Developers of hybrid office-industrial buildings for high-technology companies in Fairfax County have outrun their market and are being forced to slow down, according to county and industry officials.
Despite record leasing of this specialized low-rise space last year, "Developers are delaying construction of new projects until absorption of available space suggests renewed market opportunities," according to a recently released report by the Fairfax County Economic Development Authority (EDA).
EDA official Theda Parrish said hybrid space refers to high technology, research and development, warehouse, light manufacturing and assembly facilities. The term is used to describe many of the low-rise buildings along the Dulles Road corridor in western Fairfax.
The buildings attract potential users because they are basically shells, providing low-cost versatility that permits tenants to design interiors to meet individual needs. Mixing office, R&D and manufacturing use in the same building is particularly appealing to small high-tech companies in which employes may play more than one role.
"A hybrid is never over 24 feet in height, never more than two stories. A lot of them make nice office buildings," said Steve Mields of the EDA. He said those buildings don't make the same kind of office buildings that are found at Tysons Corner. But the main market for such structure are tenants who need to combine office buildings with two-story storage or warehouse operations, he explained. He said hybrid buildings also give the tenant the option to put in lofts to accommodate office space at a lower rate than conventional buildings.
However, current demands for such space is down slightly, and more than 2.4 million square feet is available for lease. The EDA report said the market for such space is "strong as leasing activity proceeds at near-record levels," but even this level of leasing has not been able to absorb the 1.3 million square feet of new space recently brought on line and available.
Leasing of hybrid space hit a record 2 million square feet in 1984, and although EDA officials predict leasing will catch up with the market, current available space "represents a 14-month supply based on current absorption rates," the report said.
According to EDA, 1.1 million square feet of hybrid space is under construction, compared with 2.3 square million feet during the previous six-month reporting period ended last fall.
Approximately 1.8 million square feet is scheduded for start-up and delivery by the end of 1986, the report said.
Monthly absorption rates during the first months of 1985 are down from the summer months of 1984, the last comparable reporting period.
New space coming on line is renting from $4.25 to $13.25 a square foot,compared with rates for existing older buildings ranging from $4.50 to $7 a square foot.
Of the 1.1 million square feet under construction in 20 buildings, 64,200 square feet already is leased at rates from $4.75 to $9 a square foot, the report said. Approximately 65 percent of that space is in the Dulles/Reston area.
Charles G. Gulledge, chairman of the EDA Commission, said the Dulles/Reston area accounted for the majority of leasing and construction of hybrid space in the county in the last six months. He said the reasons for the popularity of that area are the opening of the Dulles toll road and the announcement of the state's intention to build the Center for Innovative Technology (CIT) near Washington Dulles International Airport.
In the Dulles/Chantilly area, 512,317 square feet of hybrid space was recently completed. Another 709,350 feet is under construction, and 523,000 feet is planned.
However, the Dulles area soon may be getting strong competition in the hybrid market: Developers are hoping to build hybrid structures in the Springfield and Newington areas in the southern part of the county.
In the Newington area, more than 567,570 square feet in hybrid construction is planned, which exceeds plans for the Dulles/Chantilly area. More than 360,000 square feet was completed recently in the Newington area.
In the Shirley/Springfield area, more than 191,000 square feet was finished recently, but a whopping 515,000 feet is planned.
In Herndon, 185,070 square feet was finished recently. No new space is being built now, but 174,000 square feet are planned, according to EDA statistics.
Only 88,360 square feet of new hybrid space hit the market in Reston, and no new space is under construction or planned, according to EDA figures.