Exclusive Investment Offering: Condominium Interest - Transwestern

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Market Overview
The McLean Retail Submarket
Ideally located within the Capital Beltway, between
the George Washington Parkway and I-66, McLean is
comprised of 770,000 square feet of retail space, 68%
of which is found in shopping centers. The majority of
this submarket was developed in the 1970s in response
to the growing population and burgeoning federal
contractor presence in nearby Tysons Corner. Today,
the McLean retail submarket remains focused on
upscale boutiques, service providers, and restaurants,
supplemented by neighborhood grocery stores serving
the community’s dense and affluent residential base.
Premier tenants in the McLean submarket include
Balducci’s, Giant, Safeway, Starbucks, CVS, Boston
Market, and Blockbuster.
Submarket Fundamentals
Currently the McLean submarket is nearly at full
occupancy, with only 0.3% vacancy. The submarket
has historically performed with negligible supply,
exacerbating pent-up demand and creating significant
interest when available space becomes available for
lease. Year to date absorption totals positive 2,600
square feet, compared to positive 15,000 square feet
in 2006 which was the result of retail leasing at The
Palladium. Recent leases in this submarket include
The Jewelry Store at the Madison Building which inked
1,135 square feet of space for $45.00 triple net. In the
same building Boone & Sons is offering a sublet of 1,325
square feet at $50.00 triple net, with 3% escalations
per year for five years. Further, retail at the corner of
Chain Bridge Road and Center Drive is commanding
rents between $45.00 and $57.00 triple net for leases
consummated in 2006 and 2007. All leases include
3% annual rent escalations for five to ten year terms.
With little available supply, rents in the submarket have
shown steady growth, increasing an average of 4.3%
annually since 2004. McLean rents remain some of
the highest in the region at an average of $48.00
triple net.
Deliveries and Development Pipeline
There are no retail projects currently under
construction in McLean nor has any product been
delivered in 2007. The most recent deliveries
include the Subject Property in 2006 and the
Chesterbrook Shopping Center, a 9,300 square
foot retail center which is fully leased including
Wachovia Bank. Further, there are no new projects
under construction in McLean as developable
infill opportunities are rare. Many owners have
begun to consolidate parcels in attempt to
realize the “Main Street” vision as depicted in the
Fairfax County Comprehensive Plan. Significant
consolidation around Redmond Drive and Old
Dominion Drive could result in a significant future
mixed-use project; the County and property
owners are currently reviewing this potential.
Above: Elevation of Chesterbrook Shopping Center
Opposite page: Aerial view of the Palladium along Lowell Street