From Old Strip Malls And Office Parks, Fairfax Developers Are Going Full Mixed-Use, Metro Or Not
Want to get a jump-start on upcoming deals? Meet the major D.C. players at one of our upcoming events!
The D.C. suburb of Fairfax County has historically been home to more low-rise retail plazas, residential neighborhoods and stand-alone office parks than mixed-use developments. But with shopping centers throughout the county undergoing redevelopment, and large transit-oriented projects taking shape around Silver Line stations, developers are increasingly turning the county into a walkable, mixed-use environment.
A large owner of shopping centers throughout the D.C. region, Combined Properties has recently begun to redevelop its old Fairfax County retail plazas into mixed-use projects.
In the Alexandria section of Fairfax County, Combined plans to develop 400 apartments, 41 townhouses and 44K SF of retail on the site of the former Penn Daw Plaza. The developer is in negotiations with a grocery store anchor, Combined CEO Katherine Bonnafé said. After signing that lease, it will seek financing with hopes of breaking ground in Q1.
On the site of the Fairfax Circle Shopping Center, Combined is preparing to break ground on a redevelopment with 400 units and 73K SF of retail. In August it signed Giant as a 54K SF anchor for the project, which sits on the border of Fairfax City and the county. It is currently seeking financing and hopes to start construction by year-end.
Combined owns additional retail centers in Fairfax County, such as the Bradlick Shopping Center in Annandale, Rolling Valley Mall in Burke and Chantilly Plaza and Sully Plaza in Chantilly, plus three more in Fairfax City. Bonnafé said it is beginning to align lease expirations at more than one of those centers, though she could not disclose which ones. Combined hopes to turn them into mixed-use developments in the next 10 years.
The company's strategy of turning once low-rise retail properties into dense mixed-use developments comes in part from its desire to diversify its portfolio to include uses other than retail, Bonnafé said. But the developer also sees a trend toward suburban placemaking.
"In certain locations, if you can create a sense of place and have good, service-oriented retail that supports your residential, that is a model that will work," Bonnafé said.
The mixed-use model fails when developers try to add retail to residential developments in areas that cannot support the commercial component, Bonnafé said. But with properties that have historically been retail centers, she said the public is used to shopping there and it becomes easier to include retail with residential. One challenge of doing this to existing retail centers is the patience required to take an asset that is generating cash flow and close it for a period of time while it undergoes redevelopment, she said.
Jefferson Apartment Group is going through entitlements for a similar type of mixed-use conversion in Reston. It is rezoning the obsolete Tall Oaks Village shopping center, which has lost multiple grocery anchors, to allow for 156 for-sale residential units and 15K SF of retail.
"It was an interesting conversion of a use that was not really appropriate in today's retail environment or people's daily habit of real estate, but it also wasn't quite appropriate for the high-rise multifamily development we do in other sites," JAG Development partner Greg Van Wie said. "But it still worked for a dense redevelopment opportunity focused on for-sale housing with a retail component."
That project, which JAG plans to sell to another developer following the zoning process, sits on Wiehle Avenue just a mile north of the Wiehle-Reston East Metro station, the current terminus of the Silver Line.
At that Silver Line station, Comstock Partners is undertaking a mixed-use development of a much larger scale.
The developer is nearing completion on the first of three office buildings at Reston Station, a 1.5M SF mixed-use development at the Wiehle-Reston East Silver Line stop. In early 2016, it delivered BLVD, the project's 448-unit apartment building. It has signed a popular restaurant brand in Founding Farmers, which plans to open by the end of the year. It also has a Starbucks open and Sweet Leaf, an organic fast-casual concept, will open in the coming months.
Comstock has still not signed an office tenant at 1900 Reston Metro Plaza, the 16-story, 365K SF, brightly lit office tower it is preparing to deliver at Reston Station. But Comstock CEO Chris Clemente said he is in talks with several tenants that could fill a significant portion of the building.
Clemente is so confident in the leasing potential that Comstock plans to break ground speculatively on the second office component, a 180K SF building, early next year. He said Comstock is going through the design stage for the third component, a 250K SF office building, which the company could also be building on spec.
A big part of Clemente's confidence in the office leasing comes from the emerging mixed-use environment Comstock is creating around the station.
"The consistent theme we're seeing is that companies are focused on their ability to recruit young people," Clemente said. "Millennials want to be in a mixed-use environment and they want to be on Metro."
Next to that project, Comstock is planning another mixed-use development, The Promenade at Reston Station, on a low-rise office complex it acquired last year. That project will be more residential-heavy than Reston Station, with 500 units complemented by 91K SF of retail and 178K SF of either office or hotel. It is currently going through entitlements, and Clemente hopes to break ground on that project by mid-2019.
Clemente said the Silver Line and the growing mixed-use environment is attracting young people to live in Reston. He saw that with BLVD, now 95% leased, and he expects the success will continue with the future residential component.
"Reston Station is not just what's on the Metro plaza," Clemente said. "It's the entire neighborhood around those buildings that we started over the last several years. What people are excited about is that we're creating a new neighborhood from scratch that has all the elements that are driving demand in mixed-use developments today."
Comstock does not just undertake massive transit-oriented developments like Reston Station and Loudoun Station, it is also planning a smaller, mixed-use development on a former auto dealership site in Herndon.
The developer reached a deal with Herndon in September to build 281 apartments, 18K SF of retail and an 18K SF arts center on the 4.7-acre site.
Even without the accessibility of Metro — the project is two miles north of a future Silver Line station — Clemente said mixed-use developments are becoming more appealing throughout Fairfax County. This is in part because the average age of homebuyers has risen, so more people are looking to rent apartments and are increasingly looking to live in walkable areas full of amenities.
"It's a shift toward lifestyle and environments and mixed-use is really an important way to make it work," Clemente said. "It speaks to how people's way of thinking about real estate and where they want to spend their time and where they want to live has really changed."
Bonnafé, Van Wie and Clemente will each discuss their developments at Bisnow's Fairfax County State of the Market on Thursday at 1900 Reston Metro Plaza.