Q4 2020 Northern Virginia Market Report

Pandemic-induced uncertainty continued to affect the Northern Virginia market fundamentals of the final quarter of 2020, registering -677,170 SF in occupancy losses. Though leasing increased from third-quarter activity, total leasing activity remains down 45% from year-ago levels as activity and demand continue to fall across all building classes. Though the fourth quarter delivered no new buildings, Northern Virginia’s development pipeline remains robust, as Reston and National Landing developments continue on schedule. The lack of deliveries follows a similar trend to other national markets, as construction has slowed due to pandemic-related effects in markets. Average direct rental rates fell $0.77/SF from year-ago levels, marking the first yearly decrease in average asking rates since 2014. Effective rental rate (factoring in concessions) declines have continued throughout primary submarkets in Northern Virginia. However, several submarkets are expected to quickly rebound after pandemic-induced uncertainty begins to fade.