Reston Spring

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Thursday, May 19, 2016

Washington’s sputtering office market has developers scrambling, WaPo, May 19, 2016

This Washington Post article by Jonathan O'Connell highlights the erosion of the suburban office market as many CRE firms look elsewhere to grow.  The "money line" in the article appears about half way through it:
“People are just not taking as much office space anymore,” (Savills Studley's Thomas) Fulcher said. “Even if companies are growing, they are not taking as much space.”
So rather than continue to try to lease the buildings, some of Washington’s most tenured firms are selling them off or moving on to greener pastures. . . .
So what is the situation now:
Record-high vacancies have become the new normal as employers curb their appetite for space and shift their attention to more urban locales. Some office buildings have been empty so long that several of the region’s stalwart development firms are tearing up their plans and selling off large chunks of property at bargain-basement prices in favor of pricier, more centrally located buildings.
Buildings began to empty during the recession, and they took another punch when the government shut down and federal spending slowed. The local economy began to pick up last year, but the recovery has been spotty, with construction cranes dotting the Washington skyline but absent from many parts of the suburbs, particularly areas far from mass transit. . .
The pain for Washington building owners is most acute in the suburbs, where vacancy rates have been on the rise for five years in a row and are about double that of the District. By one count, there are 151 spaces of 50,000 square feet or more available in Northern Virginia alone.
But downtown has not been spared; . . .
We have explained this evolving situation to Fairfax County Board Chairman Sharon Bulova, the rest of the Board of Supervisors, and the Planning Commission in numerous letters, but they all still are planning hundreds of millions of additional square feet of office space across the county, including some areas--such as the Richmond Highway Community Revitalization District--that do not even have access to Metro.  We received one rather pathetic response from the County Planning Staff that defended the County's far outdated standard of 300 gross square feet of office space per worker (reality is less than 200 SF/worker and as low as 100 SF/worker) and the outrageous County-sponsored taxpayer-paid office employment forecasts of GMU's Center for Regional Analysis that drove Tysons' and Reston's master planning efforts.  The same also occurred in Reston's Lake Anne redevelopment plan that has sense folded like a cheap suit.  It has happened in virtually every CRD, CBC, CRA, and TSA in the County as County leaders attempt to build and tax their way out of their poor budget management record.

Now the huge and intentional planning development errors are about to be augmented by an equally faulty one-size-fits-all zoning ordinance amendment (ZOA) that will irrevocably permit FAR 5 development in more than 20 County localities, including Reston's TSAs and Richmond Highway CRD.  That ZOA, left unamended, could permit tens of millions of additional square feet of office space in EACH locality--and that doesn't count Tysons which is in a category all its own. 

It is astounding to us at Reston 20/20 that County officials continue pursuing a policy course that will lead to more vacant office buildings, more congestion and pollution, and greater taxes on the County's residents in the face of overwhelming evidence that the office market has stagnated for the foreseeable future and the repeated judgments of experts in the CRE industry and amateurs like ourselves that this is the case. 

The County Emperor really is wearing no clothes, but none of its sycophants is willing to drive that point home.  In fact, developers keep demanding more density.  The farther we go, the worse the situation will become.

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