Demand Has Dipped In Dense R-B Corridor, But Its Mix Of Uses Has Blunted COVID Impacts
The Rosslyn-Ballston Corridor is one of the D.C. region's densest areas with a host of office space that typically has its streets bustling with foot traffic during the day.
While the coronavirus pandemic has slowed down that foot traffic and created challenges for its restaurants and retailers, the corridor has been bolstered by the thousands of residents that have moved into its new apartment buildings in recent years.
The gradual return to the office has also generated more business for Rosslyn and Ballston retailers, but stakeholders are concerned restaurants could struggle as the winter approaches and outdoor seating becomes more difficult.
"We don’t feel like a ghost town like some neighborhoods in downtown might, because we’ve already got people living here," Leone said. "They’re working from home, so they still want to get outside.”
While Rosslyn has historically been an office-heavy neighborhood, Rosslyn BID President Mary-Claire Burick said the residential development over the last decade has made it more prepared to withstand the crisis.
"I believe we have weathered this pandemic far better than we would have 15 or 20 years ago when it was predominantly commercial," Burick said. "Certainly the office market is what makes us such a robust and bustling place, but having those residents here in the neighborhood is what is keeping a lot of the restaurants moving forward and able to keep their doors open."
One new development that exemplifies the corridor's mix of uses is Shooshan Cos.' 4040 Wilson Blvd. tower in Ballston. The 22-story tower, part of Shooshan's Liberty Center development, delivered earlier this year with 187K SF of office space, 250 apartments and 38K SF of retail.
"One of the things the R-B corridor has offered people is a live-work environment, so you can live and work closer to each other," Shooshan Cos. founder John Shooshan said. "So people may be home and not going to the office but still need to go out and get the dry cleaning done or go to the drugstore and things like that."
The gradual return to the office has also helped generate more activity in the R-B Corridor. Shooshan said the number of people coming into his company's Ballston office buildings increased after Labor Day and is now around 50%.
"We're hearing more people aspire at least to get back to a more meaningful on-site employment," Shooshan said. "I think we're starting to hear more people getting antsy to come back."
Monday Properties, the largest office owner in Rosslyn, has also seen more people coming back to the office this month, Senior Vice President of Property Management and Operations Jennifer Burns said.
"We have definitely seen an increase post-Labor Day of businesses and companies returning to the office, which has been very positive," Burns said. "It’s similar to what we were expecting, because schools have flushed out what their process is going to be, and employers [are] getting comfortable with having employees come back to work."
Burns also said the increase of residential development in Rosslyn has helped maintain activity in the neighborhood during the pandemic.
"Rosslyn really over the last 10 years has continued to break the mold of what people maybe perceived previously," Burns said. "There is a lot of daytime and nighttime activity, there is large residential presence in Rosslyn. We have condos and apartments, so there is activation throughout the day."
While the residential population and the slow return to office have helped keep restaurants alive, stakeholders are concerned about what could happen when the weather becomes colder.
"In this weather, it's been great," Shooshan said of outdoor dining. "Now you've got the fall weather, so the next month or two will be great, but we've got to do something because we could lose anywhere from one-third to one-half of these restaurants that just won't be able to reopen."
Burick said the outdoor seating has been critical for Rosslyn's restaurants as people have not been as comfortable eating inside.
"The comfort level of indoors is starting to increase over time, but outdoors is where a majority of people are comfortable, so outdoor zones have been incredibly helpful for allowing restaurants to make their way through this," Burick said.
Arlington County is working on a program to help restaurants obtain outdoor heaters for the cold weather, but Leone said she has been pushing the county to move faster.
“We’re behind on this because the people that rent these heaters are already booked so if you haven’t ordered these heaters now not you might not get them until February," Leone said. "We’ve got to get on the ball. I believe the county has said in the next week or so they’ll have guidelines on this, but frankly we're late on it."
"It couldn't have been worse timing because they really hadn't hit stride yet with Ballston Quarter, they're not fully leased," Leone said. "So it's quiet, it's definitely not what it was in March before this all happened. So it's going to be a slow climb back."
After partially closing March 24, Ballston Quarter reopened May 29 and now has 47 tenants open, Brookfield Senior Marketing Manager Cristian Becker said. Punch Bowl Social has remained closed, but Becker said it is aiming to reopen at the end of this month. A Punch Bowl Social spokesperson confirmed it plans to reopen soon.
"We continue to see traffic increase week over week," Becker wrote in an email. "As offices begin to reopen, we have seen an increase in our weekday traffic, and we are lucky to be in such a high-density residential area, which has definitely helped."
Jefferson Apartment Group had designed some of the 8,300 SF of retail space in its new Ballston apartment building for restaurants, but Senior Vice President Greg Van Wie said the industry's challenges have made landing a food and beverage user more difficult. He said the developer is negotiating a lease with a salon operator for one of its three retail spaces, and it is also looking at other potential tenants including banks, fitness studios and dentists.
"We have pivoted away from food and beverage ... it's hard to project when those types of groups are going to be able to recover," Van Wie said. "We've talked to more of the neighborhood service users."
JAG's 22-story J Sol apartment building in Ballston began leasing in early August and has signed around 20 leases, Van Wie said. He said it has stepped up its virtual tour offerings, but he still sees many renters choosing to stay in place or move in with their parents.
"We do believe there has been an impact on demand as a result of the pandemic," Van Wie said. "It's fewer new people moving to the area who would typically be apartment renters, whether as a result of getting a new job out of school or moving for a school or graduate program, a lot of those people aren't showing up."
"We have seen some anecdotal evidence of stronger performance in our more suburban assets," Van Wie said.
But he thinks this dynamic will be short-lived, and JAG remains confident in the ability to lease high-rise apartments in the R-B Corridor over the long term. The developer in June filed plans to replace Rosslyn's RCA building with a 26-story multifamily tower, and in July it filed an application for a 128-foot-tall apartment building in Clarendon.
"We are really bullish on Arlington and the R-B Corridor as a location that provides access and connectivity to Downtown D.C. as well as to more suburban employment centers in the D.C. area," Van Wie said.
Office leasing in the R-B Corridor has been slow during the pandemic, but landlords expect it to pick up as the economy continues to recover. The Rosslyn submarket experienced negative net absorption of 64K SF during the first six months of the year, according to JLL, while the Ballston submarket experienced 78K SF of positive net absorption.
"Activity has been virtually nonexistent," Shooshan said. "No one has certainty, and people are hesitant to make decisions."
He said he expects some of that uncertainty to disappear after the election, and he anticipates an increase in leasing activity next year.
"Once that transition is made and people know where we're going to come out, that year after, things tend to pick up," Shooshan said.
Burns said Monday Properties has seen some activity in its virtual touring, and she expects to have new leases closing in the coming months. She said the company's tenant mix is well-positioned for an economic downturn, with companies that benefit from increased federal spending.
"All the tenants in our portfolio are going to continue to benefit," Burns said. "We have a very good mix of different types of tenants with Raytheon, Nestle, Grant Thornton and a lot of government contracting groups, and we have the federal government as a tenant. We have a diverse and strong portfolio that is going to continue to be successful."