Partly Sunny… …with a Slight Chance of Growth

2009 Annual Arlington Real Estate Review and Forecast

2009 Annual Arlington Real Estate Review and Forecast

There’s A Lot of Storms Out There…
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2009 Annual Arlington Real Estate Review and Forecast

2007-2009 Credit Crisis and Recession
• Housing bubble and subprime lending • U.S. consumer spending and debt • High leverage (financial derivatives)

• • • • •

Stock market decline Devaluation of assets and liquidity problem Overall tightening of credit Low consumer confidence Further implications on budget deficit, currency, inflation rates, etc.

3% 0.0% 1.3% 1.1% 12.0% 6.000 10.000) Inflation 2.000 14.9% 6.500 10.0% 1. Dinegar Robert M.000 12.5% 4.8% Source: Washington Post .200 23.000 35.000 (46.6% 8.858 10.000 12.000 7.4% 6. Pinkard W.000 5.6% 6.2% 15.2% -1.0% 12.6% 2.0% 1.8% 5.0% 13.000 Office Vacancy 11.000 10.5% 3.000 (5.1% 5.2% Job Growth 23.0% 13.3% 1.8% 0.9% 1.400 5.0% 13.9% 5.7% 11.2% 2.5% 1.6% 1.0% Housing Permits 12.1% 13.100 13.0% 2.000 23.0% 1.7% 6. Lyles Carr III April Young Stephen S.9% Gross Regional Product Growth 2.2009 Annual Arlington Real Estate Review and Forecast 2009 Forecasts of Washington Metro Area Economists Virginia Unemployment 2008 Actual James C.9% 1.000 15.4% 2. Leisch Steven Pearlstein 4.000) 18. Fuller Mark Vitner Jay McGonigle Gregory H.

2009 Annual Arlington Real Estate Review and Forecast .

2009 Annual Arlington Real Estate Review and Forecast Annual Job Change Washington DC Metro Area 80 Thousands 60 40 20 0 2002 2003 2004 2005 2006 2007 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual Data 2008 Annual Month Over Year Source: GMU Center for Regional Analysis .

000 2. VA 8.2009 Annual Arlington Real Estate Review and Forecast Business Establishments Arlington.000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Virginia Employment Commission.000 6.000 4. 2nd Quarter Data .

000 120.2009 Annual Arlington Real Estate Review and Forecast At Place Employment Arlington.000 30.000 150.000 60.000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Virginia Employment Commission.000 90. VA 180. 2nd Quarter Data .

500 $1.200 $900 $600 $300 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Virginia Employment Commission. 2nd Quarter Data . VA $1.2009 Annual Arlington Real Estate Review and Forecast Average Weekly Wage Arlington.

0% 0.0% 6.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008* Arlington Northern Virginia US Source: Virginia Employment Commission.0% 2.0% 4. 2nd Quarter Data .2009 Annual Arlington Real Estate Review and Forecast Unemployment 8.

448 1.198 2008 2.453 1. Inc.203 954 1.384 1. SAIC CACI 2009 2.294 1. Inc.659 1.257 1.2009 Annual Arlington Real Estate Review and Forecast Principal Private Employers* Arlington. Verizon Marymount University The Boeing Company Interstate Hotels & Resorts NRECA Watson Wyatt Macy's** Nordstrom 2009 900 790 637 545 501 500 500 NA 472 2008 500 995 651 579 N/A 500 500 550 593 *Total corporate employment for all Arlington locations ** In transition and data unavailable Source: Arlington Economic Development.450 1.534 1. VA Company Name Virginia Hospital Center Corporate Executive Board US Airways Lockheed Martin Corp Marriott International. BAE Systems Booz Allen Hamilton SRA International. Inc. February 2009 .283 1.294 1.533 1.472 1.407 1.246 Company Name Bureau of National Affairs.720 1.127 1.354 1.

VA Company Virginia Tech MedStar Health.593 15. Counterpart International Inc.043 7.000 70. Inc. Koch Charitable Foundation US Committee for Refugees & Immigrants Association of Public Television Industry Education and Research Medical Nonprofit Association Nonprofit Nonprofit Association Submarket Ballston Rosslyn Crystal City Clarendon Clarendon Crystal City Crystal City SF Estimated Occupied Employment 100.000 15.500 300 150 65 50 45 45 20 Source: Arlington Economic Development .2009 Annual Arlington Real Estate Review and Forecast Selected 2008 Announcements Arlington. National Association of College Admission Councils Charles G.000 21.000 23.

812 24.51 $35.99 9.669 38. DC Boston Arlington County Los Angeles Dallas Denver Minneapolis Atlanta Total Office Inventory (SF) 44.98 $28.527 35.5% 18.2% $27.029.5% $31.56 $51.351 22.732.0% 13.5% 9.1% 26.781 31.06 $12.965.75 $35.580 36.6% 7.299.0% 9.2009 Annual Arlington Real Estate Review and Forecast Private Office Market Comparisons Downtown Market Philadelphia Houston Seattle Washington.15 $20.666 27.965.070.10 Source: CB Richard Ellis.443.16 $18.6% 13. 4th Quarter 2008 .558 37.891 41.138 17.029.05 $35.6% 12.732 Vacancy Rate Average Asking Rate 10.461.2% 7.46 $56.397.672.

619 Percent Vacant* 9.2% 8.655 413.927.600 171.667.774.452.987.044. 2009 .396 1.406 11.3% 18.791 0 3.132 3.511.399 3.2009 Annual Arlington Real Estate Review and Forecast Office Availability by Regional Submarket Selected Washington Area Submarkets Submarket Cluster Downtown DC Herndon/Reston Capitol Hill Tyson's Corner RB Corridor Crystal City/Pentagon City Bethesda/Chevy Chase Rentable Building Area (SF) 86.441.093.319 246.330.266.008 294.064 12.321 6.9% 8.776.823.156.572 1. March 5.3% Under Construction SF Available 1.955 5.401 29.771 30.865 753.314 66.840 *With Sublet Source: CoStar.653 Total SF Total Sublet SF Available Available 10.315.080 1.0% 9.893 1.315 2.937.744 43.708.224 22.943.173 409.040 27.6% 12.108.6% 13.

039.378 131.655 467.209 1.006.418 38.544.272 0 124.245 134.358 490.545. 2009 .316 1.308.130.301 5.048.090 8.020 1.936.485 0 850 15.4% 5.888 Total SF Total Sublet SF Available Available 1.468.457 246.6% *With Sublet Source: CoStar.771 2.9% 0.174.323 Percent Vacant* 13.320.8% 10.858 1.710 996. VA Submarket Crystal City Rosslyn Ballston Clarendon/Courthouse Pentagon City Virginia Square Outside Metro Areas Total Rentable Building Area (SF) 11.2009 Annual Arlington Real Estate Review and Forecast Office Availability by Submarket Arlington.0% 5.8% 9.8% NA 10.564 7. March 5.297 487.803.871 5.

000.000 800.400. VA 1.200.000 400.000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 SF Average SF Source: Northern Virginia Realtors Association .000 1.000 1.000 200.000 600.2009 Annual Arlington Real Estate Review and Forecast Office SF Completed Arlington.

Housing and Development .986 328.060 SF Source: Arlington Department of Community Planning.471 1.576 Long Term Annual Average = 660.740 175.181 641.2009 Annual Arlington Real Estate Review and Forecast Major Office Projects Completed Arlington.152 620.962 64.412 2006 2007 2008 747.550 19.364 192.545 74.069 620.314 248.475 196.328.576 410.448 837. VA Project Arlington Gateway Kettler Capitals Iceplex One Liberty Center Two Liberty Center 4401 Wilson Blvd The Regent Station Square The Phoenix Navy League One & Two Potomac Yard Waterview FDIC Phase 2 Office GMU Foundation Office Total Submarket Ballston Ballston Ballston Ballston Ballston Ballston Clarendon Clarendon Courthouse Crystal City Rosslyn Virginia Square Virginia Square 2005 312.401 248.

000 0 Retail* 23.000 943 244.000 790.2009 Annual Arlington Real Estate Review and Forecast Major Nonresidential Projects Under Construction.455 10. 318 hotel rooms Submarket Clarendon Clarendon Courthouse Crystal City Crystal City Shirlington Shirlington Virginia Square Office* 97.418 0 16. Housing and Development .472 0 Hotel** 0 0 176 625 Other* Delivery 0 0 0 0 4Q/10 4Q/10 3Q/09 4Q/10 4Q/09 3Q/09 1Q/09 2Q/10 0 0 142 0 0 0 0 244.298 168.725 *Square Feet **Rooms Source: Arlington Department of Community Planning.379 0 195. VA Project Clarendon Center (North) Clarendon Center (South) Residence Inn Arlington Courthouse Marriott Renaissance Hotel & Residence Inn National Gateway 1 & 2 Hilton Garden Inn Randolph Square George Mason University Phase II Total Delivery in 2009 = 666.000 71. 2009 Arlington.047 38.724 SF.059 0 0 374.333 9.860 123.

459 Retail* 26.495 11.512 41.292 9.996 44.920 323. Phase II Monument View National Gateway 3-4-5-6 Pentagon Centre 4.983 *Square Feet **Rooms Source: Arlington Department of Community Planning.586 Projected Start 2009 2009 2009 2009 - 4.827 660.325 33.555 30. Housing and Development .503.299 1.328 107.906 10.900 4.554 Other* 0 0 0 0 0 0 0 0 0 21.920 92.298 489.067 SF Submarket Ballston Ballston Ballston Courthouse Courthouse Crystal City Crystal City Crystal City Pentagon City Rosslyn Rosslyn Rosslyn Office* 282.064.034 3.000 84.2009 Annual Arlington Real Estate Review and Forecast Selected Approved Nonresidential Projects Arlington.911 569.020 27.190 100.1 1812 N Moore St 1716 Wilson Blvd (Contis) Central Place Total Projected 2009 Start = 1.257.949 26.031 0 9. VA Project 800 N Glebe Rd 900 N Glebe Rd Founder's Square Demar Office Building NSTA Office Site Plan Crystal City Retail.633 323.739 108.989 132.753 570.

000 825.333.178.482 1.000 517.968 1.520 1.7% 76.619.200.105 1.160.2009 Annual Arlington Real Estate Review and Forecast Net Office Absorption.1% 103.576.732 Percent of NOVA 95.1% Source: Realty Firms .063 802.054.776 Arlington 1.4% 142.238.082 2.810 1.127 1.2% 67.000 772.137.4% 70.6% 106. 2008 Firm Cassidy & Pinkard CB Richard Ellis CoStar Cushman & Wakefield Delta (Transwestern) Grubb & Ellis Jones Lang LaSalle Northern Virginia 1.000 363.

George's Fairfax Stafford Loudoun Pr. William 0 100 200 300 400 500 600 700 800 Jan-08 Jan-09 Number of Foreclosures per 10.C Alexandria Metro Area Pr.2009 Annual Arlington Real Estate Review and Forecast Mortgage Foreclosure Rates Washington Metro Jurisdictions Montgomery Arlington Frederick D.000 Housing Units Source: GMU Center for Regional Analysis .

297 1.559 351 1.000 304 1.084 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Detached Attached Condo Source: Northern Virginia Realtors Association .793 1.917 1.086 1.000 1.670 438 386 328 268 1.807 1.000 1.2009 Annual Arlington Real Estate Review and Forecast Home Sales Arlington.239 1.420 317 1.098 253 820 2.698 1.400 1.029 1.000 3.220 1. VA 4.348 377 2.381 1.

000 $600. VA $800.000 $200.000 $100.000 $400.000 $700.000 $300.000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Detached Attached Condo Source: Northern Virginia Realtors Association .2009 Annual Arlington Real Estate Review and Forecast Average Home Sales Prices Arlington.000 $500.

000 $200.000 $300.000 $400.2009 Annual Arlington Real Estate Review and Forecast Sample Condo Sale Prices: The Continental Arlington.000 $600.000 $100. VA $700.000 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 C1 C2 C3 C4 C5 = Condo Sale Source: Arlington County Real Estate Assessments .000 $500.

VA 4.0% 2005 2006 2007 2008 Efficiency 1 Bedroom 2 Bedroom 3 Bedroom Source: Housing Survey. Housing and Development .0% 0. Arlington Department of Community Planning.0% 1.0% 3.0% 2.2009 Annual Arlington Real Estate Review and Forecast Rental Apartment Vacancy Rates Arlington.

000 2.500 2. VA 3.000 1.000 500 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Units Average Source: Northern Virginia Realtors Association .500 1.2009 Annual Arlington Real Estate Review and Forecast Residential Units Completed Arlington.500 3.

2009 Annual Arlington Real Estate Review and Forecast Major Residential Projects Completed Arlington. VA Project Residences at Liberty Center I* Residences at Liberty Center II The Phoenix* Zoso Halstead Arlington The Palatine The Park at Courthouse* Vista on Courthouse Camden Potomac Yard The Concord The Eclipse on Center Park* The Shelton The Gramercy at Metropolitan Park 1800 Wilson Blvd* Bennett Park Apartments Parc Rosslyn Waterview* Delancey Apartments IO Piazza* The Hawthorn Total * Condominium Source: Arlington Department of Community Planning. Housing and Development Submarket Ballston Ballston Clarendon Clarendon Columbia Pike Courthouse Courthouse Courthouse Crystal City Crystal City Crystal City Nauck Pentagon City Rosslyn Rosslyn Rosslyn Rosslyn Shirlington Shirlington Virginia Square 2007 2008 234 235 2009 194 114 269 274 207 252 386 412 479 94 399 153 224 238 185 187 244 143 3.801 94 .028 1.

341 0 1.218 0 7. 2009 Arlington. VA Project Clarendon Center (South) 55 Hundred Siena Park Rhodes Hill Square* 220 20th Street The Aster at Crystal City Crescent Apartments Shirlington Crest* Alexan 24* Buckingham Village The Millennium Hilltop House 100* Turnberry Tower* Amelia Residential Total Submarket Clarendon Columbia Pike Columbia Pike Courthouse Crystal City Crystal City E. Housing and Development . 60.158 66.2009 Annual Arlington Real Estate Review and Forecast Major Residential Projects Under Construction.125 SF Retail * Condominium Source: Arlington Department of Community Planning.119 0 4.563 0 6.544 34.755 Projected Delivery 4Q/10 2Q/09 4Q/09 3Q/09 2Q/09 4Q/09 2Q/10 3Q/10 3Q/10 Var.630 0 0 0 8.707 Units. Falls Church Nauck Outside Metro Outside Metro Pentagon City Rosslyn Rosslyn Virginia Square Units Retail SF 244 235 188 89 266 184 205 171 217 574 300 100 337 108 3. 4Q/09 2Q/10 2Q/09 1Q/09 Projected 2009 completion = 1.400 4.

495 16.299 97.044 3.705 351.000 34. 216.635 2. Outside Metro Three Metropolitan Park Pentagon City Central Place Rosslyn Rosslyn Commons Rosslyn Club on Quincy* Virginia Square Total Projected 2009 Start: 1501Units.868 0 33.554 12.503 15.990 Founder's Square Ballston The Jordan Ballston The Fairmont* Ballston Garfield Park* Clarendon The Waverly at Clarendon Station Clarendon Penrose Square Columbia Pike Arlington Mill Community Center Columbia Pike Washington View Courthouse Airport Plaza IV Crystal City Crystal House Lofts Crystal City Brittany East Crystal City Brittany West Crystal City Monument View Crystal City 2201 N.200 20.757 18.708 26.915 SF Retail * Condominium Source: Arlington Department of Community Planning.900 0 9.2009 Annual Arlington Real Estate Review and Forecast Selected Approved Residential Projects Arlington. VA Project Submarket Units Retail SF 362 90 237 149 155 299 192 141 240 252 360 331 352 188 411 350 479 120 4. Housing and Development Projected Start 2010 2009 2009 2009 2009 2009 2009 2010 2009 - . Pershing Dr.685 0 0 16.345 44.

881 $2.339 $2.585 $2.439 $2.7% 1. VA Taxable Sales ($M) $2.4% 4.234 Annual Change 0.3% 4.2009 Annual Arlington Real Estate Review and Forecast Retail Sales Arlington.283 $2.889 $2.273 $2.5% -0.5% NA NA 6.9% Year 2008* 2007 2006 2005 2004 2003 2002 2001 2000 1999 Source: Virginia Department of Taxation .756 $2.422 $2.7% 6.4% -2.

591 162. VA Submarket Ballston Clarendon Columbia Pike Courthouse Crystal City East Falls Church Nauck Pentagon City Rosslyn Shirlington Virginia Square Total Under Construction 0 61.455 82.242 0 0 49.024 Source: Arlington Economic Development .205 0 2.341 39.630 2.2009 Annual Arlington Real Estate Review and Forecast Retail Space in Major New Projects Arlington.980 Approved 72.472 4.044 49.158 237.400 16.981 6.500 8.840 96.885 9.380 41.056 100.705 572.119 4.

000 200.000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 SF Average SF Source: Northern Virginia Realtors Association .000 300. VA 500.2009 Annual Arlington Real Estate Review and Forecast Retail SF Completed Arlington.000 100.000 400.

904.558 702.851 (784.348 Annual Change (651.522 (383.622.185.028.785 17.720.652) Source: Metropolitan Washington Airports Authority .786) (2.881.601 13.679.550.287 18.898 1.859 14.888.387 15.736 1.123 12.2009 Annual Arlington Real Estate Review and Forecast Washington National Airport Year 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Total Passengers 18.943.028 1.265.343 18.812) 702.223.341.199 15.056) 128.887 15.847.

05 $171.2% 62.87 $182.6% -8.53 $105.13 $113.35 $143.3% -5.37 2007 % Change $108.7% 2008 $66. DC-MD-VA Washington.4% 3.1% 58.8% 2007 % Change 66.3% -5.8% 76.62 $105.4% -3.1% 88.65 $105.13 $63.19 $105.48 $204.0% -5.10 $100. DC (CBD) Bethesda/College Park Arlington .4% -1.84 $61.45 $148.30 -7.32 $172.6% -1.5% -7.1% 6.33 $146.5% 77. VA Fairfax/Tysons Corner.3% -6.20 $148.11 $152.2% -10.5% -6.2% -4.9% -5.72 $248.61 $115.16 $107.58 $216.60 $146.92 $66.6% 83.4% -3.3% -3.6% -4.1% -0.9% -4.7% 82.1% -8.71 RevPAR 2007 % Change $71.1% Source: Smith Travel Research .5% -7.72 $133.0% 67.4% 71.4% 77.54 $113.6% 71.5% -6.15 -0.2% 73.0% 74.3% -0.7% 73.28 $160.87 $108.91 $102.18 $126.5% 63.0% -11.5% 85.39 $252.2009 Annual Arlington Real Estate Review and Forecast Characteristics of Selected Hotel Markets (October) Occupancy 2008 United States South Atlantic Washington.4% -7. VA Suburban Virginia Area Alexandria.35 $136.8% Average Daily Rate 2008 $107.5% -0.5% 75.83 $188.32 $143.2% -2. VA Dulles Airport Area 62.70 $71.07 $157.8% 77.07 $108.

76 $119.853 9.2009 Annual Arlington Real Estate Review and Forecast Hotel Rates and Occupancy Arlington.1% 74.49 $161.7% 69.773 9.282 9.5% 73.1% 74.0% 67.17 $127.60 $121.3% $162.903 9.64 Gross Revenue* $431 $431 $384 $376 $334 $300 $292 $281 Year 2008 2007 2006 2005 2004 2003 2002 2001 Source: Smith Travel Research and Arlington Commissioner of the Revenue .1% 68.18 $140.8% 73.856 9.05 $121.930 9. VA Number of Average Average Rooms Occupancy Room Rate 9.295 73.715 9.49 $155.

2009 Annual Arlington Real Estate Review and Forecast Hotel Rooms Completed Arlington. VA 400 300 200 100 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Rooms Average Rooms Source: Northern Virginia Realtors Association .

with quite a few projects about to start.2009 Annual Arlington Real Estate Review and Forecast AED’s Outlook for 2009 The economists agree (sort of). We have seen some limited downsizing. The office market looks better than we might have expected. but prices look to remain relatively stable. but not the major losses of past years and certainly nothing like the dot. Sales may be soft. but fail to find the black cloud in the silver lining. There has not been much degradation in the housing market. with new starts planned this year. .com bomb.

Most economists suggest that the recession will be “first in. keeping demand strong among the “Metro Renters. this is Washington at the start of the Obama administration and the region has not had this kind of interest in decades.” The visitor industry may still have some stress ahead. restricting travel. first out. however unemployment will still be modest and incomes will remain high. On the other hand. first out.” .” but in Arlington’s case it is more likely to be “last in. Occupancy rates are relatively high and are likely to remain well above national levels. Government and business austerity measures are likely to remain in place for some time.2009 Annual Arlington Real Estate Review and Forecast AED’s Outlook for 2009 Retail sales will probably decline somewhat.

2008Annual Arlington Real Estate 2009 Annual Arlington Real Estate Review and Forecast Review and Forecast Special thanks to our sponsors: .

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