Ballston

Ballston is home to a wide variety of tenants, from government agencies to major public companies to small firms. Large scale move-outs have resulted in negative net absorption, rising vacancy, and anemic rent growth since 2012. Relocations by large government tenants such as the National Science Foundation and U.S. Fish and Wildlife Service have created stiff competition for big-block tenants with 7 properties having 50,000 sf or more available. Other large tenants have staggered lease expiration dates over the next decade, which should help the submarket recover. As is the case in many submarkets, 3-Star properties are disproportionately affected with a 34% vacancy rate in Ballston, alone. There is only one property under construction in Ballston, Shooshan Co’s Liberty Center which will be a mix of office, retail, and apartments. The lack of new construction has eased the rise of vacancy and resulting downward pressure on rental rates.

Ballston is 2^nd only to Rosslyn in total square footage at over 8 million square feet. It currently has the highest vacancy rate in the submarket cluster at 24%. Even with positive net absorption of nearly 50,000 sf in the past 12 months, rents decreased by 3.6% for an average asking rate of $41.10/sf/yr.

Virginia Square

Virginia Square is the smallest submarket in the Rosslyn-Ballston Corridor with only 1.6 million square feet of inventory. Despite positive net absorption in the past 12 months of over 28,000 sf and a vacancy rate of only 11.4%, rent growth was negative at 2.5% resulting in an average asking rate of $37.68/sf/yr.

Clarendon/Courthouse

With 2 metro stops and a heavier concentration of residential and retail than Ballston or Rosslyn, the Clarendon/Courthouse submarket is more often thought of as a play rather than work area. Still, many government agencies and contractors call this submarket home and while large move-outs in 2015 increased vacancy rates and put downward pressure on rental rates, a strong economy in recent years has led to job growth and increased demand. As a result vacancy rates are now below the metro average.

There have been zero deliveries in the past 12 months with no new construction planned for the next 12 months. The last year saw 129,000 sf of negative net absorption with a resulting 2.7% decline in rental rates. Clarendon/Courthouse has nearly 6.3 million square feet of inventory and an average asking rate of $39.82/sf/yr.

Rosslyn

Rossyln is the largest submarket in the RB Corridor with over 10 million square feet of inventory. BRAC and sequestration contributed to massive net absorption in recent years, but Nestle’s decision to move its headquarters to the submarket brought 750 jobs and put a dent in the vacancy rate. There was a significant delivery in the past 12 months of 560,000 sf at Central Place; however, Gartner’s 315,000 sf lease nullified the impact on vacancy.

Rosslyn has the 2^nd highest vacancy rate in the corridor at 21.8%. Despite positive net absorption in the past 12 months, rents saw a decrease of 2.7% and still struggle to find meaningful growth. With 577,000 sf set to deliver in the next 12 months the submarket is vulnerable to continued downward pressure on rates. At $43.78/sf/yr, average rates are the highest in the corridor but still well below those in the East End, CBD, or West End.