Q4 2021 Northern Virginia Market Report
Uncertainty looms as Omicron surge throws a wrench in the return to office plans for tenants. As tenants grapple with the long-term effects of COVID and its various variants, occupiers continue to shed space as they evaluate a hybrid workplace strategy and the right real estate footprint for their needs. Overall vacancy levels in Northern Virginia continued their upward trend to 20.0% at the end of the fourth quarter, 180 basis points higher than fourth quarter last year. While absorption levels continue to plunge, leasing activity for class A product is more than double leasing in class B buildings, with 5,351,081 SF of class A leased during 2021 vs 2,507,000 SF of class B. This highlights the flight to quality seen as occupiers get more for their money.
In a sign of optimism, for the first time since the pandemic started, Fairfax County recorded a positive absorption number in the fourth quarter this year, with more than 100k SF of leases signed. Developers are also viewing the light at the end of the tunnel with one building breaking ground this fourth quarter in Ballston: Skanska’s 3901 N Fairfax Drive will be built with no announced preleases.