An office park just southwest of Herndon near the Innovation Center Metro Station has a new owner.
Finmarc Management, a commercial real estate firm with headquarters in Bethesda, Maryland, announced on Jan. 2 that it has completed a $51 million acquisition of Dulles Corner, an office complex with approximately 620,000 square feet of space across four buildings.
Counting Reston-based technology contractor Peraton and satellite company BlackSky D.C. among their tenants, the buildings at 2411 Dulles Corner Park, 13880 Dulles Corner Lane, 2355 Dulles Corner Blvd and 13825 Sunrise Valley Drive were previously owned by an affiliate of Brandywine Realty Trust, according to Fairfax County property records.
According to Finmarc Principal Neil Markus, the former owners were “reluctant to invest” additional money in leasing efforts at Dulles Corner, resulting in “limited” tenant additions “over the past several years” — a challenge that his company hopes to address.
“We believe market fundamentals remain extremely positive, led by the portfolio’s position, the diverse range of industries in the D.C.-Northern Virginia market, and the presence of a highly skilled labor force,” Markus said in a press release announcing the acquisition. “Our team sees many paths to achieve substantial upside, and we intend to pursue every opportunity.”
Finmarc’s plan to more aggressively pursue office tenants runs counter to the prevailing trend of residential redevelopments and conversions that has taken over many areas of Fairfax County, particularly for older properties.
Last summer, the Fairfax County Economic Development Authority reported that the county’s overall office vacancy rate had reached 17.2% by the end of 2023, up from 13.9% in 2019 before the COVID-19 pandemic accelerated an embrace of remote work.
The 28 office buildings identified as having high vacancy rates — meaning they were less than 33% leased despite having over 50,000 square feet of space — were especially concentrated along the Dulles corridor, including one building that appeared to be in the Dulles Corner area.
Located within a half-mile of the Metro station, the office park is within a portion of the Innovation Center Transit Station Area South that Fairfax County envisions in its comprehensive plan as predominantly residential, though up to 40% of development can be office uses.
However, in its acquisition announcement, Finmarc doesn’t indicate any interest in redevelopment.
Originally built between 1988 and 1997, the buildings that make up Dulles Corner have all gotten some upgrades since then, though the two-story Sunrise Valley Drive property’s improvements came in 2005, according to Finmarc. The other three buildings were all improved or renovated in 2022.
The new property owner says it sees “significant upside potential” to investing in office leasing, pointing to the site’s proximity to the Metro station, Dulles Toll Road and Dulles International Airport as well as the availability of amenities, including a private fitness center, a day care center, and a central park with walking paths, water features and outdoor dining areas.
Leasing at Dulles Corner will be overseen by Cushman & Wakefield, a commercial real estate services firm whose other properties in the Herndon area include the Dulles Park Technology Center and Woodland Pointe.
“We intend to reinvigorate the marketing and leasing strategy by capitalizing on the market dynamics that favor best-in-class and extremely well-positioned assets such as Dulles Corner,” Markus said.
According to Cushman & Wakefield, Herndon currently has a 24.9% office vacancy rate.
In its press release, Finmarc says its confidence in the Northern Virginian office market is bolstered by the state’s ranking as CNBC’s top state for business, a 63% increase in contract spending in Fairfax County by the federal government over the past 10 years, and the region’s status as a data center hub.
While the data center industry’s growth has raised concerns among some local residents about its impact on the environment and their neighborhoods, the nearly 80 million square feet of new data center space slated to be delivered in Northern Virginia by 2030 will create more than 40,000 new jobs, or an estimated 155 office jobs for every 300,000 square feet of space, according to Finmarc.
The firm’s acquisition of Dulles Corner follows its takeover last August of Trinity Centre, another four-building office park in Centreville that currently includes Carfax’s headquarters among its tenants. The vehicle data company signed a lease this week to relocate its base to Reston Station by the end of 2025.
“Our recent acquisition of Trinity Centre, together with significant commercial real estate holdings in the Northern Virginia and greater Washington, D.C. market, validates our optimism about the long-term prospects of the region,” Markus said.
