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NAIOP MID-YEAR FORECASTNorthern VirginiaJuly 2017

NAIOP MID-YEAR FORECASTNorthern VirginiaJuly 2017

-30

-20

-10

0

10

20

30

40

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan Feb Mar Apr May

NE

W J

OB

S I

N T

HO

US

AN

DS

JOB GROWTHNorthern Virginia

Source: Bureau of Labor Statistics, Transwestern.

12 Months Ending – 201726,100 Jobs Year-Over-Year

10-Year Average Annual Growth13,000 Jobs Per Year

-4 -2 0 2 4 6 8 10 12 14

Information

Other Services

Manufacturing

Federal Government

Wholesale/Transportation/Utilities

Retail Trade

Financial Services

Leisure/Hospitality

State and Local Government

Construction/Mining

Education/Health

Professional/Business Services

2017 - Year-Over-Year Average

Recovery Period - Since Q2 2009

A N N U A L J O B G R O W T H I N T H O U S A N D S

JOB GROWTH BY SECTORNorthern Virginia

Source: Bureau of Labor Statistics, Transwestern.

7,000

19,100 17,800

0

5,000

10,000

15,000

20,000

25,000

2007 to 2011 2012 to 2016 2017 to 2021

AV

ER

AG

E A

NN

UA

L JO

B G

RO

WT

HJOB GROWTH PROJECTIONNorthern Virginia

Source: Bureau of Labor Statistics, Moody’s, Transwestern.

10-Year Average13,000

Source: Bureau of Labor Statistics, Moody's, Transwestern.

23.0% 24.2% 25.9% 27.1%

54.6% 53.4% 51.9% 50.3%

22.4% 22.5% 22.2% 22.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2012 2016 2021

Arlington/Alexandria

Fairfax

Loudoun/Prince William

SHARE OF JOBSNorthern Virginia

Source: Woods & Poole, Moody’s, Transwestern.

0 5 10 15 20 25

Manufacturing

Federal Government

Wholesale/Trans/Utilities

Information

Education

Construction/Mining

Other Services

Financial Services

Health

State and Local Government

Leisure/Hospitality

Retail

Professional/Business Services

J O B G R O W T H I N T H O U S A N D S

PROJECTED JOB GROWTH Northern Virginia | 2017-2021

$36.1

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

IN B

ILLI

ON

SPROCUREMENT SPENDINGNorthern Virginia

*First quarter annualized.

Source: FPDS, Transwestern.

Source: FPDS, Transwestern.

55%

71%84%

11%

6%

2%

9%

3%

4%

4%3%

3%21% 17%8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Arlington/Alexandria Fairfax Loudoun/Prince William

Balance of Agencies

Justice

State

Health and Human Services

Defense/Homeland/Veterans

SHARE OF PROCUREMENT SPENDINGNorthern Virginia | 2016

$8.9Total Procurement In Billions $24.3 $4.2

18%

17%

17%13%

9%

7%

5%

5%

5%4%

Reston/Herndon

Loudoun County

Tysons Corner

Route 28 Corridor South

RCB Corridor

Merrifield

Fairfax Center

Crystal City/Pentagon City

Springfield/Huntington

Balance of Submarkets

TOP GOVERNMENT CONTRACTOR LOCATIONNorthern Virginia | 2017

Source: WBJ, CoStar, CompStak, Transwestern.

0

5

10

15

20

25

07 08 09 10 11 12 13 14 15 16 17 18 19

Flex/Industrial

Multifamily

Office

Retail

DEVELOPMENT PIPELINE Northern Virginia

Source: CoStar, Transwestern.

IN M

ILLI

ON

S O

F S

F

DEVELOPMENT PIPELINE – PROJECTS UNDER CONSTRUCTION Northern Virginia

Office

Multifamily

Flex/Industrial

Retail

Source: CoStar, Transwestern.

-6

-4

-2

0

2

4

6

8

10

Office Flex/Industrial Retail Multifamily

New Construction

Class A

Class B

NET ABSORPTION SINCE 2010Northern Virginia

Source: CoStar, Transwestern.

IN M

ILLI

ON

S O

F S

F*

*Multifamily in 10,000 SF.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

07 08 09 10 11 12 13 14 15 16 17*

Office

Flex/Industrial

Multifamily

Retail

VACANCY RATENorthern Virginia

Source: CoStar, Delta Associates, Transwestern.

*Second quarter 2017.

Vacancy Rate at Q2 2017:Annual Rent Growth Since 2010:

OFFICE METRICS BY LOCATIONNorthern Virginia

0.5 MILE TO XX 14.8% 1.2%

MIXED-USE9.3% 1.8%

NORTHERN VIRGINIA15.9% 0.8%

Source: CoStar, Transwestern.

Source: CoStar, Transwestern.

0% 5% 10% 15% 20% 25% 30%

Tech

Government

Health

Financial Services

Consulting

Tech

Consulting

Government

Financial Services

S H A R E O F L E A S I N G

TOP THREE OFFICE TENANT SECTORS LEASING BY CLASSNorthern Virginia | Since 2010

Clas

s ANe

w Co

nstru

ctio

nCl

ass B

$20

$25

$30

$35

$40

$45

07 08 09 10 11 12 13 14 15 16 17*

New ConstructionClass AClass B

OFFICE ASKING RENTSNorthern Virginia

Source: CoStar, Transwestern.

*Second quarter 2017.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2002 to 2007 Recovery 2008 to 2009 Recession 2010 to 2017 Recovery

To Northern Virginia From DC

To DC From Northern Virginia

OFFICE RELOCATIONSNorthern Virginia vs. District of Columbia

Source: CoStar, Downtown BID, Transwestern.

IN M

ILLI

ON

S O

F S

F

-400

-300

-200

-100

0

100

200

300

07 08 09 10 11 12 13 14 15 16 17*

Office

Flex/Industrial

Multifamily

Retail

MARKET INDEXNorthern Virginia

Source: Transwestern.

Land

lord

Mar

ket

Tena

nt M

arke

t

*Second quarter 2017.

Flat Market Conditions

7900 Tysons One Place, Suite 600McLean, VA 22102