Indeed, lease fundamentals have been improving since 2015, according to Cresa figures. The company recently noted in a market research report that vacancy has been leveling off since 2015 and should continue to gradually decline due to historically low levels of new construction since 2009. Meanwhile, there are currently only four active office projects totaling 202,000 square feet under construction with the 103,000 square foot Greencourt Innovation Center in Rockville set to deliver in Q3 2016, accounting for one half of the total.

But this decline in vacancy hasn't translated well in most deals, Carpenter says. “It has been perplexing that the capital markets and institutional buyers have not wanted to take full advantage of it,” he said.

For instance, Station Ridge has about 48,000 square feet of vacant space but are enough lease prospects for the property that it could be fully occupied within the next six to twelve months, Carpenter said. “Of course not all prospects come to fruition but there is clearly active interest in this building.”

Walkable Suburban Office Markets

One reason suburban office markets have fallen out of favor is that they are viewed as obsolete properties that must be reached by car and have few amenities for workers. Station Ridge does not fall in that category. It is a modern building, Carpenter said — its LEED Gold certification was one of the attractions for Tritower — and it is next to an Amtrak station.

And that is the rub in this particular story: Station Ridge is located next to a train station, not a metro station. This theme of suburban office recovery in Maryland has been gaining traction but largely in the three submarkets that have walkable, CBD-type environments and are close to metro stops — namely, Bethesda, Silver Spring, and Rockville. These submarkets have a collective vacancy rate of 12.4%, according to Cresa, which is more than 10% lower than non-Metro-oriented submarkets that average a 23% vacancy rate.

Tritower is banking on this trend spreading further out.

HANOVER, MD–This summer Boston-based Tritower Financial Group made a statement of sorts about the Washington DC area office market when it acquired a suburban office complex that was 82% leased for $57.5 million, or $217 per square foot. The sale of the property, which closed in June, was Station Ridge, a three-building, 265,354-square foot portfolio located at 7031-7037 Ridge Rd. The seller was Goldman Sachs.

The statement was this: suburban office assets are in play – and not just those close in to the District, such as Bethesda or Silver Spring.

Improving Lease Fundamentals

“Leasing fundamentals in these markets are continuing to improve, not in leaps and bounds granted, but slowly and steadily,” Cushman & Wakefield's Jon Carpenter told GlobeSt.com. Carpenter, along with Nicole Keelty and Graham Savage, represented the seller in this deal.

Indeed, lease fundamentals have been improving since 2015, according to Cresa figures. The company recently noted in a market research report that vacancy has been leveling off since 2015 and should continue to gradually decline due to historically low levels of new construction since 2009. Meanwhile, there are currently only four active office projects totaling 202,000 square feet under construction with the 103,000 square foot Greencourt Innovation Center in Rockville set to deliver in Q3 2016, accounting for one half of the total.

But this decline in vacancy hasn't translated well in most deals, Carpenter says. “It has been perplexing that the capital markets and institutional buyers have not wanted to take full advantage of it,” he said.

For instance, Station Ridge has about 48,000 square feet of vacant space but are enough lease prospects for the property that it could be fully occupied within the next six to twelve months, Carpenter said. “Of course not all prospects come to fruition but there is clearly active interest in this building.”

Walkable Suburban Office Markets

One reason suburban office markets have fallen out of favor is that they are viewed as obsolete properties that must be reached by car and have few amenities for workers. Station Ridge does not fall in that category. It is a modern building, Carpenter said — its LEED Gold certification was one of the attractions for Tritower — and it is next to an Amtrak station.

And that is the rub in this particular story: Station Ridge is located next to a train station, not a metro station. This theme of suburban office recovery in Maryland has been gaining traction but largely in the three submarkets that have walkable, CBD-type environments and are close to metro stops — namely, Bethesda, Silver Spring, and Rockville. These submarkets have a collective vacancy rate of 12.4%, according to Cresa, which is more than 10% lower than non-Metro-oriented submarkets that average a 23% vacancy rate.

Tritower is banking on this trend spreading further out.