New Direct International Flights From Dulles Could Boost Investment, Leasing In D.C. Region
United Airlines will begin offering nonstop service next year from Dulles International Airport to Tel Aviv, it announced this month, the first direct flight available from Washington to Israel. It is part of a continued expansion of D.C.'s international connections that economic development officials say could benefit the region's commercial real estate market.
The Tel Aviv addition followed Cathay Pacific Airways' December announcement that it would offer nonstop service from Dulles to Hong Kong. The flight is scheduled to begin Sept. 16 and will include four nonstop trips per week. The first direct route from D.C. to Hong Kong, the world's most expensive real estate market, is estimated to bring in $30M in direct economic impact to Virginia.
Many foreign investors in real estate prefer to visit their properties multiple times and think about them as physical assets rather than numbers on a sheet, JLL Senior Managing Director Bill Prutting said, and direct flights make that easier.
"It creates a greater convenience," Prutting said of direct flights. "It depends upon the city and the travel distance, but I believe it certainly helps to have that connectivity, because it does reduce the barriers."
Direct flights from Dulles to Tel Aviv are scheduled to begin in May. The Israeli city will be the 56th international destination with flights from the Northern Virginia airport. Thirteen of those destinations offer only seasonal flights and one offers one-stop, single-plane service.
The accessibility of a U.S. market from global cities can have a major impact on the decisions of foreign investors. When the Association of Foreign Investors in Real Estate was created by a group of Dutch and German investors, they chose to put their offices in Atlanta largely due to the city's wide-ranging international flight offerings, outgoing CEO Jim Fetgatter said.
The group always holds its annual conference in cities with many direct international flights, Fetgatter said, and it once canceled a plan to host the meeting in Charleston because investors would have had to take a short connecting flight. Beyond the group's main offices and meetings, Fetgatter said direct flights can impact where the investors put their money.
"I'm definitely of the opinion that direct flights do make a difference in where foreign investors go," Fetgatter said, adding that he thinks the Hong Kong flight will be particularly beneficial for D.C.'s investment sales market.
"There is a lot of investment coming from Hong Kong," he said. "I think it will definitely be an improvement. It's easier for them to get to the West Coast, that's why you see so much Asian investment in California. If you can go all the way to D.C. and not have to land in San Francisco or Los Angeles, yeah it makes a big difference."
A Hong Kong investor last year paid $133M for a 476-acre resort in Leesburg. Israeli investors have also been active in the D.C. real estate market. Alony Hetz is one of D.C.'s top foreign owners of real estate as the Israeli investor owns a major stake in Carr Properties, one of D.C.'s largest developers.
The direct connection to Israel could also boost the D.C. area's leasing market. Israel has a large concentration of technology and defense-related companies, industries that also make up a big portion of Northern Virginia's office market. Several Israeli companies have opened offices in Reston and Herndon, including VERINT Contact Solutions, Priority Software, BitDam and Melanox Federal Systems, according to the Fairfax County Economic Development Authority.
"We have had some considerable success in bringing in businesses from Israel in spite of the fact we haven't had a direct flight," FCEDA President Jerry Gordon said. "With direct flights, I can only imagine it's going to increase dramatically."
Gordon said the FCEDA has been pushing for the direct flight to Israel for years because of the benefit it could have to the county's economy. He said adding nonstop service to Israel and other countries could help the region compete with other major U.S. markets for business.
"If a company has a direct flight to New York, that's where they're going to put business because it's easier," Gordon said. "This minimizes the air travel time by four to five hours, and that makes a big difference."
Montgomery County Economic Development Corp. President David Petr also thinks the new Tel Aviv direct flight will help business growth in the county, despite the river that separates it from Dulles. Israeli companies have contributed about $185M per year to Maryland's economy, according to the Maryland Department of Commerce.
"Israel and Montgomery County, Maryland, share a like-minded approach to business with a strong focus on innovation and entrepreneurship," Petr said in an email. "We welcome the new direct flights to Israel from the Washington, D.C. region and expect the change to open new avenues for global collaboration and connectivity."
