TYSONS, VA–Last year Boston Properties began charging for parking at Reston Town Center after it had been free for 26 years. A few months later the REIT was sued by a restaurant in the project on the grounds that the paid parking violated its lease and had damaged its business. The restaurant won a preliminary injunction but by this time Boston Properties had relented — other businesses in Reston Town Center were also angry about the paid parking — and narrowed the window for the fees to weekday afternoons.
Introducing paid parking into a market that had been used to free parking is clearly a fraught issue — and one that has been spreading to the Tysons submarket ever since the arrival of the Silver Line, according to a new white paper by Newmark Knight Frank.
“Charging for parking space is a phenomenon that we have seen in Rosslyn going back to the 1970s, and more recently in Bethesda and Ballston, but Tysons has remained largely unaffected throughout all those years,” NKF Senior Managing Director of National Research Sandy Paul told GlobeSt.com. “But now it's a submarket in transition with the access to metro and the emphasis on walkability.”
The Tysons situation is a bit different than what happened in Reston last year — the Reston Town Center lawsuit was brought by retail tenants whose customers could no longer park for free. Tysons' main constituent affected by the arrival of paid parking are office users — as well as commuters that want to park and ride the metro.
A Gap in Asking Rates
But paid parking is having an effect on the properties themselves in the submarket, as the white paper explains.
It writes:
In looking at Tysons' competitive Class A properties, there is a gap in asking rents between properties that charge tenants for parking versus those that offer free parking. Average asking rents for both subsets of Class A properties were similar through the third quarter of 2013—about one year before service began on Metro's Silver Line. From then through year-end 2017, average asking rents for Tysons properties that charge tenants for
parking rose rapidly, at one point outpacing average rents for properties offering free parking by more than $6.00/SF in the third quarter of 2015. As of the fourth quarter of 2017, the average asking rent gap is $5.95/SF.This gap can be explained by examining the concerned properties' locations—most Class A assets that charge for parking are located within walking distance of a Silver Line station, the Tysons Galleria and Tysons Corner Center, or both. The Class A properties that offer free parking are generally located further from Metro and do not offer a walkable amenity base.
One solution some office owners are turning to as they try to bridge the distance between their location and the metro are ride-hailing services, Paul said. They are a replacement for the shuttle services that buildings tried but found them to be too inconvenient. “These property owners are essentially providing an Uber or Lyft account to office tenants, which has turned out to be cheaper than a shuttle system.”
But ride-hailing services cannot be expected to completely close the gap between asking rents of buildings located within walking distance of the metro and buildings further out. Indeed this gap is expected to widen as the cost of parking in Tysons rises. Right now the current average cost for parking space in Tysons is $99 a month, Research Director Alex Shirokow-Louden told GlobeSt.com. “But there is still growth to be expected in the coming years as the metro is extended out to Dulles Airport and as the submarket develops further.”
“In talking with property owners and brokers we've pegged that trophy assets in Tysons will top out at $130 a month, which will bring it close to Ballston's current average of $125 a month but not quite as high as Rosslyn's average of $165 per month,” Shirokow-Louden said.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
