We Have A New #1 State for Business


Marc DeLuca

We have a new national leader when it comes to doing business: Virginia!

According to CNBC’s just-released 2019 report, Virginia topped the long-time leader, Texas, as the nation’s top state for business. From our perspective, KBS has long recognized Virginia’s potential for strong office assets. With six select Virginia office properties in our portfolio (see details on those properties below), we have confidence in Virginia as one of the top-performing secondary markets in the country.

The properties we own are located in Northern Virginia, where office fundamentals have been slowly but steadily improving. Newmark Knight Frank reports that demand for office space in this market continued to be robust during the second quarter of 2019, with total absorption at 207,177 square feet, and vacancy decreased 20 basis points over the quarter to a percentage that is 10 basis points lower than a year ago.

Another positive trend for the Northern Virginia office sector is that rental rates are rising, with average overall asking rents increasing 3.1% from a year ago to $33.10 per square foot.

Cranes are in the Northern Virginia sky as well, with 2.9 million square feet of office space currently under construction in the market, an increase of more than 300,000 square feet over the previous year.

High-profile tenants including Fannie Mae, the Transportation Security Administration, Leidos and Amazon are pre-leasing large amounts of space in the buildings currently being developed, another sign of the market’s strength.

In fact, Virginia made global headlines when Amazon chose its Crystal City as the location for its second headquarters (HQ2). The site was picked for its high density of trained tech workers.

The retail mega-giant plans to spend $2.5 billion and hire 25,000 people, and Virginia Tech University plans to open an “innovation campus” right next to the site.

As companies maintain their flight to quality in Northern Virginia, KBS will continue to provide high-quality, well-managed office space to accommodate their needs.

So why did Virginia reach the top of the CNBC report? According to the report, it surged due to its strong quality of life, affordable cost of doing business, access to capital, business friendliness, infrastructure, and reasonable cost of living.

In 2018, Democratic Governor Ralph Northam signed into law a program that will cut business regulations by 25 percent within three years.

This is not the first time that Virginia has won the CNBC title. It was the first state to top that chart back in 2007; however, it hasn’t won that spot since 2011.

Part of the reason for that may be a five-year slowdown in defense spending, but that’s old news now. The Pentagon’s defense budget has risen to $686 billion for fiscal year 2019.

This recent rise in defense spending has been a boon to Virginia’s economy. Twelve percent of that economy is currently from defense spending, which is more than any other state – and that number is rising, according to the National Conference of State Legislatures.

The U.S. Bureau of Labor Statistics found that Virginia has the nation’s fourth highest concentration of science, technology, engineering and math (STEM) employees, consisting of 9% of the state’s workforce in 2018. It’s also a “right to work” state with very little union presence.

In the meantime, Texas is no slouch, coming in at a close #2. Texas continues to be a strong business state, and that’s not changing anytime soon. In fact, its new CNBC report ranking may be an indicator that jobs, relocation, and entrepreneurship may be starting to spread to other markets, which could be a good thing for the nation as a whole.

The CNBC report scores states in 10 categories, equaling 2500 points. Virginia scored the highest, with 1,610 points.

  • Workforce – 450 points
  • Economy – 375 points
  • Infrastructure – 350 points
  • Cost of Doing Business – 350 points
  • Quality of Life – 325 points
  • Education – 175 points
  • Technology & Innovation – 175 points
  • Business Friendliness – 175 points
  • Access to Capital – 75 points
  • Cost of Living – 50 points

We’ve made plenty of room for business in Virginia. Check out our assets there:

 

3001 WASHINGTON

ARLINGTON, VA

3001 Washington Boulevard is an 8-story, multi-tenant LEED Gold certified Class A office building located in the Clarendon neighborhood within the RCB Corridor market in Northern Virginia.

  •  94,837 Sq. Ft
  •  Class A

 

3003 WASHINGTON BLVD.

ARLINGTON, VA

3003 Washington Boulevard is a 10-story, multi-tenant LEED Gold certified Class A office building located in the Clarendon neighborhood within the RCB Corridor market in Northern Virginia.

  •  210,804 Sq. Ft
  •  Class A

 

DULLES STATION EAST I

HERNDON, VA

Dulles Station East I is a NAIOP award-winning office building located in the metro Washington, D.C. market situated minutes away from Dulles International Airport. The property is part of Dulles International Airport.

  •  186,922 Sq. Ft
  •  Class A

 

REDWOOD PLAZA I, II & III

FAIRFAX, VA

KBS acquired Redwood Plaza I and II in 2000 and additionally developed Redwood Plaza III in 2006. The properties are part of a large mixed-use planned unit development in Fairfax County.

  •  207,414 Sq. Ft
  •  Class A

 

RESTON SQUARE

RESTON, VA

Reston Square is a seven-story, 138,995-square-foot Class A office building located in the Reston submarket in Northern Virginia within the Washington, D.C., metropolitan area.

  •  138,995 Sq. Ft
  •  Class A

 

WILLOW OAKS CORPORATE CENTER

FAIRFAX, VA

Willow Oaks Corporate Center is a three-building office park located in the desirable Merrifield submarket of Fairfax County, Virginia. Willow Oaks offers tenants a solid combination of price, location, access and amenities.

  •  584,003 Sq. Ft
  •  Class A

 

Discover all of our assets nationwide. 

 

We Have A New #1 State for Business Marc Deluca web 02 240x300
Marc DeLuca is the Eastern Regional President for KBS, overseeing four asset managers and a portfolio of assets totaling over 11.0 million square feet.