The Reston Office Market, Year-end 2012

Cassidy-Turley Commercial Real Estate Services is one of the region's principal realtors of office space.  It also provides timely analyses and forecasts for the region's office market (unlike the County's official semi-annual reports from FCEDA which are published five months or so after the close of the reporting period).   It has recently published its analysis of the Northern Virginia market for the last year.  Here are some key takeaways from the report:

• The office market in northern Virginia (NoVa) is in worse shape now than a year ago with net absorption (the net amount leased over the period) in decline and the net vacancy rate increasing and well above the historical average. 

• The office vacancy rate in Reston was 16.0% in the fourth quarter of the year, slightly below the regional vacancy rate of 16.5%, but well above the historical regional average.
• Net absorption in Reston in the fourth quarter was minus 70,000 gross square feet (GSF).  Net absorption for the year was a positive 31,000 GSF--or one percent of the available vacant space and two-tenths of one percent of Reston's total office space inventory.
• At $28.10 per square foot, the average asking rent in Reston is 10.5% below the NoVa regional average rental asking price of $31.40/gsf.
• The forecast for the NoVa office market is murky:
• "The outlook remains clouded by key fiscal policy decisions that still need to be made. We assume the sequestration cuts will be scaled back significantly, but until the “grand bargain” is signed into law, the uncertainty will suppress growth in NoVa for most of 2013.
• Outside of the fiscal drag, NoVa’s private sector was surprisingly resilient in 2012, adding 18,000 private sector jobs. This suggests there is upside; assuming clarity on the federal budget comes sooner rather than later.
• Outside of the highest quality Class A (prime) space, expect effective rents to turn slightly negative for the bulk of 2013, falling by 1-3%."