From the experts, a view of the commercial landscape
By Anne Keisman
Tenant representatives, developers and financiers discussed the status of Loudoun’s emerging commercial real estate market at Loudoun County Chamber of Commerce’s annual Virtual Realty Tour on Oct. 26.
The event confirmed that Loudoun’s commercial real estate market is, in many ways, still the younger sibling to the more mature markets to the east: Fairfax, Arlington and Washington, D.C. Currently, Reston and Herndon dominate the commercial real estate market in the Dulles corridor.
But all signs show that Loudoun’s business landscape will continue to grow. The next decade will see an increase of 100,000 jobs in Loudoun, according to Stephen Fuller, director of the Center for Regional Analysis at George Mason University, who spoke at the forum. He said that jobs have already grown from 80,600 in 1997 to 172,600 in 2007.
Tenant representative Cathy Delcoco, of CB Richard Ellis, said that price, expandability and location are the three top factors influencing her clients’ leasing decisions. She noted that if Loudoun can offer leases at a lower cost than in Herndon and Reston, the county will have a competitive advantage.
She will be watching closely, she said, as 3 million square feet of commercial space becomes available over the next few years in Reston and Herndon. The prices set by that market will dictate, in a large degree, Loudoun’s rental rates.
Developers offered a different perspective. Ray Ritchey, executive vice president of Boston Properties, is in the process of building the South of Market office complex, comprised of two 10-story buildings and one six-story building in the Reston Town Center. He downplayed the importance of price for tenants in search of Class A office space.
“If you’re competing to win on price, you’re going to lose,” he said.
He said he tells potential leasers up front that his properties in Reston will be the most expensive product in that market. But people still want to be there, he said, because of the amenities offered by the town center.
He also warned Loudoun developers of town centers, to be prepared for many ups and downs over the course of the project’s life.
One such developer, Bob Buchanan, president of Gaithersburg-based Buchanan Partners, was also on the panel. His company is in the early stages of developing Arcola Center, a mixed-use development just north of U.S. 50, which will feature big-box stores, a pedestrian-friendly town center, 2.1 million square feet of office space, as well as apartments and town houses.
A rezoning application for the project is now being reviewed by the county’s Planning Commission.
“I still feel that Loudoun does not have a corporate address. And that is why we pale in comparison to Reston and Herndon,” he said, adding that there is still a feeling among developers that Loudoun is “in the middle of nowhere.”
During the third and final panel, equity investors noted that since Loudoun is still fairly new ground for the commercial market, investment here would be more cautious than in more established locations. Retail and apartment complexes would be the easiest sell to a potential investor. Office space, they said, usually develops after retail and residential developments emerge.
With about 6,000 acres of commercially zoned land undeveloped in Loudoun, the Chamber’s event highlighted that Loudoun’s business landscape is still largely unmapped but full of promise