Northern Virginia’s tier-3 submarkets are comprised of Springfield/Burke, Annandale, and the Woodbridge/I-95 Corridor. While not the smallest submarkets in the region, I consider them 3rd tier because of their general in lack of appeal. When discussing potential areas to locate their business tenants rarely, if ever, mention these submarkets. Even below metro average rents are insufficient to create any meaningful demand.
Springfield/Burke
- RBA: 7,104,623 SF
- Vacancy Rate: 17.0%
- 12 Month Net Absorption: 123,000 SF
- Average Asking Rent: $28.12
- 12 Month Rent Growth: 0.2%
A seemingly inexplicable supply wave from 2011-2013 pushed vacancies in the submarket above 20% and while positive absorption in the past few years has led to a decline in the vacancy rate, at 17% it is still well above the metro average. About 1/3 of Springfield’s inventory is comprised of 4 & 5 Star properties. What’s interesting is that these are the worst performing properties in the submarket with more than 36% of the inventory sitting vacant. Springfield does have good access to the Capitol Beltway and I-395, not to mention the Franconia-Springfield Metro station (Blue Line); however, these nodes are used more by commuters traveling into DC as opposed to into the submarket, itself. The biggest boon for Springfield/Burke in recent years is the announcement by the GSA to relocate its TSA headquarters to the submarket along with its 3,400 employees. This should have a positive impact on fundamentals as federal contractors are attracted to the submarket by low rents and proximity to the TSA. Boston Properties is building a 625,000 SF property adjacent to the Franconia-Springfield Metro station for the agency’s 15-year lease.
Woodbridge/I-95 Corridor
- RBA: 3,593,313 SF
- Vacancy Rate: 7.3%
- 12 Month Net Absorption: 48,900 SF
- Average Asking Rent: $25.47
- 12 Month Rent Growth: 1.7%
Annandale
- RBA: 2,245,617 SF
- Vacancy Rate: 11.9%
- 12 Month Net Absorption: 23,300 SF
- Average Asking Rent: $25.18
- 12 Month Rent Growth: 0.1%