On March 28, the SLM Corporation, better knows as Sallie Mae, signed a deal for 238,000 square feet building and campus on a previously undeveloped 3.5 acre site.
On April 16, Unisys signed a lease for 280,000 square feet of "Class A" office space at Plaza America, the 1.2 million square foot mixed use facility along Sunset Hills Road.
Five days later, on April 21, Titan, a San Diego-based defense contractor, announced it, too, had signed a lease for 282,000 square feet at Two Freedom Square in Reston Town Center.
At a time when the United States was preoccupied with war in Iraq, the mysterious and emerging threat from SARS and a sluggish economy, three local real estate pronouncements breathed new life into a beleaguered commercial property market along the Dulles Toll Road.
In the span of less than a month, three large companies pledged their leasing allegiance to Reston and the thought-to-be-struggling Dulles Corridor. All news is not rosy, however, as vacancy rates in the area continue to top out near 30 percent and more than 19 million square feet of commercial real estate goes unused in Fairfax County, a majority of which exists in the Tysons Corner-Reston-Herndon market. Is the economy rebounding or has it just bottomed out? What does it mean? Depends on who's answering.
• <b>Tim McGrath,</b> commercial real estate broker, Herndon.
Specializing in small to mid-size clients, McGrath speculated that the emerging Homeland Security budget and new war-related government contracts were fueling the recent surge in Reston real estate. "It wouldn't surprise me if that were the case," McGrath said. "History indicates when government takes action, this area benefits. These are the slow times, but are they the lull between the storms?"
McGrath said it was too early too draw any concrete solutions from the recent headline-grabbing deals. "It's easier to see it after it has happened has been my experience," he said. "We have been replacing industries that have gone up in smoke, like the dot-coms, so really it is just a reallocation and not a reflection of the economy as a whole," McGrath argued. "If you have to wait for industries to come back, if you don't have as diversified an industry base as we do in this area then you run into these cyclical economies. We had an artificial stimulation of the economy, and of office space needs, by the dot-com boom and that was not sustainable. Now we are just washing out of that."
• <b>Mike Kuznewski,</b> owner, FSI Furniture, Herndon.
Kuznewski is a office furniture liquidator and some consider his type of business a bellwether of things to come. "When a company downsizes, upsizes or goes out of size, I go in and acquire their assets," he said. "For us the economy isn't all that important. We're here in good times and bad."
Companies, large and small, also come to Kuznewski's Herndon store where his store also sells furniture, new and used. "I have definitely seen an upswing in those customers looking to buy, they just aren't buying new furniture," he said. "They are being a little more cautious."
As companies continue to move out of the District, the neighboring suburbs become increasingly attractive. "Right now, the Reston-Herndon is hot for buyers," Kuznewski said. "For selling, the hot-spots are probably D.C.
Don't tell Kuznewski the economy isn't beginning to rebound, he has seen it. In January, Kuznewski's 18,000 square foot building filled up with furniture. He had to rent 10 large storage bays to hold the excess furniture. Now, he has just four bays. Since January and February, Kuznewski said he as seen a dramatic 50 percent decrease in selling. On an average Saturday, the owner said he would make about $3,000 on five pieces of furniture. Last Saturday, Kuznewski sold 11 pieces and pocketed $12,000. "That tells that people are spending money again," he said. "It's everything from banks to mortgage companies to big corporations and they are beginning to expand. They want furniture, but they want it cheap."
• <b>Tracey White</b>, president of the Greater Reston Chamber of Commerce, Reston.
Ever the cheerleader for the Reston business community, Tracey White likes the signals she has seen over the last few weeks. "I think that on a whole there are signs of good things to come and an upswing in the economy," White said. "It takes announcements like these to really get the ball rolling."
The most important thing, said White, to take from the recent rash of high profile business transactions, is truly "any of these companies could have chosen to move anywhere, and the fact that they chose to expand in Reston or stay in Reston is a really important and a good sign," she said. "Obviously, that is a positive note for the community."
White was careful not to paint too rosy a picture of a post-boom economy in Reston and the surrounding areas. "While those announcements are helpful, we still have a substantial vacancy rate in the area," White said.
Like a whale attracting barnacles, White said that the recent news should spur smaller companies to follow suit. "Whenever you see these types of companies, like Unisys, their ability to affect the companies around them, either with subcontracts or vendor relationships, all of those tend to be a magnet for smaller to medium-range companies to either grow or pick Reston and the Dulles Corridor to do business or to pick to locate the business," she said.
• <b>EILEEN CURTIS</b>, president Herndon-Dulles Chamber of Commerce, Herndon
Curtis is cautiously optimistic that the worst is over, but all she has to do is look out on the sea of empty office space in and around Herndon. "It's still too early to tell," she said. "I am hoping to see the pace pick-up now that the war is ending."
Curtis is confident that the things that lured businesses to Herndon during the 1990s will, though to a lesser extent, bring what she termed as a "moderated revival."
"It's that quality of life, attractive rates and a good reputation that will get us through this," Curtis said.
Championing the small business entrepreneur, Curtis argued that the recovery will stem, in large part, on the success of small businesses and larger companies co-op sharing with smaller companies. "America is built on the backs of small business," she said. "With its progressive and state-of-the-art zoning laws, Herndon was and is a leader in the home-business model." Curtis said that many dot-comers came to the Herndon-Dulles area during the boom of the 1990s and chose to stay, even after so many of them lost their jobs to the tech crash. It is these former dot-comers that can help revive the small business boom."
• <b>Jerry Gordon</b>, president, Fairfax County Economic Development Authority, Vienna
When the recession hit two years ago, every major market in the United States struggled and had a terrible time with job losses. From Atlanta to Boston and west to the Silicon Valley, high-tech centers lost tens of thousands of jobs. Gordon said Fairfax County, during the same period of time, actually gained a net gross of 20,000 jobs. The recent developments tell Gordon that the market, in Reston specifically, is coming back. "Hopefully, this is the first of several such announcements," Gordon said. "Because there are very few announcements that have over 500 jobs and to have several in Reston or in Fairfax County says to me that, even though it is slower growth that we are used to, we are doing better than our competitors."
The traditional drawing cards to Reston — the nature of its community and its proximity to the airport — coupled with the enormous amounts of empty office space make the Reston-Herndon area very attractive. "The prices have come down and there are some very good deals to be had," Gordon said. "That is a situation that Reston has never had before."
Much of the movement, according to the EDA, is coming from federal and military contractors. Though Gordon says that, while it has flattened out, the telcom and IT industry is still alive and making noise. "The growth that we are seeing today is pretty normal growth. It is just that we were seeing such phenomenal growth rates a few years ago that abnormally high rate is what people came to expect," Gordon said. "They've been spoiled rotten."