Commercial Real Estate Market Picking Up

Commercial Real Estate Market Picking Up

Fewer office building vacancies eases property tax burden on local residents.

Two years ago, Reston had more empty office buildings than anywhere else in Fairfax County. The dot-com bust had left the Reston and Herndon areas filled with vacant buildings and county officials were beginning to worry the economic slump was going to persist.

But those fears have proved unwarranted. According to an upcoming report by the Fairfax County Economic Development Authority, the commercial real estate market in the Reston area has picked up and is considered among the fastest-growing area in the county.

"Reston is one of the hottest markets in the county and I don't see that changing," said Gerald Gordon, director of the EDA.

Largely thanks to technology firms and homeland security and defense contractors, the once-empty buildings along Reston Parkway and the Dulles Toll Road are beginning to fill up.

Two years ago, almost a quarter of Reston's office buildings were vacant, comprising more than 4 million square feet. Late last year and over the last six months, the vacancy rate has steadily declined. By the end of this year, county officials expect the vacancy rate to be lower than 10 percent.

That is good news for county residents, Gordon said, because as commercial real estate fills up, the burden on residential property taxes is lifted.

"We're positioned well for the coming years," he said.

FAIRFAX COUNTY'S main source of revenue is through property taxes. As the commercial real estate market improves, more buildings are built and more commercial property owners pay taxes. When the commercial real estate market has a high vacancy rate, the county relies more heavily on residents.

That burden was at its peak two years ago following the bursting of the Internet bubble. Now, the market is becoming significantly healthier, particularly in Reston, giving county officials hope residential property taxes could be alleviated.

Reston has almost always been a healthy commercial real estate market because of its close proximity to Dulles International Airport and easy access to highways leading into Washington, D.C. and Tyson's Corner. But defense and homeland security contractors are the top sector aiding the current market, said Casey Veatch, vice president of Trammell Crow Company, a commercial real estate firm.

"Reston is getting more winds," he said. "Reston seems to be recovering more quickly than even Tyson's."

For the second half of last year, two of the four largest new office buildings were located in Reston. The Nextel building, comprising 182,961 square feet, and the Unisys building, comprising 173,717 square feet, helped lead the way to the market's current health.

"This area is really picking up," said Andrew Sterling, spokesman for the Greater Reston Chamber of Commerce.

More details about the commercial real estate market in Reston and the rest of Fairfax County will be released in the coming weeks when the EDA releases its biannual report.