This month we will review the CRE market in Loudoun, Fairfax, and Prince William Counties. You will get a bird’s eye view of the sales, vacancy, availability, and Cap Rates, as well as seeing the spread of buyer and seller types.
Loudoun County Commercial Real Estate in 2022
Loudoun County offers a great deal to business growth, success, tax incentives, and safety.
Sales Numbers for 2022
If we look at the overall CRE stats, we see the following:
- 216 properties were sold in 2022, totaling $2.2 billion. The average sales price was $10.9 million, with individual and portfolio sales dominating the numbers.
- 67% of sales fell in the $500K to $8.7M range. Of that number, 17.6% were in the $1M to $2M, and 18% in the $4.2M to $8.7M range.
- 7.9 million SF were sold at an average price of $392/SF. Within that, 37% of sales were in the $200 to $300/SF range, 19% in the $100 to $200/SF range, 11.5% in the $300 to $400/SF range, and 10.5% in the $400 to $500/SF range. The remaining 22% ranged from less than $100/SF to more than $800/SF.
- Properties were on the market for an average of 15 months, with an average sale-to-asking price of 95.7%.
Quarters 2 and 4 saw the highest sales volumes, closing $900 M and $550 M respectively. (Numbers rounded to the nearest $1 million.)
Cap Rate Distribution
- The average Cap Rate on sold properties was 5.6%, ranging from a low of 3.8% to a high of 7.8%. The Average Cap Rate began Q1 at 5.14%, rising to a high in Q2 of 6.28%, and ending Q4 at 5.7%.
- Cap Rate distribution for the year shows that 30.6% of sales were in the 5-6% range, 25.6% in the 6-7% range, and 30.6% in the 7-8% range. The remaining 13.2% of sales were in the 3-5% range.
Transactions by Buyer and Seller Type
Sales by Buyer Type
- 49% of buyers were Institutional
- 28% Private
- 13% REIT/Public
- 5% Private Equity
- 5% User
- Overall, 99% of buyers were National
Sales by Seller Type
- 45% of sellers were Private
- 37% User
- 16% REIT/Public
- 2% Institutional
- 94% of Sellers were National
Leasing and Market Rent
- 94.8% of the properties were leased at sale.
- Market rent began 2022 at just below a 5.9% growth YOY. It rose to 7.7% in Q3 and dropped in Q4 to a YOY growth rate of just below 7.4%.
- Average daily vacancy rates were just below 3.5% in Q1, rose to 4.1% in Q2, fell in Q3 to 3.6%, and rose, in Q4, to just below 4.6%.
- Availability rates began 2022 at just on 3.9%, rose in Q2 to 4.5%, fell to 4.25 in Q3, and ended the year rising to 5.2%.
Fairfax County Commercial Real Estate in 2022
Fairfax County is a major tech, aerospace, and healthcare center, offering many opportunities for new investment.
Sales Numbers
- 450 properties were sold last year, totaling $ 5.2 billion. The average sales price was $12.3 million, dominated by portfolio and individual sales.
- Almost 80% of sales were in the $310K to $25M range. Breaking that down, 19% were in the $10M to $25M range, 16% in the $4.3M to $10M, another 16% in the $310K to $750K, almost 14.5% in the $750 to $1.8M range, and about 13% were in the $1.8M to $4.3M range.
- 21.7 million SF were sold at an average price of $248/SF. This number breaks down, showing almost 27% of sales were in the $210 to $280/SF range, 24% in the $140 to $210/SF range. About 10% of sales were $70 to $140/SF, 10% in the $280 – $350, and another 10% in the $350 to $420/SF The remaining 19% of sales ranged from less than $70/SF to above $560/SF.
- Properties were typically on the market for 10.8 months, and we saw an average sale-to-asking price of 92.8%.
Q3 saw the highest sales volume with $2.5B. Q2 saw $1.17B sold, and Q4 was the third-best month with a total of $875M
Cap Rate Distribution
- The average sold property Cap Rate was 6.3%. This ranged from a low of 3.9% to a high of 10.6%. Average Cap Rate began Q1 at fractionally above 6.6%, falling to just above 5.9% in Q2, rising to 6.6% in Q3, and falling to just above 6.0% in Q4.
- Cap Rate distribution for the whole year shows that 28% of sales were in the 7-8% range, 17% in the 4-5% range, another 17% in the 6-7%, and another 17% in the 8-9% range. The remaining 21% were in the <4% and the 10-11% ranges.
Transactions by Buyer and Seller Type
Sales by Buyer Type
- 37% of buyers were Private
- 34% Private Equity
- 13% Institutional
- 9% REIT/Public
- 7% User
- 98% of buyers were National as opposed to Foreign or Local.
Sales by Seller Type
- 44% of Sellers were Private
- 42% REIT/Public
- 8% Institutional
- 4% User
- 2% Private Equity
- 89% of Sellers were National and 10% Local.
Leasing and Market Rent
- An average of 91.8% of the properties were leased at sale.
- Market rent growth YOY began 2022 at just below a 2.2% increase over 2021. It rose to 3.4% in Q2 and again in Q3 to just below 3.7% then dropped in Q4 to a YOY growth rate of just below 3.1%.
- Average daily vacancy rates were 15.92% in Q1, dropped a little to 15.85% in Q2, rose in Q3 to 16.56%, and then fell in Q4, to 16.3%.
- Availability rates began 2022 at just on 19.8%, fell in Q2 to 18%, rose to 18.44% in Q3, and ended the year at 17.95%.
Prince William County Commercial Real Estate in 2022
Prince William County is Virginia’s second-largest county. The county’s economy is vibrant, balanced, and diversified
- 214 properties were sold in Prince William County, totaling $1.9 billion. The average sales price was $9.2M, again, dominated by portfolio and individual sales.
- The sales price distribution shows that nearly 20% of sales were in the $1M to $2.2M range, 18% in the $480K to $1M, 16% in the $2.2M to $4.8M, 15% in the $220K to $480K range, almost 11% in the $4.8M to $10M range, and 10% in the $10M to $22M range. Around 3% of sales were $220K or below, and 7% were above $22M.
- 5 million SF were sold at an average price of $250/SF. This divides into just over 30% of sales being in the $200 to $300/SF range and 30% in the $100 to $200/SF range. 17.5% were $300 to $400/SF, 7.5% were below $100/SF, and 6.5% sold between $400 to $500/SF. All other properties sold for between $500/SF and over $800/SF.
- Properties took an average of 15.3 months to sell, and there was an average sale-to-asking price of 97.1%.
Q2 saw the highest sales volume at just under $745M. Q3 was the second highest at just under $560M.
Cap Rate Distribution
- The average sold property Cap Rate was 6.0%, ranging from 3.7% to 10.6%. Average Cap Rate began Q1 at 6.2%, rising to 7.3% in Q2, falling to just below 4.5% in Q3, and increasing again in Q4 to 5.6%.
- Cap Rate distribution for the whole year shows that 28% of sales were in the 7-8% range, 25% in the 5-6% range, 18% in the 4-5%, and 11% in the 6-7% range,7.5% in the 9-10% range. The remaining sales were in the <4% and >10% ranges.
Transactions by Buyer and Seller Type
Sales by Buyer Type
- 46% of buyers were Private
- 26% User
- 15% Institutional
- 11% Private Equity
- 98% of buyers were National.
Sales by Seller Type
- 59% of Sellers were Private
- 17% REIT/Public
- 10% User
- 7% Institutional
- 7% Private Equity
- 87% of Sellers were National, 11% Local, and 2% Foreign.
Leasing and Market Rent
- An average of 96.8% of the properties were leased at sale.
- Market rent growth YOY began in 2022 at fractionally below 6% up on 2021 The rate grew to 6% in Q2 and again in Q3 to 6.9% then dropping in Q4 to a YOY growth rate of 6.12%.
- Daily vacancy rates averaged 6.85% in Q1, dropped to 6.7% in Q2, and then fell in Q4, to 6.1%.
- Availability rates began 2022 at just below 9.5%, reduced in Q2 to just below 8.5%, rose to 10% in Q3, and ended the year at 9%.
Final Comment
Northern Virginia is a multi-billion-dollar CRE market. Our clients range from owner-operators to NNN-lease, passive investors. They are based locally, nationally, and globally. If you would like to do a deep dive into any of the stats you’ve read or want to discuss any aspect of our market, please just visit our website to learn more about our company and the market, or if you want to discuss a specific issue, please just click here, and we will get right back to you.