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Share of rents > $50 p.s.f. has reached all-time high in RB Corridor, driven by private sector leasing activity

  • Despite rising vacancy and tepid tenant demand in the RB Corridor over the past decade, the composition of lease economics has shifted. From 2007 to 2009, $30-39 p.s.f. rents comprised almost two-thirds of leases, driven by a larger concentration of federal government tenants.

  • Today, $30-39 p.s.f. rents comprise only 20% of leases, while the share of $40-49 p.s.f. rents has increased from 15% in 2007 to 59% YTD. As the market continues its slow recovery from BRAC and sequestration, the private sector is driving leasing activity. Landlords that were bound by GSA rent caps have benefited from up to a 31% increase in rent from the last year of federal government lease to the first year of a private-sector lease.

  • In addition to the uptick in private sector leasing, new construction is driving rents. The RB Corridor leads Northern Virginia in new construction pricing, and as a result, the share of $50+ p.s.f. leases is at an all-time high of 20%.

  • Increased mixed-use focus and a hefty proposed pipeline are expected to transform the corridor, streetscape and perception of the corridor further in coming years. Obsolete product will eventually be removed from supply and the share of $50+ p.s.f. leases will trend upward, establishing new rent highs.

Source: JLL Research

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