Absorption Rebounds While Vacancy Holds Steady
Northern Virginia’s industrial market rebounded in Q3, recording 168,600 square feet (sf) of positive net absorption and bringing year-to-date (YTD) absorption to positive 71,000 sf. Warehouse/distribution (W/D) product drove 207,100 sf of positive absorption, while office service (OS) space recorded losses of 38,400 sf.
The largest moves of the quarter occurred in Route 28 North, where the Washington Post occupied 58,200 sf at 22630 Lockridge Rd, RTB Volleyball moved into 37,900 sf at 44080 Little River Tpke, and Air Cartage Express occupied 24,000 sf at 45180 Global Plz. These gains were partially offset by Costco Logistics' departure from 42,000 sf at 45065 Old Ox Rd and JK Moving's departure from 29,400 sf at 22810 Quicksilver Dr. Elsewhere, MobileSentrix, a cellphone parts wholesaler, moved into 99,550 sf at 9061-9073 Euclid Ave in Manassas.
Overall vacancy held at 5.0%, down 10 basis points (bps) from Q2, as W/D vacancy declined to 4.7%—down 10 bps from Q2—while OS vacancy increased to 5.5%, up 20 bps over the same period.
Demand: Leasing Activity Accelerates In Q3
New leasing activity totaled 695,600 sf in Q3, with W/D leasing accounting for 563,900 sf, 81% of the quarterly total. Demand remained concentrated in core industrial corridors, led by Springfield/I-95 with 294,900 sf of new leasing, followed by Manassas with 199,500 sf, and Route 28 North with 179,900 sf. This brought YTD new leasing to 1.7 million square feet (msf), driven by 1.4 msf of W/D activity.
Renewal activity totaled 338,000 sf in Q3, led by Springfield/I-95, which recorded 154,000 sf after Amazon renewed its 133,000-sf lease at 6885 Commercial Dr. This brought YTD renewal activity to 896,000 sf, comprising 561,000 sf of W/D renewals and 335,000 sf of OS renewals.
Pricing: Rents Rise
Asking rents rose $1.31 per square foot (psf) from Q2 to $18.73, with OS rents increasing $0.29 to $18.90 psf and W/D rents up $1.91 to $18.61 psf. Rents remain elevated relative to historical levels, supported by tight vacancy and constrained available supply across the region.
