Q2 2022 Commercial Real Estate Market Report: Ashburn, VA
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In the second quarter of 2022, commercial real estate in Ashburn, VA saw mixed performance, with its office market sector taking the biggest hits with record lease concessions, flat asking rents, and negative net absorption.
Other sectors, such as industrial, saw overall growth in asking gross rents and occupancy rates. But despite this, some areas, particularly those near the Dulles Tech Corridor, did see a decline in the average cost per square foot of commercial real estate during this period.
General Area Overview & Demographics
Ashburn, VA is a town in Loudoun County, Virginia. The population was about 46,000 at the 2020 census.
It’s located about 30 miles northwest of Washington, D.C. and is part of the Washington metropolitan area.
Ashburn is home to many high-tech companies and data centers, including Verizon Business, Internet Software Consortium, Yahoo!, Amazon Web Services, Dell EMC, Juniper Networks, and Telos Corporation.
General Commercial Real Estate Performance in Ashburn, VA
Ashburn, VA’s overall commercial real estate market showed mixed growth in the second quarter of 2022. Overall commercial rents increased by about 3%, and the average cost per square foot of commercial real estate grew by 2%.
The Ashburn, VA office market, however, saw direct asking rents stay flat at about $33 per square foot alongside a negative net absorption of -1.07 msf and a vacancy rate of about 17.4%.
The market is expected to continue modest performance for the rest of the year.
Ashburn’s Office Market Activity in Q2 2022
The office market in Ashburn remained relatively flat in Q2 2022, with rents hovering around $33 per square foot and the average cost per square foot declining.
Office market activity in Ashburn was still far below pre-pandemic levels.
The number of new leases signed in the quarter was down from the same period last year, and the vacancy rate remained elevated at 17.4%.
Notable Office Market Deals in Ashburn in Q2 2022
The majority of office deals in Ashburn in Q2 2022 were lease renewals:
- Boeing renewed and expanded its space at 460 Herndon Parkway.
- Leido’s renewed its space at 14668 Lee Road.
- Accenture renewed its space at 800 N Glebe Road in Ballston.
Commercial lease renewals are starting to slow down nationwide while new leases are starting to make a bigger appearance.
This focus on office renewals in Ashburn, VA in Q2 2022, alongside an elevated vacancy rate, may be a signal of weak market growth in the office sector.
Ashburn’s Industrial/Warehouse Market Trends
In the second quarter of 2022, Ashburn’s industrial and warehouse real estate market continued to tighten.
The average gross asking rent for leasing industrial/warehouse real estate increased slightly to about $13.23 per square foot.
This is due to the limited number of properties available for lease or purchase in this market.
Despite inflationary pressures and rising interest rates, the demand for industrial/warehouse space in Ashburn remains high as businesses look to take advantage of the region’s robust transportation infrastructure
Vacancy rates for industrial real estate in Ashburn, VA sit at about 3.6%.
Ashburn Industrial Real Estate Development Projects in 2022
In the first quarter of 2022, approximately 1.3 million square feet worth of industrial real estate development went underway.
About a quarter of that number began construction in Loudoun County’s biggest submarket: Dulles North.
With upward pressure on industrial rents slightly continuing through 2022, these new development projects, slated for completion in Q1 2023, should provide some relief.
New Commercial Real Estate Development Projects in Northern Virginia in Q2 2022
New commercial real estate development projects are popping up in and around Northern Virginia to help create a supply and demand equilibrium.
Some of these projects include:
- New luxury condominiums in Old Town Alexandria opened up this spring.
- A new Reston Town Center in Fairfax County, adding about 1.4 million new square footage in office space to the area.
- A new student housing complex, built north of George Mason University, with rates starting at $874 per month.
These are just three of some of the many development projects planned for the area throughout the rest of 2022 and into 2023.
Takeaways for Ashburn Commercial Real Estate Investors
Ashburn, VA may not be the most enticing location for new and seasoned investors. Nonetheless, as the economy continues to recover, so might Northern Virginia.
- The office market in Ashburn has taken the hardest hit in Q2 2022.
- The industrial sector in Ashburn shows promising signs of growth amidst new development project.
- Other commercial real estate development projects centered around housing and community are slated to finish this year and next.
Stay aware, do your due diligence, and happy investing.
Methodology
All figures presented in this article are based on MyEListing.com’s commercial real estate listing data in corroboration with other freely available data and information covering the commercial real estate industry.
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