It was big time. It was sophistication. It was 1976 and Bloomingdale's had just opened its first outpost beyond metropolitan New York in, of all places, Fairfax County, Virginia.
Bloomingdale's arrival at a Colonial-era crossroads where cows once grazed ushered in a new era of possibilities, and guests at Tysons Corner Center celebrated the event by dancing up a storm at the gala Bloomie's preview.
This is a tale of the financial and political struggles that led first to Bloomie's -- that pivotal point in Tysons' history -- and now to another turning point, Tysons II. It is a tale of competing visions, changing economic markets and of the perils of boom-town growth as Fairfax County reached for economic success.
Playing major roles are some of the nation's biggest developers -- James W. Rouse, Mortimer Zuckerman and Theodore N. Lerner -- lured by the wooded tract where Tysons II, a huge office, retail and hotel complex, is going to complete the vision. The official opening of the R.H. Macy & Co. store Thursday signals the beginning of TYSONS SQUARED Second of Two Articles Tysons II; the rest of the Galleria -- the Tysons II shopping center -- is scheduled to open Oct. 6.
The tale includes the disintegration of a once successful partnership including Lerner, Homer Gudelsky and H. Max Ammerman, the developers of the original Tysons Corner Center, which they sold in 1985. Their feud over what to do with the vast neighboring tract on the other side of Chain Bridge Road (Rte. 123) led to two dramatic courthouse showdowns and resulted in the birth of the 117-acre Tysons II.
When Tysons II is completed -- the construction schedule is 10 to 15 years long -- it is envisioned to house a showcase of department stores, 10 office high rises and two hotels.
The Tysons area will be home for eight major department stores and 365 smaller specialty stores, more big-name retailers in one spot than all but two other suburban areas in the nation.
The importance of the 1976 Bloomingdale's opening was that it signaled the beginning of a new perception about the viability of the Washington region as a fashion market.
"This market was always thought of as dominated by bureaucrats and the military," said E.M. Risse, a principal in Synergy Planning Inc., a development consulting firm in Fairfax. "The PX took a big chunk of the consumers' dollars, so when retailers looked at the data, Washington didn't look like a strong market. The image of Washington was of a bunch of gray bureaucrats not interested in fashion.
"Only in the last 10 years has Washington gotten a new image. All of a sudden it is the only city in the country where the office and residential markets are growing without any blips. That has resulted in a dramatic increase in buying power and a shift in the PX mentality, making Washington an extremely attractive market for retailers."Battle of the Developers
In 1962, Tysons Corner was a dusty crossroads, home to a general store, a fruit stand, a gas station and acres of apple orchards. That was also the year that Tysons became a battleground for a multimillion dollar tug of war between two giant shopping center developers -- Rouse and the Gudelsky-Lerner-Ammerman group.
Both wanted the same thing: to build an enclosed shopping mall on Rte. 123 where it intersects Rte. 7, just off the yet-to-open Capital Beltway. Rouse, then a Baltimore mortgage banker and now a nationally known developer and urban innovator, controlled property on the northwest side of Rte. 123; the Gudelsky-Lerner-Ammerman group was on the northeast, on rural land dotted occasionally with a farmhouse.
Homer Gudelsky's older brother Isadore, Lerner and Ammerman had joined in 1955 to develop Wheaton Plaza in Montgomery County, the largest shopping mall in the Washington suburbs when it opened.
Isadore Gudelsky was the reticent son of immigrant parents who had quietly built a vast construction and real estate empire that would shape much of suburban Washington. Lerner, young, aggressive and already active in residential real estate, was brought into the shopping center field by Gudelsky. Ammerman was a Washington real estate lawyer with more than three decades of experience.
In the spring and summer of 1962, a procession of nationally recognized architects and experts bearing color slides, elaborate charts, a model simulating traffic with tubular fluorescent lights and a brief for either Rouse or the Gudelsky-Lerner-Ammerman group trooped before the Fairfax County Board of Supervisors.
"It was extraordinarily intensive activity," recalled Fairfax County Executive J. Hamilton Lambert, then a low-level planning aide for the county. "What happened was all of a sudden the entrepreneurs . . . came to the recognition that, yes, there are shoppers out there and, yes, they are not always interested in going downtown."
On the site where Tysons II is going up, Rouse's plans included a $18 million enclosed mall patterned after "an old-fashioned Main Street." His mall would be encircled by thousands of potted chrysanthemum plants "like a breath of fresh air," internationally recognized architect Victor Gruen told the supervisors.
"It was too dramatic for the Fairfax County mentality," said 81-year-old Ammerman. "They didn't appreciate it . . . like him showing them up as hicks."
County officials pondered the competing applications for months. They even discussed (to the horror of both developers) whether to rezone both sides of Rte. 123 for a regional shopping center.
Rouse told the board of supervisors that the worst thing the county could do would be to have two competing shopping centers at this intersection. "Two centers aiming at the same thing would defeat the purpose of both and neither would be the success that this intersection deserves. The area could not support both," Rouse said, according to minutes of the hearing.
In the end, the supervisors bypassed the county planning staff and the planning commission that favored the Rouse site. They designated Gudelsky-Lerner-Ammerman as victors, approving the $20 million Tysons Corner Center property on the stated grounds that its plan had better traffic access.
The deciding factor, according to numerous observers, had little to do with cars or roads. The Tysons Corner Center team "was more of a local gang," said T. Eugene Smith, who was serving on the county's board of zoning appeals.
Rouse, who would later develop Columbia in Howard County, Harborplace in Baltimore and several urban renewal projects around the nation, walked away from Tysons empty-handed. Edgar Prichard, one of Rouse's zoning attorneys, said he urged Rouse to appeal the decision in court, "but Rouse said he didn't want to have anything more to do with Fairfax," according to Prichard.
Rouse declined to be interviewed.
The selection of the Gudelsky-Lerner-Ammerman plan "was a major choice point" in the livability of Tysons, said Joe Brown, an urban planner with EDAW Inc., an urban planning and landscape architectural firm in Alexandria.
Rouse's proposal, which included stores, apartments and offices, "definitely would have been worth trying. It would have been better than doing the straight suburban shopping center . . . . It was at a time when you could have initiated housing" because land costs were low enough to make housing economical.
The government actions that brought about Tysons Corner Center came when rezonings were looked upon with suspicion by many Fairfax County residents. Federal and state investigations into zoning practices led to bribery convictions of three county supervisors in the mid-1960s, but none of the cases involved the Tysons shopping mall war.
With the winning shopping center in hand, Gudelsky-Lerner-Ammerman then purchased the most visible portion of the rival Tysons II site from contractor and cattle farmer Marcus Bles, who made millions assembling and selling Tysons property. The partnership snapped up the land to eliminate the threat of competition, according to Ammerman and Jack C. Merriman, Homer Gudelsky's attorney.
Lerner, however, said, "We bought the property just as an additional real estate investment, not expecting it would eventually materialize as five million square feet of leasable commercial real estate."
When they bought it in 1963, the Tysons II site was zoned for high-rise apartments, according to records. While the owners pondered, then fought about its future, the land would sit undeveloped for more than 20 years, a scarred and wooded landscape where dirt bikers roared.
In December 1963, Isadore Gudelsky died of a stroke at age 59. Lerner remembers Isadore Gudelsky as his confidant, a man with whom he shared mutual respect and no quarrels. Lerner said the two of them had intended to develop the Tyson II site together someday.
With Isadore Gudelsky gone, "I inherited new partners," said Lerner of the new partnership, which included Lerner and Ammerman plus Homer Gudelsky, Isadore's brother and heir. That partnership survived for two decades, then underwent a messy and public unraveling that set the stage for Tysons II.
"These problems would never have occurred if Isadore Gudelsky had not prematurely passed away. Isadore Gudelsky would not have permitted the problems," Lerner said. Area's First Modern Mall
At its grand opening in 1968, Tysons Corner Center was heralded as the largest single-level mall in the country and was the first modern-day, covered mall in the Washington area.
Success came quickly. According to a 1988 marketing brochure, Tysons Corner Center surpassed in only two years its five-year goal of selling $140 million in goods annually.
When the mall first opened, its major department stores were all local retailers: The Hecht Co., Woodward & Lothrop and Lansburgh's. Lansburgh's had fought hard to secure its spot, going to court to win rights to build a store at one end of the mall after the developers decided they wanted a Sears, Roebuck & Co. store instead.
But five years after Lansburgh's opened at Tysons, steep losses forced it to close its doors, not only in Fairfax but also in the District. Another court battle ensued as Lansburgh's tried to transfer its Tysons lease to the discount chain E.J. Korvette. Lerner, Ammerman and Gudelsky opposed that, arguing that Lansburgh's could not assign its lease without their consent.
The dispute spilled into the mall. With one anchor closed, shoppers no longer walked the length of the shopping center and many stores near Lansburgh's saw their traffic drop sharply.
Not for long. First, the developers succeeded in blocking Korvette's. Then the big coup: They successfully wooed Bloomingdale's.
"Although our customer was not there then, we felt they could be attracted," said Marvin Traub, Bloomingdale's chairman.
With Bloomingdale's debut in 1976, the makeup of Tysons Corner Center changed dramatically, both in the types of stores found at the mall and in the customers.
"When the center first opened, it used to get real farm boys, almost woodsmen," recalled Toni Ray, one of the founders of Georgetown Leather, which was one of the first tenants of Tysons Corner Center. "All of that is certainly gone. The clientele began to change dramatically after Bloomingdale's. For one thing, Maryland traffic returned," after having left the center in favor of the newer Montgomery Mall, which opened in 1968.
Tysons Corner Center would lose customers again in 1977 when Lerner opened White Flint in Bethesda and included another Bloomingdale's, and again in 1980, when Fair Oaks Mall in Fairfax opened 5 1/2 miles to the southwest and siphoned off customers from western Fairfax and Prince William counties.
But in the late 1970s and early 1980s, the slowdown in growth at Tysons Corner Center also was attributed to the growing discord among the owning partners. "Upkeep of the mall began to fall off and the owners didn't seem to care," said one retailer who declined to be named. Ammerman and Lerner deny those allegations.
In any case, the Tysons Corner Center partners were arguing at the time over what to do with the Tysons II site and the argument became more and more personal, according to all parties.
Homer Gudelsky and his family controlled a 65 percent interest in the Tysons II land and Tysons Corner Center; Lerner, the managing partner, had 25 percent, and Ammerman owned 10 percent. Unanimous approval was required for major development decisions.
The partnership had submitted plans in 1974 for a "sister" regional shopping center across Rte. 123 from the original Tysons mall. But even before zoning approval was won in 1978, Ammerman said, Lerner started pressing his partners for a bigger interest in the Tysons II site. Lerner "refused to proceed unless he had a bigger share," Ammerman said. "We weren't about to let him . . . . We didn't buy it to give it up."
Lerner said in an interview he wanted to buy at least another 25 percent interest in the Tysons II site, saying he needed that amount to make it worth his while.
Gudelsky's lawyer Merriman and Ammerman said that at some point in the late 1970s, the two partners decided they wanted Lerner out of the partnership.
"We didn't want to deal with Lerner," Ammerman said. "He was a hard-nosed guy. If he didn't get his way, he was a terror. Meetings would end up in verbal fights."
Lerner said that Ammerman and Gudelsky "had no intention of developing the {Tysons II} property; they wanted to sell it."
Lerner also said that the Tysons II project was stalled primarily because Homer Gudelsky was embroiled in litigation with relatives who shared his interest in the Tysons II tract.
"Every time I would bring up the suggestion of us going ahead and developing Tysons II, in essence, he said he wasn't going to do anything to help his niece's family obtain additional wealth when they were suing him in court," Lerner said.
The suit, brought by Isadore Gudelsky's widow Bertha, who in turn was replaced as plaintiff after her death by her daughter Arlene Zimmerman, accused Homer Gudelsky and other coexecutors of improperly handling Isadore Gudelsky's estate. After a 12-year legal battle, the plaintiffs dropped their suit in 1984.
Gudelsky declined to be interviewed. Merriman said that while "there could be some truth" in Lerner's claim that Gudelsky family litigation was delaying things, it was Lerner the managing partner who declined to push the Tysons II project.
Lerner said the partnership was harmonious until he learned that Ammerman and Gudelsky wanted to sell the prized Tysons II site to Mortimer B. Zuckerman, the high-profile Boston office developer who later acquired The Atlantic magazine and U.S. News & World Report.
It was 1980 and the strategically placed acreage also had attracted queries from high-powered Dallas developer Trammell Crow and from Gerald D. Hines Interests, the Texas developer who created Houston's huge Galleria, among other projects. Zuckerman agreed to a $25 million purchase price for the Tysons II tract, nearly nine times what the team had paid in 1963.
Lerner objected to the sale. "If you own a piece of property, should you be forced to sell it if you don't want to sell it?" Lerner asked. "I wasn't going to sell a piece of property I owned."
Gudelsky and Ammerman went to court, seeking to dissolve their partnership with Lerner. To settle the matter, a Fairfax judge ordered an auction for the tract, with bidding limited to Zuckerman and Lerner.
In a hot, stuffy room in Fairfax Circuit Court in the summer of 1981, Lerner outbid Zuckerman by agreeing to pay $35 million, then an astonishing price for commercial land in the suburbs. Zuckerman, who before the bidding had joked with reporters, slumped against a corridor wall in defeat.
Lerner put down a $1.5 million deposit, but the deal was never consummated. Lerner argued that the Virginia highway department was demanding that he pay millions in road-building costs, thus significantly lowering the value of the site. The Virginia Supreme Court ultimately ruled in Lerner's favor and ordered his deposit returned.
That meant that Tysons II -- still owned by the unhappy Gudelsky-Lerner-Ammerman partnership -- was once more up for grabs. Again a Fairfax Circuit judge ordered an auction, this time open to anyone.
On March 24, 1983, more than 100 lawyers, real estate agents and civic leaders packed the small courtroom to watch the bidding, which was to begin at $25 million. They left disappointed.
About 30 minutes before the auction, Lerner agreed to pay $28 million to buy Gudelsky's and Ammerman's interests in the Tysons II site.
Homart Development Co., a Chicago-based subsidiary of Sears, Roebuck & Co. then joined Lerner as a 50-50 partner in developing the site, Lerner said later.
John T. (Til) Hazel, Lerner's attorney throughout the battle, quipped, "Poker games never end until the last hand."
Beaming, Lerner announced that he was off to play racquetball.
Behind the scenes, Lerner had been negotiating with Homart for two years. Homart wanted the Tysons II parcel for an office development after looking at more than 80 sites in the Washington area, according to John P. McEvilly, a Coldwell Banker real estate broker who was contacted by Homart.
In April 1981, McEvilly called Lerner. "He didn't know us from Adam," McEvilly recalled. "We were stunned at how interested he was to talk to us. I guess it was our lucky day."
Despite the good beginning, two major events derailed Lerner-Homart negotiations.
First, Sears moved to acquire Coldwell Banker and Dean Witter Reynolds, and while it was completing those acquisitions, all other deals, including Tysons II, were "put in suspended animation," McEvilly said. "We were at the altar railing. We were at the church and Homart pulled away," he said.
Second, Lerner was in court trying to extricate himself from the $35 million deal he had bid at the first auction.
Only after Sears had put its financial services empire together and Lerner had settled his disputes could the Homart-Lerner deal be consummated.
But Lerner, Ammerman and Gudelsky still owned the Tysons Corner Center, which they held for two more years. In 1985, they sold it for $142 million to the Dallas-based Lehndorff Group, a consortium of pension funds and other institutional investors. Combined with the sale of the land, which was owned by another partnership, the $167 million price tag for Tysons Corner Center was to make its acquisition the most expensive shopping-mall purchase at the time.
Lerner says he thinks that Gudelsky's and Ammerman's sale of both the Tysons II tract and Tysons Corner Center was "a major, colossal mistake."
Ammerman, said that "I don't need it; I have my millions." He said that he and Gudelsky had no regrets and that they wished Lerner luck. "We got out of Tysons {Corner Center} to cut all ties to mother Lerner," he said. Struggle Over Zoning
The partnership struggle got the headlines, but it was only part of the battle. The rest was over zoning.
The Tysons II tract was zoned mostly for high-rise apartments when the Gudelsky-Lerner-Ammerman partnership purchased it in 1963. As years passed and the Tysons area grew, residents became concerned that high rises would bring even larger traffic jams to an area straining under the burdens of rapid development and inadequate roads.
In 1974, Gudelsky-Lerner-Ammerman presented county officials and civic groups with a new proposal: a low-rise, 1.3 million-square-foot shopping center with about 300,000 square feet of office space. On June 28, 1978, the progrowth supervisors rezoned the Tysons II property to permit that change.
"People supported that idea and that was what was planned," said Lilla Richards (D-Dranesville), a McLean civic activist who was elected last November to the Fairfax County Board of Supervisors on a slow-growth platform. "The betrayal came later."
After Lerner and Homart acquired the Tysons II property in 1983, they announced plans for quite a different project, one that would include a shopping center, offices and hotels. To do that type of mixed-use development with the tall buildings they wanted, they needed new zoning.
Despite citizen opposition, county officials said they favored new zoning in part because they feared that Lerner and Homart would build nothing but offices if they didn't get it.
"We made it clear that we thought they should come back" for rezoning, said Denton Kent, deputy county executive for planning and development. "They realized they were going to be in a bad position as far as public relations and community involvement if they didn't come back . . . . You just don't plop it down with no community involvement."
The 1984 rezoning was granted after the developers agreed to major road improvements in Tysons and the county agreed to Tysons II -- 4.65 million square feet, including 800,000 square feet of shopping (about half the size of the existing Tysons Corner Center), 10 office towers with 3 million square of office space, and two hotels.
Richards calls it "the worst possible outcome" because of traffic from the office towers. "Nobody is objecting to a shopping center; the objection is making it into what is really an office park."
Concern about the impact of Tysons II comes not only from slow-growth advocates who worry about the traffic of the future, but also from some of the politicians who supported it.
"No one in their right mind would have outlined {Tysons II} this way; it evolved this way," said Fairfax County Supervisor Thomas M. Davis III (R-Mason), who voted for the project in 1984. Davis and other current and former county officials said they supported the 1984 rezoning because the property already was slated for intensive development and because they wanted guarantees for some of the developer-financed road improvements that now are taking place around Tysons.
But some also said privately that the lure of classy stores such as Saks Fifth Avenue and millions in tax revenue tempered the degree to which the county was willing to play hardball in both the 1978 and the 1984 rezonings.
Richards and other slow-growth advocates assert that Tysons II's impact could have been limited by restricting access to the site, by lowering the 10 office towers that will soar between 14 and 17 stories high, and by preventing the developers from reducing the parking spaces from the numbers usually required. In Richards' view, the supervisors "increased the density tenfold and they cut back on the road improvements."
Lost from the initial plan was a freeway style interchange at the intersection of Rte. 123 and International Drive, one of the busiest intersections in Tysons. According to state and county officials, the interchange became too costly, too impractical and would not work as well as the current scheme for roads.
"Tysons II represents the perfect example of "the overenthusiasm of Fairfax County at the time for development," said Audrey Moore, the new chairman of the board of supervisors whose recent election signaled the beginning of a new, slower growth era.
"There was that attitude, 'If it's brick, it's beautiful,' " said Moore, who cast the lone dissenting vote against Tysons II in 1984 because of traffic concerns.
Tysons II sits atop an abandoned quarry and when it is completed there will a great deal of brick. The beauty issue remains open. The project is "in the right place at the right time," said Hal Boles, a commercial real estate broker. "These things happen. If you start all over again, it might not happen quite that way."
-------------TYSONS II DEVELOPMENT------------
1962
Battle begins over development of Tysons Corner area. Combatants: developers James W. Rouse vs. team of Theodore N. Lerner-Isadore Gudelsky-H. Max Ammerman.
1963
Isadore Gudelsky dies, and brother Homer Gudelsky steps in.
Lerner-Gudelsky-Ammerman team buys tract that eventually will become Tysons II.
1968
Tysons Corner Center opens. Later in the year, Montgomery Mall opens across the Potomac River in Bethesda.
1970 Tysons Corner Center reaches five-year goal of selling $140 million in goods annually.
1973 Lansburgh's Department Store closes.
1976 Bloomingdale's opens at Tysons Corner Center.
1977
White Flint Mall opens in Bethesda.
1978
Commercial use zoning approval won for eventual site of Tysons II.
1980
Fair Oaks Regional Mall opens in central Fairfax County.
Mortimer Zuckerman offers $25 million for Tysons II tract.
1981
Lerner outbids Zuckerman, offering $35 million, then backs out months later.
1983
Lerner buys out partners for $28 million.
1984
Tysons II site rezoned for planned development commercial, mixed-use project.
1985
Lerner, Ammerman and Gudelsky sell Tysons Corner Center and land to Dallas-based Lehndorff Group for $167 million.
1988
Tysons II opens; artist's rendering below.