Northern Virginia stands out as a beacon for investors looking to capitalize on emerging trends and opportunities in commercial real estate (CRE). This area encompasses the cities of Alexandria and Arlington, the suburbs of Falls Church and McLean, and many more beautiful cities and towns. Together, it is becoming a pivotal arena for understanding the future of real estate investment. Given that, let’s look at the trends shaping the VA commercial real estate leasing and sales market and why this region is becoming a hotbed for forward-thinking investors.
Tech Expansion and Data Centers
A significant driver of Northern Virginia’s CRE market is the burgeoning tech industry. The most famous and single largest example we can point to is Amazon’s massive HQ2 in Arlington. By 2031, Amazon will have created 25,000 jobs in the region. However, that’s just the tip of NoVa’s tech iceberg.
As of 2021, Northern Virginia housed over 70% of the world’s internet traffic, facilitating an unparalleled expansion in data center demand. Ashburn, VA is home to more than 3,500 tech companies, and has over 30 million square feet of data centers with 5 million more in development. Its status as a global hub for digital data is undisputed, and creates an endless source of growth opportunities in both the job and real estate market.
Mixed-Use Developments
Another trend gaining momentum is the rise of mixed-use developments. Projects like The Boro in Tysons and Reston Town Center exemplify this trend, offering a blend of residential, commercial, and entertainment spaces. Such developments are a response to the growing desire for walkable communities, with the Urban Land Institute noting that mixed-use developments can enhance property values by up to 20% (Source: Urban Land Institute, 2020).
Sustainable and Smart Buildings
Sustainability and technology integration are becoming critical in CRE investment. Northern Virginia has seen a surge in LEED-certified buildings, with Arlington County boasting over 150 LEED projects as of 2022. Additionally, the Smart Building Market report predicts a global market growth to $108.9 billion by 2025, with smart technology adoption in commercial properties playing a significant role. As the demand for green buildings continues to rise, Northern Virginia has cemented itself as a leader in the space, and has a leg up on nearly every other region in the country.
Transit-Oriented Development
Transit-oriented developments (TODs) are reshaping Northern Virginia’s urban landscape. The expansion of the Silver Line metro has spurred developments like the Reston Station, blending residential, commercial, and public spaces. Studies have shown that properties within a quarter-mile of a metro station command a premium of 10-20% over those further away. This indicates that the continued expansion of public transit in Northern Virginia will have a great effect on future commercial real estate property values.
Conclusion
Northern Virginia’s commercial real estate market is a microcosm of future trends shaping the industry nationwide. From the tech-driven demand for office spaces and data centers to the growth in mixed-use developments and sustainable building practices, the region offers a wealth of opportunities for savvy investors. By understanding and leveraging these trends, investors can position themselves to capitalize on the future of commercial real estate, ensuring long-term growth and success in this dynamic market. As we look ahead, the Northern VA commercial real estate leasing and sales market not only offers a glimpse into the future of CRE investment but also presents a roadmap for navigating the opportunities and challenges of real estate’s changing landscape.
If you are interested in a free broker opinion of value or just learning more about investing in commercial real estate in Maryland, Virginia, or Washington DC, please contact us. Avenue Real Estate is a leading full service commercial brokerage in the Baltimore and Washington DC areas and we would love to help you explore your options and make informed decisions about commercial real estate investments.