Market Report. Northern Virginia 4th Quarter cushmanwakefield.com

Transcription

1 Market Report Northern Virginia 4th Quarter 217 cushmanwakefield.com

2 Contents DC Metropolitan Area Overview...3 Northern Virginia & Map Alexandria...7 RB Corridor...8 Crystal City/Pentagon City...9 Tysons Corner Reston/Herndon Route 28 South/Chantilly...13 Loudoun County...14 Appendix...15 Tables Methodology & Definitions...25 About Cushman & Wakefield...26 Cushman & Wakefield 2

3 Washington, DC Metropolitan Area The past 12 months proved to be another strong year for economic performance in the Washington, DC politan region (DC ). For a third straight year, job growth far exceeded the historical average, adding 56,3 nonfarm payroll positions in 217 only slightly off the 215 and 216 totals of 57, per year. Job growth was led by the office-intensive Professional and Business Services sector, which grew by 16,3 jobs in 217. Job creation in other office-using sectors was flat to negative: employment in Financial Services ended the year up 7, in Federal Government down 5 and in Information down 2,5 jobs. Among non-office-using sectors, the Education and Healthcare, and Leisure and Hospitality sectors experienced strong gains of over 13, positions each. The District of Columbia (DC) added 1, jobs while Northern Virginia (NoVA) and Suburban Maryland (SMD) both added 23,. While job growth and the overall economy continued to surge, overall net absorption continued to erode compared to historical averages. The DC region absorbed 1.9 million square feet (msf) of space in 217, well off the 2.6 msf that the region has averaged every year since 21. The regional vacancy rate was 17.8%, relatively unchanged from year-end 216. DC accounted for 6, square feet (sf) of absorption and a 12.4% vacancy rate, NoVA registered 1. msf of absorption and a vacancy rate of 21.5% and SMD had 13, sf of absorption with vacancy ending the year at 19.4%. While technology, consumer goods and real estate firms executed several notable new leases in 217, most large new transactions were executed by organizations that are typically on the top deals list in the DC region: federal agencies, law firms, not-for-profits and federal contractors. The federal government s leasing arm the General Services Administration (GSA) was responsible for the largest lease of the year in each of the three DC jurisdictions, with the Federal Communications Commission leasing 473, sf in DC, the Transportation Security Administration leasing 625, sf in Northern Virginia, and the Department of Homeland Security leasing 575, sf in Suburban Maryland. These three cases demonstrate that the government will continue to consolidate large requirements in submarkets that offer quality development at a relative value compared to pricier, traditional government enclaves. New supply in the core downtown submarkets of DC continues to be a concern for overall market fundamentals looking forward. The Central Business District (CBD), East End, and Capitol Hill/NoMa are expected to deliver over 7. msf of office space in the next 24 months, 4.8 msf of which is currently under construction. Among those projects that are currently under construction, 2.5 msf 51% is already preleased. Expect vacancy rates and concessions to rise in these submarkets as tenants continue to seek the top floors while velocity on lesser space in new developments remains modest, at best. On the flipside, the transit-oriented suburban submarkets have been relatively supply-constrained with under-construction projects nearing 8.% preleased. This supply constraint is subject to change as a plethora of high-profile, large tenants are currently active in the market with limited existing quality space options left to accommodate them. This will benefit developers like Carr Properties, The Meridian Group and JBG Smith, all of whom have risked spec development. The next 12 to 18 months should see two or more developments getting underway in Reston/Herndon, one likely in Tysons, and an active market for projects that recently broke ground in Bethesda. Washington, D.C. Metro Economic Indicators Market Indicators (Overall, All Classes) Overall Net Absorption/Overall 4Q TRAILING AVERAGE 1,5 1, Washington, DC Metropolitan Area NET ABSORPTION - DELIVERIES - VACANCY MSF 5-5 Q4 16 Q4 17 D.C. Metro Employment 3.2M 3.3M D.C. Metro Unemployment 3.8% 3.6% U.S. Unemployment 4.6% 4.1% Q4 16 Q % 17.8% YTD Net Absorption (sf) 1.4M 1.9M Under Construction (sf) 8.4M 1.M Average * $35.85 $37.54 *Rental rates reflect gross asking $psf/year -1, $ Net Absorption, SF (thousands), $ PSF Net Absorption Deliveries 12-Month Forecast 12-Month Forecast $39 $39 $38 $38 $37 $37 2% 16% 12% 8% 4% % Rate cushmanwakefield.com 3

4 Northern Virginia Economy Job growth in the Washington, D.C. Metropolitan region, though strong, slowed slightly in 217, adding 54, net new nonfarm payroll jobs or about 1.7% over 216 and higher than the 1.4%-growth nationwide. While fewer jobs were added than the 57, gained in 215 and 216, job growth was still above the historical average of 36, net new jobs. The unemployment rate for the region declined to 3.6%, 5 basis points (bps) lower than the national rate of 4.1%. Northern Virginia (NoVA) experienced job gains of 2,5 in 217 down from the 32, jobs added in 216. But NoVA accounted for all the growth in financial sector employment in the Washington D.C. 36 new jobs and for two-thirds of the job growth in Professional and Business Services with 9,2 jobs year-over-year. Other sectors contributing to growth included Construction and the Education and Healthcare sector which added 3,6 and 4,9 positions, respectively. Market Overview Northern Virginia capped off a year of notable relocations, with year-to-date overall net absorption closing the fourth quarter of 217 at a positive 1.2 million square feet (msf) a dramatic increase of 721.1% from the fourth quarter of 216. Nestlé completed the move into its new headquarters at 1812 North Moore Street, taking a total of 244, square feet (sf), which includes a 46,-sf expansion the company signed in the third quarter of 217. The National Science Foundation (NSF) moved into its new 72,-sf space at 241 Eisenhower Avenue which delivered in the third quarter of 217. This NSF relocation contributed to the drop in overall vacancy for both the region and the Huntington/ Eisenhower submarket. However, Ballston experienced a large increase in vacancy, due to the NSF vacating its space at 421 Wilson Boulevard and 4142 Wilson Boulevard. Future vacancy in Ballston will be further impacted as AvalonBay Communities pre-leased 73, sf of space at 44 Wilson, relocating its headquarters from 671 North Glebe Road. The new headquarters for AvalonBay will deliver in 22. Despite rising vacancy in Ballston, strong positive absorption helped keep vacancy rates in NoVA in check, closing the fourth quarter of 217 at 21.6% just a slight uptick of 3 bps year-overyear. Only one building delivered to the Northern Virginia market during the fourth quarter of 217: 121 Wilson (CEB Tower) added 521, sf of new-to-market space that was 73% preleased. Overall, new leasing activity in 217 proved to be even more impressive than it was in 216, registering a total of 6.7 msf and representing year-over-year growth of 24.6%. The fourth quarter s 1.7 msf of new leasing marked the second highest new leasing total for 217, just behind the 2.5 msf signed in the third quarter, but still representing an uptick when compared to the number of leases. NoVA continues to be a desirable destination for both large relocations and smaller tenants, particularly as new product is slated to come online. Outlook Northern Virginia s skyline will continue to evolve with Capital One s new Tysons headquarters, which is slated to deliver in the third quarter of 218, set to become the tallest building in the region. Likewise, construction of the 22-story, mixed-use building at 44 Wilson Boulevard in the final phase of Liberty Center is expected to break ground in the first quarter of 218, and will become the tallest building in Ballston. With the addition of 2311 Wilson Boulevard scheduled to deliver in the first quarter of 218, NoVA s office development shows no signs of slowing down, particularly with a significant amount of large requirements hitting the Silver Line Corridor submarkets in the 218 to 22 timeframe and a dearth of quality existing options. *According to public media reports Market Indicators Net Absorption/ 4Q TRAILING AVERAGE 4 Overall Q4 16 Q4 17 Overall 21.3% 21.6% Net Absorption 63k 1.1M Under Construction 4.1M 2.5M Average $32.23 $ Q % 22% 2% 18% 16% 14% 2 Net Absorption, Th. SF 12-Month Forecast, $ PSF 12% Q4 217 $35. $33. $31. $29. $27. $25. 1-Year Historical Average = 17.5% Cushman & Wakefield 4

5 Northern Virginia Office Submarkets Northern Virginia Office Submarkets LOUDOUN LOUDOUN PHASE II MARYLAND ROUTE 772 ROUTE 66 RESTON RESTON 267 INNOVATION CENTER WASHINGTON DULLES INTERNATIONAL AIRPORT PHASE I 7 HERNDON RESTON TOWN CENTER 267 WIEHLE - RESTON EAST TY UN TY CO UN N CO X SPRING HILL FA OU WASHINGTON, DC IR UD Y NT TY OU UN X C CO FA N IR TO FA ING L R A FA LO DI ST DULLES AIRPORT D AN YL IA AR IN M IRG V RI MA RY CT OF LA N D CO LU M BI A HERNDON HERNDON LOUDOUN COUNTY 5 FAIRFAX COUNTY GREENSBORO MCLEAN TYSONS CORNER 286 ARLINGTON COUNTY TYSONS 495 WEST FALLS CHURCH EAST FALLS CHURCH VIR BALLSTON ALGONKIAN P 5 FAIRFAX CENTER IA CLARENDON VIRGINIA SQUARE - GMU R-B CORRIDOR 495 VIENNA 66 AR GIN ROSSLYN COURT HOUSE DUNN LORING/ MERRIFIELD 123 ROUTE 28 SOUTH 5 5 PENTAGON CRYSTAL CITY MERRIFIELD AY KW RONALD REAGAN WASHINGTON NATIONAL NATIONAL AIRPORT AIRPORT 236 I-395 CORRIDOR FAIR FAX COUN TY PRINCE WILLIAM C O POTOMAC RIVER VAN DORN STREET UNT Y EISENHOWER AVENUE KING STREET 1 OLD TOWN ALEXANDRIA EISENHOWER AVENUE PRINCE WILLIAM COUNTY 95 FRANCONIA/ SPRINGFIELD SPRINGFIELD/ NEWINGTON cushmanwakefield.com 5

6 Top Transactions Key Lease Transactions Q4 217 PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET 875 North Randolph Street 315, GSA Office of Naval Research Renewal Ballston 12 Sunrise Valley Drive 186,2 Fannie Mae Renewal Reston/Herndon 1261 Fair Lakes Circle 172, CGI Group Renewal Fairfax Key Sales Transactions Q4 217 PROPERTY SF SELLER / BUYER PRICE / $PSF SUBMARKET 255 Wasser Terrace Overlook Towers at Dulles Corner 217,342 PGIM Real Estate / Tritower Financial Group $61,5, / $283 Reston/Herndon 828 Greensboro Drive 29,669 LACERA / Meridian Group $64,125, / $36 Tysons 475 Wilson Boulevard Two Liberty Center 177,238 Fred Schnider; Clark Enterprises / Westbrook Partners $72,12, / $46 Ballston Northern Virginia Office Market Net Absorption - Deliveries -, Fourth Quarter 217 Northern Virginia Office Market Inventory and by Submarket, Fourth Quarter Square Feet (Millions) % 22% 2% 18% 16% 14% 12% 1% 8% 6% % - New Deliveries Net Absorption Average Deliveries: 1.4 msf Average Absorption 1k SF Rate Average : 17% Leased Vacant Rate Cushman & Wakefield 6

7 Alexandria Market Indicators *Arrows = Current Qtr Trend 26.3% Net Absorption 12,63 SF Under Construction SF Deliveries 72, SF $3.9 FS Alexandria market fundamentals softened throughout the fourth quarter of 217. While year-to-date new leasing activity totaled 468,89 square feet (sf) a new high watermark following the previous record set in 213 the fourth quarter only registered 9,169 sf, ranking in the bottom third for 217. The largest lease was that signed by Fishbowl, which took 16,53 sf at 44 Canal Center Plaza in Old Town, and was the only lease of the quarter greater than 1, sf. Despite a year of strong leasing, the submarket saw vacancy tick upward 28 basis points (bps) year-over-year (YOY), closing the fourth quarter of 217 at 26.3%. Even in Old Town, which has generally been the only submarket with a single-digit vacancy rate, vacancy rose to 1.3%, up 12 bps YOY. The increase in vacancy was due to 97,137 sf of negative absorption for the year. Oblon, McClelland, Maier & Neustadt put 36,539 sf on the market for sublease at 194 Duke Street during the fourth quarter. Additionally, Phase One Consulting vacated 19,122 sf at 99 Canal Center Plaza following its acquisition by Accenture. As vacancy increased year-over-year, direct rental asking rates dipped in both the Old Town and I-395 submarkets; rates at the close of the fourth quarter were at $34.62 per square foot (psf) in Old Town (down 3.5% YOY) and $29.11 psf in the I-395 submarket (down 3.6% YOY). The Huntington/Eisenhower submarket saw direct rental rates jump 2.% closing the quarter at $27.48 psf, a direct result of the delivery of 241 Eisenhower Avenue in the third quarter of 217 and the National Science Foundation occupying its new headquarters in the fourth quarter of the year. With no new deliveries in the fourth quarter of 217, and the exact timing uncertain for construction commencement on the two office towers in the pipeline at 765 John Carlyle Street (part of the Carlyle Plaza Two development), near-term development remains limited. That will help keep vacancy rates in check. However, should the developers go spec on the 333,376-sf Carlyle Plaza Two project, it would certainly increase supply in the relatively slow-leasing Eisenhower submarket. Net Absorption Deliveries Square Feet, s 8 3% 6 25% 4 2% 2 15% -2 1% -4 5% -6 % Net Absorption Deliveries Rate Old Town Rate New Leasing Activity MSF Q1 Q2 Q3 Q4 $4 Rate Outlook Outdated office buildings in the submarket continue to be destined for conversion into residential units. As construction has trended towards new, built-to-suit headquarters rather than office space, the submarket may struggle with drawing new tenants. However, Alexandria hopes to benefit from the development of Potomac Yard as it expands closer to the submarket by bringing more office workers and residents into the area who desire a live-workplay location. In addition, large government requirements that continue to seek value options could bring increased activity to Springfield, Eisenhower and I-395 submarkets as recent deals with National Science Foundation, and Transportation Security Administration have proven. Full Service PSF $35 $3 $ Class A Class B cushmanwakefield.com 7

8 RB Corridor Market Indicators *Arrows = Current Qtr Trend 24.1% Net Absorption 163,614 SF Under Construction 174,962 SF Deliveries 521, SF $42.27 FS New leasing activity in the Rosslyn-Ballston (RB) Corridor was steady during the fourth-quarter of 217, totaling 268,295 square feet (sf) a 2.1% decline year-over-year (YOY). Leasing in the corridor slowed slightly from that in the third quarter of 217; new leases totaled 14,484 sf in Rosslyn and 79,851 sf in Ballston. Activity in these two markets was up compared to a year ago 134.8% in Rosslyn and 7.6% in Ballston. The Courthouse/ Clarendon/Virginia Square submarket experienced a 54.% decline in leasing activity from 216, ending the fourth quarter of 217 at 83,96 sf. The largest new lease of the quarter was signed by a new tenant in the market: the University of Virginia s Darden School of Business signed for 39,574 sf at 11 Wilson Boulevard, positioning itself at a convenient location for its prospective graduate-class student base. Accenture signed the second largest new lease of the fourth quarter, taking 29, sf at The Corporate Executive Board s (CEB s) newly delivered tower at 121 Wilson Boulevard. The largest lease in Ballston in the fourth quarter was that for the Children s School, which signed for 24, sf at 442 North Fairfax Drive. Despite slow fourth-quarter leasing activity in Courthouse/Clarendon/Virginia Square, that market did score a big win; media start-up Axios committed to a long-term deal to locate its headquarters in Clarendon, signing for 15,31 sf at 31 Clarendon Boulevard, where it is currently leasing in MakeOffices coworking space. For a second quarter in a row, the RB Corridor experienced a number of move-outs, resulting in 126,579 sf of negative absorption. The National Science Foundation (NSF) accounted for the majority of the negative absorption, vacating its space at 421 Wilson Boulevard to move into its new headquarters at 241 Eisenhower Avenue in Alexandria. The RB Corridor kept its year-end total absorption in positive territory, registering 163,614 sf of absorption a 27.1% increase from 216, thanks in large part to the new-to-market move-in of Nestlé s headquarters at 1812 North Moore. in Ballston took a hit as a result of the NSF s relocation, closing the year at 27.9%--an increase of 85 basis points (bps) from 216. That bumped up the RB Corridor s overall vacancy rate 18 bps YOY to 24.1%. On the other end of the vacancy spectrum, Rosslyn and Courthouse/Clarendon/Virginia Square experience declines, with their vacancy rates decreasing 15 bps to 26.2% and 29 bps to 15.8%, respectively, from a year ago. The delivery of 521,-sf top-of-market space in the CEB Tower at 121 Wilson Boulevard was a major factor in the large spike in Rosslyn asking rents. Direct Class A rents closed the fourth quarter of % higher compared to those at the end of the fourth quarter of 216. Direct asking rents in Ballston and Courthouse/Clarendon/Virginia Square rose just 2.4% and 1.3% YOY, respectively. With two buildings in the pipeline, both these submarkets may soon see similar rental rate hikes Wilson Boulevard, a 174,962 sf building which is 57.6% pre-leased is due to deliver in Courthouse in the first quarter of 218, while a proposed Liberty Center, 187,425 sf building at 44 Wilson Boulevard, is due to break ground in the second quarter of 218. Net Absorption Deliveries Square Feet, s New Leasing Activity MSF Full Service PSF 1, $55 $5 $45 $4 Outlook % 2% 15% 1% With the proximity to Washington, DC, skyline views and an increasing number of amenities offered throughout the Rosslyn-Ballston Corridor, companies will continue to see that market as a viable alternative to pricier options in the Washington, DC core markets and will in turn add an increasingly diverse tenant base to the corridor. Additionally, with tenant demand for new, quality options showing little sign of slowing, look for Class A asking rents to remain elevated for the next 24 to 36 months 5% % Net Absorption Deliveries Rate Q1 Q2 Q3 Q4 $ Class A Class B Rate Cushman & Wakefield 8

9 Crystal City/Pentagon City Market Indicators *Arrows = Current Qtr Trend 21.1% Net Absorption 163,59 SF Under Construction 99, SF Deliveries SF $36.47 FS The Crystal City/Pentagon City submarket closed the fourth quarter of 217 with 56,128 square feet (sf) of new leasing accounting for 24.1% of total leasing year-to-date (YTD). This marked the fourth consecutive quarter during which new leasing activity remained below the five-year average. The largest leases of the quarter were those of Cobham Advance Electronic Solutions, which took 15,12 sf at 2121 Crystal Drive, followed by G4S Secure Solutions expansion by 1, sf at 29 Crystal Drive. A handful of small tenant move-ins at 2511 Jefferson Davis Highway contributed to the 58,259 sf of positive absorption, bringing the YTD total to 221,768 sf. Overall vacancy for the submarket was down 2 basis points (bps) from a year ago, closing the fourth quarter at 21.1%. However, tenants in Crystal City continued to prefer new and renovated buildings over Class B properties which comprise 27.% of the submarket s total inventory. for Class B space was 35.6% for the fourth quarter, up 9 bps year-over-year (YOY). Occupiers continued to favor Class A space as Class A vacancy was 15.7%, down 32 bps year-over-year. Across the board, the Crystal City/Pentagon City submarket continued to see average asking rents dip. This is likely the result of by landlords attempting to drum up activity in the submarket, particularly in light of declining new leasing activity. At the close of the fourth quarter asking rent averaged $36.47 per square foot (psf) for all classes (down 127 bps year-over-year), $39. psf for Class A (down 14 bps YOY) and $33.85 psf for Class B (down 131 bps YOY). Net Absorption Deliveries Square Feet, s 1, , -1,5-2, 3% 25% 2% 15% 1% 5% % Net Abso rption Deliveries Vacan cy Rate New Leasing Activity MSF.4.2 Rate The new headquarters for the National Industries for the Blind (NIB) at 3 Potomac Avenue remains the only construction project in the pipeline. The 99,-sf building is on track to deliver in the second quarter of Q1 Q2 Q3 Q4 $44 Outlook With rental rates rising in the RB Corridor, tenants seeking Potomac River views may be drawn to Crystal City s lower rental rates. Combined with JBG SMITH s continued investment in the redevelopment of Crystal City and plentiful transportation options, the Crystal City/ Pentagon City submarket is positioned for revival in the near term. In additional, with quality Class B options in the District becoming harder to find and a widening rent spread, Crystal City has become a viable option for valueconscious tenants, particularly those in the Not-For-Profit sector. Full Service PSF $42 $4 $38 $36 $34 $ Class A Class B cushmanwakefield.com 9

10 Tysons Corner Market Indicators *Arrows = Current Qtr Trend 2.2% Net Absorption 314,664 SF Under Construction 1,564,986 SF Deliveries SF $32.51 FS New leasing activity was strong in Tysons Corner during the second half of 217. While the first two quarters of 217 saw a combined 48,934 square feet (sf) of new leasing in the submarket, leasing activity was nearly double that in the second half of the year, with a total of 919,521 sf executed in the third and fourth quarters. Tysons Corner s 217 year-to-date (YTD) leasing activity of 1.3 million square feet (msf) was virtually identical to that of 216, down by a barely noticeable.2%. The largest lease of the quarter was that of the National Automobile Dealers Association (NADA), which signed for 63,284 sf at 8484 Westpark Drive. The association is expected to take occupancy in the fourth quarter of 218. WealthEngine signed the second largest lease of the quarter, a 25,65-sf sublease at 8619 Westwood Center Drive. Other notable leases during the fourth quarter 217 included those for Digital Management, which signed for 23,629 sf at 16 International Drive, and Cross Country Consulting, which signed for 23,73 sf at 16 Tysons Boulevard. Following near-record leasing activity, Tysons Corner registered 77,976 sf of positive absorption during the fourth quarter of 217, bringing the year-to-date total to 31,479 sf the highest since 25. Tysons Corner s positive absorption was driven primarily by BAE Systems move into 29,658 sf at 821 Greensboro Drive and NTT Data s 25,539-sf move-in at 166 International Drive. As a result, vacancy continued to fall in the Tysons submarket, closing the fourth quarter of 217 at 2.%, a 7.8% decline yearover-year (YOY). With tightening market fundamentals, asking rents continued to climb. Class A direct asking rates rose a significant 8.7% YOY, closing 217 at $4.23 per square foot (psf) full service. Class A asking rate increases accounted for nearly the entire rent growth in Tysons. With four new Class A developments in the pipeline set to deliver in the 218/219 timeframe, asking rents will continue to increase in the coming years. Tysons Corner boasted two notable sales in the fourth quarter of 217. Meridian Group acquired 828 Greensboro Drive from RREEF for $64,125, ($36 psf), and PGIM/AEW sold 869 Westwood Center Drive to Atlantic Realty for $34,5, ($219 psf). Overall, 217 was a year of solid sales activity in Tysons Corner, indicating renewed interest from investors seeking the higher yields that are offered in suburban submarkets. Net Absorption Deliveries Square Feet, s 1, New Leasing Activity MSF 25% 2% 15% 1% -4 5% -6-8 % Net Absorption Deliveries Q1 Q2 Q3 Q4 Rate $5 Outlook Tysons Corner will continue to be one of the strongest submarkets in the Northern Virginia region due to its ideal location, mass transit options and amenities, and a robust development pipeline. The third quarter of 218 will see the delivery of the 975,-sf, built-to-suit Capital One Campus, which will become the tallest building in the region. Looking ahead, several large tenant requirements active in the market combined with a lack of quality large available blocks will benefit those projects currently under construction and is likely to spur speculative development in the next months. Full Service PSF $45 $4 $35 $3 $ Class A Class B Cushman & Wakefield 1

11 Reston/Herndon Market Indicators *Arrows = Current Qtr Trend 17.8% Net Absorption 7,555 SF Under Construction SF Deliveries 354,913 SF $3.34 FS The fourth quarter of 217 proved to be very strong for the Reston-Herndon submarket, which recorded 49,972 square feet (sf) of new leasing activity, bringing the year-to-date (YTD) total to 1.6 million square feet (msf) and marking a year-overyear (YOY) increase of 6.5%. Notably Reston-Herndon also captured the most leasing activity of any submarket in Northern Virginia, and the second-most leasing activity in the Metro D.C. area, behind the District s CBD submarket, which registered 2.6 msf of new, year-to-date leasing activity. The largest lease of the fourth quarter of 217 was a renewal signed by Peraton (formerly the Harris Corporation) for 167,285 sf at Worldgate Drive. Another government contractor signed the second-largest lease of the quarter, with SAIC renewing their lease for 136, sf at 121 Sunset Hills Road. The two largest new leases of the fourth quarter were by CareFirst, Inc., which took 31,629 sf at 174 Parkridge Boulevard, and by Northern Virginia Community College, which leased 18,974 sf at 1821 Michael Faraday Drive. Despite incredibly strong leasing fundamentals, the Reston- Herndon submarket experienced slight negative absorption, closing the fourth quarter of 217 at 9,138 sf. However, the submarket s YTD absorption was slightly positive registering 7,884 sf. The largest move-out of the fourth quarter was Orange Business Services, which vacated 123,65 sf at McLearen Road. This negative absorption was largely offset by Serco s move-in at 1293 Worldgate Drive, for 83,38 sf in December 217. Additionally, SAP took occupancy of 26, sf at 2355 Dulles Corner Boulevard. With minimal absorption in the fourth quarter of 217, it is no surprise that overall vacancy was virtually unchanged from the third quarter, registering 17.8%. This also marked the fourteenth consecutive quarter in which Reston-Herndon had the lowest vacancy rate in Fairfax County. Reston-Herndon s overall average rental rate rose above 3 dollars for the first time since 29, closing 217 at $3.32 per square foot (psf). While asking rents for Class B and C buildings remained flat in Reston-Herndon, Class A average asking rents rose 21 basis points (bps) year-over-year (YOY) to $32.73 psf. Asking rents for Class A buildings in Reston-Herndon rose primarily due to the delivery of Comstock s Reston Station at 19 Reston Metro Plaza in the third quarter, which is marketing space with rents that far exceed the typical asking price in the rest of the submarket. Reston-Herndon s sales activity slowed after experiencing six sales in the third quarter of 217. The only sale of the fourth quarter was Tritower Financial s purchase of 255 Wasser Terrace from PGIM for $61,5, ($283 psf). Net Absorption Deliveries Square Feet, s 2,5 25% 2, 2% 1,5 15% 1, 1% 5 5% -5 % Net Absorption Deliveries New Leasing Activity MSF Q1 Q2 Q3 Q4 $32 $3 Rate Outlook Given the strong leasing fundamentals the Reston-Herndon submarket has exhibited, vacancy rates will continue to trend down, particularly as the pipeline of new, speculative construction remains limited and tenants chip away at remaining blocks of space. As one of the most sought after submarkets in the Northern Virginia region, asking rents are expected to continue to remain elevated, with much of the demand driven by technology firms and government contractors who are attracted to Silver Line access and competitively affordable rents in office space along the Toll Road. A multitude of large tenants in the market and a lack of quality existing options is certain to kickstart new development in Reston and Herndon in the coming year. Full Service PSF $28 $26 $24 $22 $ Class A Class B cushmanwakefield.com 11

12 Route 5/66 Market Indicators *Arrows = Current Qtr Trend 2.2% Net Absorption (15,435 SF) Under Construction SF Deliveries SF $28.54 FS The Merrifield/Route 5 and Fairfax/Oakton/Vienna submarkets closed the fourth quarter of 217 with mixed fundamentals. The overall vacancy rate for Merrifield/Route 5 rose 27 basis points (bps) year-over-year (YOY), to 2.2%. The overall vacancy rate for Fairfax/Oakton/Vienna, however, remained flat YOY, holding at 24.7%. Despite rising vacancy in Merrifield/Route 5, the submarket managed to register 122,27 square feet (sf) of positive absorption during the fourth quarter of 217. Cognosante s 28,5 sf move-in at 311 Fairview Drive and HDR, Inc. s 22,239 SF move-in at 265 Park Tower Drive were major contributors to Merrifield s fourthquarter positive absorption. Those move-ins still were not enough to offset move-outs during prior quarters, and thus year-to-date (YTD) net absorption ended the fourth quarter with with 116,433 sf of negative absorption. The Fairfax/Oakton/Vienna submarket also experienced similar net absorption trends, registering 53,52 sf of positive absorption in the fourth quarter of 217 but year-todate net absorption of 25,478 sf of negative absorption. New leasing activity was strong in both the Merrifield/Route 5 and Fairfax/Oakton/Vienna submarkets, registering a combined year-end total of 628,511 sf the highest YTD total since 213. Leasing activity more than doubled in both submarkets yearover-year. It is evident that, after years of flight from companies like Noblis, Reed Smith, LLP, Dyncorp, and General Dynamics that tenants are taking another look at these secondary markets especially as rents are starting to rise in Tysons, Reston and Herndon. The largest lease of the quarter in either submarket was a 172, sf renewal: CGI signed for eight additional years at its 1261 Fair Lakes Circle location in Fairfax. In Merrifield/Route 5, the largest relocation of the fourth quarter was that of Fors Marsh Group, which committed to 34,23 sf at 311 Fairview Park Drive. In Fairfax/Oakton/Vienna, the largest relocation of the fourth quarter was that of VIGNET, Inc., which signed for 18,856 sf at 4114 Legato Road. Square Feet, s MSF Net Absorption Deliveries , New Leasing Activity Net Absorption Deliveries Merrifield Rate Fairfax/Oakton/Vienna Rate 3% 2% 1% Q1 Q2 Q3 Q4 % Rate $34 $32 Outlook With negative absorption in eight of the last ten years and rising vacancy rates over time, the Merrifield/Route 5 and Fairfax/Oakton/Vienna submarkets continue to face headwinds as tenants seek locations with Metro-proximity and greater exposure to amenities. As a result, asking rents will likely stay relatively flat over time, and landlords may have to improve concession packages in their attempt to retain occupancies in the Merrifield/Route 5 and Fairfax/ Oakton/Vienna submarkets. In addition, owners that can offer a great tenant experience with some combination of fitness, roof top, conference and food service at a relative value to Tysons, Reston and Herndon will outperform the greater market. Full Service PSF $3 $28 $26 $24 $ Merrifield/Route 5 Fairfax/Oakton/Vienna Cushman & Wakefield 12

13 Route 28 South/Chantilly Market Indicators *Arrows = Current Qtr Trend 17.7% Net Absorption 249,332 SF Under Construction 665, SF Deliveries SF $25.94 FS The Route 28 South/Chantilly submarket closed 217 with its strongest quarter of new leasing activity since the third quarter of 213. New leasing activity in the fourth quarter of 217 totaled 172, square feet (sf) and accounted for 46% of total new leasing for the year. The largest lease of the fourth quarter was that of the International Association of Fire Chiefs which signed for 26, sf at 4795 Meadow Wood Lane. With the uptick in new leasing activity, direct asking rental rates for Route 28 South/Chantilly closed the fourth quarter of 217 at $26.29 per square foot (psf), a 1.5% increase year-over-year (YOY). Class A direct asking rents also registered a slight bump from a year ago, rising.62% from the fourth quarter of 216, and closing 217 at $27.67 psf. Despite some green shoots in new leasing activity and asking rents, year-to-date absorption for 217 declined 43.% yearover-year due to a number of move-outs at 1451 George Carter Way and Newbrook Drive. However, year-to-date overall absorption still remained positive, closing the year at 294,332 sf. While positive absorption dialed back in 217, it was still sufficient to help to chip away at lingering blocks of space. Overall vacancy closed the fourth quarter of 217 at 17.7%, down nearly 33 basis points (bps) YOY. Overall Class A vacancy rates declined slightly more dramatically, closing the fourth quarter at 14.6%, down 39 bps YOY. No new construction broke ground during the fourth quarter of 217, although the submarket is awaiting the delivery of two fully pre-leased developments for U.S. intelligence agencies: the Peterson Companies 48,-sf project at the Dulles Discovery campus is expected to deliver in the first quarter of 218, COPT s 24,-sf project at Conference Center Drive is due to deliver during the fourth quarter of 219. Net Absorption Deliveries Square Feet, s 1,2 1, New Leasing Activity MSF % 25% 2% 15% 1% 5% % Net Absorption Deliveries Rate Q1 Q2 Q3 Q4 Rate Outlook With President Trump s defense budget for fiscal year 218 expected to expand by 5.% or more, the Route 28 South/Chantilly submarket is already well positioned to benefit from the additional spending given the number of federal agencies and contractors in the submarket. The limited new construction and lack of speculative projects will help to keep vacancy rates in check, particularly as the submarket continues to attract tenants attention. Full Service PSF $3 $28 $26 $24 $22 $2 $ Class A Class B cushmanwakefield.com 13

14 Loudoun County Market Indicators *Arrows = Current Qtr Trend 14.2% Net Absorption 193,527 SF Under Construction SF Deliveries 136,8 SF $24.31 FS Loudoun County s fourth quarter of 217 experienced nearly 88, square feet (sf) of positive absorption, higher than each of the three previous quarters of the year. Absorption during the last quarter of year was largely driven by SSP America s 2,33- sf move-in at 248 Bashan Drive, with additional absorption coming from two 8,-sf subleases moving into 4561 Woodland Road. In all, year-to-date (YTD) absorption totaled 27,634 sf, the highest level of positive absorption seen in the submarket since 29. With four straight quarters of positive absorption in Loudoun County, it should be no surprise that vacancy dropped 4 basis points (bps) year-over-year (YOY) to close the fourth quarter of 217 at 14.2% -- a historical low for the submarket. for Class A product closed the fourth quarter of 217 at 11.4% bps lower than the overall average vacancy rate for all building classes in Loudoun County. Net Absorption Deliveries Square Feet, s Net Absorption Deliveries Rate 25% 2% 15% 1% 5% % Rate Despite robust positive absorption, overall rental rates stayed relatively flat year-over-year (YOY), registering a 15 basis point (bps) increase, and closing the fourth quarter at $24.31 per square foot (psf). However, Class A asking rents continued to climb as closing the fourth quarter of 217 at $26.4 psf, a.8% YOY increase and nearly $4. higher than the average Class B rental rate. With 66,136 sf of new leasing activity, the fourth quarter of 217 was Loudoun s strongest quarter of the year. Despite this, 217 as a whole saw leasing activity fall 42.8% YOY compared to 216 a record year for the submarket. Although the 217 total of 182,816 sf new leasing activity was the lowest YTD total in Loudoun County since 213, it fell in line with activity seen in 214 and 215. The largest lease of the quarter was an expansion by Orbital ATK at 217 Atlantic Boulevard, as they expanded by 25,192 sf to occupy a total of 63,424 sf at One Steeplechase. No other leases over 1, sf signed during the fourth quarter of 217, but Gravy Analytics and Rhythmic Technologies signed 8,973 sf and 7,5 sf leases at 4561 Woodland Road and Ridgetop Circle, respectively. In 217, Loudoun saw two construction completions for a total of 136,8 sf, though neither delivered in the fourth quarter. With no new construction deliveries slated for the next 24 months, Loudoun County will continue to keep supply and vacancy rates in check. Outlook With tightening vacancy rates and a lack of new construction in the pipeline, active tenants in the Loudoun County submarket may struggle to find viable Class A office space in the future. As tenants continue to seek out amenitized, transit-oriented locations, the extent to which Loudoun County may benefit from the delivery of Metro still remains to be seen. Still, with rental rates in welllocated buildings in submarkets further east starting to surpass historic highs, quality options in Loudoun could be a good option for value-conscious tenants. New Leasing Activity 1..8 MSF Q1 Q2 Q3 Q4 $28 $26 Full Service PSF $24 $22 $2 $18 $ Class A Class B Cushman & Wakefield 14

15 Appendix Table Summaries Metro Washington Office Market Summary 15 Employment Data 15 Office Availability,, and Net Absorption 16 Trailing 12-Month Data 17 Historical Year-End Data 18 Market Statistics by Class 19-2 Survey of New Office Space by Submarket Methodology & Definitions 25 Metro Washington Office Market Summary: Fourth Quarter 217p Inventory Total Vacant Space Metro Washington Current Employment Data Rate Q 217 Absorption Year to Date Absorption Washington, DC 13, 12. % Northern Virginia 2 2. % Suburban Maryland 59, 1 % Regional Totals % Nonfarm Employment (Jan- 216) Nonfarm Employment (Jan- 217p) Jobs Added/ Lost* Percent Change Washington, DC % Northern Virginia 1,433,7 1. % Suburban Maryland 9 1, 2. % Regional Totals 3 3,2 1.6% SOURCE: U.S. Bureau of Labor Statistics (Not seasonally adjusted) * Average per year to date p - preliminary cushmanwakefield.com 15

16 Appendix Office Availability,, and Net Absorption, Fourth Quarter 217p Total Inventory New/Relet Space Available Sublet Space Available Total Space Available Rate New/Relet Absorption Sublet Absorption Total Net Absorption Rosslyn 9,161,749 2,88, ,52 2,41, % 65,617 (233,69) 417,8 Courthouse/ Clarendon/Virginia Square 5,531, ,562 38,12 873, % 54,422 54,4224 Ballston 7,95,248 1,892,643 9,158 1,982, % (614,66) 16,651 (598,9) Crystal City/Pentagon City 1,677,69 2,2,485 49,476 2,249, % 78,284 (2,25) 58,259 Arlington County 32,465,813 7,17,234 49,256 7,57, % 168,663 (236,983) (68,32) RB Corridor 21,788,744 4, ,78 5,257, % 9,379 73, , 614 Old Town 7,991, ,45 127,6 826,51 1.3% (78,668) (48,973) (127,641) I-395 Corridor 6,58,5 2,326,251 8,592 2,334, % 39,612 39,612 Huntingon/Eisenhower 3,143,79 1,354,173 1,445 1,364, % 833,119 1, ,397 City of Alexandria 17,193,425 4,379, ,97 4,525, % 794,63 (47,695) 746,368 Inside the Beltway 48,659,238 11,397,18 636,353 12,33, % 962,726 (284, ,4 Annandale/Baileys 1,369, ,77 12, , % (33,7) ) 73 (32,277) Merrifield/Route 5 6,68,194 1,261,379 74,478 1,335, % 12,61 3, ,25 Fairfax/Oakton/Vienna 9,59,467 2,236, ,147 2,352, % 7,585 4,836 75,421 Tysons Corner 22,935,182 4,41,3 23,378 4,631,48 2.2% 16,831 (69,67) 91,161 Reston/Herndon 24,585,75 3,949, ,227 4,372, % 8,664 (18,131) (9,467) Rt 28 S/Chantilly 8,677,298 1,351,693 18,711 1,532, % 17,819 17,819 Springfield 3,268,42 1,3,887 35,48 1,65, % 16,41 (32,32) (15,631) Fairfax County 76,953,937 14,618,229 1,71,573 15,689,82 2.4% 343,894 (83,843) 26, Corridor 16,117,661 3,498,7 19,625 3,688, % 173,186 35,26 28,446 Loudoun County 5,347, ,16 59,83 757, % 56,236 17,588 73,824 Outside the Beltway 82,31,532 15,316,389 1,131,376 16,447,765 2.% 4,13 (66,255) 333,875 Northern Virginia 131,96,77 26,713,497 1,767,729 28,481, % 1,362,856 (35,933) 1,11,923 1 The Rosslyn/Ballston (R/B) corridor is comprised of Rosslyn, Clarendon/Courthouse, Virginia Square, and Ballston submarkets. 2 Inside the Beltway is comprised of Arlington County and Alexandria/Outside the Beltway is comprised of Fairfax and Loudoun Counties 3 The 5/66 corridor is comprised of Merrifield, Vienna, Oakton, Fairfax Center, and Fairfax City submarkets. ****New Space Available and New Space Absorption based on buildings delivered 25 to present P - Preliminary Cushman & Wakefield 16

17 Appendix Trailing 12-Month Data Total Office Inventory Office Rate Total Office Absorption 1st Qtr 217 2nd Qtr 217 3rd Qtr 217 4th Qtr 217 1st Qtr 217 2nd Qtr 217 3rd Qtr 217 4th Qtr 217 1st Qtr 217 2nd Qtr 217 3rd Qtr 217 4th Qtr 217 Rosslyn 8,638,623 8,638,623 8,64,749 9,161, % 27.4% 25.9% 26.2% -31, ,25 58, ,8 Courthouse/ Clarendon/ Virginia Square 5,531,747 5,531,747 5,531,457 5,531, % 15.7% 15.8% 15.8% 16,792 59,936-6,576 54,422 Ballston 7,95,248 7,95,248 7,95,248 7,95, % 17.2% 19.5% 27.9% 5,41 147, , ,9 Crystal City/ Pentagon City 1,677,69 1,677,69 1,677,69 1,677, % 22.% 21.6% 21.1% 144,529-25,534 44,514 58,259 Arlington County 31,942,687 31,942,687 31,944,813 32,465, % 21.3% 21.6% 21.6% 224,91 293,7-64,26-68,32 RB Corridor 21,265,618 21,265,618 21,267,454 21,788, % 21.% 21.2% 24.1% 8, ,541-18,72-126,579 Old Town 7,991,666 7,991,666 7,991,666 7,991, % 9.2% 8.7% 1.3% -1,856 1,289 4,71-127,641 I-395 Corridor 6,58,5 6,58,5 6,58,5 6,58,5 38.9% 38.7% 39.2% 38.5% -56,187 15,724-32,892 39,612 Huntington/ Eisenhower 2,423,79 2,423,79 3,143,79 3,143, % 35.3% 68.7% 43.4% -13,778-6,148-58, ,397 City of Alexandria 16,473,425 16,473,425 17,193,425 17,193, % 23.9% 29.8% 26.3% -8,821 1, ,89 746,368 Inside the Beltway 48,416,112 48,416,112 49,138,238 49,659, % 22.2% 24.7% 24.2% 144,8 33, ,15 678,48 Annandale/Baileys 1,369,626 1,369,626 1,369,626 1,369, % 28.2% 26.8% 29.2% -15, ,975-32,277 Merrifield/Route 5 6,68,194 6,68,194 6,68,194 6,68, % 2.3% 21.8% 2.2% -292,662 11,26-55, ,25 Fairfax/Oakton/Vienna 9,59,467 9,59,467 9,59,467 9,59, % 24.3% 25.5% 24.7% 87,193-48, ,362 75,421 Tysons Corner 22,92,597 22,92,597 22,935,182 22,935, % 21.6% 2.9% 2.2% 13,83-31,55 241,475 91,161 Reston/Herndon 24,23,837 24,23,837 24,585,75 24,585, % 16.6% 17.7% 17.8% -127,99 65,67 79,945-9,467 Rt 28 S/Chantilly 8,675,922 8,675,922 8,675,922 8,677, % 17.7% 17.9% 17.7% 18,3 221,595 36,915 17,819 Springfield 3,268,42 3,268,42 3,268,42 3,268, % 32.6% 32.1% 32.6% -6,87 5,744 16,591-15,631 Fairfax County 76,583,63 76,583,63 76,952,561 76,953, % 2.4% 2.8% 2.4% -378, ,41 22,715 26, Corridor 16,117,661 16,117,661 16,117,661 16,117, % 22.6% 22.7% 22.9% -25,469 61, ,186 28,446 Loudoun County 5,66,595 5,275,595 5,347,595 5,347, % 14.7% 15.6% 14.2% 68,411 34,285 17, Outside the Beltway 81,649,658 81,858,658 82,3,156 82,31, % 2.% 2.4% 2.% -31,22 42, , ,875 Northern Virginia 13,65,77 13,274,77 131,438, ,96, % 2.8% 22.% 21.6% -165,942 76,558-4,293 1,11,923 1 The Rosslyn/Ballston (R/B) corridor is comprised of Rosslyn, Clarendon/Courthouse, Virginia Square, and Ballston submarkets. 2 Inside the Beltway is comprised of Arlington County and Alexandria/Outside the Beltway is comprised of Fairfax and Loudoun Counties. 3 The 5/66 corridor is comprised of Merrifield, Vienna, Oakton, Fairfax Center, and Fairfax City submarkets. 4 The I-395 and Springfield/Newington submarkets were updated in the second quarter of 212 with additional inventory. p- preliminary cushmanwakefield.com 17

18 Appendix Historical Year-End Data Total Office Inventory Office Rate Total Annual Absorption p p p Rosslyn 8,613,43 8,638,623 9,161, % 27.7% 26.2% 159,29 9,47 555,42 Courthouse/Clarendon/Virginia Square 5,531,747 5,531,747 5,531, % 18.7% 15.8% (81,594) (7,256) 214,574 Ballston 7,76,618 7,95,248 7,95, % 19.4% 27.9% 127,316 6,792-66,38 Crystal City/Pentagon City 1,945,42 1,677,69 1,677, % 23.1% 21.1% 346,228 (462,146) 221,768 Arlington County 32,166,81 31,942,687 32,465, % 22.8% 21.6% 551,159 (399,14) 385,382 RB Corridor 21,221,48 21,265,618 21,788, % 22.6% 24.1% 24,931 63,6 163,614 Old Town 8,191,666 7,991,666 7,991, % 9.1% 1.3% (82,12) (55,877) -97,137 I-395 Corridor 6,58,5 6,58,5 6,58,5 37.3% 38.% 38.5% (227,461) 136,184-33,743 Huntingon/Eisenhower 2,742,77 2,423,79 3,143, % 34.5% 43.4% (17,885) (11,38) 233,483 City of Alexandria 16,992,423 16,473,425 17,193, % 23.5% 26.3% (327,466) 69,269 12,63 Inside the Beltway 49,159,233 48,416,112 49,659, % 23.% 24.2% 223,693 (329,871) 487,985 Annandale/Baileys 1,358,75 1,369,626 1,369, % 3.1% 29.2% (97,367) 12,58-28,89 Merrifield/Route 5 6,68,194 6,68,194 6,68, % 17.5% 2.2% (16,447) 112,725-15,435 Fairfax/Oakton/Vienna 9,55,63 9,59,467 9,59, % 24.7% 24.7% 5,921 (477,161) -3,19 Tysons Corner 23,24,699 22,92,597 22,935, % 21.7% 2.2% 67,379 (76,977) 314,664 Reston/Herndon 24,69,837 24,23,837 24,585, % 16.2% 17.8% 268,14 266,554 7,555 Rt 28 S/Chantilly 9,242,182 8,675,922 8,677, % 21.% 17.7% 41, ,96 294,332 Springfield 3,268,42 3,268,42 3,268, % 32.4% 32.6% 73,48 (28,25) -8,383 Fairfax County 77,914,64 76,583,63 76,953, % 2.5% 2.4% 252,792 24,855 47, ,113,797 16,117,661 16,117, % 21.8% 22.9% (1,526) (364,436) -18,544 Loudoun County 5,121,795 5,121,795 5,347, % 18.2% 14.2% 74,754 4,4 193,527 Outside the Beltway 83,36,435 81,74,858 82,31, % 2.3% 2.% 327,546 28, ,261 Northern Virginia 132,195,668 13,12,97 131,96, % 21.3% 21.6% 551,239 (49,12) 1,152,246 1 Inside the Beltway is comprised of Arlington County and Alexandria/Outside the Beltway is comprised of Fairfax and Loudoun Counties 2 The Rosslyn/Ballston (R/B) corridor is comprised of Rosslyn, Clarendon/Courthouse, Virginia Square, and Ballston submarkets. 3 The 5/66 corridor is comprised of Merrifield, Vienna, Oakton, Fairfax Center, and Fairfax City submarkets. 4 The I-395 and Springfield/Newington submarkets were updated in the second quarter of 212 with additional inventory. Cushman & Wakefield 18

19 Market Statistics Northern Virginia 4th Quarter 217 Market Statistics Buildings Total Inventory (SF) New/Relet (%) Sublet (%) Total * (%) Net Absorption Current QTR (SF) Under Construction (SF) Average (FS) Alexandria Class A 47 8,575, % 1.% 19.6% 631,26 $34.14 B 64 6,746,2 29.3%.7% 3.% 141,567 $28.88 C 27 1,872,29 43.%.7% 43.8% (26,45) $24.5 TOTAL ,193, %.8% 26.3% 746,368 $3.9 RB Corridor Class A 5 13,28, % 3.% 24.5% (114,427) 174,962 $44.81 B 35 6,227, %.4% 23.% (26,745) $41.25 C 19 2,28, %.9% 25.% 14,593 $33.23 TOTAL 14 21,788, % 2.% 24.1% (126,579) 174,962 $42.27 Crystal City/Pentagon City Class A 25 7,794, %.5% 15.7% 7,87 99, $39. B 13 2,882, %.4% 35.6% (12,611) $33.85 C N/A TOTAL 38 1,677,69 2.6%.5% 21.1% 58,259 99, $36.47 Tysons Class A 52 13,255, %.6% 21.1% 77,976 1,555,419 $38.9 B 61 7,622, %.5% 23.4% 28,127 $29.58 C 29 2,42, %.1% 18.6% (14,942) $24.77 TOTAL ,92, %.6% 21.6% 91,161 1,555,419 $31.94 Reston/Herndon Class A 17 18,322, % 1.7% 18.1% (9,138) $32.73 B 63 5,589,26 15.% 1.9% 16.9% 4,713 $25.54 C , %.7% 16.5% (5,42) $18.31 TOTAL ,585, % 1.7% 17.8% (9,467) $3.34 * Current - the vacancy rate is calculated using the combined total of vacant direct, sublease and new space. cushmanwakefield.com 19

20 Market Statistics Northern Virginia 4th Quarter 217 Market Statistics Buildings Total Inventory (SF) New/Relet (%) Sublet (%) Total * (%) Net Absorption Current QTR (SF) Under Construction (SF) Average (FS) Merriield/Route 5 Class A 2 3,616, % 1.3% 27.9% 122,27 - $31.8 B 15 1,566, % 1.6% 13.2% 1,563 C 2 1,424,94 8.3%.1% 8.4% 435 $24.94 $22.23 TOTAL 55 6,68, % 1.1% 2.2% 133,25 - $28.54 Fairfax/Oakton/Vienna Class A 25 4,365, %.5% 17.1% 53,52 $3.33 B 47 4,41, % 2.1% 32.4% 25,387 $24.29 C , %.% 24.3% (3,18) $23.27 TOTAL 84 9,59, % 1.% 2.2% 75,421 $32.51 Route 28 South Class A 49 6,127, %.9% 14.6% (3,933) 665, $27.44 B 27 2,548, % 4.9% 24.9% 48,752 $23.82 C N/A TOTAL 76 8,675, % 2.1% 17.7% 17, , $25.94 Loudoun County Class A 44 3,939, % 1.% 11.4% 87,931 $26.4 B 18 1,47, % 1.4% 21.9% (14,17) $22.14 C N/A TOTAL 62 5,347, % 1.1% 14.2% 73,824 $24.31 Northern Virginia Class A ,65, % 1.5% 19.6% 865,414 2,53,948 $36.16 B ,611, % 1.3% 24.9% 26,754 $29.93 C 143 1,743, %.4% 24.7% (6,245) $25.83 TOTAL ,96, % 1.3% 21.6% 1,11,923 2,53,948 $32.68 * Current - the vacancy rate is calculated using the combined total of vacant direct, sublease and new space. Cushman & Wakefield 2