Market Overview

Virginia Business
June 2005

Focus: Northern Virginia
Federal spending continues to power the commercial real estate market in Northern Virginia. "Everything is on fire right now," broker Mark Larsen, president of Larsen Commercial Real Estate Services in Reston, told colleagues during a recent statewide real estate conference. From condos to office and retail, space is being leased or bought, fueled by employers making new hires. The result: Vacancy rates have dropped from 20 percent to 13 percent in the past three years.

The demand for space comes as the region grows faster than any metropolitan area outside the Sunbelt. Since the September 2001 terrorist attacks, increased government spending — the figure was $100 billion in Northern Virginia in 2003 — has prompted companies to add jobs, attracting new residents and businesses. Government contractor Booz Allen Hamilton of McLean, for instance, plans to add 4,600 employees by 2010.

Recent census figures show a 41 percent jump in Loudoun County's population in four years. The population growth and planned 23-mile extension of the Metrorail through Tysons Corner to Dulles Washington International Airport bode well for commercial real estate. Meanwhile, housing prices have become astronomical. "In Reston, people are paying $1.4 million for a two-to-three bedroom condo," says Larsen.