Even with the Loudoun County Board of Supervisors agreeing to cover the county’s $270 million share of the construction of the second phase of Metro’s Silver Line to Dulles International Airport, a large chunk of the costs will still be borne by commercial-land owners and developers through a new tax district.
And many are not complaining. Supporters of the project expect the new Metrorail stations to boost development in the surrounding area, and an analysis of area office rental rates bears that out. Office rents in suburban Washington buildings located within a quarter-mile of commuter rail stations achieve an average of slightly more than $14 a square foot in rent premium.
While the majority of new Silver Line Metrorail stations will open in Fairfax County, one could argue that a greater impact may be felt in Loudoun County, where the amount of proposed developments far outnumber those in closer-in counties with more established markets. Compared to other major jurisdictions in the Washington market, Loudoun has nearly double the amount of proposed commercial real estate projects.
The total square footage of all the new commercial projects proposed in each county typically averages between 15 percent and 20 percent of the total county’s existing commercial property base. For Loudoun County, that percentage soars to a staggering 38 percent of its total existing inventory.
If neighboring Fairfax County serves as an example, the opening of the first three Metrorail stations in Loudoun County will be a catalyst for large-scale development. In a flurry of Metro-related developments, Lerner Enterprises broke ground on an 18-story office building on a site which has an additional 2.1 million square feet of development potential. Macerich recently began construction on a $500 million mixed-use development planned for 1.4 million square feet, and Capital One recently announced plans for an additional 5 million square feet of proposed development near its Tysons Corner headquarters.
Developers and investors are banking on similar growth around Loudoun County’s new rail stations for years to come.
D.J. O’Brien is a research manager with CoStar Group in Washington.