Metro stations attract economic development like flowers attract bees — or so we are told by proponents of transit-oriented development. With this argument, skeptical supervisors in Loudoun County are being urged to commit their constituents to an estimated $713 million in debt over the next 30 years by signing on to Phase 2 of Dulles Rail. The payoff comes when development around the two new Metro stations makes it all worthwhile.
But is this trade worth it? Where is the promised surge of development in Tysons Corner, where four Metro stations are currently under construction? With Phase 1 of the Silver Line scheduled to open next summer, nearly 15 percent of available commercial space there is unoccupied. The vacancy rate in Reston, where another Metro station is going up, is more than 17 percent.
This mirrors the 16.4 percent commercial vacancy rates in Northern Virginia as a whole, up from last year’s 15.3 percent, according to the Washington Business Journal. The recession and the 2005 BRAC relocations left nearly 1.4 million square feet of office space empty in the Washington region, including previously sought-after locations in Crystal City, Rosslyn and Ballston.
The soft commercial real estate market has convinced one developer to abandon a planned office building at Braddock Metro Place and seek approval from Alexandria officials to build a multifamily residential building there instead. If Arlington and Alexandria are having so much trouble attracting paying tenants, it’s folly to believe that Tysons Corner and Reston will have better luck, let alone Loudoun County.
Northern Virginia’s commercial real estate doldrums, which one broker described as “malaise,” has thrown a monkey wrench into previous economic projections. Nobody’s crystal ball predicted that the supposedly recession-proof Washington area would be named the “Biggest Loser,” with the nation’s most sluggish commercial leasing activity of all major metropolitan areas during the first three months of this year.
With almost 40 percent of the local economy tied to the overdrawn federal government and major uncertainty lingering over future spending cuts — particularly at the Pentagon — even Dr. Stephen Fuller, the widely quoted head of the Center for Regional Analysis at George Mason University, was forced to drastically dial back his optimistic growth forecasts.
In 2008, Fuller told the Tysons Corner Task Force that 80,000 new jobs would be created annually in the D.C. region between 2010 and 2030. Three years later, he was warning of 93,600 job losses if Congress did not reach an agreement on spending cuts.
Reston 20/20 economist Terry Maynard pointed out that Fuller’s latest “High” scenario for population and job growth released in February is lower than his previous “Low” scenario from just 18 months ago. He notes that if you take all of the projected commercial growth for Northern Virginia through 2030 under the new best-case scenario, there is enough empty space in Reston to accommodate two-thirds of it. This is what commercial real estate experts say is the “new normal.”
Look around the Beltway. Even with the benefit of a booming local economy, transit-oriented development has largely bypassed the New Carrollton station, built in 1983, which is also a hub for Amtrak and MARC trains. The same is true of underdeveloped Shady Grove on the Red Line. Twenty-nine years after transit arrived, development has still not followed.
And after thousands of area foreclosures, with federal cutbacks and defense job losses looming, those empty offices in Northern Virginia may remain so for some time. Instead of a honey pot from the Silver Line, Loudoun County may just get stung.
Barbara F. Hollingsworth is The Examiner’s local opinion editor.
