THE SILVER LINE ECONOMIC AND OFFICE
MARKET IMPACT – 2015-2040
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e b A en w o s a h y r b n u wy e
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w oad Br y la Route 28 North
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ds Blvd o u
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28 y Leesburg Pike
Sully Rd
P k w y Springvale Rd 62528 N Sterling Blvd MARYLAND ROUTE 772/ RYAN ROAD 19328 28628
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e
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l
d m v l
o B y
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a k
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i d 193
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t g t r n
o e Dulles Greenway Sterling Rd u R
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C 28 287 28 x 738 a 28 f r Leesburg Pike Herndon i 621 a 28 F H
u 26728 n Old Ox Rd t
22828 Reston e Ge
r o
rg M e
606 town Pik
28 i 7 e
l 28
l
INNOVATION R CENTER d HERNDON RESTON 26728 Tysons TOWN WIEHLE- DULLES 12328 50 CENTER RESTON Corner
AIRPORT Sully Rd EAST SPRING 60828 W HILL e s Reston Pkwy t
Centreville Rd O x R GREENSBORO John Mosby Hwy 65728 d MCLEAN L aw ye TYSONS 286 rs 28 Rd CORNER Lawyers Rd 60628 28 G Polend Rd 50 28
u Fox Mill Rd m
S p r i Hunter Mill Rd n WEST g EAST FALLS d v l R B FALLS d CHURCH t
62028 f
o 665 CHURCH
r 50 28 c 28628 12328
e 65728 DUNN LORING
n Lee Jackson Memorial Hwy
o VIRGINIA
t Sully Rd d S yR e VIENNA 29 ll a V Lee Hwy t 29 n
a
s
a e
l 50 Arlington Blvd 50 P Fairfax Blvd
50 Pleasant Valley Rd 29 23728 28628 65028 23628 Main Street Lee Hwy F Gallows Rd
a
i r f Little River Turnpike 24428 a x 12328 609 28 C Lincolnia Rd 28 28 o 62028 u 645 n 28 t y P Lee Hwy k 23628 w y 62028 29 Ox Rd Elizabeth Norton
Centreville Rd Braddock202.775.7026 Rd Cliffton Rd Cliffton [email protected] VAN DORN ST 648 645 28628 28 28 63828 2828 Burke Lake Rd ECONOMIC AND OFFICE THE SILVER LINE MARKET IMPACT – 2015-2040
PHASE 1 – Opened July 2014 PHASE 2 – Opening 2018 TYSONS CORNER RESTON HERNDON ROUTE 28 NORTH
McLean Tysons Greensboro Spring Wiehle - Reston Herndon Innovation Dulles Int’ Route 606 Route 772/ Corner Hill Reston East Town Center Center Airport Ryan Road
The Silver Line is an extension of the Washington HIGHLIGHTS Metropolitan Area Transit Authority (WMATA) rail line, which runs from Route 772 in Loudoun County, Virginia, • From 2015 to 2040, a total of 70,000 office using jobs to Largo Town Center in Largo, Maryland. When fully are projected to be added to the four submarkets completed, the Silver Line will consist of 34 stations, of impacted by the new Silver Line Metro stations. 61% of which 11 will be new in Northern Virginia. Five of these these jobs are expected to be within a half mile of the new stations have opened as of July 2014. The remaining new Metro stations. Most of this growth is due to occur six stations are planned to open by 2018. from 2015 to 2030, as 75% of new office using jobs are expected to be added during this period. The new stations will be located in the Tysons Corner, Reston, Herndon, and Route 28 North submarkets. This • Most office using job growth will occur within a half white paper projects job growth and office demand over mile of the new Metro stations, with the exception of the next 25 years in each submarket. In addition, given the stations located in the Route 28 North submarket. over 60% of office using job growth will surround the new • Of the 14.0 million square feet of office demand Metro stations we drill these projections down to a half projected for the four submarkets from 2015 to mile radius for each new station. Following are highlights 2040, 8.5 million square feet is expected surrounding from the report. Thereafter analysis and recommendations the Metro stations. Tysons Corner is expected to are provided by submarket. experience the greatest office demand during this period. EMPLOYMENT AND OFFICE DEMAND PROJECTIONS Job Growth 2015 • Although above average growth near Metro is 2015 2040 to 2040 expected, the growth will be lighter than it could be ENTIRE SUBMARKET due to several factors as discussed in the conclusion Number of Total Employees 352,200 537,000 184,800 of this report. Number of Office Employees 148,804 218,788 69,984 • Tenants will remain interested in newer or fully Projected Office Demand: 13,996,800 renovated office space. Given most office inventory near the Metro stations is Class B/C and will continue WITHIN A HALF MILE OF METRO STATION to age through 2040, property owners should focus on Number of Total Employees 153,400 245,100 91,700 renovating this space to Class A to remain competitive Number of Office Employees 72,440 115,135 42,695 to tenants. Projected Office Demand: 8,539,000 SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern • New development is warranted more so for Tysons Corner near the new Metro stations, but not out of the question for Reston or Herndon in select locations. New development could occur in the Route 28 North submarket near Metro, as the current inventory is relatively low.
The Silver Line – Economic and Office Market Impact – 2014-2040 | 2 ECONOMIC AND OFFICE THE SILVER LINE MARKET IMPACT – 2015-2040
Number of Office Employees 10,000 12,000 14,000 16,000 18,000 20,000 2,000 4,000 6,000 8,000 NEW JOBS PROJECTED NEW OFFICE USING JOBS 0 Between Created Between 2015-2020 2015 − 2040 2015 − 2040 2020-2025 % 2025-2030 61
2030-2035 0.5 MI 2035-2040 70K 184K Office Use Total Jobs Balance of Submarket
Half Mile of Metro Station SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern NEW JOBS PROJECTED NEW OFFICE USING JOBS 6,000 Between Created Between ) S F
f 5,000
o 2015 − 2040 2015 − 2040 s d a n s 4,000 % u o
t h 61
n i
( 3,000
d m a n e 2,000 0.5 MI
D 70K 184K e c fi
f Office Use Total Jobs
O 1,000
0 Tysons Corner Reston Herndon Route 28 North
SOURCE: Transwestern
Source: www.greenforwardblog.com Source: www.wtop.com
The Silver Line – Economic and Office Market Impact – 2014-2040 | 3 ECONOMIC AND OFFICE
THE SILVER LINE MARKET IMPACT – 2015-2040
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ll 28 e i
s Gr r TYSONSe CORNERb A en w o s a h y r b n u wy e
k r P
n m P G r k
Fa l
w o y u c ester P Recommendation: Developk new office product or w oad Br y la
n L
renovate Classds Blvd B/C product too Class A near Metro to u
n
d
o
u
capture demand, which shouldn occur mostly from 2015
C
W o
ax d 625 u
pool R 28 n
267 t
to 2030. 28 y Leesburg Pike
Sully Rd
P k w y Springvale Rd 62528 N Sterling Blvd MARYLAND ROUTE 772/ RYAN ROAD 19328 Tysons Corner is projected to add 56,000 new jobs from28628
B
e
Drainesville Rd
l
d m 2015 tov 2040, a 47% increase. This growth rate translates l
o B y
n r w
t ROUTE 606
a k
t R
s P
i to 1.9% d per year, which is above the 10-year historical 193
h y 28
t g t r n
o e Dulles Greenway Sterling Rd u R
N o
annual d growth rate of 1.0% for Fairfax County. C 28 287 28 x 738 a 28 f ir Leesburg Pike 621 a 28 F H
u 26728 n Old Ox Rd t
22828 e Ge
Of the 56,000 new jobs projected for Tysons Corner, r o
rg M e
606 town Pik
28 i 7 e
l 28
l
approximately 29,100 jobs are expectedINNOVATION to be office R CENTER d HERNDON using. Most growth is projected to occur from 2015 toRESTON 26728 Tysons TOWN WIEHLE- 2030, as 71% of the new officeDULLES using jobs will be created 12328 50 CENTER RESTON Corner
AIRPORT Sully Rd during this period. In recent years tenants have allocated EAST SPRING 60828 W HILL on average 200 square feet per employee, e which totals s Reston Pkwy t
Centreville Rd O x R GREENSBORO 5.8 million squareJohn feetMosby Hwy of office demand65728 fromd 2015 to MCLEAN L aw ye TYSONS 2040, or 233,000 square feet per year. 286 rs 28 Rd CORNER Lawyers Rd 60628 28 G 50 Polend Rd 28 26728
u Fox Mill Rd m
S p
r i Number of Office Employees Hunter Mill Rd n WEST g EAST FALLS d 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 v l R B FALLS d CHURCH t
62028 f
o 665 CHURCH
0 r 50 28 c 28628 12328
e 65728 DUNN LORING
n Lee Jackson Memorial Hwy
o VIRGINIA
t Sully Rd d S yR e VIENNA 29 ll 2015-2020 a V Lee Hwy t 29 n
a
s
a e
l 50 Arlington Blvd 50 2020-2025 P Fairfax Blvd
Pleasant Valley Rd 2025-2030 EMPLOYMENT AND OFFICE DEMAND PROJECTIONS Job Growth 2015 2015 2040 2030-2035 to 2040 ENTIRE SUBMARKET 2035-2040 Number of Total Employees 120,200 176,200 56,000
Balance of Submarket Number of Office Employees 62,504 91,624 29,120 Projected Office Demand: 5,824,000 Half Mile of Metro Station SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern WITHIN A HALF MILE OF METRO STATION Number of Total Employees 68,400 118,400 50,000 Approximately 89% of the projected office using jobs Number of Office Employees 35,568 61,568 26,000 arriving in Tysons Corner from 2015 to 2040 will be Projected Office Demand: 5,200,000 located within a half mile of the new Metro stations. This SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern translates to a total of 5.2 million square feet of potential office demand near the Metro stations in Tysons Corner, or 208,000 square feet per year. Of the four new Metro stations in Tysons Corner, the Spring Hill and McLean Metro stations are projected to experience the greatest rise in office using employment, which translates to 2.0 million square feet and 1.6 million square feet of potential office demand from 2015 to 2040, respectively.
The Silver Line – Economic and Office Market Impact – 2014-2040 | 4 ECONOMIC AND OFFICE THE SILVER LINE MARKET IMPACT – 2015-2040
Tysons Corner has an office inventory of 18.6 million SF 2,000 within a half mile of Metro, of which approximately 64% )
is Class B/C. Currently tenants in the market are seeking S F
f o newer or fully renovated office space that is close to s 1,500 d a n quality amenities and transit, a trend we expect to s u o
continue. With our projection of 5.2 million square feet t h
n 1,000 i ( of potential demand from 2015 to 2040 surrounding the d Metro stations, we believe available space will tighten as m a n e
demand rises particularly during the 2015 to 2030 period. D
e 500 c fi Tenants will be further challenged if they are seeking f newer office space, as most of the current inventory is O older product and will continue to age through year 0 McLean Tysons Corner Greensboro Spring Hill 2040. Given this, we recommend developing new office product or renovating Class B/C product to Class A in SOURCE: Transwestern order to capture this rising demand.
EMPLOYMENT AND OFFICE DEMAND PROJECTIONS Job Growth 2015 NEW JOBS PROJECTED NEW OFFICE USING JOBS 2015 2040 to 2040 Between Created Between MCLEAN STATION Number of Total Employees 13,200 28,800 15,600 Number of Office Employees 6,864 14,976 8,112 2015 − 2040 2015 − 2040 Projected Office Demand: 1,622,400 89% Job Growth 2015 2015 2040 to 2040 TYSONS CORNER STATION Number of Total Employees 27,200 37,000 9,800 29.1K 56K 0.5 MI Number of Office Employees 14,144 19,240 5,096 Office Use Total Jobs Projected Office Demand: 1,019,200
Job Growth 2015 2015 2040 to 2040 GREENSBORO CORNER STATION NEW JOBS PROJECTED NEW OFFICE USING JOBS Number of Total Employees 10,800 16,600 Between5,800 Created Between Number of Office Employees 5,616 8,632 3,016 Projected Office20 Demand:15 −603,200 2040 2015 − 2040
Job Growth 2015 2015 2040 % to 2040 89 SPRING HILL STATION Number of Total Employees 17,200 36,000 18,800 Number of Office Employees 8,944 18,720 9,776 Projected Office Demand:29.1K1,955,20056K 0.5 MI SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern Office Use Total Jobs
The Silver Line – Economic and Office Market Impact – 2014-2040 | 5 ECONOMIC AND OFFICE
THE SILVER LINE MARKET IMPACT – 2015-2040
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s Gr r RESTON e b A en w o s a h y r b n u wy e
k r P
n m P G r k
Fa l
w o y u c ester P Recommendation: Focus on renovating Class B/C product k w oad Br y la
n L
to Class A near Metro in order to capture demand,ds Blvd which o u
n
d
o
u
should steadily occur from 2015 n
C
W o
ax d 625 u
pool R 28 n
267 t
to 2040. 28 y Leesburg Pike
Sully Rd
P k w y Springvale Rd 62528 N Sterling Blvd MARYLAND ROUTE 772/ RYAN ROAD 19328 Reston is projected to add 17,600 new jobs from 2015 to 28628
B
e
Drainesville Rd
l
d m 2040, a 26% increase. This growth ratev translates to 1.0% l
o B y
n r w
t ROUTE 606
a k
t R
s P
i per year, which is on par with the 10-yeard historical annual 193
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t g t r n
o e Dulles Greenway Sterling Rd u R
N o
growth rate of 1.0% for Fairfax County.d C 28 287 28 x 738 a 28 f ir Leesburg Pike 621 a 28 F H
u 26728 n Old Ox Rd t
22828 Reston e Ge
Of the 17,600 new jobs projected for Reston, r o
rg M e
606 town Pik
28 i 7 e
l 28
l
approximately 9,300 jobs are expected to be office INNOVATION R CENTER d HERNDON using. Office using employment growth is expected to RESTON 26728 TOWN WIEHLE- be relatively consistent per five year period from 2015 to DULLES 12328 50 CENTER RESTON
AIRPORT Sully Rd 2040. In recent years tenants have allocated on average EAST SPRING 60828 W HILL 200 square feet per employee, which totals 1.9 million e s Reston Pkwy t
Centreville Rd O x R GREENSBORO square feet of office demand from 2015 toJohn 2040, Mosby Hwy or 65728 d MCLEAN L aw ye TYSONS 75,000 square feet per year. 286 rs 28 Rd CORNER Lawyers Rd 60628 28 G 50 Polend Rd 28 26728
u Fox Mill Rd m
S p
r i Hunter Mill Rd n WEST g EAST FALLS Number of Office Employees d v l R FALLS
1,000 1,200 1,400 1,600 1,800 2,000 2,200 B d CHURCH t
62028 f
200 400 600 800
o 665 CHURCH
r 50 28
c 28628 12328 e 657
0 28 DUNN LORING
n Lee Jackson Memorial Hwy
o VIRGINIA
t Sully Rd d S yR e VIENNA 29 ll a V Lee Hwy 2015-2020 t 29 n
a
s
a e
l 50 Arlington Blvd 50 P Fairfax Blvd 2020-2025
Pleasant Valley Rd
2025-2030 EMPLOYMENT AND OFFICE DEMAND PROJECTIONS Job Growth 2015 2015 2040 2030-2035 to 2040 ENTIRE SUBMARKET 2035-2040 Number of Total Employees 67,600 85,200 17,600 Number of Office Employees 35,828 45,156 9,328 Balance of Submarket Projected Office Demand: 1,865,600 Half Mile of Metro Station WITHIN A HALF OF METRO STATION SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern Number of Total Employees 45,400 56,600 11,200 Number of Office Employees 24,062 29,998 5,936 Approximately 64% of the projected office using jobs Projected Office Demand: 1,187,200 arriving in Reston from 2015 to 2040 will be located within SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern a half mile of the new Metro stations. This translates to a total of 1.2 million square feet of potential office demand near the Metro stations in Reston, or 47,000 square feet per year. Of the two new Metro stations in Reston, Reston Town Center is projected to experience a greater rise in office using employment, which translates to 721,000 square feet of potential office demand, compared to Wiehle-Reston East at 466,000 square feet.
The Silver Line – Economic and Office Market Impact – 2014-2040 | 6 ECONOMIC AND OFFICE THE SILVER LINE MARKET IMPACT – 2015-2040
Reston has an office inventory of 11.7 million square feet 800 within a half mile of Metro, of which approximately 50% is
) 700
Class B/C. With our projection of 1.2 million square feet S F
f o of potential demand from 2015 to 2040 surrounding the s 600 d
Metro stations, which averages only 47,000 square feet a n s 500 u per year, we expect supply and demand will be relatively o t h
n 400 i in balance during this period. Given this, coupled with (
d tenant demand for newer or fully renovated office space, 300 m a n we believe the focus should be on renovating Class B/C e D 200 e product to Class A. This is not to say that a spec office c fi f project would not be successful in the right location, O 100 particularly near Reston Town Center as this location is 0 already a draw to tenants and is due to experience greater Wiehle/Reston East Reston Town Center demand. However, to keep the vacancy rate at controlled SOURCE: Transwestern levels, new office construction should be kept in check.
EMPLOYMENT AND OFFICE DEMAND PROJECTIONS NEW JOBS PROJECTED NEW OFFICE USING JOBS Job Growth 2015 2015 2040 to 2040 Between Created Between WIEHLE/RESTON EAST STATION Number of Total Employees 17,200 21,600 4,400 2015 − 2040 2015 − 2040 Number of Office Employees 9,116 11,448 2,332 Projected Office Demand: 466,400 64% Job Growth 2015 2015 2040 to 2040 RESTON TOWN CENTER STATION Number of Total Employees 28,200 35,000 6,800 9.3K 17.6K 0.5 MI Number of Office Employees 14,946 18,550 3,604 Office Use Total Jobs Projected Office Demand: 720,800 SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern NEW JOBS PROJECTED NEW OFFICE USING JOBS Between Created Between 2015 − 2040 2015 − 2040 64%
9.3K 17.6K 0.5 MI Office Use Total Jobs
The Silver Line – Economic and Office Market Impact – 2014-2040 | 7 ECONOMIC AND OFFICE
THE SILVER LINE MARKET IMPACT – 2015-2040
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s Gr r HERNDON e b A en w o s a h y r b n u wy e
k r P
n m P G r k
Fa l
w o y u c ester P Recommendation: Focus on renovating Class B/C k w oad Br y la
n L
product to Class A near Metro in order to capture ds Blvd o u
n
d
o
u
demand, which should occur mostly from 2015 to 2020 n
C
W o
ax d 625 u
pool R 28 n
267 t
but remain steady thereafter. 28 y Leesburg Pike
Sully Rd
P k w y Springvale Rd 62528 N Sterling Blvd MARYLAND ROUTE 772/ RYAN ROAD 19328 Herndon is projected to add 20,200 new jobs from 2015 28628
B
e
Drainesville Rd
l
d m to 2040, a 44% increase. This growth rate translatesv to l
o B y
n r w
t ROUTE 606
a k
t R
s P
i 1.8% per year, which is above the 10-year historical annuald 193
h y 28
t g t r n
o e Dulles Greenway Sterling Rd u R
N o
growth rate of 1.0% for Fairfax County. d C 28 287 28 x 738 a 28 f r Leesburg Pike Herndon i 621 a 28 F H
u 26728 n Old Ox Rd t
22828 e Ge
Of the 20,200 new jobs projected for Herndon, r o
rg M e
606 town Pik
28 i 7 e
l 28
l
approximately 9,700 jobs are expected to be office using. INNOVATION R CENTER d HERNDON Most growth could occur from 2015 to 2020, but remain RESTON 26728 TOWN WIEHLE- steady thereafter, as most new office jobs are added DULLES 12328 50 CENTER RESTON
AIRPORT Sully Rd during this period. In recent years tenants have allocated EAST SPRING 60828 W HILL on average 200 square feet per employee, which totals e s Reston Pkwy t
Centreville Rd O x R GREENSBORO 1.9 million square feet of office demand from 2015 to John Mosby Hwy 65728 d MCLEAN L aw ye TYSONS 2040, or 77,000 square feet per year. 286 rs 28 Rd CORNER Lawyers Rd 60628 28 G 50 Polend Rd 28 26728
u Fox Mill Rd m
S p
r i Hunter Mill Rd Number of Office Employees n WEST g EAST FALLS d
1,000 1,500 2,000 2,500 3,000 v l R B FALLS d CHURCH 500 t
62028 f
o 665 CHURCH r 50 28
0 c 28628 12328
e 65728 DUNN LORING
n Lee Jackson Memorial Hwy
o VIRGINIA
t Sully Rd d S yR e VIENNA 29 ll 2015-2020 a V Lee Hwy t 29 n
a
s
a e
l 50 Arlington Blvd 50 2020-2025 P Fairfax Blvd
Pleasant Valley Rd 2025-2030 EMPLOYMENT AND OFFICE DEMAND PROJECTIONS Job Growth 2015 2015 2040 2030-2035 to 2040 ENTIRE SUBMARKET 2035-2040 Number of Total Employees 45,900 66,100 20,200
Balance of Submarket Number of Office Employees 22,032 31,728 9,696 Projected Office Demand: 1,939,200 Half Mile of Metro Station SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern WITHIN A HALF OF METRO STATION Number of Total Employees 19,800 33,400 13,600 Approximately 67% of the projected office using jobs Number of Office Employees 9,504 16,032 6,528 arriving in Herndon from 2015 to 2040 will be located Projected Office Demand: 1,305,600 within a half mile of the proposed Metro stations. This SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern translates to a total of 1.3 million square feet of potential office demand near the proposed Metro stations in Herndon, or an average 52,000 square feet per year. Of the two proposed Metro stations in Herndon, Innovation station is projected to experience a greater rise in office using employment, which translates to 797,000 square feet of potential office demand, compared to the Herndon station at 509,000 square feet.
The Silver Line – Economic and Office Market Impact – 2014-2040 | 8 ECONOMIC AND OFFICE THE SILVER LINE MARKET IMPACT – 2015-2040
Herndon has an office inventory of 4.7 million SF within 900 a half mile of the Metro stations of which approximately
61% is Class B/C. With our projection of 1.3 million square ) 800 S F
f feet of potential demand from 2015 to 2040 surrounding o 700 s d
the proposed Metro stations, which averages only 52,000 a n 600 s u square feet per year, we expect supply and demand o 500 t h
will be relatively in balance during this period. Given n i ( 400 this, coupled with tenant demand for newer or fully d
renovated office space, we believe the focus should be m a n 300 e D on renovating Class B/C product to Class A. This is not e c 200 fi f
to say that a spec office project would not be successful O in the right location, particularly near Innovation station 100 as this location is due to experience greater demand. 0 Herndon Innovation Station However, to keep the vacancy rate at controlled levels, SOURCE: Transwestern new office construction should be kept in check.
EMPLOYMENT AND OFFICE DEMAND PROJECTIONS NEW JOBS PROJECTED NEW OFFICE USING JOBS Job Growth 2015 2015 2040 to 2040 Between Created Between HERNDON STATION Number of Total Employees 11,600 16,900 5,300 2015 − 2040 2015 − 2040 Number of Office Employees 5,568 8,112 2,544 Projected Office Demand: 508,800 67% Job Growth 2015 2015 2040 to 2040 INNOVATION STATION Number of Total Employees 8,200 16,500 8,300 9.7K 20.2K 0.5 MI Number of Office Employees 3,936 7,920 3,984 Office Use Total Jobs Projected Office Demand: 796,800 SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern NEW JOBS PROJECTED NEW OFFICE USING JOBS Between Created Between 2015 − 2040 2015 − 2040 67%
9.7K 20.2K 0.5 MI Office Use Total Jobs
The Silver Line – Economic and Office Market Impact – 2014-2040 | 9 ECONOMIC AND OFFICE
THE SILVER LINE MARKET IMPACT – 2015-2040
D C
u l a 7
ll 28 e i
s Gr r ROUTE 28 NORTH e b A en w o s a h y r b n u wy e
k r P
n m P G r k
Fa l
w o y u c ester P Recommendation: Given relatively low office inventory k w oad Br y la Route 28 North
n L
surround the proposed Metro stations, limited new ds Blvd o u
n
d
o
u
development could be justified to capture demand, which n
C
W o
ax d 625 u
pool R 28 n
267 t
should occur mostly from 2015 to 2030. 28 y Leesburg Pike
Sully Rd
P k w y Springvale Rd 62528 N Sterling Blvd MARYLAND ROUTE 772/ RYAN ROAD 19328 Route 28 North is projected to add 91,000 new jobs from 28628
B
e
Drainesville Rd
l
d m 2015 to 2040, a 77% increase. This growth rate translates v l
o B y
n r w
t ROUTE 606
a k
t R
s P
i to 3.1% per year, which is above the 10-year historical d 193
h y 28
t g t r n
o e Dulles Greenway Sterling Rd u R
N o
annual growth rate of 1.0% for Fairfax County. d C 28 287 28 x 738 a 28 f ir Leesburg Pike 621 a 28 F H
u 26728 n Old Ox Rd t
22828 e Ge
Of the 91,000 new jobs projected for Route 28 North, r o
rg M e
606 town Pik
28 i 7 e
l 28
l
approximately 21,800 jobs are expected to be office INNOVATION R CENTER d HERNDON using. Most growth is projected to occur from 2015 to RESTON 26728 TOWN WIEHLE- 2030, as 74% of the new office using jobs will be created DULLES 12328 50 CENTER RESTON
AIRPORT Sully Rd during this period. In recent years tenants have allocated EAST SPRING 60828 W HILL on average 200 square feet per employee, which totals e s Reston Pkwy t
Centreville Rd O x R GREENSBORO 4.4 million square feet of office demand from 2015 to John Mosby Hwy 65728 d MCLEAN L aw ye TYSONS 2040, or 175,000 square feet per year. 286 rs 28 Rd CORNER Lawyers Rd 60628 28 G 50 Polend Rd 28 26728
u Fox Mill Rd m
S p
r i Hunter Mill Rd n WEST g EAST FALLS Number of Office Employees d v l R FALLS
1,000 2,000 3,000 4,000 5,000 6,000 7,000 B d CHURCH t
62028 f
o 665 CHURCH
r 50 28
c 28628 12328 e 657
0 28 DUNN LORING
n Lee Jackson Memorial Hwy
o VIRGINIA
t Sully Rd d S yR e VIENNA 29 ll a V Lee Hwy 2015-2020 t 29 n
a
s
a e
l 50 Arlington Blvd 50 P Fairfax Blvd 2020-2025
Pleasant Valley Rd
2025-2030 EMPLOYMENT AND OFFICE DEMAND PROJECTIONS Job Growth 2015 2015 2040 2030-2035 to 2040 ENTIRE SUBMARKET 2035-2040 Number of Total Employees 118,500 209,500 91,000 Number of Office Employees 28,440 50,280 21,840 Balance of Submarket Projected Office Demand: 4,368,000 Half Mile of Metro Station SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern WITHIN A HALF OF METRO STATION Number of Total Employees 19,800 36,700 16,900 Number of Office Employees 3,306 7,537 4,231 Approximately 19% of the projected office using Projected Office Demand: 846,200 jobs arriving in Route 28 North from 2015 to 2040 SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern will be located within a half mile of the proposed Metro stations. Unlike the other submarkets, the Route 28 North submarket is projected to experience greater growth outside the half mile radius of the proposed Metro stations. This is due in part to two Metro stations, Dulles Station and Route 606 Station, located on or adjacent to Dulles International Airport.
The Silver Line – Economic and Office Market Impact – 2014-2040 | 10 ECONOMIC AND OFFICE THE SILVER LINE MARKET IMPACT – 2015-2040
Of the three new Metro stations in Route 28 North, 600 the Route 772 station is projected to experience ) S F
the greatest rise in office using employment, which
f 500 o translates to 564,000 square feet of potential office s d
demand from 2015 to 2040. a n s 400 u o t h
n
The Route 28 North submarket currently has a relatively i
( 300 low office inventory of 594,000 square feet within a half d m a n
mile of the proposed Metro stations. With our projection e 200 D of 846,000 square feet of potential demand from 2015 e c fi f
to 2040 surrounding the Metro stations, which averages O 100 34,000 square feet per year, we expect demand to outpace supply given the current inventory level. Given this, we 0 Dulles Route 606 Route 772 believe limited new construction could be warranted as SOURCE: Transwestern demand rises, particularly from 2015 to 2030.
EMPLOYMENT AND OFFICE DEMAND PROJECTIONS NEW JOBS PROJECTED NEW OFFICE USING JOBS Job Growth 2015 2015 2040 to 2040 Between Created Between DULLES STATION Number of Total Employees 17,700 24,000 6,300 2015 − 2040 2015 − 2040 Number of Office Employees 2,655 3,600 945 % Projected Office Demand: 189,000 19 Job Growth 2015 2015 2040 to 2040 ROUTE 606 STATION 0.5 MI Number of Total Employees 500 2,000 1,500 21.8K 91K Number of Office Employees 155 620 465 Office Use Total Jobs Projected Office Demand: 93,000
Job Growth 2015 2015 2040 NEW JOBS PROJECTEDto 2040 NEW OFFICE USING JOBS ROUTE 772 STATION Between Created Between Number of Total Employees 1,600 10,700 9,100 Number of Office Employees 496 3,317 2,821 Projected Office20 Demand:15 −564,200 2040 2015 − 2040 SOURCE: Metropolitan Washington Council of Governments, ESRI, Transwestern 19%
21.8K 91K 0.5 MI Office Use Total Jobs
The Silver Line – Economic and Office Market Impact – 2014-2040 | 11 ECONOMIC AND OFFICE THE SILVER LINE MARKET IMPACT – 2015-2040
CONCLUSION Regardless, the Silver Line Metro stations will be an added benefit to Northern Virginia, as growth is expected We project 91,700 new jobs will be added within a half to be above average surrounding the stations. To take mile of the new Silver Line Metro stations from 2015 to advantage of this projected growth, we recommend 2040. With approximately 42,700 of these jobs office focusing on renovating older product to Class A space, using, this translates to 8.5 million square feet of office as most of the office inventory near the stations is older demand during this period, or 285,000 square feet per and will continue to age through 2040. Currently tenants year. This is above the average of 206,000 square feet in the market are seeking newer or fully renovated office absorbed annually during the past 10-years. Although space that is close to quality amenities and transit, a our projection is above the historical average, we believe trend we expect to continue. Notably, WRIT will spend a handful of factors are holding it back from greater gains. $35 million on renovating of 7900 Westpark to bring it to Class A status to attract tenants. To be competitive, we 1. The Silver Line Metro stations in Northern Virginia expect more property owners to follow suit in renovating are above ground, which limits growth immediately older stock to Class A. We believe new development is surrounding the station. warranted more so for Tysons Corner near the new Metro stations compared to the other submarkets impacted 2. The submarkets impacted by the Silver Line are already by the Silver Line. Although new development is not developed, due in large part to Tysons Corner and out of the question for Reston or Herndon, we believe Reston Town Center. Currently, there is a total of 69.4 developers should be cautious and select prime locations million square feet of office inventory in these four for new development as demand and supply will be more submarkets before the arrival of Metro. This compares in balance in these two submarkets. Notably, limited to the RCB Corridor, which was largely undeveloped new development could occur in the Route 28 North with only 5.6 million square feet of office inventory submarket near Metro, as the current office inventory is before the arrival of Metro in the 1980s. Today, the RCB relatively low. Corridor has 24.0 million square feet of office inventory. 3. Projected job growth is expected to be limited due to the tightening of the federal budget. We project an average of 30,000 new jobs per year from 2015 to 2040 for the entire Washington metro area. This is below the 20-year annual average of 42,600.
Source: www.restonnow.com Source: www.planitmetro.com
The Silver Line – Economic and Office Market Impact – 2014-2040 | 12 Elizabeth Norton Transwestern is a privately held real estate firm specializing in agency leasing, property and Managing Research Director facilities management, tenant advisory, capital markets, research and sustainability. The fully 202.775.7026 integrated global enterprise leverages competencies in office, industrial, retail, multifamily [email protected] and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate 1700 K Street NW investment management and research. Transwestern has 34 U.S. offices and assists clients Suite 660 through more than 181 offices in 40 countries as part of a strategic alliance with Paris-based Washington, DC 20006 BNP Paribas Real Estate. 202.775.7000 For more information, visit us at www.transwestern.com