To be sure, AOL's declining fortunes was a blow to Northern Virginia's tech real estate development. Northern Virginia has traditionally been home to the defense contractor community; 10 years ago it was taken for granted that next gen tech development – and the accompanying real estate necessary to accommodate it – would grow up alongside these old-school IT contractors. One only had to look to AOL's former Pacific Corporate Park headquarters here -- a sprawling multi-complex operation encompassing more than 600,000 square feet -- to understand the excitement.

That was then, though. Fortunately, the local market has had a while to readjust to AOL's troubles -- and during a period when growth was otherwise strong. Also helpful was the fact that Northern Virginia has traditionally had low unemployment – although that is changing with this recession. For instance, when AOL announced it would cut its workforce by 10% at the beginning of this year the Virginia Employment Commission reported that unemployment in Northern Virginia was 3.4% -- a still very low number – but higher than the 2.3% a year earlier. The larger problem was AOL's empty real estate and even that issue has been largely resolved – in an ironic twist, by an old-school IT government contractor.Last month Raytheon Co. announced it would consolidate some of its Northern Virginia operations in four offices it is leasing at AOL's Pacific Corporate Park. It was a 600,000-square-foot transaction for the government contractor, which was represented by JLL in the deal. CBRE repped AOL.How much remains to be leased at the complex is unclear.

The larger point, though, is that Northern Virginia has adapted to the demise of AOL by focusing on its core strengths, Scott Homa, research director with JLL tells GlobeSt.com. "It is never a good thing for a major tenant to leave or scale back in a submarket. Fortunately the DC area has a dependable tenant base driven by the government and government contractors."

Instant Insights /

AOL-Warner Split Not Traumatic for Industry

Related Stories

Recommended For You