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Silver Line Phase 2 Is Opening Nov. 15. Is Loudoun County Ready?

After years of delays, Metro announced Monday afternoon that the second phase of the Silver Line is scheduled to open Nov. 15, finally bringing rail to Washington Dulles International Airport, but also adding two new stations to Loudoun County and a third just over the border in Fairfax County.

But delivering on the plans for housing, office and retail around those stations is much harder now than it would have been than when Phase 2 was originally projected to open in 2018.

"It's an uphill battle right now from a macroeconomic standpoint," Buddy Rizer, executive director of the Loudoun County Department of Economic Development, said during Bisnow's Future of Loudoun County event last week. "It has slowed delivery of things we were hoping to have done."

Claude Moore Charitable Foundation's Guy Gravett, Howard Hughes Medical Institute's Monti Mercer, Loudoun County Department of Economic Development's Buddy Rizer, Guardians of Honor's Susan Mitchell, and Community Foundation for Loudoun and Northern Fauquier Counties' Amy Owen speak during a panel at Bisnow's Future of Loudoun County event on Oct. 26, 2022.

Rizer said he's still optimistic about the future of Loudoun County's transit-oriented development. He noted that nearly three-quarters of commercial development in Northern Virginia over the past few years has been proximate to Metro, transforming Reston and other towns thanks to developers like Comstock.

But Comstock, which owns a significant amount of land around the Ashburn Metro station, has been waiting for trains to arrive before fully realizing its plans there. The event was held at Comstock's BLVD Gramercy East, a multifamily building next to the Ashburn station.

Comstock Chief Operating Officer Tim Steffan said there are five parcels the company owns and plans to develop. He anticipates bringing 240 to 330 units to market over the next three years and said Comstock is also hoping to construct a 175K SF mid-rise office building, but is waiting on an anchor tenant before starting construction.

The developer has similar holdings around the Phase 1 terminus station, Wiehle Avenue, where it signed major leases with Google, Rolls-Royce North America, Neustar and ICF International at three new office towers in the Reston Station mixed-use district.

At Ashburn Station, Comstock hasn't seen the same momentum, and now it's facing the same economic headwinds in Loudoun County squeezing everyone else. Steffan said his company has recently seen a 35% to 40% increase in material costs on projects that had been priced out four years earlier — when Silver Line Phase 2 was first projected to open.

Steffan said he's hoping that the housing market's slowdown amid rising interest rates could bring down material costs, giving Comstock's projects more favorable pricing.

"You can only do so much value engineering," Steffan said. "We're finally at that inflection point now that is going to help us with pushing material costs down."

That's good news for the county, which has fallen behind in adding housing for its growing population. County leaders passed a new comprehensive plan in 2019 that opened up new areas of the county for development, but in the years since developers have pushed for lighter zoning restrictions to spur more housing.

The problem may be in the supply of available land, Knutson Cos. CEO Donald Knutson said. The number of residential permits in the county dropped from 3,500 in 2015 to 2,000 in 2021, he said at the event, and the number of for-sale housing communities dropped from about 130 to 38 over the same period.

"That's a precipitous drop," Knutson said. "We need to put our collective heads together to get more housing lots approved."

Comstock's Tim Steffan, Rappaport's Susan Bourgeois, Knutson Cos.' Donald Knutson, USTA Mid-Atlantic Section's Beth Twomey and Walsh Colucci's Mike Romeo speak during a panel at Bisnow's Future of Loudoun County event on Oct. 26, 2022.

Despite the drop-off, Knutson said sunnier days are likely ahead for the county. He's seeing "urgency and discussion" among county leaders in addressing that housing shortage, and said he has three active projects in Loudoun County, the most he's ever had at one point.

"Good things are happening, notwithstanding [Federal Reserve Chairman] Jerome Powell, but good things are happening," Knutson said.

Rizer said building more housing is essential to the long-term viability of the county because of the war for talent. He noted the unemployment rate in Loudoun is 2%, but the overall labor participation rate is at its lowest since World War II. 

Rizer said talent is inseparable from housing, and that adding more residential development for workers will make the county more enticing to businesses.

"The first thing that we need to do is make sure that we have people in our community to fill the jobs that are available," Rizer said. "We can't go for years and years and years and not add houses and then expect we can do it overnight."

In September 2021, the county approved its Unmet Housing Needs Strategic Plan to guide affordable and attainable housing development. The plan found that the county had a dearth of rental housing, and residents with incomes above 80% of area median income occupied about half the units that could be affordable for those making less.

The plan calls for new public funds to invest in affordable multifamily properties, as well as zoning changes that would reduce parking minimums, add density bonuses for developments near transit centers and more.

"Low-income workers must either pay more than they can afford, double up, or commute long distances which can affect the stability of this labor force," the plan found. "By having housing that is affordable, the workforce can live where they work, support the local economy, and be involved in the community. In addition, having a larger pool of workers makes for a more attractive location for businesses to stay and grow or relocate to, which in turn improves the tax base."

The workers who occupy that housing may well be the ones most eager to use the Metro, said Monti Mercer, community relations manager for the Howard Hughes Medical Institute and a member of the Loudoun Cares board of directors.

He said the county needs to orient its development and its infrastructure, including supplementary bus routes, around the Metro in order to ensure good quality of life in Loudoun County for workers of all income brackets. 

While Metro service is arriving in two weeks, Mercer is still worried that without county support, the clock may be running out on plans that would have brought much-needed development for Loudoun County's workers.

"I'm a little fearful of how long it's going to take for Metro to come and if they're going to be able to hold on to those plans with everything that's going on with the economy right now," Mercer said. "That's one fear that I have. But overall, I'm very optimistic."