Annandale REAL ESTATE: It’s the Economy (mostly)
By: Scott Pearson, Pearson Realty
April 2017, ENDEAVOR News Magazine
Annandale housing and commercial property market is obviously affected by the economy, including consumer confidence, local employment and economic development via revitalization. Pearson Realty keeps a close eye on what is happening and maintains a supply of tea leaves to read the future.
What is presently occurring is a period of a flat or restricted housing market. Although houses coming onto the market are being snapped up in shorter periods of time, the number of houses coming onto the market is relatively small. Therefore, demand remains steady but supply is still weak.
The result is that we have not seen The a year-over increase in home sale values. Across the County, the average price of a home only increased 1.5 percent following previous years that saw healthier numbers. However, the tax assessment value averaged an increased of 1.64% . Around Annandale, the county tax office claims the percentage of change in assessed value was 1.32%. Nonetheless, many Annandale single family homeowners are experiencing a 5% increase with whopping additional real estate taxes to pay at now the highest rate the county has ever levied.
The market has experienced great uncertainty due to the Presidential election and the ensuing observation of change coming from the White House and Congress. That uncertainty may increase further if (and likely when) Congress starts implementing reduction in force (RIF) that may threaten the jobs of some federal workers.
Whether that situation is offset by economic development via the construction and operation of INOVA’s research campus, the redevelopment of the Landmark Mall, and increased defense spending that impacts numerous contractors spread throughout the County is unknown. But these types of events ripple to Annandale because of its geographic location and the arteries that connect it quickly to other County neighborhoods. As we move into the spring season there is every reason to believe that housing and commercial enterprises in the Annandale area will continue a steady pace forward. The one possible exception is the leasing of retail space. This small market segment appears to be struggling.
If you live or work in Annandale it is hard not to notice what is happening at the Pinecrest Plaza where Staples used to be and that now has seven empty spaces. It is difficult to discern the reason for the exodus of businesses, some of which have been there for years. But there seems to be a general consensus among former tenants that the rents simply became unmanageable. It may also be that these tenants are out of touch with current lease rates not having had a renewal in many years.
Pearson Realty serves as a property manager for retail space and, therefore, assists owners in deal with the balance between profits and maintaining tenants. And it is a balance. Tenants understand if rent increases are due to increased property taxes; not the owner’s fault. Or, if costs increase to provide services for the benefit of the tenants; not the owner’s fault.
What retail tenants, particularly smaller mom-n-pops, don’t understand, and often cannot tolerate, is a sudden and unexplained increase in rents upon lease renewal. It feels like gouging to them. So they react by moving out and if the new rents are in fact unjustifiable, no new tenant moves into that space. Well in advance of a renewal, tenants should start negotiating with their landlord so they have time to ponder lease increases v. moving.
The underlying problem sometimes is that a large, national investor owns the retail space and is setting rents based on an unrealistic view of the market and location. Pinecrest Plaza is in a reasonable location, but it is not prime retail space.
Meanwhile, the County is creating a task force to consider the revitalization of Lincolnia. Although this, like other planned projects, will be years in the coming, there is no doubt that the stretch from Landmark Mall to the beltway will likely see significant changes in the next decade or two. We believe Annandale has both a bright housing and commercial future. But patience is definitely in order.
Median Sales Price of Annandale Homes
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