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Developers, Metro Officials Still Pushing New TOD Forward Despite Low Ridership

Metro stations have served as anchors of development in the D.C. area for decades, but over the last 13 months those stations have been quieter than ever. 

The ridership drop caused by the coronavirus pandemic has yet to recover, and the increased prevalence of remote work leaves experts uncertain about how quickly it will rebound, but this isn't stopping developers from planning new major projects around the stations. 

A rendering of Urban Atlantic's New Carrollton Metro development

Several developers and WMATA's head of real estate, speaking Wednesday on Bisnow's Connectivity and the Future of Greater D.C. Transit-Oriented Development digital event, said they still have enough confidence in the future of transit usage to move forward with billions of dollars worth of development around these stations. 

Urban Atlantic Managing Director of Development Alan Lederman, whose company is partnering with Metro on a 2.5M SF development at the New Carrollton station in Prince George's County, said his long-term outlook remains strong despite the short-term uncertainty. 

"We’re very hopeful that transit will recover," Lederman said. "We don’t know how long it’s going to take, and we’re not quite sure what that looks like. But by and large, we still feel very bullish, and long-term the growth trends are such that being on a transit hub, especially a multimodal station like New Carrollton or others in the region, is really where you’re going to see the bulk of growth going forward."

Metro ridership fell as much as 95% during the darkest days of the pandemic, and it is still about 85% below pre-pandemic levels, the Washington Post reported last week. And WMATA's projections anticipate the recovery will be slow, with ridership only expected to be about 35% of pre-pandemic levels by June 2022. 

WMATA Vice President of Real Estate and Parking Nina Albert said the short-term forecast for Metro ridership is murky and it depends on several factors, such as when companies bring employees back to the office and when vehicular traffic congestion returns, an issue that helps push people toward transit. 

"We don’t know when ridership will return, it will very much depend on when people are going back to [the] office, when congestion starts to increase, etc.," Albert said. "It will be a process we're all going to be monitoring very carefully, but the long-range view continues to support a transit-oriented region."

Many of the most attractive transit-oriented development opportunities in the region are on Metro-owned land next to its stations, and the agency is continuing to move forward with an aggressive push to develop this land. 

Metro currently has nine development partnerships underway, including major projects at the New Carrollton, Grosvenor-Strathmore and West Falls Church Metro stations, and Albert said none of those projects have slowed down. 

"I have to tell you, I don’t think that we’ve been busier," Albert said. "We have been really firing on all cylinders. We’ve got nine joint developments currently underway, and the developers who have partnered with us are not easing up on the gas."

Albert also said Metro is moving forward with ambitious long-term plans for development around Metro stations. 

A map of Metro's long-term vision for the stations where it aims to pursue partnerships for the development of transit-adjacent land.

The transit agency aims to achieve 20 joint agreements with developers over the next decade, Albert said, including the nine it currently has under contract. On the Bisnow event, Albert shared a map that hadn't been previously released of the preliminary vision for which Metro stations the agency aims to develop. 

"This is what we think we can enter into in the next 10 years," Albert said. "Maybe there can be others. The market will change, but this is our vision right now of where we think the opportunities are, and this fits in tightly with where we’re at today. That mix of suburban-urban living that we might go to. If people think that’s the direction we’re going in, you can see that our portfolio fits that strategy as well."

Jair Lynch Real Estate Partners CEO Jair Lynch, after Albert showed the map of potential transit-oriented developments, said it will take a significant effort from public and private partners in the region to deliver on the goals. 

"All of these opportunities are wonderful, but we've had them for the last 30 to 40 years," Lynch said. "All of these stations have been in place. The growth of the region requires bold thinking, it requires the elimination of layers so we can actually deliver this housing."

Lynch, who completed a transit-oriented development last year near the Navy Yard station and has projects moving forward near the Rhode Island Avenue and Takoma stations, said the drop in transit usage isn't changing his calculus around TOD going forward. 

"The macro trends are still there, there is still a drive to urban locations," Lynch said. "We define them as walkable urban locations, of which there are 50-plus in [the] region, the majority outside of D.C. They’re often in these suburban nodes that are clustered and have the benefit of fixed transit. So we still think that is the primary thesis. There will be other components we'll look at, but we're not picking up and moving our business to the Southeast or starting to do single-family development. We believe in the region." 

A new transit-oriented development began to move forward this week in Southeast D.C. The Office of the Deputy Mayor for Planning and Economic Development selected a development team to build a 117-unit affordable project with 9,500 SF of commercial space near the Congress Heights Metro station. 

The development partnership consists of Banneker Ventures, District Development Group and Congress Heights Community Training and Development Corp. The property is a 39K SF lot next to the former Malcolm X Elementary School, which is planned to become the Bard High School Early College, and near the massive St Elizabeths East development. 

Clockwise from top left: Banneker Ventures' Omar Karim, Duball Partners' Marc Dubick, Selzer Gurvitch's Bob Dalrymple and Urban Atlantic's Alan Lederman.

Banneker Ventures President Omar Karim, who mentioned the selection on the event, told Bisnow in an interview Thursday that he expects the project will break ground within the next two years. 

"We're super excited to be working with the District on this really transformative project for a community that really deserves this type of investment," Karim said in the interview. "This project will support the mayor's vision for bringing more affordable housing to the District while transforming our Metro sites."

The project is the fourth transit-oriented development planned in the region for Banneker Ventures, and Karim said it is looking to hire more employees to support the work. 

Banneker has an 85-unit project with retail planned near the Anacostia Metro station that Karim said he hopes to break ground on in July. It has a 193-unit project near the Addison Road Metro station that he hopes to break ground on in February 2022. And it has a 300K SF project near the Largo Metro station that he said it hopes to break ground later this year. 

Karim, speaking on the event, said he thinks transit usage will pick up as more people get vaccinated, and he is encouraged by the increased activity he has seen around D.C. so far this spring. 

"We really see an uptick of people feeling safer to go to restaurants and other places," Karim said. "We believe folks will be more comfortable getting back on trains and mass transit, and long-term, we're certainly bullish on Metro stations and transit-oriented nodes in the region."

Duball LLC President Marc Dubick, whose firm is moving forward with transit-oriented developments in Rockville and Bethesda, said the pandemic has hurt transit-oriented locations in the short term, but he thinks it will bounce back. 

"It has pushed people out of mass transit and into their own car, and it’s also pushed some people out of high-rise, densified housing into suburban locations to get more space," Dubick said. "But over time, if you look at the creation of the urban environment going back to Europe and whatnot, I ultimately think we’ll get there. It’s just a timing issue that relates to when the pandemic completely wraps up, and we call it over. I guess we’re heading in that direction, but we're not there yet."

Transit-oriented development in some parts of the D.C. suburbs faces issues not only with Metro ridership, but with delays in the opening of new transit stations. The 21-station Purple Line in suburban Maryland has experienced significant construction delays, including the contractors walking off the job in September, and the timeline for opening is now uncertain. 

Urban Atlantic's New Carrollton project is on the planned eastern terminus of the Purple Line, and Lederman said he's not clear on when the line will open. But with New Carrollton already servicing the Metro, MARC and Amtrak, he said the Purple Line opening isn't critically important for its plans. 

"In talking with folks at the Purple Line over time, they haven’t provided any sort of commitment in terms of scheduling and when things are going to finalize," he said. "The Purple Line is an incremental add to that, but it’s not the impetus for our development or a make-or-break for it. It's additive, and something we're looking forward to, but it certainly hasn’t stopped us from continuing to develop."

Lederman said he has seen positive signs for transit-oriented apartment projects over the last month. Urban Atlantic's first multifamily building at New Carrollton, a 282-unit project, began leasing up three weeks ago, and he said it has already signed 27 leases. 

"Some people were signing leases without even having tours, so I think that's a strong indication the market is there for new residential product, particularly at transit stations," Lederman said. 

Transit-oriented office development may not recover as quickly as apartments. 

A rendering of the Scotts Run development in Tysons

Cityline Partners Managing Director Donna Shafer, whose firm has about 4M SF of office space planned at the Scotts Run project near Tysons' McLean Metro station, said it may have to reduce that density to meet the market. 

"In conversations we're having with prospects, we're looking at densities and opening ourselves up to maybe slightly lower densities," she said. "Maybe we need to be looking at 300K SF to 400K SF office buildings instead of the 400K SF to 600K SF office buildings we have approved and ready for construction. I think in order to keep the success of TOD rolling, that's a conversation we'll have to have."

Shafer said she is optimistic that transit usage will recover as more people are vaccinated, and she still has a positive long-term outlook for transit-oriented development. She said the duration of the pandemic, now more than 13 months, has made some companies and employees more eager to return to the office. 

"There was a work-from-home notion out there, but this experiment really forced us to take a closer look at that," Shafer said. "We’re coming out realizing we can work from home, but also in [a] perverse way it’s a good thing it didn’t end after six months, because think of where we were six months ago: 80-something percent of companies interviewed said we’re going to reduce our footprint. Now that’s not the case. We know we got our work done, but we didn’t come up with new ideas. The collaboration, the culture, everything suffered."

Clockwise from top left: Cityline Partners' Donna Shafer, National Landing BID's Tracy Sayegh Gabriel, EYA's McLean Quinn and Walsh Colucci's Andrew Painter.

EYA President McLean Quinn, who has multiple transit-oriented developments planned across the region, said he still expects to see strong demand for walkable, transit-oriented locations in the future. 

"Clearly we’ve placed a large bet on TOD being a trend that doesn’t go away," Quinn said. "To step back for a second and recognize what we’re talking about: Covid is a blip on the radar of a trend that’s been going on for hundreds of years, so to think blip dislodges that long-term trend is dubious in my mind."

Federal City Council CEO Anthony Williams, who served as D.C.'s mayor from 1999 to 2007, said the transit-oriented development he is focused on most is the redevelopment of Union Station. A multibillion-dollar expansion of the station is in the planning stages, and Akridge has 3M SF of mixed-use development planned above the station's rail tracks. 

Williams said he also sees opportunities for TOD at under-developed Metro stations in suburban areas like Prince George's County, but he sees the overhaul of Union Station as critically important for the region, given its connections to the Metro, MARC, VRE and Amtrak systems. 

"I always tell people if you combine King's Cross, Padddington and St. Pancras in London, you would have some notion of the importance of [Union Station] here in D.C.," he said. "When we talk about transit-oriented development, if we can't do a big project like Union Station, how are we going to do smaller TOD projects?"