Is Transit-Oriented Development DC's New Black?

WASHINGTON, DC-Another day, another transit-oriented transaction in the DC area. This time it was TIAA-CREF's sale of the Air Rights Center in Bethesda, MD, to MRP Realty and Rockpoint Group, which announced the purchase of the three-building complex and development site on Friday. The 688,717-square foot office buildings are 90% leased; the development site is at 7300 Pearl St. and will comprise 150,000 square feet of office space. Its site plan is already approved.

This transaction follows other transit-oriented deals in recent days. A joint venture between MRP Realty and AEW Capital Management announced plans to develop a mixed-use, transit-oriented property located across from the Huntington Metro Station in Alexandria, VA. In Herndon, VA, Corporate Oaks II, a 78,576-square foot office building traded for $17.2 million. It is 100% leased and located within walking distance of the future Herndon-Monroe metro station. And let's not forget the ongoing activity in Tysons Corner, illustrated by such deals as Intelsat's 188,000-square foot lease at Tysons Tower.

It is not, of course, as though DC has suddenly discovered the lures of transit-oriented development—work-live-play has been a watchword for years. What is new, though, is that now developers appear to be prioritizing transit-oriented projects—especially as the demographics fall into place. A recent Jones Lang LaSalle report provides some insight into why: transit oriented development is woefully under represented in the Washington DC area. Just 0.9% of the land in the entire Washington region, JLL says, is currently devoted to such transit-oriented places, meanwhile these areas house 34% of the region's jobs.

In addition, JLL notes that the success of mixed-use development is heavily contingent on demographics—namely young, educated adults. During the Great Recession many in this group were not in a position to invest in their own apartments or homes. That, however, is changing – hence the race to development multifamily projects, and, now, transit-oriented projects.