New Data Shows How Silver Line Phase 1 Boosted Tysons Office Rents
The Silver Line's long-awaited second phase is slated to open Tuesday, delivering six new stations across Fairfax and Loudoun counties at a time when Metro ridership is rising but still far below pre-pandemic levels.
A new report looking back at the Northern Virginia office market over the last decade shows how the Silver Line boosted commercial real estate around its first string of stations.
After Phase 1 opened with four stations in Tysons, that area's office market experienced an acceleration in rent prices compared to nearby Reston, data shared with Bisnow by CompStak found.
Since 2014, average effective rents were up 26.6% in Tysons and up 17.7% in Reston, according to the data. That rise is a testament to the power of smart development planning around transit, said Cole Perry, real estate insights analyst at CompStak.
"In advance of the construction of the Metro being in Tyson's Corner, Fairfax County really put a lot of money into making Tysons less auto-centric, adding new streets to the street grid, infilling, cutting up parcels, adding plazas," Perry said. "That made it more of a destination."
While the presence of transit can benefit real estate in its immediate vicinity, CompStak's data suggests that not all stations are created equal. Perry said that Wiehle-Reston East, the lone Phase 1 station in Reston, may have brought that submarket's office rents up sooner had it not started out as a station surrounded by parking.
In the last few years, Comstock's Reston Station development has attracted major tenants like Google and Rolls-Royce, suggesting the boost transit-oriented planning provides can be harnessed years after stations first open.
But stations along Silver Line's Phase 2 that already have dense development like Reston Town Center likely have a leg up over the competition.
"Reston Town Center was a fully functioning city center when basically it was completed in 2006. The station there is not going to have a garage," Perry said. "Rent growth in Reston Town Center itself is going to be relatively high now that the station is opening."
The link between transit access and rising office rents may be stronger in some places than others. At the new Potomac Yard Metro station, which is slated to tie into the Yellow Line early next year, Perry said infill development is currently lacking.
"The station is essentially in a parking lot, right there with Target and a lot of the other large, big-box stores," Perry said. "If you were to see rent growth near that station, it would probably be a few years from now."
The CompStak findings back up previous research that has shown transit proximity remains a reliable driver of demand, especially for those properties that are closest to a station entrance.
In October, JLL found that net absorption for properties within one block of a transit station was 0.7% over the last 12 months, while absorption at properties two blocks or more from a transit station was negative, according to data shared with Bisnow.
Across Northern Virginia, roughly three-quarters of commercial development is near a Metro station, Buddy Rizer, executive director of the Loudoun County Department of Economic Development, said at a Bisnow event in October.
Loudoun County is also gearing up for growth, with several parcels of land near the Ashburn Metro station already teed up for development by Comstock, including a new mid-rise office building. That new construction may put to the test whether the trends that supported transit-oriented development in pre-pandemic times can remain strong in an era of changing office usage patterns.
"Reston is a market to watch," said Alie Baumann, director of real estate intelligence at CompStak. "Will it follow that speed, will it accelerate faster, or now in this new pre-pandemic environment, will it remain the same? I think that's the most interesting thing."