Surge in Construction Adds Up to Greater Optimism
Fairfax County has twice as much office space under construction as last year, a sign developers are betting on a turnaround.
They may be right.
"The market is really coming back," said Sandy Paul, mid-Atlantic research director for Delta Associates, an Alexandria-based real estate consulting firm. "Job growth has come in particular from hiring by government contractors. And developers are responding in kind."
In the second quarter, 1.2 million square feet were under construction, up from around 600,000 a year earlier, said CoStar Group Inc., a Bethesda commercial real estate information service.
One recently completed project, in Reston, is the new headquarters for SLM Corp., an education lending firm better known as Sallie Mae. The company plans to move into the 240,000-square-foot building Aug. 23.
Yet the office vacancy rate in Fairfax, home to much of the region's technology business, is still the highest in the Washington region at 15.8 percent, though not as high as it was last year at 18.9 percent.
"The vacancy rate rose considerably after the tech wreck of 2001," Paul said. "A lot of tenants either went under or simply found they didn't need the kind of space they had anticipated. Well, the market is coming back slowly but surely. "
Vacancies have kept rents from rising. The average asking price is $23.13 per square foot this year, down from $23.64 in 2003.
-- Bill Brubaker