by James A. Bacon
Well, well, well, what do you know? The commercial building boom in Tysons triggered by the imminent completion of Phase One of the Rail-to-Dulles project doesn’t seem to be running on schedule. A Washington Post article today highlights Lerner Enterprise’s lengthy delay in building an 18-story, 476,000-square-foot office building near one of Tysons’ four Metro stations. Writes Jonathan O’Connell:
Office leasing has been flat, at best, in most parts of the region since then. The vacancy rate at office buildings in Northern Virginia is more than 17 percent, and other buildings built without tenants lined up are still largely empty. And the Silver Line has been delayed.
The good news is that Lerner is finally ready to move; it expects to complete construction by late 2015 or early 2016. But the question is how rapidly the Tysons commercial market can absorb (a) existing vacancies, (b) Tysons Tower, a Macerich project nearing completion, and (c) the Lerner office space, in a regional economy driven by federal spending in an era when federal spending, especially the defense spending so predominant in Northern Virginia, is severely curtailed and as businesses continue to shrink their office footprint per employee. Rob Whitfield, a former commercial real estate broker and a Rail-to-Dulles gadfly, estimates that Northern Virginia could have an eight-year office supply at present.
The multibillion-dollar long-term plan for transforming Tysons from a poster child for autocentric sprawl into a walkable, transit-oriented community has more interlocking pieces than a Chinese puzzle. The plan depends heavily upon an increase in development around Tysons to stimulate Silver Line ridership, pay for the reconfiguration of the business district’s paisley street pattern into a walkable grid, and generate tax revenues to offset the billions of dollars of road and highway improvements needed to move traffic in and out of the district.
If the development is slow to materialize, then the money to pay for the supporting transportation and streetscape upgrades will be slow to materialize. The question is, what happens if the anticipated smart-growth amenities aren’t built? Will Silver Line revenue fall short? If it does, who will pay? Will businesses find the district less attractive and locate in more walkable places, like Arlington, instead?
At least Tysons partisans can console themselves about one thing. Reston, a prime competing market on the Silver Line, turns out to have massive financial obligations of its own. The Reston Citizen Association estimates that Reston’s infrastructure needs to be $1.5 billion in current dollars ($2.5 billion in future dollars). Meeting those obligations could drive up Reston leases and rents.
The Silver Line is being built — that die has been cast, and there is no going back — so it only makes sense to use the Metro as a stimulus for more rational land use in Tysons and along the Dulles corridor. Tysons stakeholders are doing what the logic of the situation impels them to do. I’m just worried that the cost of the transformation — Silver Line subsidies, transportation access in and out of Tysons, and other infrastructure — is so huge that it can’t be paid for and the whole thing will disintegrate in slo-mo. I hope my fears are overblown. Somebody please tell me why I’m wrong.