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Monday, November 21, 2011

Silver lining along the Silver Line?

Reston-Herndon-Dulles Toll Road Submarket - by Dan Gonzalez

The biggest news to hit this submarket is that California-based Bechtel Corp. will move 625 jobs from Frederick, Md. to Reston Town Center, where it will occupy 200,000 square feet at 12011 and 12021 Sunset Hills Road. The move will occur during the third quarter of 2012 to the buildings that were developed by Boston Properties in 1999.

Overall, as of the end of the third quarter, office rental activity in the Reston-Herndon submarket (along the Dulles Toll Road) of the Washington, DC. region remained sluggish though. This trend probably will continue into the first part of 2012. What activity there was, occurred through renewals and relocation.

According to the 3Q Avison Young Washington Report, the Reston-Herndon submarket has a vacancy rate of 14.49 percent; year-to-date net absorption of 247,000 square feet; and an average rental rate of $28.

While most leasing activity for this submarket was small to medium sized deals, in addition to the Bechtel announcement, ManTech Corporation signed a lease for a large consolidation of 109,736 square feet at 2251Corporate Park Drive in Herndon. The company will be combining several locations, which has been a recent trend among government contractors --- including Qinteiq, Deltek, and EADS North America --- to realize certain efficiencies and take advantage of current favorable rental rates. ManTech will be backfilling space vacated by Scitor Corporation, which is moving to 12010 Sunset Hills Road in early 2012.

The construction of the Silver Line Metrorail extension to Dulles International Airport is creating demand for mixed-use projects such as Dulles World Center, which will have its own Metro stop. At build out, it will be the same size as Reston Town Center and have 4.1 million square feet of office space in eleven buildings; 400,000 square feet of retail space; 1,300 residential units; and a 350-room full service hotel.

Uncertainty for 2012 is still the theme, but perhaps there are some silver linings starting to cling to the clouds we have been accustomed to seeing.

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