Posted on August 16, 2021 by Eric Wilmot

Northern Virginia Office Market 2020

In Northern Virginia, it’s become quite clear that the pandemic hasn’t scared the residents away. With NOVA’s Class A properties absorbing more than 388,000 square feet in the second quarter, quality office space remains in high demand. These tenants are even looking for spaces with upscale amenities to suit their long-term needs.

Though tenant movement was limited due to COVID-19 restrictions, the demand for office space in Northern Virginia remained strong. In fact, the largest lease of the quarter was signed by Microsoft, and two new Reston buildings were completed near the end of the second quarter in 2020, totaling more than 473,000 square feet between the two of them.

The reason NOVA was able to keep its leasing activity so active was that it was awarded relief funds in the form of federal contract dollars due to COVID-19 upwards of $1.5 billion in federal funds. The Small Business Administration in Northern Virginia ($599 million), the Department of Veteran Affairs ($306.8 million) and the Health and Human Services ($92.9 million) are among those that received the most contract volume for COVID-related needs; other categories include IT and medical R&D.

Though Northern Virginia seems well placed in comparison with most other areas around the country, there are several companies that have had to announce layoffs and/or bankruptcy status, including Tysons, Hilton Hotels, Cvent and OneWeb. Alongside these losses are also ones we’ve commonly encountered in the private sector, especially those in the retail and service industries. Fortunately, this economic blow won’t be as severe, thanks to the COVID-related contracts which already add to the booming government sector within Northern Virginia.

Office Market Washington D.C. 2020

For Washington D.C., COVID has really given a wallop to commercial real estate, causing some firms to look for virtual offices within lower-density areas. In fact, if you view the graph below, you’ll see data collected from a recent study conducted by CommercialCafe, which reported that the Washington D.C. area is one of the top markets, with the most suburban office space per square feet, compared with the areas of Dallas-Fort Worth, TX; Bay Area, CA; New Jersey and Chicago, IL.

“We’ve definitely seen a slowdown, comparatively, year over year. We’ve seen a 50% decrease in leasing volume in Q1 and Q2 compared to the five-year average.” – Steven Spartin, Vice Chairman of JLL Washington

D.C. took a hit of near 177,000 square feet because businesses are downsizing to smaller buildings. This means that those who are deadlocked in leases are also incurring significant occupancy losses of 779,000 square feet for larger commercial buildings and 150,000 square feet of loss for those leasing spaces under 10,000 square feet.

Sub-leasers and building managers alike are in a bind as we see a 10% rise in demand for office relocations into these empty spaces. While the overall office vacancy rate in D.C. reaches an all-time high of 15.4%, there are myriad problems causing vacancy rates to rise, including the economic downturn caused by the pandemic, but it’s essentially rising supply and diminishing demand.

While the national trend will be similar in terms of the office market in D.C., tenants will be the ones experiencing the most benefit, with rent abatement being the primary reason for the dramatic dip in net effective rents. The CBRE states that depending on how many tenants continue to work from home, we may not see any rise in office leasing activity until late 2021, which is further dependent on how soon a vaccine is developed.

Now Is The Best Time To Move!

In view of the vast amount of vacancies within Washington D.C. and Northern Virginia, November and December will be the most ideal time to book an office relocation for tenants looking to lease in either of these two hotspots. Washington D.C. is facing less than desirable office vacancies due to the pandemic and a fluctuating supply, and demand for office spaces in Northern Virginia has been saved due to a few federal contracts. Both places have an exorbitant amount of office vacancies, so which will you choose?

Did you know...?

How do I prepare my home and myself for move day?

Your mover may ask you to choose several consecutive days during which your goods may be loaded. The number of days in what is referred to as a "load spread" depends upon the size of your shipment and the time of the year when your shipment is loaded. Remember to try and remain flexible during the busy moving season by allowing for three to five extra days on your load spread to have a better chance of securing a truck and driver to load your shipment.

The customer service representative and/or driver will contact you at least 24 hours prior to load day to let you know the time of arrival. Be sure to let them know of any changes that have taken place that may affect loading day. A good example of changes that may take place is that the street in front of your home is under construction, preventing the large over-the-road truck to get near your home. Or possibly, you haven't completed packing due to an unanticipated event. Contact your mover as soon as possible so that they can send out professional packers to complete the job for you.

Make sure your home is ready for the crew. Move anything off the porch and walkways that may obstruct movement of your goods out of the home. Take doors off the hinges if you know certain items will not fit through. Remove all small throw rugs from traffic areas that could cause the driver or crew to trip or slip.

Offering water, Gatorade, or other soft drinks on hand to the driver and crew, especially on a hot summer day, is an incredible gesture and, although our drivers come prepared, they will be grateful for your thoughtfulness.

Our drivers will prepare the home with runners, door jamb protectors, and railing protectors if applicable. This will help save on the little knocks that may occur during the loading process.