacancy rate of 9.23 percent. Overall, the vacancy rate in Fairfax County rose from 10.2 percent to 12.6 percent between midyear 2002 and midyear 2003, largely because of vacancy increases in Toll Road submarkets, which have the most office space.

Those submarkets — which were once home to hundreds of young technology companies — are still dealing with the effects of the collapse of the technology sector. Reston’s midyear office-vacancy rate rose from 13.34 percent last year to 14.2 percent this year. Herndon, meanwhile, maintained a vacancy rate of over 17.76 percent, more than a half-percent higher than midyear 2002, the FCEDA reported.

In other Fairfax County submarkets, vacancy rates dropped. Springfield, for instance, saw its rate fall from 13.22 percent to 10.39 percent. And the vacancy rate in Franconia, which was a whopping 45.1 percent last year, came down to 19.1 percent this year.

But things are not all bad along the Toll Road. The amount of sublet space — space that tenants are not using and put on the market — declined in most areas for the first time in three years. And while vacancy rates remained high in most places, they did not get considerably worse, leading some real estate analysts to believe that the market is ready to improve.

“As vacancy rates have stabilized, the real estate community is cautiously optimistic that the market has finally bottomed out,” FCEDA said in its report. “If leasing activity in the form of expansions begin to occur within the next six months, the overall vacancy rate should begin to decline, albeit at a slow pace.”

Convention Center team chosen

D.C. Mayor Anthony A. Williams has chosen a team led by Houston-based Hines Interests LP to redevelop the old Washington Convention Center site at 900 Ninth St. NW.

The 10-acre parcel will be transformed into a mix of apartments, condominiums, shops, restaurants and a large cultural center. The amount of square feet devoted to each use won’t be determined for at least a year.

Backers of a proposed music museum have expressed interest in locating their project at the site. Producer Quincy Jones and singer Nancy Sinatra announced a fund-raising campaign for the museum about five hours after Mr. Williams announced Hines’ selection yesterday.

Property Lines runs Fridays. Tim Lemke can be reached at tlemke@washingtontimes.com or 202/636-4836.


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