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While Loudoun was spared major move-outs due to BRAC closures that other areas of Northern Virginia saw in the second quarter, demand for office space remained flat. Besides the uncertainty brought on by federal budget concerns and the upcoming presidential election, Loudoun's 13.5 million square feet of office space competes heavily with Fairfax County, which at 106 million square feet has considerably more product. But “we believe that with rail coming, there will be a lot more opportunities that we'll be able to compete on that we may not have in the past,” Economic Development Infrastructure Manager Robyn Bailey said. The sentiment was echoed in a Cassidy Turley office market report for the second quarter of 2012: “In addition to providing mass transit in the long term, the construction of the Metrorail extension is expected to improve office demand from associated contractors in the region.” Further, the report also noted that despite flat demand and multiple relocations within the market—citing as examples Bohler Engineering and MC Dean vacating a total of 38,000 square feet at 22630 Davis Drive­­—“average asking rents increased for a fourth consecutive quarter during the second quarter of 2012, rising 11 cents over the previous quarter to $24.03 per square foot on a full service basis.” From a boots-on-the-ground perspective of small space users,activityhasbeenslowbutsteady,Clarke-HookPresident Ed Zigo said. The family-owned development company and boutique brokerage focuses on the small- to mid-sized business market for office, light industrial, research and development and retail users. Loudoun properties include University Commerce Center in Ashburn, Loudoun Commerce Center and Technology Trading Park in Sterling and The Capitol Building at Dulles Trade Center. “The first six months we saw a consistent flow of

RETAIL: John Fainter, Cypress Equities Despite vacancy rates remaining flat in the second quarter, Loudoun remains a very attractive retail market, according to Economic Development’s Robyn Bailey. “The good news is that we’ll be bringing in new product potential with some of our mixed-use communities,” she said. At Leesburg's first mixed-use property, Village at Leesburg, retail has lagged behind residential leasing at the 1.2 million-square-foot center. Cypress Equities, which manages more than six million square feet in projects throughout the United States and Caribbean, was brought in to develop the commercial component of the four-story urban village that opened in spring 2010. The center originally opened with 335 residential units, 520,000 square feet of retail/restaurants and 208,000 square feet of office space. Currently, retail space is 77 percent leased, compared to 96 percent for the residential portion, which is managed by DC developer and property manager Kettler, Cypress Vice President of Development John Fainter said. He noted that retail around the country has struggled over the past few years with the economic downturn, but that lease negotiations continue with national and regional retailers. In June, for instance, Village at Leesburg announced

deals. We didn't get University Commerce Center some of them but some of them we did get. What I was looking at is that consistency, and that is what has given me some confidence— not that I want to take the plunge and start building our next building.” In response to the uptick in activity and anticipation of growth, the company is ramping up its construction division, which had been downsized when the market slowed to primarily perform maintenance work and smaller jobs such as tenant fit-outs. “In the next year or two if activity continues to grow, we'll probably enlarge that group with more personnel,” Zigo said. The company also is eyeing moving forward on its UniversityCommerceCenter,wheretwooffourplannedbuildings have been built. Located amid the George Washington University Science & Technology Campus, the center is a mixed business-use center with office, training, supporting retail and R&D uses. “If we proceed as we anticipate, our next building will front George Washington Boulevard [opposite the first GWU building, Exploration Hall] and will be a single

Therese P. Howe/Loudoun Business

story office/R&D facility totaling about 30,000 square feet. [There is] no set date for groundbreaking but we are hoping for a 2013 completion date,” Zigo said. While the move is dependent on favorable market conditions, “it means that we as owner developers are seeing enough activity to want to build enough inventory,” Zigo said. “You can call it spec, but I want to have enough so that when the market turns, we have available space in a quality business environment that we can offer to those who are starting to grow and are wanting to take advantage of it.”

made-to-order hamburgVillage at Leesburg er chain BurgerFi signed a lease for 2,474 square feet in Suite 130 of the 1608 block of Village Market Boulevard. It has also seen leasing activity in office space, which is at 60 percent capacity, with the most recent being new data analytics company Voodoo Lunchbox taking 2,942 square feet. “We've leased 40,000 to 50,000 square feet of office in 2012,” Fainter pointed out, adding that those employees offer retailers a “healthy daytime population that's going Therese P. Howe/Loudoun Business to shop, eat or stay after work.” He remains positive in and population demographics, has Cypress “very bullhis outlook, adding that “when you look at the greater ish on our prospects. We’re excited to be part of the metro area, it's one of the markets earmarked for invest- Loudoun County landscape..." ment by retailers or other businesses looking to relocate.” That, combined with Loudoun’s strong income

Loudoun Business August 202  
Loudoun Business August 202  

The August 2012 issue of Loudoun Business