The glut of empty office space that plagued the District of Columbia two years ago is alive and growing in the Washington suburbs, particularly in Northern Virginia.
Fairfax County alone will have 8.8 million square feet of empty office space this year, more than the combined markets of downtown Philadelphia and Baltimore, according to real estate industry forecasts for 1985. Alexandria, in a smaller area, will have 3.6 million square feet for lease. These figures include space in existing buildings and in projects that will be completed this year.
Throughout the suburbs, developers will complete about 13 million square feet of offices and space for high-tech companies in new buildings this year, according to Kenneth L. McVearry, a vice president of Coldwell Banker Commercial Real Estate Services. He predicted that less than half -- 6 million square feet -- would be leased in 1985. About 3.7 million square feet were absorbed in 1984, he added.
At least 10 percent of all 57 million square feet of offices that now exist in the Washington suburbs is empty, McVearry said.
In Fairfax County, only half of the available offices had tenants last year, according to another commercial real estate expert.
The construction boom in Northern Virginia and, to a lesser extent, in the Maryland suburbs, reflects a national trend. The suburbs of some cities, including Los Angeles and Atlanta, have four times more office space than the downtown areas.
The high vacancy rates also are being reported by other cities, but are "not deterring future development," said Edward R. Dale, Coldwell Banker senior vice president. " . . . Developers are building and planning many new projects in many U.S. cities and 1986, '87 and '88 will see enormous increases in supply."
In the Washington area, Northern Virginia "has become a phenomenon in the last two years, with development equaling and then surpassing" the downtown market in the District of Columbia, according to Stephen E. Perkins, vice president of the Jackson-Cross Co. in Washington.
Perkins predicted that "Northern Virginia will continue to grow at an incredible rate" in 1985. "We don't even see a slowdown in the near future."
As a result, "we think the Virginia market will begin seeing the ups and downs that excessive building causes in an established market," Perkins said. Tysons Corner, where the air is thick with construction cranes, "is a good example of what some might call an overbuilt market, while others might say it is underleased."
Competition for tenants to fillNorthern Virginia's vast supply of office space probably will lead to offers of generous concessions by building owners. Perkins said the high vacancy rate "could exclude and eliminate parking charges for office tenants altogether."
The exception to the rule in the Virginia suburbs is Crystal City, where there is an office vacancy rate of less than 1 percent. Ninety percent of Crystal City's 7 million square feet of space is occupied by defense contractors, Perkins said.
Much of Montgomery County's construction is taking place around the Bethesda Metro station. Nearly 1 million square feet of office space is being built in several buildings.
"Bethesda . . . was an area that consumed annually up until 1978 less than 100,000 square feet," said C. Duke Brannock, head of the Jackson-Cross office in Washington. "We all hope it works well out there because that's just a ton of space to dump in that market."
Throughout Montgomery County, 3.6 million square feet of offices will be available this year. Slightly more than 100,000 square feet is already leased. Montgomery building owners leased 1.4 million square feet of the total 2.5 million that was empty in 1984, Brannock said.
Prince George's County too has had a "tremendous surge" in commercial building. Tenants leased nearly 700,000 of the 1.8 million square feet available in 1984. With new construction scheduled for 1985, the county will have about 1.5 million square feet of space available this year. This includes offices and industrial park space as well as "the high rises that are popping up around the Beltway," Brannock said.
Rents vary widely in the suburbs, with Virginia office space leasing at $15 to $24 per square foot, depending on the location and age of of the building, cost of land and the amount of space a tenant needs, Perkins said.
Offices in Arlington command the highest rents in the suburbs, with existing space averaging from $19 to $22 per square foot, and the asking price for new buldings is expected to be $24 per square foot, Brannock said. The best bargains, in terms of price, are in the Maryland suburbs, where offices rent for about $18 per square foot in Montgomery County and $16 in Prince George's in existing buildings. Owners are expected to ask $22 to $24 per square foot for space in Montgomery buildings now under construction and $17 in Prince George's, according to Brannock.
The District set a record last year with 3.1 million square feet, well over the annual absorption rate of 2.5 million square feet in past years.
The city began 1984 with 6 million square feet empty, 3 million of it in new buildings constructed in 1983 and not leased. This year began with 1.5 million square feet of empty space left over. When buildings erected in 1985 are added, the District will have 5.6 million square feet of officies will be available, Brannock said.
He predicted that 4 million square feet will be leased up this year, which would set another record.
Even if this figure is reached, about 1.6 million square feet of empty space will carry over into 1986, that when added to new construction, will "will leave us with 7 million square feet on the market. That's a lot of square feet," Brannock said.