Commercial office development will be essential to future economic recovery efforts in Tysons and Fairfax County, a new study says.
Released last Thursday (March 4) by the Tysons Partnership, an economic report and market study developed by the consulting firms HR&A Advisors, Toole Design, and Wells & Associates argues that Tysons will need at least 1.9 million square feet of new office space over the next 10 years — despite predictions that the COVID-19 pandemic could permanently alter white-collar workplaces.
“In early 2021, we remain in the midst of the global COVID-19 pandemic, with fallout still being measured,” the economic report says. “However, office investments to date are seeing a strong performance return and will certainly play a key role in County and regional pandemic economic recovery efforts.”
According to the report, Tysons saw a 40 to 75% drop in the use of office space after COVID-19 arrived, following regional and national trends, but prior to the pandemic, vacancy rates had been declining, dipping four percentage points between 2015 and 2019.
In addition, the study projects that office-based employment in Tysons will grow by 7%, or 7,500 jobs, by 2030.
Office work is already integral to Tysons’ economy. Office workers constitute 81% of the total 107,000-person workforce, with the largest sector — the professional services industry — employing two of every five workers in the area. Tysons accounts for 17% of Fairfax County’s office-using jobs.
Tysons outpaced the rest of the county with a 9% job growth between 2015 and 2020, and that faster growth is expected to continue over the next five years, albeit at a slower rate of 5%. Professional services will still be the largest sector, but the biggest area of growth will be in healthcare, which is projected to grow by 24% through 2025.
However, the projected office-using job market growth is far short of what developers would need to fill all of the office space that is in the works for the Tysons area.
If all projects in construction and 50% of all proposed projects in Tysons are completed, that would result in 4.5 million square feet of new office space that could accommodate an estimated 18,200 workers, according to the market study.
In comparison, driven by the opening of the Metro Silver Line in 2014, Tysons added 1.9 million square feet of office space between 2015 and 2020, a 7% growth in inventory that surpassed the rate for both Fairfax County overall (4.7%) and Arlington County (4%).
Though they anticipate future job growth, the economic report and market study acknowledge that “long-term trends remain uncertain” due to the pandemic, which triggered a 5% climb in office vacancy rates and sent the leasing market plummeting from 81 deals in the first quarter of 2019 to just five in the fourth quarter of 2020 so far.
“Tysons Partnership leaders understand much work remains to be done as recovery efforts begin post COVID-19 and in identified areas where continued investment and resources are essential, including housing affordability, mobility, and implementation,” the partnership said in a news release.
Outside the office market, the report says that Tysons has cemented its role as a regional retail hub over the past decade, generating $3.5 billion in annual retail spending, which represents 17% of Fairfax County’s total retail spending.
As reported at the Tysons Partnership’s “State of Tysons” event in December, Tysons’ residential population grew 39% from 2010 to 2018, a rate four times higher than the county’s average growth. Led by mid- and high-rise developments, Tysons has expanded its housing stock by 34% to 13,800 units since 2010, and it is projected to grow by 36% to nearly 19,000 units by 2025.
“The investment on behalf of the public and private sectors in smart, sustainable urbanization is working,” Tysons Partnership president and CEO Sol Glasner said.
The full report and market study can be found on the Tysons Partnership website. The nonprofit plans to use the collected data to develop a dashboard that “will serve as the go-to information hub for a wide range of stakeholders and promote the growth of Tysons,” according to the market study.
Staff photo by Jay Westcott, slide via Tysons Partnership
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