Subject: [NEXTEL-1] No.Va. welcomes Nextel search

From: [email-masked]
Date: Mon, 25 Aug 2003 14:07:09 -0400

No.Va. welcomes Nextel search

300K hunt for new space gives market reason to celebrate
Suzanne White
Staff Reporter

Nextel Communications will soon add more office space to its already massive
Northern Virginia portfolio, potentially absorbing vacant buildings in a soft
market where landlords anxiously await signs of improvement.

Binswanger Advisor Services and The Staubach Co. brokerage firms are representing
Nextel in its search for 300,000 square feet of office space in Northern Virginia.

Bill Evans, senior vice president at Binswanger, says the company will select a
site by the end of August.

Although Evans would not say how many locations Nextel is considering, he did
confirm that one or more future leases would be in addition to the company's
current 670,000 square feet of leased space in eight buildings throughout Northern
Virginia.

"There will be no shedding of space as part of this," Evans says.

Private-sector growth has been sorely missed since 2000, when firms that once made
Northern Virginia the Silicon Valley of the East began shrinking into oblivion.
Dozens of buildings in Northern Virginia were vacated or delivered without a
tenant. Demand dwindled and rents subsequently decreased.

This market dynamic has created movement among tenants, even helping some pockets
within Northern Virginia, such as Reston, which has seen significant lease deals
from Unisys and Titan Systems in recent months.

The majority of recent deals, however, have not been good for the overall real
estate market. Most activity has come from consolidation, lease renewals,
subleases or upgrades with little or no growth. This year, for example, Unisys'
consolidation in Reston left behind 244,000 square feet in McLean. Titan's lease
in Reston included occupying two floors of sublet space at Two Freedom Square. And
Fannie Mae has leased 400,000 square feet in Reston, but in an office Sallie Mae
will vacate when its new headquarters in Reston is complete.

Net new absorption -- like the Nextel deal will bring -- still is an anomaly in
today's market. In fact, a 300,000-square-foot deal would account for 19 percent
of all leases in the second quarter in Northern Virginia.

Still, should Nextel take 300,000 square feet of existing space off the market, it
would make just a tiny dent in the 22.5 million square feet of available space in
Northern Virginia.

According to CoStar Group, there are at least eight proposed and existing sites in
Reston, Herndon, Dulles and McLean with more than 300,000 square feet available.

"I think it's a very good time for tenants to be making a move right now," says
Marty Almquist, senior vice president and managing director at Grubb & Ellis.
Almquist has noticed activity in her Northern Virginia office slowly picking up.
"I do think in September we're going to see a big jump in activity."

Market sources say Nextel likely will concentrate its search in Reston near its
headquarters on Edmund Halley Drive. (The company moved there in 1999.) Nextel
leases two CarrAmerica Realty buildings totaling about 323,000 square feet at 2001
and 2003 Edmund Halley Drive, according to CoStar Group. The company also leases
about 100,000 square feet in 2000 and 2002 Edmund Halley Drive, buildings owned by
the estate of James Campbell.

"We are talking to them about expansion," says CB Richard Ellis broker Milton
Hamilton Jr., representing the Campbell estate. It is unclear how much existing
nearby space is available for Nextel.

Nextel (www.nextel.com) has increased its employee count by 13 percent in the past
12 months. It now has about 15,200 employees worldwide.

E-MAIL: [email-masked] PHONE: 703/816-0331

http://washington.bizjournals.com/washington/stories/2003/08/25/story1.html

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