Commercial builders are putting shovel to ground in Fairfax County without knowing who their tenants will be when the construction is finished, a trend that Fairfax County’s Executive Anthony Griffin worries could be a precursor to a further real estate slump.
Griffin, the county’s top appointed official, forecast the future of the county’s tax base at a budget news conference last week. He warned that the drop in residential real estate taxes had not reached its bottom and the commercial real estate tax revenue could also fall.
The rise in the value of office space, and the associated growth in taxes, has been partially responsible for keeping the county out of the red. But current double-digit growth might not be as strong in years to come, Griffin predicted.
“The concern I have is there are a number of buildings presently under construction for which there are no tenants identified, to the best of our knowledge,” he said. “I think about two-thirds of them were speculative.”
He said the construction was fueled by government contracting, which had “topped out” in Fairfax County.
“We’ll be lucky if it stays the same rate for the next couple of years,” Griffin said.
While Griffin appeared to be addressing office space under construction, the existing stock of office buildings is not experiencing large vacancies, Economic Development Authority President Jerry Gordon said.
He agreed with Griffin that builders are building without identified tenants. Gordon, however, said he “wasn’t terribly concerned.” Vacancies now run only about 7 1/2 percent, he said. In the 1990s, when property values and county revenues slumped dramatically, that vacancy rate ran as high as 19 percent, he said.
“It’s not the same problem we’ve had in past years,” Gordon said.
The county’s Office of Public Affairs declined to answer questions on Griffin’s remarks, referring queries on the county executive’s statements to the EDA.
wflook@dcexaminer.com
