With the Silver Line slated to open in 4 days, all of us who live and work in Reston are gearing up for some big, exciting changes. For those of us in real estate, the game will be changing dramatically – especially for commercial real estate. If you are in the market for office space, here is a rundown on everything you need to know about how the Silver Line will affect commercial real estate in Reston:
Reston’s Vision for the Metro
To prepare for the Silver Line and really make the most of having a Metro stop at Wiehle Avenue, a ½ mile radius around the Wiehle Avenue station was rezoned (as part of the Fairfax County Comprehensive Plan) to allow for (and encourage) high density development.
Planners like to use the term Transit Oriented Development (TOD), but in plain English that means we can expect mixed-use development that will include condos, apartments, offices, hotels, restaurants, shops, outdoor activities, educational institutions, cultural and other attractions – much like what we find today at the Reston Town Center. The suburban office parks that are currently within this area will likely be transformed or torn down to make way for TOD. How long it will take for that to happen is the multi-million-dollar question.
Who Will Benefit from being close to Wiehle-Reston East Station?
As we continually do extensive research, we find that what we like to call The Commercial Real Estate Ecosystem™ is extremely complicated in Reston, making it impossible to explain in one blog post. While we can answer commercial real estate questions more thoroughly through personal conversation (see below for contact information), below you’ll find our thoughts on who will benefit from being close to Reston’s metro station.
Naturally, building owners with property in the ½ mile zone, or closer, will greatly benefit. They can charge a premium to rent/lease, and they can choose to develop mixed-use buildings with even more tenants than what they currently have.
Companies who become tenants will also benefit by being able to attract Millenials (those who are 18 – 33 years old), who are expected to become 51% of the workforce by 2020. When you consider that DC ties with New York for the third-largest increase in car-free households over 5 years, mostly due to Millenials who want to live in the city center and avoid the burden of car-ownership, suddenly being near a Metro station becomes really important!
Finally, Reston residents will enjoy a new live-work-play neighborhood, an influx of more jobs and new amenities, higher property values for their homes, and less traffic.
Commercial Real Estate Trends Close to Reston’s Metro
So what have the commercial real estate trends been over the past three years? Our research found that within a ¼ of a mile radius of Reston’s new Wiehle Ave., asking rents for Class A office space increased from an average of $24 per sq. ft. in 2011, to $27.30 today. That is a 13.75% increase. Within a ½ mile radius of the metro, rent has seen a 12.8% increase with office space being $23.30 per sq. ft. in 2011 and now $26.30 per sq. ft. The value of the commercial real estate close to the Metro is steadily increasing.
Surprisingly—or unsurprisingly—vacancy rates have also gone up. According to our research, within a ¼ of a mile radius of Reston’s metro, vacancy rates were as low as 11% in 2011 and are now sitting at 25%. The vacancy rates within the ½ mile radius are not as dramatic however, with only a 12% vacancy rate in 2011 to a rate of 15% today. This is surprising because why would people leave when the Metro offers extensive benefits? On the other hand, it is unsurprising because the value of commercial real estate close to the Metro will increase slowly over time, and some prefer to wait.
Although there is no concrete data available on the reasoning behind the increase in vacancy rates, it would make sense that landlords have raised their rent in anticipation for a significant demand once the Metro starts running. At the same time, those companies that were leasing within a close radius of the Metro and didn’t believe they would directly benefit from it decided not to pay the higher premium.
The Bottom Line: This is a Great Time to Buy/Lease in Reston
Currently the most expensive price per sq. ft. in Reston is located in and around the Reston Town Center. Because the Town Center offers so many amenities, demand has outstripped supply. This is why office space in the Town Center is leasing for over $45 per sq. ft. Just like the Reston Town Center took several years to reach this level of demand, so too will the Wiehle Ave. station. As the amenities near Reston’s Silver Line steadily increase, so will the price per sq. ft.
Therefore, if you benefit from being close to the Metro, now is the time to secure a 5 – 10 year contract, while rates are most likely lower than they will be in two years. As we advise all of our clients, look at the long-term benefits of your real estate decision and how it will affect your business goals. For example, if you are looking to hire more Millenials, want to increase your property investments, or have something to offer to the “live, work, and play” environment, then buy or lease space now while asking prices are lower than they might eventually be.
There is prime real estate available for a great price. This adds up to a tenants’ market – at least for now. It is highly possible that empty space will fill up quickly once the Silver Line is running successfully, but of course we will have to wait and see if this prediction comes true.
Contact us to find out if leasing/buying by Wiehle Ave. is the best business decision for you. 703.435.4007 or shoot us an email at firstname.lastname@example.org.