As Tysons' Pipeline Fills, Developers Expect Distinct Submarkets To Emerge
Prospective apartment renters and office tenants have traditionally viewed Tysons as a single submarket, centered around the Tysons Galleria and Tysons Corner Center malls. But developers who are building major projects near the Greensboro and McLean Silver Line stations say the area will soon divide into distinct submarkets.
"You go back to 'how did Tysons get built originally?' It was the first mall and then the second mall, it has sort of been mall-centric," Meridian Group president David Cheek said. "Now you've got the malls and you have the Greensboro Drive hill and there is a new emerging submarket where LCOR is in McLean near the Capital One headquarters and Wegmans."
Meridian is becoming the dominant player in the Greensboro Metro area. The developer, along with Kettler, is building the 1.7M SF Phase 1 of The Boro, which will deliver around the end of 2018 and include 677 residential units and 250k SF of retail featuring a flagship 70k SF Whole Foods and a 15-screen Showplace Icon movie theater. At full build-out, The Boro will have 1,500 units, 1.3M SF of office and 400k SF of retail.
After signing the first pre-lease last summer for the development's 437k SF Boro Tower office building, with a 60k SF lease from Tegna, Cheek said they will soon be able to announce a deal with a law firm for a similarly sized lease that will bring the building to about 25% leased.
Meridian last week acquired the four-building, 764k SF Tysons Metro Center office park from Beacon Capital Partners; it sits next to The Boro site and the three-building, 640k SF Greensboro station Meridian owns. Meridian is preparing to rebrand Tysons Metro Center to something related to The Boro and better integrate the properties. Cheek said he expects the area to evolve much like Reston Town Center, with activity focused around a four-block core urban center.
"We see it as a logical next level for us to put it all together and create more connectivity," Cheek said. "We’re working with a landscape architect to make sure all the buildings have the best possible connectivity within the urban center."
Meridian is not the only developer building next to the Greensboro station. Foulger Pratt is planning its 350k SF office component of Tysons Central. At full build-out, the project will also have 1,100 residential units, 200 hotel rooms and 135k SF of retail.
The developer is still looking for a tenant before breaking ground, but managing principal Bryant Foulger said he has not ruled out building on spec.
"We, like others, are out there looking for a lead tenant," Foulger said. "We're still in conversations about what it would take for us to break ground. It may be that we break ground speculatively, it depends where the market is and where the momentum is."
Foulger said he is encouraged by how bullish Meridian is on the Greensboro area and he said his project, which sits just south of The Boro, will benefit from the location.
"We’re big fans of The Boro because for us it provides a lot of amenities that we can’t provide on our site, movie theaters, restaurants and the Whole Foods," Foulger said. "It really does a lot to create the overall atmosphere we want to be a part of in Tysons, and it gives you a wonderful picture of what the Tysons of the future will be."
Two Metro stops east of the Greensboro station, on the other side of the two malls that sparked Tysons resurgence, another distinct neighborhood is beginning to emerge around the McLean station.
LCOR is working on the first phase of its seven-phase Anderson Park develoment that will replace a 1960s-era two-story garden apartment community. It demolished 120 of the 577 apartments, while the remainder continue to generate income, to build the first apartment building. The Kingston, as the first phase is called, will deliver in September with 319 units. At full build-out, the project will have up to 2,560 units and 50k SF of retail.
The project sits a quarter-mile southeast of the McLean Metro station next to an existing Safeway and across the street from where Capital One is building its 26-acre corporate campus anchored by a Wegmans.
LCOR executive vice president Bill Hard said the Tysons market currently has an undersupply of residential, and he believes pent-up demand will help leasing at the first phase. He has no timeline for the additional phases and said he is keeping an eye on The Boro and other residential development around Tysons before breaking ground on another apartment building.
While he sees these other developments as direct competitors now, he expects the McLean and Greensboro Metro areas will be viewed as their own neighborhoods once all of the projects deliver.
"It’s likely that the Tysons market eventually will kind of start to subdivide itself into neighborhoods," Hard said. "But at this relatively early stage, the renters are going to look at all four stops."
Cheek, Foulger and Hard will all be on hand to discuss the future of Tysons at Bisnow's Tysons 2017 Update on March 9.