Q2 2021 Northern Virginia Market Report
The Northern Virginia office market experienced 535,250 SF of negative absorption in the second quarter of 2021. While this number is lower than the nearly 1.36 million SF of negative absorption from the prior quarter, only four of nineteen submarkets saw modest gains in absorption. In a positive sign for the market, average direct rental rates are returning to pre-pandemic levels, increasing $.57/SF year-over-year to $33.94/SF. Government contractors led the way in terms of top leases, highlighted by Raytheon’s 521,366 SF renewal at Pacific Corporate Park in Dulles. Vacancy levels have risen to 20.2%, a 230-basis point increase compared to year-ago levels, as oversupplied sublease availability and slow leasing activity continue to hinder the market. A strong base of government contractors and a burgeoning tech landscape should help the market continue the upward trajectory it experienced before the impact of COVID-19. While recent deliveries have decreased the pipeline, 1.7 million SF of construction remains underway in the Northern Virginia market.