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New Mixed-Use Projects In Office-Heavy Tysons Could Help Soften Impact Of Remote Work

Tysons, the largest suburban office market in the D.C. region, has long been dependent on people driving their cars into work every day. 

But now, with the coronavirus pandemic giving employees more choice about when to come to the office, Tysons is depending on its new mixed-use projects that have walkable retail amenities near Metro stations to help draw people back. 

"There is a lot of flexibility and people want choice, so you have to lure them back," said Jean Rosauer, chief marketing officer of Tysons-based company ID.me. "It's really important that we can walk out and go have lunch together. You can't underestimate the importance of that and the importance of bringing people to the office."

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Bluestone Lane's Diego Martin, WhyHotel's Jason Fudin, M.C. Dean's Bill Dean, ID.me's Jean Rosauer and The Meridian Group's Gary Block.

Rosauer, speaking Thursday at Bisnow's Future of Tysons event at Boro Tower, said the company has grown to nearly 1,000 people at its 8280 Greensboro Drive office, one of The Meridian Group's buildings directly to the east of mixed-use development The Boro. She said the average age of ID.me's employees is 29, and the key to bringing young people back to the office is having nearby transit and retail amenities, such as The Boro's fast-casual restaurant Fish Taco.

"When you're 29 years old you care a lot about Metro, you care a lot about convenience, and you care a lot about Fish Taco," Rosauer said. "I was asking people why they love it here, and somebody said 'Fish Taco,' and there was spontaneous applause. That's so important to that age demographic."

Tysons has a workforce of 107,000, including 86,000 office-based jobs, according to the Tysons Partnership. Tysons' office inventory totaled 23.4M SF as of Q2, according to CBRE, making it the largest submarket in the region outside of Downtown D.C. That inventory was 22.6% vacant as of Q2. 

The area's office product had largely been built as car-centric, suburban-style office until 2014, when the Silver Line opened with four new Metro stations in Tysons. That opening, along with a new land use plan that increased density around the stations, led to a surge of transit-oriented development with office, multifamily, hotels and retail clustered together. 

Tysons now has 13,800 residential units, up 34% since 2010, according to Tysons Partnership, and that is expected to grow to 19,000 units by 2025. The area's retail market, long dominated by its two shopping malls, now has 70% of its inventory within a quarter-mile of a Metro station. The number of hotel rooms in Tysons grew by 11.2% between 2015 and 2019. 

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Mixed-use development The Boro in Tysons, photographed Sept. 9.

This growth of mixed-use development has made Tysons a more attractive destination for its office users to come into work every day, M.C. Dean CEO Bill Dean said. His 3,000-employee telecommunications company signed an 86K SF lease in 2016 to move its headquarters from Loudoun County to Greensboro Station, another Meridian Group office building next to The Boro. 

"People have all kinds of options, and there's got to be a reason to drive to the office, so having this is a really big deal," Dean said of The Boro. "It's a big deal having these amenities and having this critical mass."

The Boro's massive first phase delivered in fall 2019 with two apartment towers reaching 32 and 13 floors, a 25-story condo building, a 20-story office tower, a five-story boutique office building and 250K SF of retail anchored by Whole Foods and a Showplace ICON movie theater. The Meridian Group and its partners have an additional 2M SF of development planned for future phases, including a new partnership with Akridge for 550 housing units and 45K SF of retail. 

The Meridian Group Chief Investment Officer Gary Block said the development firm has seen the need for more walkable, mixed-use development in Tysons since it started the project in 2013, but he said the pandemic has accelerated that trend. 

"We are in a situation where people want to live and work and shop and dine in one place," Block said. "We got a little bit lucky because we created this innovational place where people can live, work, shop, dine and play, and now that's more important than ever post-pandemic."

Coffee shop chain Bluestone Lane is preparing to open a new location in a stand-alone building in The Boro's central park. Bluestone Lane Director of Operations Diego Martin said the pandemic has led the retailer to seek more locations in mixed-use environments like The Boro that have residential populations rather than office-heavy central business districts. 

"Most people are working from home at least a few days a week, so it actually changed our strategy now where company-wide we're looking to expand to these districts," Martin said. "We see the change, what's happening out there, and that has changed our decision to move to centers like this."

The Boro isn't the only new mixed-use development adding amenities to Tysons.

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Tysons' Capital One Center development, photographed Sept. 9 from a Silver Line Metro car.

Capital One delivered its new Tysons headquarters, the tallest building in the region, in 2018 near the McLean Metro station. The building is part of a 6M SF mixed-use development that has continued to deliver new phases, including an 80K SF Wegmans that opened in November and a 2.5.-acre elevated park with a beer garden that opened in August. The park sits atop Capital One Hall, a new 1,600-seat performing arts center that is slated to open in October. 

Also near the McLean Metro station, Cityline Partners has moved forward with new phases of its 8M SF Scotts Run development. The developer sold a piece of the 40-acre site to Skanska, which broke ground last year on a 410-unit apartment building. Cityline in July sold a 1.3-acre portion of the site to Lennar Multifamily Communities, which plans to build a 26-story, 447-unit apartment building. 

Cityline Partners Managing Director Donna Shafer said the pandemic has changed the development team's strategy for future phases, increasing its focus on multifamily and reducing some of its planned office density.

"We are looking at taking some of our commercial sites very strategically and doing conversions to residential," Shafer said. "And then in some cases where we have really large office towers, we're looking at opportunities to either carve back some density or create smaller towers."

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Brookfield's Chris Pine, Lodgeworks' Mike Daood, Cityline Partners' Donna Shafer and Walsh, Colucci's Elizabeth Baker.

The Scotts Run project also has a new hospitality component, the 178-room Archer Hotel from developer and operator Lodgeworks Partners. The hotel broke ground in October 2019 and it is scheduled to open Tuesday, Lodgeworks President Mike Daood said. 

Tysons' hotel market has historically been dominated by the weekday business travel segment, but Daood said the surge of mixed-use development makes it a more well-rounded submarket. 

"Tysons made this leap, or this commitment, to a future vision of really being an urban, walkable destination," Daood said. "And with that comes additional retail, additional entertainment and residential, and that likely, we are betting, equates to more weekend demand."

Brookfield Properties' Chris Pine said sales at the firm's Tysons Galleria shopping mall this summer have surpassed 2019 levels. Pine led the firm's transformation of the mall's former Macy's box into a multi-tenant retail space that has been fully leased to 10 new tenants, including a movie theater, bowling alley, three home furniture and decor stores, and a restaurant. 

He said the strength of the mall's sales and its leasing activity reflect the growth of Tysons as a mixed-use, urban destination. 

"You can't speak to the success of Tysons Galleria without the success of Tysons as a city," Pine said.