Northern Virginia. Quarterly Market Report. 4th Quarter lpcwashingtondc.com

Transcription

1 Northern Virginia Quarterly Market Report 4th 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, 4Q 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 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 4th 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 decreased to 15.% in the fourth quarter, down from 15.3% at the end of the third quarter. The market recorded 665,123 square feet of net absorption in the fourth quarter, representing a 34% decrease from the 1,7,692 square feet absorbed in the third quarter. Leasing activity totaled approximately 7.8 million square feet in transactions signed. The largest lease executed was a pre-lease by the GSA-TSA for 622,812 square feet at 6595 Springfield Center Drive, a proposed building in Springfield, Virginia. Two buildings, totaling 419, square feet, broke ground; bringing the year-to-date 217 construction pipeline total to 8,465,966 square feet (59% pre-leased). Six buildings, totaling 1,63,231 square feet (75% leased), delivered this quarter including the 552,781-square-foot CEB Tower at 121 Wilson Boulevard in Arlington, Virginia. There were twenty-three sale transactions in the fourth quarter, totaling $2.14 billion. The largest sale was 18 M Street, NW in Washington, DC trading for $421,, ($725 psf). Average asking rental rates decreased $.6 to $36.81 per square foot, Full Service. From November November 217 the DC Metropolitan area had a net increase of 48,9 jobs (5,3 private sector, -1,4 government) representing 1.5% growth, while the unemployment rate decreased to 3.6%. DC VA MD Metro Area (YTD) Direct Vacancy (4Q 217) 1.% 15.4% 14.2% 14.2% Total Vacancy (4Q 217) 1.8% 16.2% 14.9% 15.% Total Net Absorption (SF, YTD 217) 1,26,926 1,79, , M SF (SF, YTD 217) 9,79,227 13,237,848 3,93, M SF 3

4 Metropolitan D.C. Market Overview 4th Quarter 217 Outlook The Washington, DC Metropolitan market had a strong finish to 217. Vacancy decreased in DC and Suburban Maryland, while Northern Virginia remained flat. All three regions posted positive net absorption in the fourth quarter and the DC Metro absorbed approximately 2.5 million square feet in 217. Sales volume totaled $7.33 billion in 217 (a 12.1% increase from year-end 216) and leasing activity totaled 26.2 million square feet (a 5.2% increase from year-end 216). Regional employment experienced 1.5% of growth YOY ending November 217, primarily driven by the private sector, specifically the Educational & Health Services industry. The DC Metro area s unemployment rate decreased to 3.6%, out-pacing the 4.1% national average. While market fundamentals strengthened in 217, Metro Washington, DC is expected to remain a tenant s market through 218. Projects and trends to keep an eye on in 218 include the upcoming deliveries of Midtown Center and Capitol Crossing and how they will impact their respective submarkets of the East End and Capitol Hill, respectively. Downtown Bethesda is heating up with proposed new developments and the future relocation of Marriott s headquarters. While there s a strong sense of optimism among defense contractors that the government s emphasis on increased Department of Defense spending will be a boon for their industry in Northern Virginia, and the region in general. 4

5 Northern Virginia 4th Quarter 217 Market Summary The Northern Virginia office market consists of 1,537 buildings over 25, square feet, totaling approximately million square feet of rentable space. The largest non-gsa lease signed during the fourth quarter was a 167,285-square-foot renewal by Harris Corporation/Peraton at Monument Worldgate Worldgate Drive in the Reston/ Herndon submarket. The largest lease signed by the GSA was a 622,812-square-foot pre-lease for the Transportation Security Administration at 6595 Springfield Center Drive in the Springfield submarket. Building sales volume totaled $444,912, during the fourth quarter. The largest transaction was the sale of Starco Portfolio - Stoneleigh I & II, Glenview I-IV - 48 & 484 Westfields Boulevard, Newbrook Drive. The RMR Group acquired the buildings from Normandy for $74.8 million ($164 psf). The buildings were 74.% occupied at the time of sale, and traded at a 9.25% Cap Rate. The second largest sale was of Two Liberty Center Wilson Boulevard. Westbrook Partners acquired the building from Carr Properties for $72,12, ($46 psf). The building was fully occupied at the time of sale, and traded at a 6.5% Cap Rate. The third largest sale was 828 Greensboro Drive in the Tysons Corner submarket. Meridian Group acquired the building from RREEF for $64,125, ($36 psf). The building was 83.% occupied at the time of sale, and traded at a 3.2% Cap Rate. Inside the Beltway, there were 51 buildings marketing 5, square feet or greater of contiguous space available at the end of the fourth quarter 217, the same as third quarter 217. Outside the Beltway, there were 78 buildings marketing 5, square feet or greater of contiguous space available at the end of the fourth quarter 217, compared to 82 from the third quarter 217. Direct Vacancy Total Vacancy Net Absorption (YTD) Leasing Activity (YTD) Under Construction Deliveries (YTD) Rental Rates U/C Percent Pre-Leased 4Q 217 3Q 217 4Q % 15.4% 16.1% 16.2% 16.2% 17.% 1,79,887 SF 1,57,727 SF 311,671 SF 13.2 M SF 9.4 M SF 11.6 M SF 2.5 M SF 3.7 M SF 4.7 M SF 2,824,691 SF $ ,646,91 SF $32.39 FS 785,713 SF $31.9 FS 68.8% 73.1% 72.5% 5

6 Northern Virginia 4th Quarter 217 Vacancy Rate Total vacancy in Northern Virginia remained flat at 16.2% at the end of the fourth quarter 217, and has decreased from 17.% since fourth quarter 216. At the end of the fourth quarter 217, 29.8 million square feet was vacant and available. Direct vacancy also remained flat at 15.4% at the end of the fourth quarter 217 and has decreased from 16.1% since fourth quarter 216. At the end of the fourth quarter 217, 28.2 million square feet was vacant and available for direct lease. Deliveries vs The sublet vacancy rate in Northern Virginia remained flat at.8% from the third quarter 217 into the fourth quarter 217, and has remained flat at.8% since the fourth quarter 216. At the end of fourth quarter 217, 1.5 million square feet was vacant and available for sublease. Deliveries Deliveries Net Absorption Vacancy Rate Total vacancy for Class A product in Northern Virginia was 16.5% while Class B product was 14.9% for the quarter. Class A vacancy remained flat from 16.5% in the third quarter 217, while Class B vacancy decreased from 15.3% in the third quarter 217. Absorption & Gross Leasing Northern Virginia recorded 22,16 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 1,79,887 square feet absorbed. A significant contributor to the positive absorption was Navy Federal Credit Union moving into 235, square feet at their newly delivered headquarters building at 17 Electric Avenue in Vienna Delivery Net Absorption 4 2 Direct Vacancy Rate Vacancy Rate (%) Year-to-date leasing activity through the fourth quarter 217 totaled 13.2 million square feet, which is a 13.8% increase from the 11.6 million square feet leased in 216. Eight of the top ten leases signed in the fourth quarter were by private sector tenants. The ten largest leases signed during the fourth quarter ranged in size from 622,812 square feet to 63,284 square feet, five of these largest transactions were renewals. The Tysons Corner submarket recorded the strongest net absorption in Northern Virginia this quarter with 127,8 square feet absorbed. The positive absorption was driven by several smaller to mid-size leases including a 17,237-square-foot move-in by Phacil at Westpark Corporate Center Building I Westpark Drive. Vacancy by Building Class % 14.9% A B 8.5% C (%) of Building Class Vacant 6

7 Northern Virginia 4th Quarter 217 Construction A total of seven buildings were under construction in Northern Virginia at the end of the fourth quarter, totaling approximately 2.5 million square feet. Nine buildings delivered this year, amounting to 2.8 million square feet added to the Northern Virginia market in 217. Buildings scheduled to deliver in 218 include; 2311 Wilson Blvd, a 175,-square-foot building in the Rosslyn- Ballston Corridor submarket. The building is 61.8% preleased to Opower, Bean Kinney & AHRI. Capital One Building 3 - Capital One Drive, a 975,-square-foot building in Tysons Corner. The 1,-square-foot building at 3 Potomac Avenue in Crystal City which is 1% pre-leased by NIB and Kaiser Permanente. Also, the 22,-square-foot building at Scotts Run Phase 1 - Dolley Madison Boulevard. And finally, the 425,-square-foot, 1% pre-leased building to the CIA at Dulles Discovery South Air and Space Museum Parkway. Buildings scheduled to deliver in 219 include; The Boro Loft Boro Place, a 143,66-square-foot building. Also, the 438,169-square-foot building at The Boro Broad Street, which is currently 24.3% pre-leased by Tegna and Hogan Lovells. Both buildings are in the Tysons Corner submarket. Four buildings completed construction during the fourth quarter 217. The CIA building at Stonecroft Boulevard, a 24,-square-foot building 1.% leased by the CIA, 497 Monument Corner Drive a 15,-squarefoot building 78.8% leased by Apple Federal Credit Union and Atlantic Coast Mortgage, 17 Electric Avenue a 235,-square-foot building 1.% leased by the Navy Federal Credit Union, and the CEB Tower Wilson Boulevard, a 552,781-square-foot building 73.3% leased by CEB and Accenture. Outlook The fourth quarter 217 was highlighted by another round of four buildings being delivered to the market, which matched the third quarter delivery totals. Also, at year end, leasing activity exceeded the 12.7 million-square-foot ten-year average by 3.9%, ending the year with 13.2 million square feet leased. Overall, the market is continuing to show signs of stabilization with vacancy rates remaining relatively flat over the course of the year, largely in part due to the majority of leasing activity the past three quarters being large scale renewals. Commercial Real Estate experienced a big win late in the fourth quarter 217 as the Trump Administration signed into law on December 22, 217, an overhaul of the tax code. The tax cut will benefit the retail industry the most, however, the office industry is expected to see a more neutral outcome. Many corporations are expected to distribute much of their tax savings to shareholders rather than investing in new office space. In addition, the $7 billion National Defense Authorization Act is expected to be an additional boost to the local economy. The Northern Virginia area added 16,1 nonfarm jobs from November 216 to November 217, representing 1.1% growth year-over-year. The Professional and Business Services sector led the way adding 9,8 jobs, while the Education and Health Services sector followed with 5,2 jobs. This a major contrast to government jobs which decreased by 6,9 year-over-year. Job loss in the government sector can be largely attributed to new GSA space-efficiency policies which directly correlates to the trend of GSA continuing to either renew at existing office space or consolidate into smaller locations. As a result, job growth in Northern Virginia will continue to be driven primarily by the private sector in the future. 7

8 Northern Virginia 4th Quarter 217 Top Ten Leases Included in the top ten leases of the fourth quarter 217 were five renewals, two pre-leases, one relet, one new lease, and one expansion/extension. The largest lease transaction of the quarter was a 622,812-square-foot prelease signed by GSA-TSA at 6595 Springfield Center Drive in the Springfield submarket. The second largest lease of the quarter was a 167,285-square-foot renewal by Harris Corp/Peraton at Monument Worldgate Worldgate Drive. The third largest lease of the quarter was a 136,-square-foot renewal by SAIC at One Discovery Square Sunset Hills Road. Boeing/Argon renewed 121, square feet at MetroPlace II - 26 Park Tower Drive. American Institutes for Research in the Behavioral Sciences signed a new lease for 87,61 square feet at 14 Crystal - 14 Crystal Drive. GSA-Department of State renewed 83,13 square feet at US Airways Building Pender Drive in the Fairfax submarket. AvalonBay pre-leased 73, square feet at Liberty Center - 44 Wilson Boulevard in the Rosslyn-Ballston Corridor submarket. Edelman Financial signed a 62,333-square-foot renewal at Centerpointe Two - 4 Legato Road. Orbital ATK signed a 63,424-square-foot expansion/extension (expanded into 25,192 square feet and extended 38,232 square feet) at One Steeplechase Atlantic Boulevard in the Route 28 Corridor North submarket. Finally, NADA signed a lease for 63,284 square feet at Westpark Corporate Center Building I Westpark Road in the Tysons Corner submarket Springfield Center Drive GSA-TSA 622,812 SF Pre-lease Monument Worldgate Worldate Drive Harris Corp/Peraton 167,285 SF Renewal One Discovery Square 121 Sunset Hills Road SAIC 136, SF Renewal MetroPlace II 26 Park Tower Drive Boeing/Argon 121, SF Renewal 14 Crystal 14 Crystal Drive American Institutes for Research in the Behavioral Sciences 87,61 SF New US Airways Building 392 Pender Drive GSA-Department of State 83,13 SF Renewal Liberty Center 44 Wilson Boulevard AvalonBay 73, SF Pre-lease One Steeplechase 217 Atlantic Bouelvard Orbital ATK 63,424 SF Expansion/Extension Centerpointe Two 4 Legato Road Edelman Financial 63,333 SF Renewal Westpark Corporate Center Building I 8484 Westpark Road NADA 63,284 SF 8

9 Northern Virginia 4th Quarter 217 Northern Virginia Sales Transactions Starco Portfolio - Stoneleigh I & II, Glenview I-IV Submarket Date Sold Price 48 & 484 Westfields Boulevard, Newbrook Drive Rt 28 South October-217 $74,8, ($164 ) Two Liberty Center Submarket Date Sold Price Buyer Seller 475 Wilson Boulevard Rosslyn-Ballston Corridor November-217 $72,12, ($46 ) Westbrook Partners Carr Properties Submarket Date Sold Price Buyer Seller Class 828 Greensboro Drive Tysons Corner November-217 $64,125, ($36 ) Meridian Group RREEF A Submarket Date Sold Price Buyer Seller 323 Hamaker Court Merrifield December-217 $62,5, ($522 ) Harrison Street Capital Grosvenor Americas Buyer The RMR Group Class A Occupancy 83.% Class A Seller Normandy Occupancy 1.% Cap Rate 3.2% Occupancy 83.6% Class A/B Cap Rate 6.5% Cap Rate 5.5% Occupancy 74.% Cap Rate 9.25% One Global View 255 Wasser Terrace 869 Metro Place 869 Westwood Center Drive 317 Fairview Park Drive Loudoun Gateway V 2297 Indian Creek Drive Submarket Reston-Herndon Submarket Tysons Corner Submarket Merrifield Submarket Rt 28 North Date Sold Price Buyer November-217 $61,5, ($283 ) Tritower Financial Date Sold Price Buyer December-217 $34,5, ($219 ) Atlantic Realty Date Sold Price Buyer November-217 $33,, ($117 ) Marcus Partners Date Sold Price Buyer October-217 $29,375, ($229 ) EPIC Seller Class PGIM A Occupancy 87.% Cap Rate 7.25% Seller Class PGIM / AEW A Occupancy 67.% Cap Rate 5.7% Seller Class CSRA A Occupancy 1.% Notes Sales Leaseback Seller Class Crown Properties A Occupancy 9.9% Cap Rate 7.5% 9

10 Northern Virginia 4th Quarter 217 Northern Virginia Sales Transactions 1718 Richmond Highway Submarket Date Sold Springfield November-217 Price Buyer Seller Class $13,1, ($328 ) PEGH Investments I-95 Business Parks Management Occupancy 1.% Cap Rate 9.45% A 1

11 Northern Virginia 4th Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD '17-4 Deliveries Highlights Total vacancy in Northern Virginia has remained flat at 16.2% at the end of the fourth quarter 217, and has increased slightly from 16.1% since fourth quarter 216. Direct vacancy also remained flat at 15.4% at the end of the fourth quarter 217 and has decreased from 17.% since fourth quarter 216. Direct Vacancy Rate Total Vacancy Rate Asking Rate 1 Year Averages (27-216) Total Absorption Deliveries (SF) Total Net Absorption 342,39 SF / Year 2. M SF / Year Northern Virginia recorded 22,16 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 1,79,887 square feet absorbed. A significant contributor to the positive absorption was Navy Federal Credit Union moving into 235, square feet at their newly delivered headquarters building at 17 Electric Avenue in Vienna. Year-to-date leasing activity through the fourth quarter 217 totaled 13.2 million square feet, which is a 13.8% increase from the 11.6 million square feet leased in 216. Eight of the top ten leases signed in the fourth quarter were by private sector tenants. Inside the Beltway, there were 51 buildings marketing 5, square feet or greater of contiguous space available at the end of the fourth quarter 217, the same as third quarter 217. Outside the Beltway, there were 78 buildings marketing 5, square feet or greater of contiguous space available at the end of the fourth quarter 217, compared to 82 from the third quarter 217. Market Stats Inventory 12.7 M SF / Year M SF Direct Vacancy 15.4% Total Vacancy 16.2% YTD 217 Absorption YTD 1,79,887 SF 13.2 M SF 2.5 M SF Percent Pre-Leased 7.5% YTD 217 Deliveries Asking Rental Rates (Full Service) 27: $ : $ ,824,691 SF YTD 217: $

12 Northern Virginia 4th Quarter 217 Property Submarket Building Available Pre-Leased Delivery Date Developer Major s 2311 Wilson Boulevard RB Corridor 175, SF 66,839 SF 61.8% 1Q 218 Carr Opower/Bean Kinney/AHRI 3 Potomac Avenue Crystal City 1, SF SF 1.% 2Q 218 NIB NIB, Kaiser Permanente Dulles Discovery South 139 Air and Space Musuem Parkway Rt 28 South 425, SF SF 1.% 3Q 218 Peterson Co. GSA - CIA Capital One Drive Tysons Corner 975, SF SF 1.% 3Q 218 Capital One Capital One Scotts Run Phase I Dolley Madison Boulevard Tysons Corner 22, SF 22, SF.% 4Q 218 Cityline Partners None Boro Tower 835 Broad Street Tysons Corner 438,169 SF 331,8 SF 24.3% 1Q 219 Meridian Tegna, Hogan Lovells Boro Loft 164 Boro Place Tysons Corner 143,66 SF 111,642 SF 22.3% 1Q 219 Meridian Whole Foods Totals 4th Quarter Start Broke Ground 4Q 217 Total % Preleased (Does not include condos) SF 2,476,775 SF 7.5% 12

13 Alexandria 4th Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD ' Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in Alexandria increased from 18.8% in the third quarter 217 to 19.8% in the fourth quarter 217, and has increased from 18.4% since fourth quarter 216. Total vacancy increased from 19.4% in the third quarter 217 to 2.5% in the fourth quarter 217, and has increased from 18.8% since fourth quarter 216. The Alexandria submarket recorded -126,214 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 434,756 square feet absorbed. Negative absorption was driven by a 36,539-square-foot move-out by Oblon, McClelland, Maier & Neustadt LLP at Crescent at Carlyle Duke Street. The largest lease signed in the Alexandria submarket in the fourth quarter was a 19,231-square-foot relet by Verisys at TransPotomac Plaza 1-11 N. Fairfax Street. The Armed Forces Services Corporation signed a 17,44-square-foot renewal/expansion at Shirlington Gateway - 28 S. Shirlington Road. They expanded by 6, square feet and renewed the remaining 11,44 square feet. Also contributing to leasing activity this quarter was a 16,53-square-foot renewal by Fishbowl, Inc. at Canal Center 1-44 Canal Center Plaza. 1 Year Averages (27-216) Total Absorption -92,37 SF / Year Deliveries (SF) 58,742 SF / Year 889,533 SF / Year Market Stats Inventory 17.2 M SF Direct Vacancy 19.8% Total Vacancy 2.5% YTD 217 Absorption 434,756 SF YTD 545,933 SF 1, SF Percent Pre-Leased 1.% YTD 217 Deliveries 7, SF Asking Rental Rates (Full Service) 27: $ : $33.62 YTD 217: $

14 Alexandria 4th Quarter 217 Major Leases TransPotomac Plaza 1 11 N. Fairfax Street Verisys 19,231 SF Shirlington Gateway 28 S. Shirlington Road Armed Forces Services Corporation 17,44 SF Renewal/Expansion Carnal Center 1 44 Canal Center Plaza Fishbowl, Inc. 16,53 SF Renewal Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate No new sales reported during the quarter Alexandria 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 Alexandria 1, SF SF 1.% 2Q 218 NIB NIB, Kaiser Permanente 14

15 Crystal City 4th 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 18.7% in the third quarter 217 to 17.9% in the fourth quarter 217, and has decreased from 2.4% since fourth quarter 216. Total vacancy decreased from 18.9% in the third quarter 217 to 18.3% in the fourth quarter 217, and has decreased from 2.7% since fourth quarter 216. The Crystal City submarket recorded -7,43 square feet of net absorption during the fourth quarter of 217, bringing the year-to-date total to 1,822 square feet absorbed. The negative absorption for the quarter was driven by a 26,97-square-foot move-out by AECOM at Century One at Century Center Crystal Drive. The largest lease signed in the Crystal City submarket was a 87,61-square-foot new lease by American Institutes for Research in the Behavioral Sciences at 14 Crystal - 14 Crystal Drive. The deal was also the third largest lease signed in Northern Virginia this quarter. The tenant will be relocating from Georgetown into Crystal City, bringing new growth into the market. Also contributing to leasing activity was Cobham Advance Electronic Solutions taking 14,99-square-feet at Crystal Park Two Crystal Park Drive. 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 17.9% Total Vacancy 18.3% YTD 217 Absorption YTD 1,822 SF 483,53 SF 1, SF Percent Pre-Leased 1.% YTD 217 Deliveries SF YTD 217: $

16 Crystal City 4th Quarter 217 Major Leases 14 Crystal 14 Crystal Drive American Institutes for Research in the Behavioral Sciences 87,61 SF New Crystal Park Two 2121 Crystal Park Drive Cobham Advance Electronic Solutions 14,99 SF 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) 4th Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD ' Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption Highlights Direct vacancy in Fairfax decreased from 19.3% in the third quarter 217 to 18.7% in the fourth quarter 217, and has decreased from 19.2% since fourth quarter 216. Total vacancy decreased from 2.3% in the third quarter 217 to 19.7% in the fourth quarter 217, and has decreased from 2.1% since fourth quarter 216. The Fairfax submarket recorded 7,28 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 26,464 square feet absorbed. The positive absorption for the quarter was driven by Paychex moving into 12,163 square feet at Williams Plaza 2-36 Williams Drive. The largest lease signed in the Fairfax submarket during the fourth quarter was an 83,13-squarefoot renewal by GSA - Department of State at the US Airways Building Pender Drive. Edelman Financial renewed for 63,333 square feet at Centerpointe Two - 4 Legato Road. Also contributing to leasing activity was a 24,982-squarefoot renewal by FICO at Crown Fair Oaks Ridge Top Road. 497 Monument Corner Drive delivered this quarter. The 15,-square-foot building is 78.7% leased by Apple Federal Credit Union and Atlantic Coast Mortgage. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ ,27 SF / Year 36,118 SF / Year 793,678 SF / Year 216: $ M SF Direct Vacancy 18.7% Total Vacancy 19.7% YTD 217 Absorption YTD 26,464 SF 92,758 SF SF Percent Pre-Leased.% YTD 217 Deliveries 15, SF YTD 217: $26. 17

18 Fairfax (Fairfax Center, Fairfax City, Oakton) 4th Quarter 217 Major Leases US Airways Building 392 Pender Drive Centerpointe Two 4 Legato Road GSA-Department of State Edelman Financial 83,13 SF 63,333 SF Renewal Renewal Crown Fair Oaks 435 Ridge Top Road FICO 24,982 SF Renewal One Fair Oaks 4114 Legato Road Vignet 18,856 SF Fair Oaks Business Park 112 Waples Mill Road PSI International 1,432 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate No new sales reported during the quarter Fairfax 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 Fairfax N/A N/A N/A N/A N/A N/A Deliveries Property Submarket Building Available Pre-leased Delivery Date Developer Major s 497 Monument Corner Drive Fairfax 15, SF 32, SF 78.7% 4Q 217 Peterson Companies Apple FCU, Atlantic Coast Mortgage 18

19 Loudoun County 4th Quarter Vacancy Rate (%) Asking Rate ($) Deliveries Highlights Direct vacancy in Loudoun County decreased from 11.4% in the third quarter 217 to 11.1% in the fourth quarter 217, and has decreased from 13.4% since fourth quarter 216. Total vacancy has decreased from 12.4% in the third quarter 217 to 12.% in the fourth quarter 217, and has decreased from 13.7% since fourth quarter 216. Loudoun County recorded 19,965 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 192,51 square feet absorbed. The positive absorption for the quarter was driven by SSP America moving into 2,33 square feet at One Loudoun Bashan Drive. Loudoun Gateway V Indian Creek Drive was acquired by EPIC from Crown Properties for $29,375, ($229 psf). The building was 9.9% occupied at the time of sale, and traded at a 7.5% Cap Rate. Direct Vacancy Rate Total Vacancy Rate Asking Rate 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory -.25 Total Net Absorption 295,18 SF / Year 352,514 SF / Year 893,41 SF / Year 15.3 M SF Direct Vacancy 11.1% Total Vacancy 12.% YTD 217 Absorption 192,51 SF The largest lease signed in Loudoun County in the fourth quarter 217 was a 63,424-square-foot expansion/ extension by Orbital ATK at One Steeplechase Atlantic Boulevard. The tenant expanded by 25,192 square feet and extended the remaining 38,232 square feet. SSP America signed a 24,-square-foot new lease at One Loudoun Bashan Drive. Also contributing to leasing activity this quarter was a 2,52-square-foot pre-lease signed by CIS Secure Computing at Ashburn Crossing Ashburn Crossing Drive. YTD Asking Rental Rates (Full Service) 27: $ : $ ,93 SF SF Percent Pre-Leased.% YTD 217 Deliveries 72, SF YTD 217: $

20 Loudoun County 4th Quarter 217 Major Leases One Steeplechase 217 Atlantic Boulevard Orbital ATK 63,424 SF Expansion/Extension One Loudoun 248 Bashan Drive SSP America 24, SF New Ashburn Crossing 215 Ashburn Crossing Drive CIS Secure Computing 2,52 SF Pre-lease Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Loudoun Gateway V 2297 Indian Creek Drive Loudoun County Oct-217 $29,375, ($229 psf) EPIC Crown Properties A 9.9% 7.5% Property Submarket Building Available Pre-leased Delivery Date Developer Major s No new construction reported this quarter Loudoun County N/A N/A N/A N/A N/A N/A 2

21 Merrifield 4th 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 11.6% in the third quarter 217 to 1.9% in the fourth quarter 217, and has decreased from 12.1% since fourth quarter 216. Total vacancy has decreased from 12.7% in the third quarter 217 to 11.7% in the fourth quarter 217, and has decreased from 12.9% since fourth quarter 216. The Merrifield submarket recorded 92,577 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to -214,72 square feet absorbed. Positive absorption was driven by a 25,89-square-foot move-in by Cognosante at 311 Fairview Park Drive. The largest sale in the Merrfield submarket this quarter was the sale of 323 Hamaker Court. Grosvenor Americas sold the building to Harrison Street Capital for $62,5, ($522 psf). The building was 83.6% occupied at the time of sale, and traded at a 5.5% Cap Rate. Marcus Partners purchased 317 Fairview Park Drive from CSRA for $33,, ($117 psf) in a sale-leaseback transaction. The two buildings were fully occupied at the time of sale by CSRA who had owned the building since 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 1.9% Total Vacancy 11.7% YTD 217 Absorption -214,72 SF YTD 873,329 SF SF Percent Pre-Leased % YTD 217 Deliveries SF The largest lease signed in the Merrifield submarket this quarter was a 121,-square-foot renewal by Boeing/Argon at MetroPlace II - 26 Park Tower Drive. Asking Rental Rates (Full Service) 27: $ : $31.77 YTD 217: $

22 Merrifield 4th Quarter 217 Major Leases MetroPlace II 26 Park Tower Drive 311 Fairview Park Drive Boeing/Argon Fors Marsh 121, SF 34,23 SF Renewal 271 Prosperity Avenue Logos Technologies 16,122 SF Renewal/downsize Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate 323 Hamaker Court Merrifield Dec 217 $62,5, ($522 psf) Harrison Street Capital Grosvenor Americas A 83.6% 5.5% 317 Fairview Park Drive Merrifield Nov 217 $33,, ($117 psf) Marcus Partners CSRA Inc. A 1% Sale Leaseback 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 4th 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 increased from 11.9% in the third quarter 217 to 13.8% in the fourth quarter 217, and has increased from 1.6% since fourth quarter 216. Total vacancy increased from 12.6% in the third quarter 217 to 14.7% in the fourth quarter 217, and has increased from 11.1% since fourth quarter 216. The Old Town Alexandria and Eisenhower Ave submarket recorded -26,93 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 645,957 square feet absorbed. Negative absorption was driven by a 36,539-squarefoot move-out by Oblon, McClelland, Maier & Neustadt LLP at Crescent at Carlyle Duke Street. The largest lease signed in the Old Town Alexandria and Eisenhower Ave submarket in the fourth quarter was a 19,231-square-foot relet by Verisys at TransPotomac Plaza 1-11 N. Fairfax Street. Also contributing to leasing activity this quarter was a 16,53-square-foot renewal by Fishbowl, Inc. at Canal Center 1-44 Canal Center Plaza. 1 Year Averages (27-216) Total Absorption -534 SF / Year Deliveries (SF) 58,742 SF / Year 672,41 SF / Year Market Stats Inventory 13.3 M SF Direct Vacancy 13.8% Total Vacancy 14.7% YTD 217 Absorption 645,957 SF YTD 447,69 SF SF Percent Pre-Leased.% YTD 217 Deliveries 7, SF Asking Rental Rates (Full Service) 27: $ : $36.24 YTD 217: $

24 Old Town/Eisenhower Ave 4th Quarter 217 Major Leases TransPotomac Plaza 1 11 N. Fairfax Street Carnal Center 1 44 Canal Center Plaza Verisys Fishbowl, Inc. 19,231 SF 16,53 SF Renewal Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate No new sales reported during the quarter Old Town/ Eisenhower Ave 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 Old Town/ Eisenhower Ave N/A N/A N/A N/A N/A N/A 24

25 Reston-Herndon 4th Quarter Vacancy Rate (%) Asking Rate ($) '16 YTD '17-1. Deliveries Direct Vacancy Rate Total Vacancy Rate Asking Rate Total Net Absorption 25 Highlights Direct vacancy increased from 11.5% in the third quarter 217 to 11.9% in the fourth quarter 217, and has decreased from 12.2% since fourth quarter 216. Total vacancy has increased from 12.7% in the third quarter 217 to 13.3% in the fourth quarter 217, and has decreased from 14.2% since fourth quarter 216. Year-to-date direct vacancy for Reston was 9.4% and total vacancy was 1.2%. Year-to-date direct vacancy for Herndon was 15.9% and total vacancy was 18.1%. The Reston-Herndon submarket recorded -97,678 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 3,57 square feet absorbed. The negative absorption for the quarter was driven by a 123,65-square-foot move-out by Orange Business Services at Dulles International Centre McLearen Road. The largest sale in the Reston-Herndon submarket during the fourth quarter 217 was the sale of One Global View Wasser Terrace. Tritower Financial acquired the building from PGIM for $61,5, ($283 psf). The building was 87.% occupied at the time of sale and traded at a 7.25% Cap Rate. The largest lease signed in the Reston-Herndon submarket in the fourth quarter and the second largest lease signed in Northern Virginia, was a 167,285-square-foot renewal by Harris Corporation/Peraton at Monument Worldgate Worldgate Drive. The second largest lease signed in the Reston-Herndon submarket in the fourth quarter and the third largest lease signed in Northern Virginia, was a 136,-square-foot renewal by SAIC at One Discovery Square Sunset Hills Road. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ ,731 SF / Year 333,516 SF / Year 216: $ M SF / Year 3.6 M SF Direct Vacancy 11.9% Total Vacancy 13.3% YTD 217 Absorption YTD 3,57 SF 2,436,591 SF SF Percent Pre-Leased.% YTD 217 Deliveries 368,143 SF YTD 217: $3.16

26 Reston-Herndon 4th Quarter 217 Major Leases Monument Worldgate Worldgate Drive Harris Corporation/ Peraton 167,285 SF Renewal One Discovery Square 121 Sunset Hills Road SAIC 136, SF Renewal Parkridge Center 6-1 Dulles Corridor 174 Parkridge Boulevard CareFirst 1821 Michael Faraday Drive Northern Virginia Community College 31,629 SF 18,974 SF The Reston Edmund Halley Drive Coppermine Commons I Sunrise Valley Drive Cloudistics Verint Systems 18,353 SF 17,5 SF Plaza America Tower Plaza America Drive Resonate Networks, Inc. 16,83 SF Reston Eastpointe 1191 Sunset Hills Road Excelacom 13,23 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate One Global View 255 Wasser Terrace Reston-Herndon Nov 217 $61,5, ($283 psf) Tritower Financial PGIM A 87.% 7.25% Property Submarket Building Available Pre-leased Delivery Date Developer Major s No new construction reported this quarter Reston-Herndon N/A N/A N/A N/A N/A N/A 26

27 Rosslyn-Ballston Corridor 4th 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 Rosslyn-Ballston Corridor submarket increased from 16.2% in the third quarter 217 to 18.% the fourth quarter 217, and has increased from 17.7% since fourth quarter 216. Total vacancy increased from 17.% in the third quarter 217 to 18.5% the fourth quarter 217, and has decreased slightly from 18.7% since fourth quarter 216. The cause for the increase this quarter was a result of the National Science Foundation s relocation from the Rosslyn-Ballston Corridor to Alexandria. The Rosslyn-Ballston Corridor submarket recorded -62,75 square feet of net absorption during the fourth quarter of 217, bringing the year-to-date total to -131,81 square feet absorbed. The primary driver for negative absorption was a 563,373-square-foot move-out by the National Science Foundation at Stafford Place I Wilson Boulevard. The second largest sale in Northern Virginia for the fourth quarter was the sale of Two Liberty Center Wilson Boulevard. Westbrook Partners acquired the building from the Carr Properties for $72,12, ($46 psf). The building was fully occupied at the time of sale, and traded at a 6.5% Cap Rate. The largest lease signed in the Rosslyn-Ballston Corridor submarket this quarter was a 73,-square-foot pre-lease by AvalonBay at Liberty Center - 44 Wilson Boulevard. UVA Darden School of Business signed for 39,574 square feet at The Towers - 11 Wilson Bouelvard. CEB Tower Wilson Boulevard delivered this quarter. The building is 73.3% leased to CEB and Accenture. 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 25.3 M SF Direct Vacancy 18.% Total Vacancy 18.5% YTD 217 Absorption YTD -131,81 SF 2,192,131 SF 175, SF Percent Pre-Leased 61.8% YTD 217 Deliveries 719,548 SF YTD 217: $

28 Rosslyn-Ballston Corridor 4th Quarter 217 Major Leases Liberty Center 44 Wilson Boulevard Twin Towers 11 Wilson Boulevard AvalonBay 73, SF Pre-lease UVA Darden School of Business 39,574 SF CEB Tower 121 Wilson Boulevard Accenture 27,96 SF New Rosslyn Plaza Building North 1777 N. Kent Street Bluemont.org 21,626 SF 8 N. Glebe Road Potomac Tower 11 N. 19th Street Accenture Esri 2,95 SF 18,645 SF Sublease Renewal Potomac Tower 11 N. 19th Street 31 Clarendon Boulevard Venture Global Axios 18,339 SF 15,31 SF Renewal Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Two Liberty Center 475 Wilson Boulevard RB Corridor Nov 217 $72,12, ($46 psf) Westbrook Partners Carr Properties A 1.% 6.5% Property Submarket Building Available Pre-leased Delivery Date Developer Major s 2311 Wilson Boulevard RB Corridor 175, SF 66,839 SF 61.8% 1Q 218 Carr Opower/Bean Kinney/ AHRI Deliveries Property Submarket Building Available Pre-leased Delivery Date Developer Major s CEB Tower 121 Wilson Boulevard RB Corridor 552,781 SF 147,592 SF 73.3% 4Q 217 JBG CEB, Accenture 28

29 Route 28 North 4th 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 14.2% in the third quarter 217 to 14.% in the fourth quarter 217, and has decreased from 16.7% since fourth quarter 216. Total vacancy decreased from 15.4% in the third quarter 217 to 15.% in the fourth quarter 217, and has decreased from 17.% since fourth quarter 216. The Route 28 North submarket recorded -5,592 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to -4,257 square feet absorbed. The primary driver of negative absorption was a 24,139-square-foot move-out by mindshift Technologies at 4561 Woodland Road. Loudoun Gateway V Indian Creek Drive was acquired by EPIC from Crown Properties for $29,375, ($229 psf). The building was 9.9% occupied at the time of sale, and traded at a 7.5% Cap Rate. The largest lease signed in Route 28 North in the fourth quarter 217 was a 63,424-squarefoot expansion/extension by Orbital ATK at One Steeplechase Atlantic Boulevard. The tenant expanded by 25,192 square feet and extended the remaining 38,232 square feet. Also contributing to leasing activity this quarter was a 2,52-squarefoot pre-lease signed by CIS Secure Computing at Ashburn Crossing Ashburn Crossing Drive. 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.% Total Vacancy 15.% YTD 217 Absorption YTD -4,257 SF 369,711 SF SF Percent Pre-Leased % YTD 217 Deliveries SF YTD 217: $

30 Route 28 North 4th Quarter 217 Major Leases One Steeplechase 217 Atlantic Boulevard Orbital ATK 63,424 SF Expansion/Extension Ashburn Crossing 215 Ashburn Crossing Drive CIS Secure Computing 2,52 SF Pre-lease Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Loudoun Gateway V 2297 Indian Creek Drive Route 28 North Oct 217 $29,375, ($229 psf) EPIC Crown Properties A 9.9% 7.5% 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 4th 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 decreased from 13.% in the third quarter 217 to 11.8% in the fourth quarter 217, and has decreased from 14.5% since fourth quarter 216. Total vacancy has decreased from 13.3% in the third quarter 217 to 13.% the fourth quarter 217, and has decreased from 15.1% since fourth quarter 216. The Route 28 South submarket recorded -8,444 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 199,317 square feet absorbed. The primary driver for negative absorption was a 42,673-square-foot move-out by Long & Foster Real Estate at Ellipse at Westfields George Carter Way. The largest sale in Northern Virginia during the fourth quarter was the sale of the Starco Portfolio - Stoneleigh I & II, Glenview I - IV - 48 & 484 Westfields Boulevard, Newbrook Drive. The RMR Group acquired the buildings from Normandy for $74,8, ($164 psf). The buildings were 74.% occupied at the time of sale, and traded at a 9.25% Cap Rate. The largest lease signed in the Route 28 South submarket this quarter was a 48,811 square-foot relet by Advanced Health at Lincoln Park II - 38 Centreville Road. Also contributing to leasing activity this quarter was a 25,715-square-foot relet by International Association of Fire Chiefs at Venture Park Meadow Wood Lane. NoVA Office D - Stonecroft Blvd delivered this quarter. The building is fully leased to the GSA-CIA. 1 Year Averages (27-216) Total Absorption Deliveries (SF) Market Stats Inventory Asking Rental Rates (Full Service) 27: $ ,139 SF / Year 373,11 SF / Year 83,129 SF / Year 216: $ M SF Direct Vacancy 11.8% Total Vacancy 13.% YTD 217 Absorption YTD 199,317 SF 772,36 SF 425, SF Percent Pre-Leased 1.% YTD 217 Deliveries 24, SF YTD 217: $

32 Route 28 South 4th Quarter 217 Major Leases Lincoln Park II - Bldg C 38 Centreville Road Advanced Health 48,811 SF Venture Park 4795 Meadow Wood Lane International Association of Fire Chiefs 25,715 SF Penrose Center I Penrose Place Kudu Dynamics 2,864 SF Expansion Stoneleigh I 48 Westfields Boulevard AECOM 12,77 SF Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate Starco Portfolio - Stoneleigh I & II, Glenview I - IV 48 & 484 Westfields Boulevard, Newbrook Drive Rt 28 South Oct 217 $74,8, ($164 psf) The RMR Group Normandy A/B 74.% 9.25% Property Submarket Building Available Pre-leased Delivery Date Developer Major s Dulles Discovery South 139 Air and Space Musuem Parkway Route 28 South 425, SF SF 1.% 3Q 218 Peterson Co. GSA - CIA Deliveries Property Submarket Building Available Pre-leased Delivery Date Developer Major s NOVA Office D- Stonecroft Blvd Route 28 South 24, SF SF 1.% 4Q 217 COPT GSA - CIA 32

33 Springfield 4th 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 remained flat at 2.5% from the third quarter into the fourth quarter 217 and has increased from 2.% since fourth quarter 216. Total vacancy decreased slightly from 2.8% in the third quarter 217 to 2.7% in the fourth quarter 217, and has increased slightly from 2.5% since fourth quarter 216. The Springfield submarket recorded 18,825 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to -5,632 square feet absorbed. The positive absorption was primarily driven by a 14,92-square-foot move-in by Deloitte at MetroPark Walker Lane. 1 Year Averages (27-216) Total Absorption 55,669 SF / Year Deliveries (SF) 127,58 SF / Year 297,841 SF / Year Market Stats Inventory 6.1 M SF Direct Vacancy 2.5% Total Vacancy 2.7% 1718 Richmond Highway sold for $13,1, ($328 psf). The building was acquired by PEGH Investments from I-95 Business Parks Management. It was fully occupied at the time of sale, and traded at a 9.45% Cap Rate. YTD 217 Absorption YTD -5,632 SF 978,181 SF SF The largest lease in the fourth quarter was a 622,812-square-foot pre-lease by GSA-TSA at 6595 Springfield Center Drive in the Springfield submarket. This was also the largest lease in Northern Virginia for all of 217. The building, set to break ground in June of 218, will serve as the headquarters for the TSA and will bring 3, jobs to the Springfield area. Percent Pre-Leased % YTD 217 Deliveries Asking Rental Rates (Full Service) 27: $ : $31.46 SF YTD 217: $

34 Springfield 4th Quarter 217 Major Leases TSA Headquarters 6595 Springfield Center Drive GSA-TSA 622,812 SF Pre-lease Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate 1718 Richmond Highway Springfield Nov 217 $13,1, ($328 ) PEGH Investments I-95 Business Parks Management A 1.% 9.45% 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 4th Quarter Vacancy Rate (%) Asking Rate ($) Deliveries Highlights Direct vacancy in the Tysons Corner submarket decreased from 16.4% in the third quarter 217 to 15.9% in the fourth quarter 217, and has decreased from 16.1% the fourth quarter 216. Total vacancy decreased from 17.1% in the third quarter 217 to 16.6% in the fourth quarter 217, and has increased slightly from 16.5% since fourth 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 35 The Tysons Corner submarket recorded 127,8 square feet of net absorption in the fourth quarter of 217, bringing the year-to-date total to 418,76 square feet absorbed. Positive absorption was driven by a 17,237-square-foot move-in by Phacil at Westpark Corporate Center Building I Westpark Drive. The largest sale in the Tysons Corner submarket during the fourth quarter 217 was the sale of 828 Greensboro Drive. Meridian Group acquired the building from RREEF for $64,125, ($36 psf). The building was 83.% occupied at the time of sale, and traded at a 3.2% Cap Rate. The second largest sale that occurred in Tysons Corner this quarter was the sale of 869 Metro Place Westwood Center Drive. PGIM/AEW sold the building to Atlantic Realty for $34,5, ($219 psf). The building was 67.% occupied at the time of sale, and traded at a 5.7% Cap Rate. The largest lease signed in the Tysons Corner submarket this quarter was a 63,284-square-foot relet signed by NADA at Westpark Corporate Center Building I Westpark Drive. Also contributing to leasing activity in the Tysons Corner submarket was a 25,65-squarefoot sublease signed by WealthEngine at Westwood Corporate Center Westwood Center Drive. Market Stats Inventory Asking Rental Rates (Full Service) 27: $ : $ M SF Direct Vacancy 15.9% Total Vacancy 16.6% YTD 217 Absorption YTD 418,76 SF 2,397,244 SF 1.8 M SF Percent Pre-Leased 62.7% YTD 217 Deliveries 34, SF YTD 217: $33.19

36 Tysons Corner 4th Quarter 217 Major Leases Westpark Corporate Center Building I 8484 Westpark Drive NADA 63,284 SF Westwood Corporate Center Westwood Center Drive WealthEngine 25,65 SF Sublease Tysons Pointe 16 International Drive Digital Management 16 Tysons Boulevard Cross Country Consulting 23,629 SF 23,73 SF American Center East 83 Boone Boulevard Merlin International 22,38 SF McLean Hilton Office Complex 7918 Jones Branch Drive MCI 21,11 SF Renewal Sales Property Submarket Date Sold Price Buyer Seller Class Occupancy Cap Rate 828 Greensboro Drive Tysons Corner Nov 217 $64,125, ($36 psf) Meridian Group RREEF A 83.% 3.2% 869 Metro Place 869 Westwood Center Drive Tysons Corner Dec 217 $34,5, ($219 psf) Atlantic Realty PGIM/AEW A 67.% 5.7% 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 Scotts Run Phase I Dolley Madison Boulevard Tysons Corner 22, SF 22, SF.% 4Q 218 Cityline Partners None The Boro Tower 835 Broad Street Tysons Corner 438,169 SF 331,8 SF 24.3% 1Q 219 Meridian Tegna/Hogan Lovells Boro Loft 164 Boro Place Tysons Corner 143,66 SF 111,642 SF 22.3% 1Q 219 Meridian Whole Foods 36