My classification of Herndon, Fairfax Center, and Merrifield as Fairfax County’s 2nd Tier submarkets is more of a statement about the 800-pound gorillas, Tysons Corner and Reston, than it is about them. Tysons Corner is one of the largest office submarkets in the nation (30,100,719 SF) and is the business center of Northern Virginia. Reston, the nation’s first planned community, isn’t far behind with 20,414,245 SF and over 1.6 million under construction. Reston Town Center commands some of the highest rents in the entire Commonwealth and Dulles International Airport is just down the road. Taken together, these two giants consume most of the office demand in Northern Virginia.
Whether a matter of perception (Herndon), lack of direct access to Metro stations (Fairfax Center), or delayed development (Merrifield), these submarkets are often an afterthought for tenants when considering where to locate their business; however, with more than 16.5 million square feet of 4 & 5 Star properties between them, these submarkets offer both quality and value with average rents well below their tier-1 counterparts.
Herndon
- RBA: 12,760,803 SF
- Vacancy Rate: 16.8%
- 12 Month Net Absorption: (253,000 SF)
- Average Asking Rent: $30.76
- 12 Month Rent Growth: 2.1%
Herndon is an interesting submarket because of the diversity of its sub-submarkets. From the one-level/flex-style office properties along Herndon Pkwy to the Class A (4 & 5 Star) properties along the Dulles Toll Road (Sunrise Valley Dr), Herndon has options for every type of tenant and budget. Historically, Herndon has suffered from a negative name perception with many tenants preferring a Reston address, but things are poised to change with the Silver Line Metro’s expansion.
With nearly 2 million square feet within ½ mile of the future Metro stations with more proposed, Herndon has the potential to become one of the hottest submarkets in the region. Fundamentals in the submarket are a bit of an anomaly. Absorption was strong in the 1st quarter of 2019, due mostly to smaller leases, but taken as a whole the past 3 years saw negative net absorption of 755,000 SF. Still rent growth in Herndon is among the strongest in the metro area; rivaling Tysons. Herndon’s 3 Star properties were the primary drivers behind the rent growth at 2.6% versus only 1% for 4 & 5 Star properties. Despite this, Herndon’s rents are below the metro average and the submarket presents a huge opportunity for tenants that want to lock in lower rates before the 2nd phase of the Silver Line delivers.
Fairfax Center
- RBA: 7,614,250 SF
- Vacancy Rate: 24%
- 12 Month Net Absorption: 76,500 SF
- Average Asking Rent: $29.40
- 12 Month Rent Growth: 2.4%
Merrifield
- RBA: 10,226,227 SF
- Vacancy Rate: 14.1%
- 12 Month Net Absorption: (21,000 SF)
- Average Asking Rent: $32.04
- 12 Month Rent Growth: 2.6%