Reston and Springfield: A Tale of Two Leases

SPRINGFIELD, VA-Two leases totaling 303,000 square feet have been inked in Northern Virginia in recent days. A sign of a resurgent lease market, perhaps? Not quite. Rather, they provide a telling glimpse of the power the federal sector has in this region, even as it scales back its presence.

“These deals highlight the dynamic nature of the Metro DC market,” Scott Homa, research director for Jones Lang LaSalle, tells GlobeSt.com. “The attraction of certain submarkets is often dictated by distinct economic drivers and priorities within the federal government, such as the relocation of the National Geospatial Intelligence Agency in Springfield.”

Springfield, in short, has become Northern Virginia’s hot submarket, while Reston will likely continue to struggle with high vacancies.

In one transaction, Bechtel is taking 200,000 square feet in the Reston Overlook One and Two buildings near the Reston Town Center. The firm will relocate its local headquarters staff, functions and services; government services business; US-based civil infrastructure staff; and Bechtel Enterprises to the submarket. CBRE’s Meredith LaPier and Cathy Delcoco represented Bechtel in the transaction.

In the other deal, an unidentified tenant is taking 103,000 square feet at the first building under construction at Corporate Office Properties Trust’s Patriot Ridge development.

In general, the federal landscape near Fort Belvoir has been heavily impacted by recent BRAC decisions, Homa says. “The NGA's consolidation from DC, Maryland and Virginia to a new 2.4 million square foot facility on the Engineering Proving Ground in Springfield,” he says, “has already begun to reshape the submarket.”

As a result, he says, there will be large-scale consequences from the relocation of thousands of new federal and civilian jobs to the Fort Belvoir area--the first of which is the impact upon the surrounding office market in Springfield, which has minimal available class A inventory. “New construction, like Patriot Ridge, will define this market over the next several years as land owners look to accommodate a new wave of defense contractors seeking close proximity to NGA.”

The Reston market, by contrast, has experienced a general slowdown based on the nature of its large IT and corporate tenant base, most of which are retrenching now.