ARLINGTON, VA—There are only seven office buildings proposed as ground-up new construction in the Rosslyn Ballston Corridor, according to a new research alert by JLL—quite the change from the period 2000 to through 2020 when 33 office buildings delivered in the submarket.
And with the Corridor's ground-up office pipeline already sparse, the total could shrink further if developers switch permitted uses to multifamily to meet strong residential demand or rezone the project as mixed-use to achieve a smaller prelease needed to kick-off construction for the office component, writes Senior Research Analyst Robert Sapunor. He gives the example of 4040 Wilson, which was rezoned from a planned 419,830-square foot office building to a mixed-use building with 191,300 square feet of office and 244 residential units. “The project, which delivers in 2020, kicked off after AvalonBay signed a 73,242-square foot prelease,” he writes.
In short, the development pipeline is shifting outside of the Beltway, especially along the Silver Line. “For example, Tysons and the RB Corridor both comprise 22 million square feet of existing inventory today, but an additional 22 million square feet is proposed for Tysons, versus only 2.9 million square feet for Rosslyn-Ballston,” Sapunor writes. “Meanwhile, the Toll Road has 13.4 million square feet of proposed office, adding to the 26 million square feet of existing inventory today.”
Pricing for New Construction
One result of this shift, Sapunor also notes, is that pricing for new construction along the Silver Line from Rosslyn to the Toll Road will look increasingly similar. This will be driven by elevated land and construction costs and the fact that tenants seeking new construction will have multiple submarkets from which to choose.
Rosslyn will maintain a premium over the broader market, with rents expected to be in the upper-$60s per square foot + FS for the next wave of construction, he concludes. However pricing along the rest of the Silver Line corridor out to the Toll Road will be in the upper-$50s to low-$60s per square foot + FS.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
