Arlington County’s prime location, public transportation system and relatively affordable office lease rates will shelter it from the Washington area’s predicted swell in office vacancy rates over the next two years, according to area experts.
Arlington’s office vacancy rate is running at 10 percent, compared with 11.2 percent for Northern Virginia in general and 7 percent for the District, according to Bethesda real estate research firm CoStar Group.
Office vacancy rates are predicted to rise as developers open up 18.5 million square feet of office space over the next two years, just as a slowing economy has made companies reluctant to expand.
“Crystal City is a long-established market with quick and easy access to the city and one Metro stop from the Pentagon,” said Steven Hubberman, executive managing director of tenant-representative firm Studley. “The Rosslyn-Ballston corridor has quick access to the city for business and government and quick access to the Pentagon and contractors.”
Existing and new companies in the region historically have absorbed about 6 million square feet of new office space a year, but that rate is running closer to 4.5 million square feet now, said Stephen Fuller, head of the George Mason Center for Regional Analysis.
That means the area will have about twice as much office space opening as it will need, sending vacancy rates up a few percentage points, Fuller and other analysts predicted.
“Fairfax is going to feel the brunt of this,” he said, adding that half of the 7 million square feet ofNorthern Virginia office space under construction is in Fairfax County. “Herndon and Reston and Route 28 are going to be much worse off than Arlington.”
Arlington County is due for 2 million square feet of new office and retail space over the next two years, said Arlington Economic Development spokeswoman Karen Vasquez.
“We’re not worried as far as a lot of the new commercial office space coming down the line,” Vasquez said. “A lot of it is happening in Fairfax, and Arlington has always been very sought after for a lot of reasons, most of which is its location.”
The county’s commercial real estate market also could be affected by a proposed increase in the commercial real estate tax, which would be used to fund transportation projects. The county board was scheduled to vote Tuesday night on a proposal to amend county rules to allow for a future commercial tax increase.
