With Store Closures, Mall Redevelopments, Tysons Retail Enters A New Generation
Tysons has long been one of the mid-Atlantic's largest retail hubs, with two major malls and a series of strip centers drawing shoppers from around the region.
Now as the retail industry around the world is adapting to disruptions from e-commerce to the coronavirus pandemic, the face of the retail market in Tysons is changing. A series of new moves in the market, from longtime store closures to first-time openings to mall redevelopments, highlight how the Northern Virginia edge city is entering a new generation of its retail life cycle.
Two large stores that have operated for over a decade are closing in the coming months. L.L. Bean next week plans to close its 76K SF space at the Tysons Corner Center Mall, a store that marked its first expansion out of Maine when it opened in 2000. Next month, Bed Bath & Beyond plans to close its 56K SF store at 2051 Chain Bridge Road, a standalone retail location that opened in 2010. The shuttering is part of a wave of more than 35 closures for the home improvement retailer.
While some older, merchandise-oriented stores may be closing, growing concepts from fitness centers to coffee shops that can't be as easily disrupted by Amazon are opening new locations in Tysons. European fitness center chain PureGym opened its first U.S. gym late last month in a 15K SF space on Leesburg Pike. In October, Bluestone Lane opened its first Virginia café at The Boro, a transit-oriented mixed-use project that represents the future of where Tysons retail is heading.
As of May 2021, nearly 70% of Tysons' retail space sat within a quarter-mile of a Metro station, according to Tysons Partnership's 2021 Economic Report. The report said that retail spending in Tysons totals $3.5B annually, and 65% of its visitors come from outside of Tysons, showing its position as a regional destination.
Tysons Corner Center, the region's largest mall that has operated since 1968, has been moving in a mixed-use direction since the Silver Line brought a Metro station to its doorstep. The property welcomed a 22-story office building, an apartment building and a hotel in 2015, a year after the Metro station opened.
Now the mall's owner, Macerich, is moving forward with its second phase of mixed-use development on the site where Lord & Taylor closed in January 2020. Macerich and its partner, Alaska Permanent Fund Corp., acquired the department store parcel and plan to demolish it to make way for new high-rise development that will front the mall's main entrance plaza.
"The Lord & Taylor closing has been pivotal in all this, and that happened to occur just before the pandemic started," Macerich Vice President of Development Hillary Zahm told Bisnow. "It gives us the opportunity to reinvent that western side of the plaza in a way that we really couldn’t before."
The owner last month filed plans with Fairfax County that call for a shuffling of the overall density that was approved on the site in 2007, shifting it to focus the next phase on the Lord & Taylor property. The plans for the next phase come with two options: a 540K SF office building with 50K SF of ground-floor retail or a mixed-use building with 304K SF of office, 279 residential units and 50K SF of retail.
Zahm said the team can only move one option through final approvals, and it is doing so with the first path that includes more office space. This will allow the developer to break ground sooner if it lands a large office pre-lease, and if it doesn't generate enough office demand for that option, it can pivot to the mixed-use option.
She said the ownership team began planning to turn Tysons Corner Center into a mixed-use complex back when the Metro extension was announced and Fairfax County in 2010 passed a Comprehensive Plan for Tysons that envisioned dense, mixed-use development around the stations.
"With the arrival of Metro, we knew it made sense to transform Tysons from being the region’s dominant shopping center into a mixed-use, transit-oriented project," Zahm said. "So each of these steps is getting us toward that conclusion."
Zahm said she couldn't comment on the circumstances that led to L.L. Bean closing its 76K SF space at Tysons Corner Center, but she said the team is already in talks with prospective tenants to backfill the space.
The area's other major mall, Tysons Galleria, sits on the opposite side of the Metro station. It completed a transformation of a vacant department store last year. Brookfield renovated the former Macy's space and fully leased it to 10 new tenants, including experiential concept Bowlero and upscale movie theater chain CMX CinéBistro.
"There are some brands that have gone past their useful life and have been replaced with some more experiential uses, such as Bowlero," said KLNB principal Jake Levin, a retail broker who represents tenants and landlords in Tysons.
As the two malls that have defined Tysons' retail market for decades are transforming vacant department store sites, new mixed-use developments are also rising around Metro stations that are drawing heavy interest from retailers.
H&R Retail principal David Ward, who works on The Boro's leasing team, said the development has been successful in luring retailers that historically would have gone into one of Tysons' malls.
"A lot of mall operators are opting to go to more of an outdoor scheme," Ward said. "So a project like The Boro ... they’ve got the big anchors you want to draw customers into the project, and then it’s a really inviting environment with a park and outdoor seating for the restaurants. It has it all, and retailers do want that these days."
While the pandemic has benefited the type of outdoor mixed-use retail that exists at The Boro, it has taken a toll on the movie theater industry, and Ward said the project's ShowPlace Icon hasn't been immune.
"One of the things that turned out to be a bigger worry than when we started is the movie theater business," Ward said. "We’ve got Showplace, probably the nicest movie theater in Washington, and unfortunately their opening was in March 2020. They’ve bounced back, but it’s a gamble as to whether theaters are ever going to perform as well as they did pre-pandemic."
The restaurant industry in Tysons has seen strong improvement from its pandemic lows, Ward said, and The Boro will soon welcome three new operators: Circa, El Bebe and Caliburger. He said they are all on track to open by June, though that represents a delay of at least three months that he attributed to supply chain issues.
He said restaurants in Tysons today are better positioned as a part of larger mixed-use environments than in the ground floor of standalone office buildings, a model that has comprised a portion of Tysons' dining scene in the past.
"Tysons has traditionally been an odd market for restaurants because they’ve been randomly placed at the bottom of various office buildings in a suburban scheme, as opposed to part of a mixed-use project," Ward said. "If you go to dinner at a place like The Boro, you have multiple options."
Levin said that the office-heavy nature of Tysons has created concerns among some prospective restaurant operators that its pre-pandemic level of traffic won't return.
"It’s just unfortunately the reality of Covid is that the office buildings here aren’t as occupied as they were in 2019," Levin said. "It doesn’t feel as busy as it did two years ago when you’re on the street."
Despite this change, he said restaurants have continued to open in Tysons, and he has used these examples to reassure food and beverage tenants.
"We were looking for a full-service restaurant in Tysons, and they were asking some questions about, 'Are other restaurants looking at Tysons? Is it a thing of the past?'" Levin said of a client, who he declined to disclose.
He said KLNB shared with the client a list of nearly 15 new restaurants that opened in Tysons last year or were preparing to open this year.
"That really gave a lot of confidence to our client who wanted to make sure they weren’t the last ones to the dance," Levin said.
Levin said that demand from fitness retailers and fast-casual restaurants remained strong throughout the pandemic, but full-service restaurant operators were slower to resume activity.
"Full-service is starting to think harder about Tysons than they were in 2020," Levin said. "There’s more optimism in Tysons today than there was a year ago."
As Levin looks ahead to the future of Tysons' retail landscape, he said the fate of the building where the Bed Bath & Beyond is closing could be a key indicator of where the market is heading. The 56K SF space sits in a standalone building with surface parking along Route 123 that could be a candidate for redevelopment.
Levin said he is working with prospective tenants that have looked at the space, and the owner told him it is considering redeveloping the property in the future, but could instead backfill the space if the right deal comes along. The building's owner, Florida-based Benderson Development, didn't respond to a request for comment.
"If they were extremely happy with a credit tenant who re-leased the space, they might be harder pressed to push for a redevelopment," Levin said. "But if they push for a redevelopment sooner, then it’s harder for them to attract credit tenant interest. That’ll be a great case study for the market to see what’s really out there, because that’s one of the better anchor spaces that’s been available in Tysons in a few years."
While Tysons isn't immune to the disruptions that have impacted the retail industry, Levin said the fundamentals of locations and demographics that have made Tysons into a retail destination will continue to propel it through the next evolution of retail.
"Brands come and they go, but the reasons why Tysons has grown to be a hub of development and traffic [the] last 50 years is why it's going to continue to stay that way," Levin said. "The concepts might change, but the place will still be plenty busy."