Office Vacancy Rates Rise in Northern VA, MD

WASHINGTON, DC-While the Washington, DC office market remained strong into the first quarter of 2001, the markets in Northern Virginia and Maryland are struggling a bit, according to first quarter statistics released by Cushman & Wakefield.

In Washington, DC, vacancy rates remained virtually unchanged from year-end 2000 rates, at 3.1% direct and 4.2% overall (overall figures include sublease space). “The Washington, DC office market is once again proving itself to be a strong and steady performer and will continue to do so,” says Brian McVay, C&W senior managing director. Four new mostly pre-leased projects in the East End and CBD were finished during the first quarter: 555 11th St. NW, 1399 New York Ave. NW, 1725 I St. NW, and 2099 Pennsylvania Ave. NW, bringing 491,810 sf more office space to the East End and 445,646 sf to the CBD. According to the company, rents are still rising across the city, with class A rents going at $42.93 sf, up from $40.81 at the same time last year. C&W also notes that 4 million sf of new office space is now under construction across the city, with nearly 60% of it already leased.

The picture isn’t quite as rosy in Northern Virginia, where there’s been much talk about the Dulles tech corridor being hard-hit by the economic downturn. Northern Virginia vacancy rates rose to 5.1% direct and 8.2% overall. According to C&W, the overall rate rose more sharply, a fact they attribute to tech-sector companies putting growth plans on hold and to employee layoffs. In the Reston/Herndon submarket, the vacancy rate was 5% direct and 12.2% overall, and in Route 28 South to 8.9% direct and 13.7% overall. However, C&W officials say these vacancy rates are localized–Dulles corridor sublease space makes up only 1.5% of Northern Virginia’s entire office space.