ARLINGTON, VA—Crystal City has been trying to reposition itself as a tech hub to prospective tenants.

While it has rolled out interesting initiatives –- measures that key landlords such as Vornado Realty have not only gotten behind but also duplicated -- leasing results from Q1 and Q2 provided by Savills Studley show that the federal government is still the top industry taking space here.

That said, tech and associations were also part of the mix in these deals and the momentum behind these leasing efforts will likely lead to more deals. Whether tech tenants ever become the dominant industry in this submarket, though, is still an open question.

In Q2 some 187,500 square feet were inked in Crystal City to the government, tech companies and associations, Nicole Miller, Savills Studley's corporate managing director, tells GlobeSt.com. Specifically, there were two leases signed by associations, two by tech firms, one by a professional services firm and two by the federal government. These were the largest for the submarket totaling about 82,000 square feet. The bulk of the new leases were in Vornado properties, except for two leases signed for 1400 Crystal Dr.

Q1's lease numbers were skewed by the 332,000-square foot lease signed by the US Marshals' Service, a $130 million deal inked by Vornado. Stripping out that deal, Crystal City would have leased about 152,000 square feet with the same mix of tenants, Miller says.

That mix, though, is changing albeit probably not as fast as landlords would like. Associations have been steadily migrating to Crystal City over the last decade for the cheaper rents and closer proximity to the airport, Miller says.

"Lately there has been a huge push by Vornado to fill out its portfolio and they have been seeking out these tenants," she says, pointing to the American Diabetes Association's recent lease for 75,000 square feet.

None of this is to say that the local initiatives such as the Crystal City Tech Fund and Vornado's 'Design Lab' are not working. Vornado's partnership with WeWork is expected to bring a 40,000-square foot co-working center to Crystal City by 2016, Savills Studley noted in its Q2 report.

The partnership is also planning to convert an existing 164,000-square foot office building at 2221 S. Clark St. into 300 residential units aimed at attracting tech workers.

Still, "while these initiatives have helped facilitate some increased activity in Crystal City, more evidence is needed to substantiate the presence of a growing trend or migratory pattern," it concluded.

Instant Insights /

Some Habits Die Hard As Crystal City Tries To Reinvent Itself As New Tech Hub

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