National Landing Leaders Look To Keep Restaurants Alive As Amazon Builds Out HQ2

The influx of Amazon workers is expected to generate strong demand for retail in National Landing, but today, as the HQ2 development is still in its early stages, local leaders are working to make sure existing businesses can survive until it arrives.

The rebranded National Landing area, including Crystal City, Pentagon City and part of Potomac Yard, has not been immune from the spate of retail closures that the coronavirus pandemic has caused throughout the region and the country this year.

Last week, Bed Bath & Beyond included its Pentagon Row location on a list of 63 locations that will close by the end of the year. In June, Bar Louie closed its Crystal City location after the company filed for bankruptcy. Last month, Mediterranean restaurant Aabee Express closed its location at Pentagon Row. Sports bar Champps also closed its Pentagon Row location in late March, citing the coronavirus as the nail in the coffin.

Leaders from National Landing BID, Arlington Economic Development, JBG Smith and Clark Construction discussed the need to support retail businesses and the latest on the Amazon HQ2 development Wednesday on Bisnow's Future of National Landing webinar.

JBG Smith, the dominant landlord in National Landing, has worked with retail tenants experiencing financial hardship on a case-by-case basis, Chief Development Officer Kai Reynolds said. He said it has also encouraged them to participate in government relief programs and set up outdoor dining. While patio service has helped keep business going during the pandemic, the approaching cold weather months will make that more difficult.

“Going forward, how you winterize these operations and adapt technology to do greater takeout business?" Reynolds said. "And assuming the pandemic continues on through the winter, that’s going to be the challenge: how to winterize these operations and keep these great restaurants and other retailers open."

National Landing BID President Tracy Sayegh Gabriel said the BID was able to support 75 businesses in the area through a grant program, and it has helped with setting up outdoor seating areas. She said it is also focusing on how to keep outdoor dining viable during the winter.

"Now we’re thinking about how do we winterize and weatherize these outdoor spaces because we know outdoor spaces reign supreme and are essential to business operations," Gabriel said. "We’re continuing to figure out how to learn from best practices in other districts and being there to support local businesses."

While it has experienced closures, Gabriel noted that National Landing is also welcoming some new retailers. Restaurants Peruvian Brothers and The Freshman have both opened in Crystal City since April.

"It's not all bleak," Gabriel said. "We've had some great examples of people being bullish about the neighborhood and opportunities here."

Arlington Economic Development Director Telly Tucker, in recorded remarks at the start of the webinar, expressed confidence in the ability of the area's businesses to weather the storm.

"We have always been and always will be a resilient community, and it's going to take a lot more than the pandemic to bring us down," Tucker said. "We may have to change course, but Arlington's business community is up for the challenge."

The pandemic has not stopped development from moving forward on Amazon HQ2 and other projects in the neighborhood. 

The first phase of new Amazon HQ2 development, a pair of office towers on the Metropolitan Park site, began construction in January. The construction team is now 75% done with the excavation work and has put up one of five tower cranes for the project, said Lee DeLong, the division president of HQ2's general contractor, Clark Construction.

Delong said Clark has moved some off-site work for Phase 1 onto the Pen Place site, where future phases are planned, in order to reduce the amount of construction traffic and congestion around the project. 

"We've talked about the importance of creating a vibrant area with walkability, so anything that we can do to reduce the impact on the area is very important to us," DeLong said. 

Amazon acquired the Residence Inn property on the same block as the Pen Place development in a $148.5M deal posted Sept. 17 to Arlington County property records and first reported by the Washington Business Journal. An Amazon spokesperson confirmed the deal to Bisnow and said it purchased the property as part of its Pen Place development plan. 

The e-commerce giant plans to create at least 25,000 jobs and has already moved at least 1,000 people into space it is leasing from JBG Smith. 

Virginia Tech is moving forward with the development of its new campus in the Potomac Yard portion of National Landing, also with JBG Smith as a partner.

Reynolds said the university campus is another major draw for office tenants to come to the area, which the developer is positioning as a technology hub. It announced Monday it paid $25M for licenses that will pave the way for a 5G network in National Landing. 

"Having the anchor of Amazon to the north and Virginia Tech to the south, we start to emulate the beginnings of what an innovation district looks like," Reynolds said. "Having a private sector and university anchor can really be instrumental in driving demand."

Despite the positive long-term fundamentals, Reynolds said signing leases with new tenants has been challenging during the pandemic, which he said could keep the office market slow for the near future. 

“In the very near term, there are serious headwinds against office leasing because people are working at home right now and are focused on health and education," Reynolds said. 

Gabriel said the pandemic could create long-term shifts in the office market, but she thinks the concentration of technology companies will benefit National Landing. 

"Certainly the shape of our offices will change in how they function, but I think there still will be a premium from our portion of market, in the tech and innovation space where that in-person relationship and creativity is going to be essential," Gabriel said. "So I'm hopeful on that front.”

New residential developments are also moving forward in the neighborhood around Amazon HQ2. JBG Smith alone has the ability to build more than 4,000 units on its properties in the neighborhood, Reynolds said.

"The importance of that is not just about making it a vibrant community by adding a mix of uses, but since the area generally lacks a lot of new housing stock because much of it was built in the '70s and '80s, by building this new stock and having modern housing choices and options, that will alleviate the pressure on the older stock and create a more diverse community," Reynolds said. 

The National Landing neighborhood has about 6,000 units in the pipeline from multiple developers, Gabriel said.

"One of the exciting components of seeing all the residential growth ... is that because we planned well for the area, we also know that we'll have commensurate investments in parks and transportation, which will really yield what we hope is an enhanced quality of life, livability and with the diversity of units, a more inclusive environment," Gabriel said.