Northern Virginia. Quarterly Market Report. 2nd Quarter lpcwashingtondc.com

Transcription

1 Northern Virginia Quarterly Market Report 2nd Quarter 217

2 Northern Virginia Leasing & Market Research Table of Contents Metropolitan D.C. Market Overview...3 Northern Virginia Quarterly Overview...5 Northern Virginia Top Ten Leases... 8 Northern Virginia Sales Transactions... 9 Market Spotlight, 2Q 217: Northern Virginia Alexandria Crystal City Fairfax Loudoun County...19 Merrifield Old Town Alexandria / Eisenhower Avenue Reston - Herndon Rosslyn - Ballston Corridor...27 Route 28 North Route 28 South Neil Alt Senior Vice President nalt@lpc.com Doug McLearn Senior Vice President dmclearn@lpc.com Chris Dyson Senior Vice President cdyson@lpc.com Eamon McCrann Senior Vice President emccrann@lpc.com Stoddie Nibley Vice President snibley@lpc.com Correll Caulfield Vice President ccaulfield@lpc.com Jed Prossner Senior Associate jprossner@lpc.com Mary Fitzgerald Senior Associate mfitzgerald@lpc.com Jack Redmond Leasing Associate jredmond@lpc.com Springfield Tysons Corner... 35r Tom Colicchio Leasing Associate tcolicchio@lpc.com Ben Hickey Leasing Associate bhickey@lpc.com Brad Blum Market Research Associate bblum@lpc.com Ben Gallucci Market Research Associate bgallucci@lpc.com

3 Metropolitan D.C. Market Overview 2nd Quarter 217 Overall Market Summary The Washington, DC Metropolitan commercial real estate market is comprised of approximately million square feet of rentable office space located in the District of Columbia, Northern Virginia, and Suburban Maryland. The total vacancy rate increased to 15.4% in the second quarter, up from 15.% at the end of the first quarter. The market recorded -518,562 square feet of net absorption in the second quarter, a notable drop from the 1,395,421 square feet absorbed in the first quarter. Leasing activity totaled approximately 6.8 million square feet in transactions signed. The largest lease executed was by Amazon Web Services for 4,677 square feet at 132 Woodland Park Road - One Dulles Tower in Herndon, VA. Three buildings, totaling 476,5 square feet, broke ground (2 DC, 1 VA, MD); increasing the metro area s development pipeline to 1,89,21 square feet (63% pre-leased). No buildings were delivered in the second quarter. There were twenty-five sale transactions in the first quarter, totaling $1.72 billion. The largest sale was 1919 N. Lynn Street - Waterview Tower in Arlington, VA trading for $46,, ($711 psf). Average asking rental rates increased $.32 to $36.63 per square foot, Full Service. From May May 217 the DC Metropolitan area had a net increase of 48,3 jobs (42, private sector, 6,3 government) representing 1.5% growth, while the unemployment rate decreased to 3.6%. The DC Metro is ranked 11th nationally in unemployment. DC VA MD Metro Area (YTD) Direct Vacancy (2Q 217) 1.5% 15.5% 15.1% 14.6% Total Vacancy (2Q 217) 11.4% 16.3% 15.7% 15.4% Total Net Absorption (YTD 217) 277,731 SF 353,145 SF 245,983 SF 876,859 SF (YTD 217) 4.5 M SF 6.4 M SF 1.6 M SF 12.5 M SF 3

4 Metropolitan D.C. Market Overview 2nd Quarter 217 Outlook The Washington D.C. Metropolitan market softened slightly as vacancy increased and the region recorded negative net absorption in the second quarter (YTD absorption remained positive, however). The market experienced some positive trends in the second quarter as well with an uptick in leasing activity, asking rents, and sales. Regional employment experienced 1.5% of growth YOY ending May 217, primarily driven by the private sector, specifically the Professional and Business Services industry. The unemployment rate decreased to 3.6%; ranking the DC Metro area 11th in unemployment nationally (among cities of 1 million+ people). Looking ahead, the private sector will continue to be the primary driver for employment in the Washington, DC Metropolitan area; with the Professional & Business Services industry leading the way. Uncertainty among the Federal agencies concerning budgets and staffing, coupled with agency consolidations/ downsizing, should continue to affect GSA leasing throughout 217. While vacancy decreased in Northern Virginia and pre-leasing is strong market-wide, the DC metro area should remain a tenant s market through 217. Aggressive landlords will continue to offer generous concessions and initiate capital improvements to remain competitive. 4

5 Northern Virginia 2nd Quarter 217 Market Summary The Northern Virginia office market consists of 1,529 buildings over 25, square feet, totaling approximately 182. million square feet of rentable space. The largest non-gsa lease signed during the second quarter was a 4,-square-foot relet by Amazon Web Services at One Dulles Tower Woodland Park Road in the Reston- Herndon Corridor submarket. The largest lease signed by the GSA was a 71,54-square-foot renewal for the DEA at Avion Mid-Rise IV Avion Parkway in the Route 28 Corridor South submarket. Building sales volume totaled approximately $1,1,811,669 during the second quarter. The largest transaction was the sale of Waterview Tower N. Lynn Street in the Rosslyn-Ballston Corridor submarket. Morgan Stanley acquired the building from Paramount Group for $46 million ($711 psf). The property was 99.% occupied at the time of sale, and traded at a 5.11% Cap Rate. The second largest sale was 181 N. Lynn Street trading from Morgan Stanley to GSA Office of Portfolio Management for $24 Million ($686 psf). The building was purchased by the tenant. Inside the Beltway, there were 53 buildings marketing 5, square feet or greater of contiguous space available at the end of the second quarter 217, compared to 55 from the first quarter 217. Outside the Beltway, there were 81 buildings marketing 5, square feet or greater of contiguous space available at the end of the second quarter 217, compared to 8 from the first quarter 217. Direct Vacancy Total Vacancy Net Absorption (YTD) Leasing Activity (YTD) Under Construction Deliveries (YTD) Rental Rates U/C Percent Pre-Leased 2Q 217 1Q 217 2Q % 15.8% 16.2% 16.3% 16.5% 17.% 353,145 SF 475,772 SF -381,356 SF 6.4 M SF 2.5 M SF 5.7 M SF 4.8 M SF 4.7 M SF 3.8 M SF 34, SF $32.47 FS 34, SF $32.19 FS 538,916 SF $31.74 FS 73.9% 74.7% 83.6% 5

6 Northern Virginia 2nd Quarter 217 Vacancy Rate Total vacancy in Northern Virginia decreased slightly from 16.5% in the first quarter 217 to 16.3% in the second quarter 217, and has decreased from 17.% since second quarter 216. At the end of second quarter 217, 3.1 million square feet was vacant and available. Direct vacancy decreased from 15.8% in the first quarter 217 to 15.5% in the second quarter 217, and has decreased from 16.2% since second quarter 216. At the end of second quarter 217, 28.6 million square feet was vacant and available for direct lease. The sublet vacancy rate in Northern Virginia remained flat at.8% from the first quarter 217 to the second quarter 217, and has increased slightly from.7% since the second quarter 216. At the end of second quarter 217, 1.5 million square feet was vacant and available for sublease. Deliveries vs Deliveries Deliveries Net Absorption Vacancy Rate 6 2 Total vacancy for Class A product in Northern Virginia was 16.8% while Class B product was 15.7% for the quarter. Class A vacancy decreased from 17.1% in the first quarter 217, while Class B vacancy decreased from 15.9% in the first quarter 217. Absorption & Gross Leasing Northern Virginia recorded -122,627 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to 353,145 square feet absorbed. A significant contributor to the negative absorption was MITRE vacating 151,949 square feet at Centerstone at Tysons Westbranch Drive Delivery Net Absorption 4 2 Direct Vacancy Rate Vacancy Rate (%) Year-to-date leasing activity through the second quarter 217 totaled 6.4 million square feet, which is a 12.3% increase from the 5.7 million square feet leased through the second quarter of 216. Nine of the top ten leases signed in the first quarter were by private sector tenants. The ten largest leases signed during the first quarter ranged in size from 4,677 square feet to 41,96 square feet, five of these largest transactions were renewals. The Rosslyn-Ballston Corridor submarket recorded the strongest net absorption in Northern Virginia this quarter with 54,13 square feet absorbed. At 425 N. Fairfax Drive, Applied Predictive Technologies moved into 87,344 square feet in second quarter Vacancy by Building Class 16.8% 15.7% A B 8.4% C (%) of Building Class Vacant 6

7 Northern Virginia 2nd Quarter 217 Construction A total of fifteen buildings were under construction in Northern Virginia at the end of the second quarter, totaling approximately 4.8 million square feet. One building broke ground during the second quarter of 217. Washington Property Company broke ground on a 63,-square-foot building at Stone Ridge Medical Center Southpoint Drive in the Loudoun County submarket. It is slated to deliver in second quarter 218 and is currently 1% available for lease. Buildings scheduled to deliver in 217 include; Reston Station - 19 Reston Metro Plaza, a 368,413-squarefoot office tower, built on a speculative basis, scheduled to deliver third quarter Electric Avenue, a 235,-square-foot development in the Vienna submarket that is 1% pre-leased to Navy Federal Credit Union is scheduled to deliver in the third quarter of N. Glebe Road, a 166,767-square-foot building in the Rosslyn-Ballston Corridor submarket that is 66.% pre-leased to, and owned by, Marymount University is scheduled to deliver in the third quarter 217. The National Science Foundation Headquarters Eisenhower Avenue, a 7,-square-foot, 98.8% preleased building in Alexandria is scheduled to deliver in the third quarter 217. NoVA Office D - Stonecroft Boulevard, a 24,-square-foot building in the Route 28 South submarket, is 1% pre-leased to the GSA-CIA and scheduled to deliver third quarter Wilson Blvd, a 175,-square-foot building in the Rosslyn-Ballston Corridor submarket, is 61.9% pre-leased to Opower, Bean Kinney & AHRI, and scheduled to deliver first quarter Monument Corner Drive, a 15,-squarefoot building in the Faifax submarket that is 78.7% preleased to Apple FCU is scheduled to deliver in the third quarter of 217. One Loudoun Bashan Drive, a 72,-square-foot development in the Loudoun County submarket that is 59.5% pre-leased to Fortessa is scheduled to deliver in the third quarter of 217. Outlook The second quarter of 217 was encompassed by significant renewal activity with five of the top ten largest leases being renewals to the market. In addition, year-to-date total net absorption has doubled compared to one year ago. All signs point towards growth as rental rates have seen a steady uptick year over year, vacancy rates decreased slightly this quarter, and sales activity in the second quarter doubled compared to first quarter 217. The most notable lease signed in the second quarter 217 was Amazon Web Services 4,677-squarefoot relet at One Dulles Tower Woodland Park Drive. AWS currently occupies nearby Monument Worldgate Worldgate Drive, however, this expansion will create 5 new jobs for the company and significantly increase their footprint in the market. The lease is also an important contributing factor to the decrease of vacancy in the Northern Virginia market as a whole. The Northern Virginia area added 26,8 nonfarm jobs from May 216 to May 217, which represents 1.4% growth year-over-year. Of that number 6,21 were related to Professional and Business Services Sector, while Government jobs increased to 5,9 year-over-year. The Leisure and Hospitality Sector experienced the largest growth of any major industry sector over the past year with a 4.5% growth rate. Job growth will continue to be driven primarily by Professional and Business Services however, spurred by the Presidential transition to the new Trump administration, analysts believe that the government contracting market will grow significantly through the end of 217 and continue into 218. Estimated job growth for the next one to two years is expected to be 2.5% to 2.6%. Buildings scheduled to deliver in 218 include; Building 3 - Capital One Drive, a 975,-square-foot, 1% pre-leased building in Tysons and the 68.3% preleased, 552,781-square-foot CEB Tower Wilson Boulevard, in the Rosslyn-Ballston Corridor. Also, the 1,-square-foot, 1% pre-leased building at 3 Potomac Avenue in Crystal City and the 63,-squarefoot, building at Stone Ridge Medical Center Southpoint Drive in Loudoun County. 7

8 Northern Virginia 2nd Quarter 217 Top Ten Leases Included in the top ten leases of the second quarter 217 were five renewals, three renewal/expansions, one expansion and one new lease transaction. The largest lease transaction of the quarter was a 4,677-square-foot relet signed by Amazon Web Services at One Dulles Tower Woodland Park Road in the Reston-Herndon submarket. The second largest lease of the quarter was a 117,176-square-foot renewal/expansion (29,321 square feet of expansion) by Booz Allen Hamilton at 6361 Walker Lane in the Springfield submarket. The third largest lease of the quarter was a 1,-square-foot renewal/expansion (1, square-foot expansion) by GDIT at Sunset Hills Road in the Reston-Herndon submarket. Accenture/ASM signed a renewal for 92, square feet at Centerpointe One - 45 Legato Road in the Fairfax submarket. The GSA-DEA also renewed 71,54 square feet at Avion Mid- Rise IV Avion Parkway in the Route 28 Corridor South submarket. BBN Technologies/Raytheon signed a renewal/expansion for 66, square feet at Century One at Century Center Crystal Drive in the Crystal City submarket. Fulcrum IT signed a 61,123-square-foot renewal at Trinity Centre Trinity Parkway in the Route 28 Corridor South submarket. Digital Globe signed a 47,267-square-foot expansion at Dulles Metro Center Dulles Corner Blvd in the Reston-Herndon submarket. BBN Technologies/Raytheon renewed 43,277 square feet at Arlington Tower - 13 N. 17th Street in the Rosslyn-Ballston Corridor submarket. Micropact also renewed 41,96 square feet at Worldgate Metro Plaza I Worldgate Drive in the Reston-Herndon submarket. One Dulles Tower 132 Woodland Park Road Amazon Web Services 4,677 SF Metro Park VI 6361 Walker Lane Booz Allen Hamilton 117,176 SF /Expansion Sunset Hills Road Centerpointe One 45 Legato Road GDIT Accenture/ASM 1, SF 92, SF /Expansion Avion Mid-Rise IV 1456 Avion Parkway GSA-DEA 71,54 SF Century One at Century Center 245 Crystal Drive BBN Technologies/ Raytheon 66, SF /Expansion Trinity Centre Trinity Parkway Fulcrum IT 61,123 SF Dulles Metro Center 2325 Dulles Corner Boulevard Digital Globe 47,267 SF Expansion Arlington Tower 43, N. 17th Street BBN Technologies/ Raytheon Worldgate Metro Plaza I 1291 Worldgate Drive Micropact 41,96 SF 8

9 Northern Virginia 2nd Quarter 217 Northern Virginia Sales Transactions Waterview Tower Submarket Date Sold Price Buyer 1919 N. Lynn Street Rosslyn-Ballston Corridor May-217 $46,, ($711 ) Morgan Stanley Seller Paramount Group Class A Occupancy 99.% Cap Rate 5.11% 181 N. Lynn Street Submarket Rosslyn-Ballston Corridor Date Sold April-217 Price $24,, ($686 ) GSA Office Buyer of Portfolio Management Seller Morgan Stanley Class A Occupancy 1.% Notes Purchase by tenant Tysons Dulles Plaza Submarket Date Sold Price Buyer 141, 142 & 143 Spring Hill Road Tysons Corner June-217 $13,25, ($27 ) Rockpoint Seller KBS Class A Occupancy 88.% Cap Rate 6.% Shenandoah Building Submarket Date Sold Price Buyer 791 Jones Branch Drive Tysons Corner April-217 $55,25, ($281 ) Rockpoint Seller TIAA Class A Occupancy 9.% Arlington Square & Prince Street Plaza Submarket Date Sold Price 441 N. Fairfax Drive & 1421 Prince Street Rosslyn-Ballston Corridor/ Old Town/Eisenhower Ave April-217 $53,511,669 ($231 ) Buyer Brookfield Seller TA Realty Class A Occupancy 3.% Stonegate II Submarket Date Sold 1552 Conference Center Drive Rt 28 South June-217 Price $27,75, ($197 ) Gramercy Buyer Property Trust/ TPG Real Estate Seller Colony Realty Partners Class B+ Occupancy 1.% Tysons Executive Plaza 1 2 Corporate Ridge Road Submarket Tysons Corner Date Sold Price May-217 $24,, ($94 ) Buyer Westport Seller C-III Class A Occupancy 6.% Notes REO Sale Fair Oaks Commerce Center Submarket 1132 Random Hills Road Fairfax Date Sold April-217 Price $23,5, ($167 ) Buyer Boyd Watterson Seller Colony Realty Partners Class B Occupancy 82.8% Cap Rate 8.% Notes Part of 72-property portfolio sale 9

10 Northern Virginia 2nd Quarter 217 Northern Virginia Sales Transactions 168 Duke Street Alexandria/Old Submarket Town/Eisenhower Ave Date Sold May-217 Price Buyer $19,, ($399 ) Kassabian Realty Seller Normandy Real Estate Partners Class B Occupancy 73.6% Mark Center Submarket Date Sold 171 & 175 N. Beauregard Street Alexandria April-217 Price $15,, ($5 ) Buyer Alexandria City School Board Seller C-III Class A Occupancy 17.% Notes Owner/user Ryan Park Office Center - Bldg A Submarket Date Sold 4348 Yukon Dr Rt 28 North June-217 Price $14,1, ($235 ) Buyer Kaiser Permanente Seller The Lenkin Company Class A Occupancy 85.5% Lincoln Park II Submarket 376 Centreville Road Rt 28 South Date Sold April-217 Price $13,45, ($138 ) Buyer Beckham Gumbin Ventures Seller Clarion Partners Class A Occupancy 92.% Cap Rate 9.% Notes Owner/user, purchase by tenant Springfield Executive Center & Cherokee Business Center Submarket Date Sold 551 Backlick Road & 552 Cherokee Avenue Springfield May-217 Submarket Date Sold Price 6858 Old Dominion Drive Tysons Corner April-217 $12,1, ($294 ) Price Buyer VAE Seller MGP Class B Occupancy 71.8% Cap Rate 6.15% $12,9, ($95 ) Buyer Amrish Gupta Seller PMI Parking Class B Occupancy 1.% Notes 131 Exchange 1

11 Northern Virginia 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD '17-4 Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Total vacancy in Northern Virginia decreased slightly from 16.5% in the first quarter 217 to 16.3% in the second quarter 217, and has decreased from 17.% since second quarter 216. Direct vacancy decreased from 15.8% in the first quarter 217 to 15.5% in the second quarter 217, and has decreased from 16.2% since second quarter 216. Northern Virginia recorded -122,627 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to 353,145 square feet absorbed. A significant contributor to the negative absorption was MITRE vacating 151,949 square feet at Centerstone at Tysons Westbranch Drive. 1 Year Averages (27-216) Total Absorption 342,39 SF / Year Deliveries (SF) 2. M SF / Year 12.7 M SF / Year Market Stats Inventory 182. M SF Direct Vacancy 15.5 % Total Vacancy 16.3 % Year-to-date leasing activity through the second quarter 217 totaled 6.4 million square feet, which is a 12.3% increase from the 5.7 million square feet leased through the second quarter of 216. Nine of the top ten leases signed in the first quarter were by private sector tenants. YTD 217 Absorption YTD 353,145 SF 6.4 M SF 4.8 M SF Inside the Beltway, there were 53 buildings marketing 5, square feet or greater of contiguous space available at the end of the second quarter 217, compared to 55 from the first quarter 217. Outside the Beltway, there were 81 buildings marketing 5, square feet or greater of contiguous space available at the end of the second quarter 217, compared to 8 from the first quarter 217. Percent Pre-Leased 73.9% YTD 217 Deliveries Asking Rental Rates (Full Service) 27: $ : $ , SF YTD 217: $

12 Northern Virginia 2nd Quarter 217 Property Submarket Building Available Pre-Leased Delivery Date Developer Major s 141 Electric Avenue Vienna 235, SF SF 1% 3Q 217 Gilbane Navy Federal Credit Union 1 N. Glebe Rd Rosslyn-Ballston Corridor 166,767 SF 56,631 SF 66.% 3Q 217 Shooshan Co. Marymount University Reston Station 19 Reston Metro Plaza Reston-Herndon 368,413 SF 357,413 SF 3.% 3Q 217 Comstock Founding Farmers 497 Monument Corner Drive Fairfax 15, SF 32, SF 78.7% 3Q 217 Peterson Co. Apple FCU NSF HQ 2415 Eisenhower Avenue Alexandria 7, SF 8,282 SF 98.8% 3Q 217 Lowe GSA - NSF One Loudoun 248 Bashan Drive Loudoun County 72, SF 29,195 SF 59.5% 3Q 217 Miller & Smith Fortessa NoVA Office D Stonecroft Boulevard Route 28 South 24, SF SF 1% 3Q 217 COPT GSA - CIA 2311 Wilson Boulevard RB Corridor 175, SF 66,638 SF 61.9% 1Q 218 Carr Opower/Bean Kinney/AHRI Dulles Discovery South 139 Air and Space Musuem Parkway Rt 28 South 425, SF SF 1.% 1Q 218 Peterson Co. GSA - CIA CEB Tower 121 Wilson Boulevard Rosslyn-Ballston Corridor 552,781 SF 175,41 SF 68.3% 1Q 218 JBG CEB 3 Potomac Avenue Crystal City 1, SF SF 1.% 2Q 218 NIB NIB, Kaiser Permanente Stone Ridge Medical Center 2456 Southpoint Drive Loudoun County 63, SF 63, SF.% 2Q 218 Washington Property Company None Capital One Drive Tysons Corner 975, SF SF 1.% 3Q 218 Capital One Capital One Boro Tower 835 Broad Street Tysons Corner 436, 813 SF 352,371 SF 19.3% 1Q 219 Meridian Tegna Boro Loft 164 Boro Place Tysons Corner 143,66 SF 111,642 SF 22.3% 1Q 219 Meridian Whole Foods Totals 2nd Quarter Start Broke Ground 2Q 217 Total % Preleased (Does not include condos) 63, SF 4,83,38 SF 73.9% 12

13 Alexandria 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD ' Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in Alexandria decreased from 18.2% in the first quarter 217 to 17.8% in the second quarter 217, and has decreased from 18.6% since second quarter 216. Total vacancy decreased slightly from 18.6% in the first quarter 217 to 18.4% in the second quarter 217, and has decreased from 19.1% since second quarter 216. The Alexandria submarket recorded 29,997 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to -12,115 square feet absorbed. Positive absorption was driven by a 4,475-square-foot move-in by the GSA at Six Skyline Place Leesburg Pike. The sale of 168 Duke Street was the largest sale in Alexandria this quarter. Kassabian Realty acquired the 47,596-square-foot building from Normandy Real Estate Partners for $19,, ($399 psf). Mark Center & 175 N. Beauregard Street also sold for $15,, ($55 psf). The Alexandria City School Board acquired the buildings from C-III. It was an owner-user sale as the buyer will be converting the office building into a school, including administrative offices and a playground. The largest lease signed in the Alexandria submarket in the second quarter was a 14,14-square-foot renewal by Wyndham Resorts at King Street Metroplace King Street. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ ,37 SF / Year 58,742 SF / Year 889,533 SF / Year 216: $ M SF Direct Vacancy 17.8% Total Vacancy 18.4% YTD 217 Absorption YTD -12,115 SF 28,227 SF 8, SF Percent Pre-Leased 99.% YTD 217 Deliveries SF YTD 217: $

14 Alexandria 2nd Quarter 217 Major Leases King Street Metroplace 1737 King Street Washington Square 625 N. Washington Street Wyndham Resorts NADCP 14,14 SF 1,442 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate 168 Duke Street Alexandria May 217 $19,, (399 psf) Kassabian Realty Normandy Real Estate Partners B 73.6% N/A Mark Center 171 & 175 N. Beauregard Street Alexandria April 217 $15,, ($5 psf) Alexandria City School Board C-III A 17.% Owner/user Property Submarket Building Available Pre-leased Delivery Date Developer Major s NSF HQ 2415 Eisenhower Avenue Alexandria 7, SF 8,282 SF 98.8% 3Q 217 Lowe Enterprises GSA - National Science Foundation 3 Potomac Ave Alexandria 1, SF SF 1.% 2Q 218 NIB NIB, Kaiser Permanente 14

15 Crystal City 2nd Quarter Vacancy Rate (%) Asking Rate ($) Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in Crystal City decreased from 2.% in the first quarter 217 to 18.5% in the second quarter 217, and has increased slightly from 18.4% since second quarter 216. Total vacancy decreased from 2.3% in the first quarter 217 to 18.8% in the second quarter 217, but has decreased slightly from 18.9% since second quarter 216. The Crystal City submarket recorded 26,354 square feet of net absorption during the second quarter of 217, bringing the year-to-date total to 161,617 square feet absorbed. The positive absorption for the quarter was driven by a 11,623-squarefoot move-in by the Millennium Engineering & Integration at 14 Crystal - 14 Crystal Drive. The largest lease signed in the Crystal City submarket this quarter was a 66,-square-foot renewal/expansion by Raytheon at Century One at Century Center Crystal Drive. The tenant expanded by 16, square feet and renewed the remaining 5, square feet. Also contributing to leasing activity this quarter was a 14,786-squarefoot extension by Deloitte at Jefferson Plaza S. Clark Street. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ : $ SF / Year 75,312 SF / Year 1. M SF / Year 11.4 M SF Direct Vacancy 18.5% Total Vacancy 18.8% YTD 217 Absorption YTD 161,617 SF 172,24 SF 1, SF Percent Pre-Leased 1.% YTD 217 Deliveries SF YTD 217: $

16 Crystal City 2nd Quarter 217 Major Leases Century One at Century Center 245 Crystal Drive Raytheon 66, SF /Expansion Jefferson Plaza 141 S. Clark Street Deloitte 14,786 SF Extension Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate No new sales reported during the quarter Crystal City N/A N/A N/A N/A N/A N/A N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s 3 Potomac Ave Crystal City 1, SF SF 1.% 2Q 218 NIB NIB, Kaiser Permanente 16

17 Fairfax (Fairfax Center, Fairfax City, Oakton) 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD ' Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in Fairfax increased from 19.% in the first quarter 217 to 19.5% in the second quarter 217, and has increased from 18.1% since second quarter 216. Total vacancy increased from 19.8% in the first quarter 217 to 2.5% in the second quarter 217, and has increased from 18.8% since second quarter 216. The Fairfax submarket recorded -89,948 square feet of net absorption for the second quarter of 217, bringing the year-to-date total to 2,523 square feet absorbed. The negative absorption for the quarter was driven by Ellucian moving out of 73,134 square feet at the DATATEL Building Fair Lakes Court. The largest sale that occurred in Fairfax during the second quarter was the sale of Fair Oaks Commerce Center Random Hills Road. Boyd Watterson acquired the office building from Colony Realty Partners for $23,5, ($167 psf). The building was 82.8% occupied at the time of sale, and traded at an 8.% Cap Rate. Accenture/ASM renewed for 92, square feet at Centerpointe One - 45 Legato Road, making it the largest lease signed in Fairfax in second quarter 217. Also contributing to leasing activity was a 32,98-square-foot renewal by Serco at Oakwood Lee Jackson Highway. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ ,27 SF / Year 793,678 SF / Year 216: $ ,118 SF / Year 12.3 M SF Direct Vacancy 19.5 % Total Vacancy 2.5% YTD 217 Absorption YTD 2,523 SF 35,461 SF 15, SF Percent Pre-Leased 78.7% YTD 217 Deliveries SF YTD 217: $

18 Fairfax (Fairfax Center, Fairfax City, Oakton) 2nd Quarter 217 Major Leases Centerpointe One 45 Legato Road Oakwood Lee Jackson Highway Accenture/ASM Serco 92, SF 32,98 SF Redwood Plaza I 156 Arrowhead Drive CDM Smith, Inc. 19,363 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Fair Oaks Commerce Center 1132 Random Hills Road Fairfax April 217 $23,5, ($167 psf) Boyd Watterson Colony Realty Partners B 82.8% 8.% Property Submarket Building Available Pre-leased Delivery Date Developer Major s 497 Monument Corner Drive Fairfax 15, SF 32, SF 78.7% 3Q 217 Peterson Companies Apple FCU, The Peterson Companies 18

19 Loudoun County 2nd Quarter Vacancy Rate (%) Asking Rate ($) Deliveries Highlights Direct vacancy in Loudoun County decreased from 12.3% in the first quarter 217 to 11.5% in the second quarter 217, and has decreased from 14.6% since second quarter 216. Total vacancy has decreased from 13.3% in the first quarter 217 to 12.6% in the second quarter 217, and has decreased from 15.% since second quarter 216. Loudoun County recorded 12,43 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to 72,834 square feet absorbed. The positive absorption for the quarter was driven by Comcast moving into 31,741 square feet at Pacific Corporate Park Pacific Boulevard. The largest lease signed in Loudoun County in the second quarter 217 was a 4,462-square-foot relet by DRS Technologies at Lakeside at Loudoun Building Ridgetop Circle. Also contributing to leasing activity this quarter was a 35,571-square-foot renewal/ expansion by Phishme at Village at Leesburg Building E Village Market Boulevard SE and a 12,198-squarefoot relet by Epsilon Data Management at Belmont Executive Building A Belmont Executive Plaza. Ryan Park Office Center - Bldg A Yukon Drive sold for $14,1, ($235 psf). Kaiser Permanente acquired the building from The Lenkin Company, making this a purchase by tenant sale. The building was fully leased at the time of sale. Direct Vacancy Rate Total Vacancy Rate Asking Rate 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory -.25 Asking Rental Rates (Full Service) 27: $ ,18 SF / Year 352,514 SF / Year 893,41 SF / Year 216: $24.67 Total Net Absorption 15.1 M SF Direct Vacancy 11.5 % Total Vacancy 12.6 % YTD 217 Absorption YTD 72,834 SF 418,639 SF 135, SF Percent Pre-Leased 31.7% YTD 217 Deliveries SF YTD 217: $

20 Loudoun County 2nd Quarter 217 Major Leases Lakeside at Loudoun Building Ridgetop Circle Village at Leesburg Building E 162 Village Market Boulevard SE DRS Technologies Phishme 4,462 SF 35,571 SF /Expansion Belmont Executive Center Building A Belmont Executive Plaza Epsilon Data Management 12,198 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Notes Ryan Park Office Center - Bldg A 4348 Yukon Drive Loudoun County June 217 $14,1, ($235 ) Kaiser Permanente The Lenkin Company A 1.% Purchase by tenant Property Submarket Building Available Pre-leased Delivery Date Developer Major s One Loudoun 248 Bashan Drive Loudoun County 72, SF 29,195 SF 59.5% 3Q 217 Miller & Smith Fortessa Stone Ridge Medical Center 2456 Southpoint Drive Loudoun County 63, SF 63, SF.% 2Q 218 Washington Property Company None 2

21 Merrifield 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD '17-1. Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in Merrifield decreased from 15.5% in the first quarter 217 to 13.8% in the second quarter 217, and has increased from 12.5% since second quarter 216. Total vacancy has decreased from 16.4% in the first quarter 217 to 14.6% in the second quarter 217, and has increased from 13.6% since second quarter 216. The Merrifield submarket recorded 9,119 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to -236,329 square feet absorbed. Positive absorption was driven by multiple small tenant move-ins. Leidos signed the largest lease in the Merrifield submarket during the second quarter with a 38,767-square-foot renewal at MetroPlace I Park Tower Drive. Wiss, Janney, Elstner Associates, Inc. signed for 2,168 square feet at 2941 Fairview Park Drive. Also contributing to leasing activity was a 17,472-square-foot renewal by Inova at 2921 Telestar Court, and a 12,163-square-foot relet by Paychex at Williams Plaza 2-36 Williams Drive. 1 Year Averages (27-216) Total Absorption -32,732 SF / Year Deliveries (SF) 54,754 SF / Year 591,476 SF / Year Market Stats Inventory 9.3 M SF Direct Vacancy 13.8 % Total Vacancy 14.6 % YTD 217 Absorption -236,329 SF YTD 229,52 SF SF Percent Pre-Leased % YTD 217 Deliveries SF Asking Rental Rates (Full Service) 27: $ : $31.77 YTD 217: $

22 Merrifield 2nd Quarter 217 Major Leases MetroPlace I 265 Park Tower Drive Leidos 2941 Fairview Park Drive Wiss, Janney, Elstner Associates, Inc. 38,767 SF 2,168 SF 2921 Telestar Court Williams Plaza 2 36 Williams Drive Inova Paychex 17,472 SF 12,163 SF 2941 Fairview Park Drive ASRC Federal 1,119 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate No new sales reported during the quarter Merrifield N/A N/A N/A N/A N/A N/A N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s No new construction reported this quarter Merrifield N/A N/A N/A N/A N/A N/A 22

23 Old Town/Eisenhower Ave 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD '17-1. Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in the Old Town Alexandria and Eisenhower Ave submarket decreased from 1.8% in the first quarter 217 to 1.4% in the second quarter 217, and has decreased from 1.6% since second quarter 216. Total vacancy decreased from 11.3% in the first quarter 217 to 11.1% in the second quarter 217, and has decreased from 11.2% since second quarter 216. The Old Town Alexandria and Eisenhower Ave submarket recorded 5,434 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to -2,79 square feet absorbed. Positive absorption was driven by multiple smaller tenant move-ins. Prince Street Plaza Prince Street was acquired by Brookfield Office Properties, Inc. from TA Realty for $2,557,34 ($389 psf). The building was 53.8% occupied at the time of sale. It was part of a 72-building portfolio sale which included flex, industrial, and office buildings. 1 Year Averages (27-216) Total Absorption -534 SF / Year Deliveries (SF) 58,742 SF / Year 672,41 SF / Year Market Stats Inventory 12.6 M SF Direct Vacancy 1.4% Total Vacancy 11.1% YTD 217 Absorption -2,79 SF YTD 226,198 SF 7, SF Percent Pre-Leased 98.8% The largest lease signed in the Old Town Alexandria and Eisenhower Ave submarket in the second quarter was a 14,14-square-foot renewal by Wyndham Resorts at King Street Metroplace King Street. Also contributing to leasing activity this quarter was a 1,442-square-foot relet by NADCP at Washington Square N. Washington Street. YTD 217 Deliveries Asking Rental Rates (Full Service) 27: $ : $36.24 SF YTD 217: $

24 Old Town/Eisenhower Ave 2nd Quarter 217 Major Leases King Street Metroplace 1737 King Street Washington Square 625 N. Washington Street Wyndham Resorts NADCP 14,14 SF 1,442 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Prince Street Plaza 1421 Prince Street Old Town/ Eisenhower Ave April 217 $2,557,34 ($389 psf) Brookfield TA Realty A 53.8% N/A 168 Duke Street Old Town/ Eisenhower Ave May 217 $19,, ($399 psf) Kassabian Realty Normandy Real Estate Partners B 73.6% N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s NSF HQ 2415 Eisenhower Avenue Old Town/ Eisenhower Ave 7, SF 8,282 SF 98.8% 3Q 217 Lowe Enterprises GSA - National Science Foundation 24

25 Reston-Herndon 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD '17-1. Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy decreased from 12.3% in the first quarter 217 to 11.3% the second quarter 217, and has decreased from 12.6% since second quarter 216. Total vacancy has decreased from 13.7% in the first quarter 217 to 12.7% in the second quarter 217, and has decreased from 14.% since second quarter 216. Year-to-date direct vacancy for Reston was 9.3% and total vacancy was 1.1%. Year-to-date direct vacancy for Herndon was 14.6% and total vacancy was 16.9%. The Reston-Herndon submarket recorded -27,353 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to 46,776 square feet absorbed. The negative absorption for the quarter was driven by K12 Inc., moving out of 47,476 square feet at Northridge II Woodland Park Road. Amazon Web Services plans to significantly increase its footprint in Northern Virginia with a 4,677-squarefoot lease at One Dulles Tower Woodland Park Drive. AWS currently occupies nearby Monument Worldgate Worldgate Drive, however, this expansion will create 5 new jobs for the company. The lease is a significant one for Northern Virginia by shrinking vacancy for the market as a whole. Their plan to open a corporate campus in Herndon will yield the state up to 1,5 new jobs, according to the governor s announcement. 1 Year Averages (27-216) Total Absorption 13,731 SF / Year Deliveries (SF) 333,516 SF / Year 2.7 M SF / Year Market Stats Inventory 29.9 M SF Direct Vacancy 11.3 % Total Vacancy 12.7 % YTD 217 Absorption 46,776 SF YTD 1,327,365 SF 368,413 SF Percent Pre-Leased 3.% YTD 217 Deliveries SF Also contributing to leasing activity this quarter was a 1,-square-foot renewal/expansion by GDIT at Sunset Hills Road. The tenant expanded by 1, square feet and renewed the remaining 9, square feet. Asking Rental Rates (Full Service) 27: $ : $28.68 YTD 217: $3.6 25

26 Reston-Herndon 2nd Quarter 217 Major Leases One Dulles Tower 4, Woodland Park Drive Amazon Web Services Sunset Hills Road GDIT 1, SF /Expansion Dulles Metro Center 2325 Dulles Corner Boulevard Digital Globe Worldgate Metro Plaza I 1291 Worldgate Drive Micropact 47,267 SF 41,96 SF Expansion Commerce Metro Center III 185 Centennial Park Drive Penn State Research Labs 19,736 SF Reston Crossing East 23 Edmund Halley Drive Volkswagen 19,68 SF Expansion Herndon Spring Park Ph 2 Bldg Spring Park Place Two Reston Crescent 1218 Sunrise Valley Drive PCCW Inscope International 18,561 SF 16,484 SF Corporate Oaks 2 67 Herndon Parkway China Telecom Corporation Monument II 1295 Worldgate Drive Expel 14,382 SF 12,75 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate No new sales reported during the quarter Reston-Herndon N/A N/A N/A N/A N/A N/A N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s Reston Station - One Plaza 19 Reston Metro Plaza Reston-Herndon 368,413 SF 357,413 SF 3.% 3Q 217 Cornstock Companies Founding Farmers 26

27 Rosslyn-Ballston Corridor 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD '17-1. Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption 27 Highlights Direct vacancy in the Rosslyn-Ballston Corridor decreased from 16.7% in the first quarter 217 to 16.2% in the second quarter 217, and has decreased from 19.9% since second quarter 216. Total vacancy decreased from 17.4% in the first quarter 217 to 17.% in the second quarter 217, and has decreased from 2.6% since second quarter 216. The Rosslyn-Ballston Corridor recorded 54,13 square feet of net absorption during the second quarter of 217, bringing the year-to-date total to 137,958 square feet absorbed. The primary driver for positive absorption was an 87,344-square-foot move-in by Applied Predictive Technologies at 425 N. Fairfax Drive. The sale of Waterview Tower N. Lynn Street was the largest sale in Northern Virginia this quarter. Morgan Stanley acquired the office building from Paramount Group for $46 million ($711 psf). The building was 99.% occupied at the time of sale, and traded at a 5.% Cap Rate. The second largest sale that occurred in Northern Virginia this quarter was the sale of 181 N. Lynn Street. Morgan Stanley sold the office building to GSA Office of Portfolio Management for $24 million ($686 psf). This was an owner/user sale and purchase by tenant. The largest lease signed in the Rosslyn-Ballston Corridor this quarter was a 43,277-square-foot renewal by BBN Technologies/Raytheon at Arlington Tower - 13 N. 17th Street. Also contributing to leasing activity this quarter was a 41,364-square-foot renewal signed by Language Associates at Rosslyn Gateway South N. Fort Myer Drive. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ ,54 SF / Year 29,29 SF / Year 216: $ M SF / Year 24.6 M SF Direct Vacancy 16.2% Total Vacancy 17.% YTD 217 Absorption YTD 137,958 SF 1,328,658 SF 727,781 SF Percent Pre-Leased 66.6% YTD 217 Deliveries SF YTD 217: $41.87

28 Rosslyn-Ballston Corridor 2nd Quarter 217 Major Leases Arlington Tower 13 N. 17th Street BBN Technologies/ Raytheon Rosslyn Gateway South 191 N. Fort Myer Drive Language Associates 43,277 SF 41,364 SF 111 Wilson Boulevard Rosslyn Center 17 N. Moore Street GSA - Department of State 35,994 SF GSA - Department of Health and Human Services 28,547 SF Two Liberty Center 475 Wilson Boulevard Potomac Tower 11 N. 19th Street Strategic Analysis Insight Global 25,931 SF 22,811 SF /Downsize Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Waterview Tower 1919 N. Lynn Street RB Corridor May 217 $46,, ($711 psf) Morgan Stanley Paramount Group A 99.% 5.% 181 N. Lynn Street RB Corridor April 217 $24,, ($686 psf) GSA Office of Portfolio Management Morgan Stanley A 1.% N/A Arlington Square 441 N. Fairfax Drive RB Corridor April 217 $31,23,559 ($216 ) Brookfield TA Realty A.% N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s 1 N. Glebe Road RB Corridor 166,767 SF 56,631 SF 66.% 3Q 217 Shooshan Co. Marymount University 2311 Wilson Boulevard RB Corridor 175, SF 74,9 SF 61.9% 1Q 218 Carr Opower/Bean Kinney/ AHRI CEB Tower 121 Wilson Boulevard RB Corridor 552,781 SF 175,41 SF 68.3% 1Q 218 JBG CEB 28

29 Route 28 North 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD ' Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in the Route 28 North submarket decreased from 15.5% in the first quarter 217 to 14.6% in the second quarter 217, and has decreased from 17.2% since second quarter 216. Total vacancy decreased from 16.4% in the first quarter 217 to 15.7% in the second quarter 217, and has decreased from 17.5% since second quarter 216. The Route 28 North submarket recorded 12,355 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to -33,117 square feet absorbed. The primary driver for positive absorption was a 31,741-square-foot move-in by Comcast at Pacific Corporate Park Pacific Boulevard. Ryan Park Office Center - Bldg A Yukon Drive sold for $14,1, ($235 psf). Kaiser Permanente acquired the building from The Lenkin Company, making this a purchase by tenant sale. The building was fully leased at the time of sale. The largest lease signed in the Route 28 North submarket this quarter was a 4,462-square-foot relet by DRS Technologies at Lakeside at Loudoun Building Ridgetop Circle. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ ,726 SF / Year 145,533 SF / Year 629,561 SF / Year 216: $ M SF Direct Vacancy 14.6 % Total Vacancy 15.7 % YTD 217 Absorption YTD -33,117 SF 19,24 SF SF Percent Pre-Leased % YTD 217 Deliveries SF YTD 217: $

30 Route 28 North 2nd Quarter 217 Major Leases Lakeside at Loudoun Building Ridgetop Circle DRS Technologies 4,462 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Ryan Park Office Center - Bldg A 4348 Yukon Drive Route 28 North June 217 $14,1, ($235 ) Kaiser Permanente The Lenkin Company A 1.% N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s No new construction reported during the quarter Route 28 North N/A N/A N/A N/A N/A N/A 3

31 Route 28 South 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD ' Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in the Route 28 South submarket has increased from 12.1% in the first quarter 217 to 12.8% in the second quarter 217, and has decreased from 15.2% since second quarter 216. Total vacancy has increased from 12.8% in the first quarter 217 to 13.3% in the second quarter 217, and has decreased from 15.7% since second quarter 216. The Route 28 South submarket recorded -13,68 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to 151,857 square feet absorbed. The primary driver for negative absorption was a 94,176-square-foot move-out by Cox Communications at Lincoln Park II - 38 Centreville Road. Lincoln Park II Centreville Road was purchased by Beckham Gumbin Ventures (BGV) from Clarion Partners for $13,45, ($138 psf). The building was 92.% occupied at the time of sale, and traded at a 9.% Cap Rate. Stonegate II Conference Center Drive also traded this quarter. Gramercy Property Trust purchased the building from Colony Realty Partners for $27,75, ($197 psf). The building was fully leased at the time of sale. 1 Year Averages (27-216) Total Absorption 37,139 SF / Year Deliveries (SF) 373,11 SF / Year 83,129 SF / Year Market Stats Inventory 13.6 M SF Direct Vacancy 12.8 % Total Vacancy 13.3 % YTD 217 Absorption 151,857 SF YTD 428,119 SF 665, SF Percent Pre-Leased 1.% The largest lease signed in the Route 28 South submarket this quarter was a 71,54-square-foot renewal by GSA-DEA at Avion Mid-Rise IV Avion Parkway. Also contributing to leasing activity this quarter was a 61,123-square-foot renewal by Fulcrum IT at Trinity Centre Trinity Parkway. YTD 217 Deliveries Asking Rental Rates (Full Service) 27: $ : $24.91 SF YTD 217: $

32 Route 28 South 2nd Quarter 217 Major Leases Avion Mid-Rise IV 1456 Avion Parkway Trinity Centre Trinity Parkway GSA-DEA Fulcrum IT 71,54 SF 61,123 SF Southgate One 45 Southgate Place Corporate Pointe Park Meadow Drive EK Fox & Associates 26,859 SF L-3 National Security Solutions 21,21 SF /Expansion Greens I 1549 Conference Center Drive AbleVets 21,144 SF Expansion Plaza East II Park Meadow Drive Integraph Corp. 17,138 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Lincoln Park II 376 Centreville Road Rt 28 South April 217 $13,45, ($138 psf) Beckham Gumbin Ventures Clarion Partners A 92.% 9.% Stonegate II 1552 Conference Center Dr Rt 28 South June 217 $27,75, ($197 psf) Gramercy Property Trust Colony Realty Partners B+ 1% N/A Property Submarket Building Available Pre-leased Delivery Date Developer Major s NoVA Office D Stonecroft Boulevard Route 28 South 24, SF SF 1.% 3Q 217 COPT GSA - CIA Dulles Discovery South 139 Air and Space Musuem Parkway Route 28 South 425, SF SF 1.% 1Q 218 Peterson Co. GSA - CIA 32

33 Springfield 2nd Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD ' Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in the Springfield submarket decreased from 21.5% in the first quarter 217 to 2.2% in the second quarter 217, and has increased from 19.4% since second quarter 216. Total vacancy decreased from 21.8% in the first quarter 217 to 2.5% in the second quarter 217, and has increased from 19.6% since second quarter 216. The Springfield submarket recorded 31,657 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to -55,485 square feet absorbed. The positive absorption was primarily driven by a 29,178-square-foot move-in by Booz Allen Hamilton at Metro Park VI Walker Lane. There was one sale in the Springfield submarket this quarter. VAE purchased Springfield Executive Center & Cherokee Business Center Backlick Road & 552 Cherokee Avenue from MGP for $12.9 million ($95 psf). The two buildings were 71.8% occupied at the time of sale, and traded at a 6.15% Cap Rate. The sale was the second transaction in the Springfield submarket above $1 million since fourth quarter 213. The largest lease signed in the Springfield submarket this quarter was a 117,176-square-foot renewal/ expansion by Booz Allen Hamilton at Metro Park VI Walker Lane. The tenant expanded by 29,321 square feet and renewed the remaining 87,855 square feet. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ ,669 SF / Year 127,58 SF / Year 297,841 SF / Year 216: $ M SF Direct Vacancy 2.2 % Total Vacancy 2.5 % YTD 217 Absorption YTD -55,485 SF 26,73 SF SF Percent Pre-Leased % YTD 217 Deliveries SF YTD 217: $

34 Springfield 2nd Quarter 217 Major Leases Metro Park VI Walker Lane Booz Allen Hamilton 117,176 SF /Expansion Shirley Industrial Park 6621 Electronic Drive Lane Construction 12, SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Springfield Executive Center & Cherokee Business Center 551 Backlick Road & 552 Cherokee Avenue Springfield May 217 $12,9, ($95 psf) VAE MGP B 71.8% 6.15% Property Submarket Building Available Pre-leased Delivery Date Developer Major s No new construction reported this quarter Springfield N/A N/A N/A N/A N/A N/A 34

35 Tysons Corner 2nd Quarter Vacancy Rate (%) Asking Rate ($) Deliveries Highlights Direct vacancy in the Tysons Corner submarket increased from 15.9% in the first quarter 217 to 16.8% in the second quarter 217, and has increased from 14.8% from the second quarter 216. Total vacancy increased from 16.3% in the first quarter 217 to 17.5% in the second quarter 217, and has increased from 15.6% since second quarter 216. Direct Vacancy Rate Total Vacancy Rate Asking Rate 1 Year Averages (27-216) Total Absorption Deliveries (SF) -.5 Total Net Absorption -35,99 SF / Year 229,82 SF / Year 2. M SF / Year The Tysons Corner submarket recorded -161,243 square feet of net absorption in the second quarter of 217, bringing the year-to-date total to 291,691 square feet absorbed. Negative absorption was driven by MITRE who moved out of 151,949 square feet at Centerstone at Tysons Westbranch Drive. The sale of Tysons Dulles Plaza - 141, 142, & 143 Spring Hill Drive from KBS to Rockpoint was the largest sale in the Tysons Corner submarket this quarter. The buildings sold for $13,25, ($27 psf). They were 88.% occupied at the time of sale, and traded at a 6.% Cap Rate. The Shenandoah Building Jones Branch Drive was also acquired by Rockpoint from TIAA for $55,25, ($28 psf). The buildings were 9.% occupied at the time of sale. Another sale that occurred in the Tysons Corner submarket was the sale of Tysons Executive Plaza 1-2 Corporate Ridge Road. C-III sold the office building to Westport for $24,, ($83 psf). Market Stats Inventory 29.2 M SF Direct Vacancy 16.8 % Total Vacancy 17.5 % YTD 217 Absorption 291,691 SF YTD 984,285 SF 1.6 M SF Percent Pre-Leased 7.2% YTD 217 Deliveries 34, SF The largest lease signed in the Tysons Corner submarket this quarter was a 32,439-square-foot relet by Hensel Phelps at The Corporate Office Tysons II - 16 Tysons Boulevard. Asking Rental Rates (Full Service) 27: $ : $3.91 YTD 217: $

36 Tysons Corner 2nd Quarter 217 Major Leases The Corporate Office Tysons II 175 Tysons Boulevard Hensel Phelps 32,439 SF Silverline Center 79 Westpark Drive Vonage 3,7 SF /Downsize 821 Greensboro Drive 166 International Drive BAE The Media Trust 29,658 SF 25,958 SF Sales 821 Greensboro Drive Altamira Technologies 18,934 SF Westpark Business Campus 7925 Jones Branch Drive Preferred System Solutions 21,966 SF Sublease Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Tysons Dulles Plaza 141, 142 & 143 Spring Hill Drive Tysons Corner June 217 $13,25, ($27 psf) Rockpoint KBS A 88.% 6.% Shenandoah Building 791 Jones Branch Drive Tysons Corner April 217 $55,25, ($281 psf) Rockpoint TIAA A 9.% N/A Tysons Executive Plaza 1 2 Corporate Ridge Road Tysons Corner May 217 $24,, ($94 psf) Westport C-III A 6.% REO Sale 6858 Old Dominion Drive Tysons Corner April 217 $12,1, ($294 psf) Amrish Gupta PMI Parking B 1.% 131 Exchange Property Submarket Building Available Pre-leased Delivery Date Developer Major s Capital One Campus - Building 3 Capital One Drive N. Tysons Corner 975, SF SF 1.% 3Q 218 Capital One Capital One The Boro Tower 835 Broad Street Tysons Corner 436,813 SF 352,371 SF 19.3% 1Q 219 Meridian Tegna Boro Loft 164 Boro Place Tysons Corner 143,66 SF 111,642 SF 22.3% 1Q 219 Meridian Whole Foods 36