Volkswagen is shifting its U.S. headquarters from Herndon to Reston to occupy a new high-rise development.

Boston Properties announced Tuesday it signed a 20-year, 196K SF lease with Volkswagen Group of America for the next phase of Reston Town Center.

The project's 1.1M SF next phase, previously known as Reston Gateway, is now 85% leased. It is currently under construction and expected to deliver in Q4 2022, according to a Boston Properties spokesperson.

Boston Properties signed Fannie Mae in 2018 to anchor the project with an 850K SF lease. The mortgage financier has since given back a portion of that space and is planning to occupy 761K SF, the spokesperson said.

The deal continues the developer's momentum at Reston Town Center this year. In May, Microsoft signed a 400K SF lease at the development's Two Freedom Drive building. The tech giant's lease represented an expansion that would create 1,500 new jobs in one of the region's largest office leases this year.

The Volkswagen deal is a relocation, with the company moving less than 3 miles to the east on the Dulles Toll Road. In 2008, it moved into a 185K space at the Woodland Park office park in Herndon.

That property, at 2200 Ferdinand Porsche Drive, is owned by German real estate powerhouse Union Investment Real Estate, which bought it from Tishman Speyer for $100M shortly after Volkswagen signed a 15-year lease.

JLL's Greg Lubar and Steve Spartin represented Volkswagen in the Reston Town Center deal.

The company's U.S. headquarters houses the operations of brands such as Audi, Bentley, Bugatti, Lamborghini and Volkswagen. It also has a manufacturing plant in Chattanooga, Tennessee.

“A company focused on the future of mobility needs a future-proof workspace to match those ambitions,” Volkswagen Group of America CEO Scott Keogh said in a release. “This space is designed from the start to be efficient, collaborative and bring our team under one roof so we can keep and attract top talent.”

Fairfax County's office market slowed down last quarter after a strong Q2 highlighted by the Microsoft deal. The Reston and Herndon submarkets in Q3 experienced negative absorption of 47K SF and 26K SF, respectively, according to JLL.

While Volkswagen's relocation within the county does not add the same level of positive absorption as the Microsoft deal, Fairfax County Economic Development Authority CEO Victor Hoskins said it affirms the county's place as a corporate destination.

"This speaks volumes about our value as a headquarters location and the ability to find and keep high-caliber talent, and joins announcements by Microsoft, Google and Facebook as important indicators of the strength of this business community, especially in a difficult period economically,” Hoskins said in a release.