Reston, VA

Wednesday Morning Notes

Virginia Polar Dip Goes Virtual — The annual event is going virtual this year due to the pandemic. Camp Sunshine is allowing participants to take patron several virtual events at any point between Feb. 6-14. [Camp Sunshine]

Microsoft Expands with New Lease — The company is expanding its presence in Northern Virginia by signing a lease in Rosslyn. [Bisnow]

Local Music Students to Perform in Virtual Concert — ‘Fairfax County Public Schools (FCPS) choral teachers have put together a virtual choral concert and presentation involving 350 middle and high school students from 37 secondary schools. The concert and presentation of student work will air at 7 p.m. on Wednesday, January 27.’ [FCPS]

Photo by Marjorie Copson

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Monday Morning Notes

Big Leasing Activity for Reston — Ranked by square footage, Microsoft Corp.’s lease for nearly 400,000 square feet of space at Reston Town Center was the largest office lease inked in the DC area so far this year. [Washington Business Journal]

Reston Association Issues Candidate Call — Three seats are open on the nine-member Board of Directors. All positions are for three-year terms and the deadline for filing as a candidate is Jan. 22. [Reston Association]

What to Expect About Local Vaccinations — The county has rounded up information on what to expect what you receive your COVID-19 vaccine, including common side effects and how the vaccine works. [Fairfax County Government]

Photo via vantagehill/Flickr

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Microsoft Corp. plans to expand with about 45,000 square feet in Reston Town Center, according to a recent earnings call by landlord Boston Properties.

The expansion is an addition to the 400,000-square-foot tech hub that is planned for the development.

Here’s more from the Washington Business Journal on the expansion:

The new space adds to what Redwood, Washington-based Microsoft is already leasing at Two Discovery Square, which stands at 12012 Sunset Hills Road. It’s also separately establishing a tech hub at Two Freedom Square, at 11955 Freedom Drive, bringing its total footprint across those two buildings to above 600,000 square feet, according to earnings data and company officials familiar with the situation.

In late May, Microsoft announced that it would invest $64 million to establish a new tub hub that would bring 2,500 new jobs to the area.

Photo by Franck V./Unsplash

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Boston Properties, owner of Reston Town Center, held its Third Quarterly Earnings Call earlier this week where the current state and future of Boston Properties in Reston were discussed.

Chief Executive Officer Owen Thomas says Boston Properties (BXP) has performed well, despite the pandemic.

“Despite a challenging recessionary environment, BXP continued to perform well in the third quarter, demonstrating the durability of our business,” Thomas explained. “In the quarter, we collected 99% of our office rents and 97% of rents overall. We completed 811,000 square feet of leasing, 40% being either new requirements or expanding existing customers, and we increased our average net rental rates on our second-generation leases by 20%.”

BXP properties that have recently been sold was also discussed, including Patriots Park in Reston that was sold for $325 million, according to Thomas, or what equals out to $450 a square foot and a 5.6 cap rate.

“This 724,000 square-foot asset is fully leased and sold to an asset management company,” Thomas said. “BXP built and subsequently sold Patriots Park in 2014 at roughly the same valuation.”

President of BXP Douge Linde later chimed in to discuss leasing activity around the country. Northern Virginia is the second market that relaxed its restrictions since the start of the pandemic, following Massachusetts, according to Linde.

“In Northern Virginia companies are actually required just to social distance and there are no limits to the occupancy threshold, and employees drive to their office,” Linde said. “We estimate our census is well under 15%. At this time, the return to work is not about transportation constraints, and it’s not about elevator constraints either.”

BXP also finalized a few leases in Northern Virginia, according to Linde, including Microsoft in Reston Town Center.

“They leased an additional 45,000 square feet and extended the 2028 expiration on 164,000 square feet to 2033,” Linde said. “We’ve also completed another 96,000 square foot of leases, 8 transactions during the quarter there. We are in negotiation on 5 more leases, totaling 65,000 square feet, for vacant space in the Town Center.”

Restonians should expect to see Volkswagon in Reston as BXP recently signed a 20-year lease with the company.

The future of BXP in Reston was also discussed by Chief Financial Officer Mike LaBelle.

“We’ve already signed leases for this space in Reston, and we expect it to be occupied in 2021,” LaBelle explained. “We partially offset the impact of the occupancy decline with revenue growth from a full quarter of contribution from our 100% leased 1750 Presidents Way development in Reston that we delivered in the second quarter, and $2 million of growth in our parking revenues.”

Staff photo by Jay Westcott

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Boston Properties, the owner of Reston Town Center, has taken a hit in earnings since the COVID-19 pandemic impacted the regional economy.

According to a quarterly earnings statement, the real estate owner’s funds from operations were down by 14 percent in the second quarter this year when compared to this time last year. The company earned $236.9 million for the first three months ending on June 30.

Boston Properties CEO Owen Thomas attributed the earnings drop to layoffs, rent concessions with struggling tenants, and dips in parking fees from office tenants that are now working remotely.

Still, the company reported some big wins. Earlier this year and in the thick of the pandemic, Microsoft signed a 400,000-square-foot-lease in Reston Town Center.

It’s unclear how the pandemic will pan out for the company. Rent collections remain high, with collections of 94 percent of rents overall, Thomas said.

I’m particularly proud of our team’s commitment to serving our customers with the highest level of professionalism that is our standard at Boston Properties,” he said.

He also noted that greater acceptance of part-time work from home may act as a headwind to office demand growth.

“So longterm, we think the product is here to stay. And the question is, who is going to be providing that and who is going to get through this pandemic most successfully?”

Photo by Jay Westcott

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Fairfax’s Edge in Flagging Office Market — Microsoft’s 400,000-square-foot-deal at Reston Town Center was one fo the biggest leasing wins for this region this year. But county business leaders see more deals coming, despite a slowdown created by the coronavirus pandemic. [Bisnow]

Reservations for Ridge Heights Pool Open Tomorrow — Reston Association is now offering members and non-members a chance to reserve a spot at the pool. The updated pool schedule is also available online. [Reston Association]

Herndon-based Company Offers Virtual Learning for Students — “Herndon-based online education provider K12 Inc. announced Wednesday it plans to hire more than 1,300 educators for the 2020 through 2021 school year, in light of a massive push to move education online during the pandemic. Across Virginia, schools have been making decisions regarding reopening in the fall, with some already opting for full online learning.” [Virginia Business Monthly]

Photo via Marjorie Copson

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Walmart Labs is expanding its presence in the Reston area.  The announcement comes as a growing number of technologies — including Microsoft — expand their footprint in the community.

The company’s technology arm has signed to lease establish a new technology center at 2245 Monroe Street, according to the Washington Business Journal.

WBJ also reports that the company will take up roughly 162,300 square-feet of a building owned by an affiliate of Barings Real Estate.

The building, which is located near the Herndon Metro Station, was recently renovated. The company already leases spaces at 10780 Parkridge in Reston.

The move would bring more than 100 jobs to Reston.

Photo courtesy Transwestern

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Herndon Police Department Releases ‘Where We Stand’ Guide — The police department offers a look at its use of force policy. “Trust and respect come through a solid foundation build on professionalism, strong policies, and continuous community engagement,”  HPD wrote. [Herndon Police Department]

Facial Recognition Tech Pitched at Microsoft Office — Microsoft tried to sell its facial recognition technology to the Drug Enforcement Administration, according to newly released emails. The company privately hosted DEA agents at its Reston office. [Tech Crunch]

Chicago Company Acquires Reston-based PagnatoKarp — “Reston-based wealth management firm PagnatoKarp has been acquired by Chicago-based Cresset Asset Management, the companies announced Wednesday.  A transaction amount was not disclosed. [Virginia Business]

State Not Ready for Phase Three — “Virginia Gov. Ralph Northam said Tuesday that statewide Covid-19 numbers ‘continue to look favorable,’ but that he will not move the commonwealth into phase 3 of reopening this week. ‘I want to have more time to see how the numbers look before we make changes, especially as we see surges in other parts of our country,’ Northam said.” [Washington Business Journal]

Photo by Marjorie Copson

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