Legacy Leesburg Market Assessment

EXECUTIVE SUMMARY

LEESBURG TOWN PLAN MARKET ASSESSMENT

INTRODUCTION This Market Assessment was conducted to inform Leesburg’s update of its Town Plan. It quantifies demand for housing, retail, office, light industrial and hotel from 2020 to 2040. This Market Assessment has relied on forecasts prepared by the Metropolitan Washington Council of Governments (Round 9.1) and the Market Analysis for Envision Loudoun, Loudoun County’s new comprehensive plan.

SUMMARY OF CONCLUSIONS Table 1

Land Use Forecasts Leesburg Planning Area 2020 to 2040

MWCOG Round 9.1 Based Market-Based Residential Dwelling Units Single Family Detached 1,340 2,640 Single Family Attached 2,130 4,620 Multi-Family 1,690 2,690 Total 5,160 9,950

Sq Ft Employment Sq Ft Employment Office /1 957,300 4,034 1,022,400 4,368 Light Industrial Flex and Data Center /2 1,178,900 1,725 2,087,800 2,438 Hotel 486 Rooms 292 440 Rooms 264 Retail /3 768,900 2,043 1,035,000 2,809

1. The Market-Based forecast was modified upwards due to the Microsoft land purchase at Compass Creek.

2. The Market-Based forecast assumes that the Leesburg Planning Area captures 85% of Town and Rural Policy Area's light industrial and data center potential. 3. The Market-Based scenario was modified to take into consideration market leakage and same store productivity growth.

Source: W-ZHA

Leesburg is in a very strong market where, for many land uses, demand is outpacing supply. Leesburg’s planning challenge is not lack of market, but, instead, harnessing growth in a manner that enhances resident quality of life and creates a strong and sustainable local economy.

- 2 -

REGIONAL INFLUENCES ON LOUDOUN COUNTY AND LEESBURG

Washington Metropolitan Area Economy and Growth The Washington Metro Area is a dynamic region with one of the strongest economies in the nation. The Metropolitan Area ranks 5th among all United States’ Metros in terms of Gross Metropolitan Product. While the Federal government still plays an important role in the region’s growth, the Washington Metro economy continues to diversify. CBRE Research ranks Washington, DC market area #3 in terms of tech talent behind the San Francisco Bay Area and New York markets.1

The Dulles Technology Corridor The Dulles Technology Corridor is an area along and between the Dulles Toll Road (VA SR 267) and Route 7 (VA SR 7). There is a concentration of defense, telecom and technology firms here as well as Dulles International Airport. Dubbed by Atlantic magazine the “Silicon Valley of the East”, the Dulles Technology Corridor is a major economic development asset.

Dulles Corridor Metrorail – Silver Line Extension Phase II The Washington Metro System’s Silver Line Extension Phase II extends Metro from Reston, VA in Fairfax County to Loudoun County. Scheduled to be completed in 2020, the Extension will include two stations in Loudoun County. Much of Loudoun County’s future growth and development is projected to occur in and around these Metro stations in the eastern part of the county.

Washington Region’s Exurban Growth Trends

Figure 1

Change in Occupied Housing Units Urban, Suburban and Exurban Washington Region 2000 - 2017 250,000

200,000

150,000

100,000 Prince

New Housing Units Units Housing New William

50,000 Loudoun

0 Urban Suburban Exurban

Source: The George Washington University Center for Washington Area Studies, “State of the Capital Region, 2019”, American Community Survey; W-ZHA

1 CBRE Research, “2018 Scoring Tech Talent”. - 3 -

Figure 1 illustrates how the housing market has accommodated regional growth. Since 2000, the Exurban counties have added more housing units than the Urban and Suburban counties combined, with Loudoun County adding more than any other single jurisdiction. Rapid growth has transformed what was once Loudoun County’s rural countryside to new residential subdivisions.

Quality of Life and Sustainability

A 2018 National Citizens Survey revealed that 87 percent of Loudoun County residents rated the County’s quality of life as excellent or good.2 As might be expected with the level of growth experienced in Loudoun County, affordability and mobility are key challenges facing Loudoun County and the Leesburg community.

DEMOGRAPHIC TRENDS AND PROJECTIONS

Fast Growth

Loudoun County’s and Leesburg’s population growth since 2000 has outpaced the Washington Metropolitan Area. Loudoun County’s population more than doubled over the last 17 years. With almost 400,000 people in Loudoun County, it is the 2nd largest Exurban County within the Capital Region.

Families Have Driven Household Growth in Leesburg

Family households have driven growth in Loudoun County and Leesburg. Family households account for over three-quarters of Loudoun County and Leesburg households. Over 40 percent of households in both Loudoun County and Leesburg have children under the age of 18.

Both Loudoun and Leesburg’s average household size exceeds the United State and Metro average. Even with a high average household size, half of the households in Leesburg are 1- and 2-person households.

One Quarter of Leesburg’s Population is Either Hispanic or Asian.

Over 60% of Leesburg’s residents are white and not Hispanic. Approximately 17% of Leesburg’s population is Hispanic and almost 8% is Asian. Whites that are not Hispanic accounted for two-thirds of the population growth since 2010. Leesburg experienced growth in the Hispanic and Asian populations as well.

Leesburg’s Households Are Generally Younger Than National and Metropolitan Averages

As compared to the Nation and the Metro area, Leesburg has a higher concentration of its households in the “full nest” stage of life – 35 to 54 years old. As of 2017, Leesburg had a lower share of its households headed by persons 65 and older as compared to the Nation, the Metro, and Loudoun County. Household age trends indicate that, while young, Leesburg’s household composition has been aging.

2 National Research Center, Inc., “The National Citizens Survey: Loudoun County, Community Livability Report, 2018”. - 4 -

The Leesburg Population Is Well-Educated and High Income

Over half (52%) of Leesburg’s population over 25 years old have a college or professional degree. This number is above the Washington Region where 50% have a bachelor’s degree or above. Leesburg’s median household income ($105,844) is lower than the Loudoun County average ($129,588) and higher than the Washington Metropolitan Area average ($97,149). With relatively large families, Leesburg’s per capita income is below the Metro and county averages.

Household and Employment Forecasts Indicate Continued Growth Over the Next 20 Years Figure 2 Loudoun County Planning Areas

Source: Loudoun County

The Metropolitan Washington Council of Governments (MWCOG) works with local jurisdictions to forecast population, households and employment given market dynamics and existing land use policies. These forecasts are constrained by current land use policy. MWCOG’s latest round of forecasts, Round 9.1, are available for Loudoun County and the Leesburg Planning Area. The Leesburg Planning Area boundaries are depicted in Figure 2.

Population, household and employment forecasts were also developed as part of the County’s Envision Loudoun Master Planning process. Unlike MWCOG’s forecasts, these forecasts were not constrained by land use policy. As such, for purposes of this report these forecasts are called the “Market-Based” forecast.

- 5 -

Figure 3 Loudoun County Policy Areas

Source: Loudoun County

The Market-Based forecast projects housing unit growth for the Suburban, Urban and Transition Policy Areas of Loudoun County and, by process of elimination, the Rural and Town policy areas (see Figure 12). The Market-Based forecast does not project households, housing units or employment growth for specific towns or Town Policy Areas. The housing unit forecasts are indicative of projected household growth. Table 2

New Housing Unit Forecast - Round 9.1 and Market-Based - Medium Scenario Loudoun County, Suburban/Urban/Transition Districts Policy Areas, and Rural/Town Policy Areas 2020, 2030, 2040

Change 2020-2030 2030-2040 2020-2040 # % # % # % MWCOG Round 9.1 Forecast Loudoun County 21,042 9,494 30,536 Transition/Suburb/Urban Districts 14,512 69.0% 5,681 59.8% 20,193 66.1% Rural/Towns 6,530 31.0% 3,813 40.2% 10,343 33.9% Market-Based Forecast Loudoun County 31,830 28,290 60,120 Transition/Suburban/Metro Districts 21,980 69.1% 17,010 60.1% 38,990 64.9% Rural/Towns 9,850 30.9% 11,280 39.9% 21,130 35.1%

Source: MWCOG Round 9.1; Envision Loudoun; W-ZHA

The table above compares the MWCOG Round 9.1 housing unit forecasts to Market-Based forecast’s medium growth scenario. The forecasts are similar in how they allocate growth between the Suburban/Urban/Transition Policy Areas and the Rural/Town Policy Areas of the County. The Market- - 6 -

Based forecast foresees considerable growth (over 20,000 housing units) in the Rural and Town Policy Areas. Leesburg is the likely location for much of this growth. Loudoun County has Become a Professional Employment Center over the Last 18 Years. Figure 4 Jobs by Industry Sector Loudoun County 2000 and 2018 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0%

Share of Jobs of Total Share 2.0% 0.0% Mining Utilities Real Estate Information Retail Trade Government Construction Other Services Manufacturing Mgmt of Comp Admin & Waste… Prof, Sci, & Tech… & Sci, Prof, Wholesale Trade Accomod & Food… For, Fish, Rel. Act. Rel. Fish, For, Arts, Entert, & Rec Education Services Finance & Insurance Transport & Warehsg Health & Soc. Services

2000 2018

Source: Moody’s Analytics; W-ZHA

With approximately 170,900 jobs, Loudoun County has shifted from having an information-, transportation and warehousing-, and government-driven economy in 2000 to a professional, scientific and technical service- and government-driven economy in 2018. The construction and retail industries have been consistently strong in the County due to its rapid household growth.

- 7 -

Over the Next 20 Years Loudoun County is Forecast to Grow by More Jobs Than It Did Over the Last 18 Years. Table 3

Loudoun County Employment Forecasts COG Round 9.1 and Market-Based 2020, 2030, 2040

Change 2020-2030 2030-2040 2020-2040 2018 2020 2030 2040 # % # % # % COG Round 9.1 Forecast Jobs 170,897 195,198 243,375 277,790 48,177 24.7% 34,415 14.1% 82,592 42.3% Market-Based Forecast Jobs Low 170,897 177,300 224,300 265,200 47,000 26.5% 40,900 18.2% 87,900 49.6% Medium 170,897 178,700 232,090 280,900 53,390 29.9% 48,810 21.0% 102,200 57.2% High 170,897 179,180 239,200 298,770 60,020 33.5% 59,570 24.9% 119,590 66.7%

Source: 2018 Employment, Moody's Analytics, economy.com; Loudoun County, "Loudoun County COG 9.1 Forecasts"; Envision Loudoun; W-ZHA

MWCOG and Market-Based employment forecasts differ in terms of County employment. Like households, MWCOG’s growth forecasts are more conservative between 2020 and 2040 as compared to the Market-Based forecast. Under all scenarios, County jobs are projected to grow significantly over the next 20 years.

Noteworthy Investments and Projects in Leesburg Will Likely Impact the Town’s Economic Position in the County.

In 2018, Microsoft bought 332 acres in Leesburg where reportedly it plans to develop office space and data centers. Across the street, ION International Training Center opened in 2019, which is expected to draw visitors from across the globe.

Loudoun United is a 2nd division professional soccer team whose stadium has recently opened in Leesburg. Also planned for Leesburg is a D.C. United (1st division professional soccer team) training center and youth academy. These investments and others will positively impact Leesburg’s economic development potential.

RESIDENTIAL MARKET POTENTIAL

Market Landscape

According to the American Community Survey 2017 5-year estimates, there were approximately 17,812 housing units in the Town of Leesburg in 2017. Over one-quarter of the units in Leesburg were multi- family dwelling units. Less than half of the Town’s residential units are single family detached units. Leesburg’s housing stock is more diverse than the county’s housing supply.

Approximately 30% of the occupied housing units in Leesburg are rentals. According to Trulia.com, a residential database, the median rent for a rental property in Leesburg over the last 12 months was $2,208 per month. This rent level is affordable to households with incomes of $88,000 or more (if no - 8 -

more than 30% of income is spent on housing). The average rent level is above what half of the rental market can afford.

Home prices are high in Leesburg. The average sales price for a home in Leesburg has increased from under $400,000 in 2009 to over $550,000 as of August 2019. New homes sell for an average of approximately $650,000 and older homes, $446,000.

Leesburg’s housing market is strong. In August 2019, the ratio of actual sales price to original listing price was 99.1% in Leesburg. A high sales price to original asking price ratio indicates strong demand with limited supply.

The strength of a market is also demonstrated by the average days a for-sale home stays on the market. The median time on the market before sale for Leesburg as of June 2019 was 14 days. Townhomes in Leesburg stayed on the market for an average of 7 days in June 2019. There is clearly more demand than supply in Loudoun County and Leesburg.

Residential Prospects

Dwelling unit forecasts from MWCOG and the Market-Based forecast were applied to project housing demand in the Leesburg Planning Area over the next 20 years.

Table 4

Conclusions Leesburg Planning Area Housing Demand 2020-2040

Constrained by Units Land use Policy Market Driven Single Family Detached 1,340 - 2,640 Single Family Attached 2,130 - 4,620 Multi-Family 1,690 - 2,690 Total 5,160 - 9,950

Source: MWCOG Round 9.1 Forecast; W-ZHA

Market prospects for residential are very strong. Demographic factors like an increasing number of smaller households and the need for affordable housing results in a market demanding a wider variety of housing types in the Leesburg Planning Area. Over one-quarter of the net new housing units forecast over the next 20 years will be multi-family. Higher density housing product is best located in mixed-use environments where the ability to walk to goods and services is prized.

- 9 -

RETAIL MARKET POTENTIAL Retail Landscape

There are an estimated 3 million square feet of retail, service and eat/drink space in Leesburg’s Historic District and shopping centers. Leesburg is the retail center for western Loudoun County which makes the community market relatively large. For this reason, Leesburg has a relatively high concentration of retail.

The downtown area contains the Historic District (estimated to have approximately 84,000 square feet of retail, service and restaurant space3) and approximately 763,000 square feet of shopping center space. Most of the shopping centers in the downtown were built over 20 years ago. As such, most of downtown’s retail outside of the Historic District is auto oriented. Outside of the downtown are newer, conventional shopping centers that are mostly auto oriented. The one exception is the Village at Leesburg which contains retail, restaurants and services in a mixed-use, walkable environment.

Retail Prospects

Retail employment forecasts were applied to forecast retail demand in the Leesburg Planning Area over the next 20 years.

Table 5

Conclusions Leesburg Planning Area Retail Demand 2020-2040

MWCOG 9.1 Market Driven Retail and Eat/Drink Space 769,000 - 1,035,000

Source: MWCOG Round 9.1 Forecast; W-ZHA

Growth will result in increased demand for retail and restaurant space in the Leesburg Planning Area. Demand for between 769,000 and 1 million square feet of retail space are projected over the next 20 years in the Leesburg Planning Area.

3 A Retail Market Analysis for Downtown Leesburg by Streetsense (January 2016) calculated that the entire Downtown (including the Historic District and excluding Shenandoah Shopping Center and Crescent Place) contained 663,870 square feet. Applying this estimate, the Historic District contains approximately 84,000 square feet of retail and restaurant space.

- 10 -

tenants that benefit from co-tenancy with other specialty retailers. These types of tenants function well in a town center environment, not a big-box-shopping center environment.

Leesburg’s Historic District is quite small and already well-occupied. Opportunities for retail expansion is limited here. The Village at Leesburg and small retail clusters like Crescent Place offer opportunities but they are limited. To realize its market potential, Leesburg needs to expand its retail offerings in pedestrian-oriented, walkable environments.

There may be an opportunity to redevelop under-utilized property in the downtown area into mixed- use, walkable projects with retail, services, entertainment, and restaurant uses on the ground floor with residential and/or office above. Planned properly, redevelopment can serve to expand downtown’s offerings and, in turn, increase its market drawing power.

OFFICE MARKET POTENTIAL Office Market Landscape

There are three multi-tenant submarkets in Loudoun County: Route 28 North, Leesburg and Route 7. The Leesburg submarket contains Leesburg and western region of Loudoun County. With approximately 1.2 million square feet, the Leesburg submarket accounts for 10% of the County’s multi-tenant office supply. Leesburg is the smallest multi-tenant office submarket in Loudoun County. The Route 28 North submarket contains approximately 60% of the County’s multi-tenant office space.

Leesburg’s multi-tenant office market is essentially full with a vacancy rate of 2.3%. Albeit with a smaller supply of multi-tenant office, Leesburg’s vacancy rate is significantly lower than Route 28 North and Route 7. Reportedly, commercial office brokers in Leesburg struggle to fulfill tenant interest because of the dearth of available space.

Leesburg’s average Class A rent is higher than the Route 7 submarket and slightly lower than the Route 28 North submarket. Leesburg’s relatively high average rent is indicative of its appeal and constrained supply.

- 11 -

Office Prospects

Office-inclined job forecasts were applied to forecast office demand in the Leesburg Planning Area over the next 20 years.

Table 6

Office Conclusions Leesburg Planning Area 2020-2040

MWCOG: Land Use Modified - Market Policy Driven Office Square Feet 957,300 - 1,022,400

Source: MWCOG Round 9.1 Forecast; W-ZHA

Employment forecasts will drive demand for approximately 1 million square feet of office in Leesburg. The Leesburg Planning Area’s potential to realize 1 million square foot of office space is largely dependent on two factors: the presence of an expanded, walkable, mixed-use district near the Historic District and lease/own office commitments from medium to large companies like Microsoft.

LIGHT INDUSTRIAL MARKET POTENTIAL

Light Industrial Landscape

The industrial product best suited for the Leesburg Planning Area market is light industrial flex space. As its name implies, flex space is suitable for office, warehouse, and light industrial uses.

According to CBRE’s Marketview report for Northern Virginia there are three industrial submarkets in Loudoun County: Route 28/Dulles North, Leesburg and Outlying Loudoun County. According to the CBRE report, as of the 2nd Quarter of 2019 there were 402,720 square feet of flex space in Leesburg. Flex space in Leesburg is fully leased. - 12 -

Light Industrial Prospects

Industrial job forecasts were applied to forecast flex space demand in the Leesburg Planning Area over the next 20 years.

Table 7

Light Industrial Conclusions Leesburg Planning Area 2020-2040

MWCOG: Land Use Modified - Market Policy Driven Light Industrial Square Feet 1,178,900 - 1,223,000

Source: MWCOG Round 9.1 Forecast; W-ZHA

Prospects for additional light industrial in the Leesburg Planning Area are strong. Light industrial will likely incorporate both flex industrial space and data center space. St. John Properties is currently constructing approximately 160,000 square feet of speculative flex space at the Leesburg Tech Park next to the Leesburg Executive Airport. There is 300,000 square feet of light industrial planned at Compass Creek also by the Leesburg Executive Airport.

HOTEL MARKET POTENTIAL

Hotel Landscape

There are six national-brand hotels in Leesburg containing 571 rooms. Leesburg’s hotel supply contains economy, select service, and suite products. There are no full-service luxury or upscale boutique hotels in Leesburg. All of Leesburg’s hotels are located on the eastern edge of downtown or outside of downtown on Route 7.

According to data provided by Visit Loudoun, Leesburg hotels are performing well. The revenue per available room (RevPAR) for Leesburg hotels was $74.69 in July 2019. Since 2013, Leesburg hotels’ revenue per available room has increased by 36%. This rate of growth was well above the national average over this period, 25%.

According to Visit Loudoun’s 2019 Lodging Study transient business travel, corporate groups, and association travel account for 41.7% of Leesburg’s occupied room nights. Leisure travel, weddings, and sports tournaments account for 45.1% of Leesburg’s occupied room nights.

- 13 -

Hotel Prospects

The Market-Based hotel market methodology was applied to forecast hotel demand in the Leesburg Planning Area over the next 20 years.

Table 8

Hotel Room Conclusions Leesburg Planning Area 2020-2040

Based on MWCOG Employment Market-Based Projections Forecast Hotel Rooms 486 - 440

Source: MWCOG Round 9.1 Forecast; Envision Loudoun; W-ZHA

Given employment forecasts there will be demand for over 400 hotel rooms in the Leesburg Planning Area. At Fort Evans Square there is a 114-room hotel in the site plan approval process now. Compass Creek and Tuscarora Village both have zoning which allows for hotel development.

Interviews with Visit Loudoun and economic development representatives indicated that Leesburg needs a full-service hotel with conference space. This product does not exist in Leesburg. A full-service hotel with conference space would support corporate and community functions.

MARKET ASSESSMENT LEESBURG TOWN PLAN

Prepared For: The Town of Leesburg, VA

Prepared By: W-ZHA, LLC

December, 2019

TABLE OF CONTENTS

INTRODUCTION...... 1

SUMMARY OF CONCLUSIONS ...... 1

REGIONAL INFLUENCES ON LOUDOUN COUNTY AND LEESBURG MARKETS ...... 2

DEMOGRAPHIC AND ECONOMIC TRENDS AND PROJECTIONS ...... 9

RESIDENTIAL MARKET POTENTIAL ...... 25

Housing Supply and Trends...... 25

Housing Tenure and Affordability ...... 27

Rental Market ...... 28

For-Sale Market...... 29

Housing Demand ...... 31

Conclusions ...... 35

RETAIL MARKET POTENTIAL ...... 35

Retail Landscape ...... 35

Market Potential ...... 39

Conclusions ...... 42

OFFICE MARKET POTENTIAL ...... 44

Office Supply and Trends ...... 43

Demand ...... 46

Conclusions ...... 49

LIGHT INDUSTRIAL MARKET POTENTIAL ...... 50

Flex Supply ...... 50

Demand ...... 51

Conclusions ...... 53

HOTEL MARKET POTENTIAL ...... 54

Hotel Existing Conditions and Trends ...... 54

Hotel Demand ...... 55

Conclusions ...... 57

SUMMARY OF CONCLUSIONS

Table 1

Land Use Forecasts Leesburg Planning Area 2020 to 2040

MWCOG Round 9.1 Based Market-Based Residential Dwelling Units Single Family Detached 1,340 2,640 Single Family Attached 2,130 4,620 Multi-Family 1,690 2,690 Total 5,160 9,950

1. The Market-Based forecast was modified upwards due to the Microsoft land purchase at Compass Creek.

Source: W-ZHA

- 2 -

REGIONAL INFLUENCES ON LOUDOUN COUNTY AND LEESBURG MARKETS

Washington Metropolitan Area Economy and Growth

Figure 1

Exurbs, Suburbs, and Urban Counties Washington Metropolitan Area

Source: The George Washington University Center for Washington Area Studies, “State of the Capitol Region: 2019”.

The Washington Metropolitan Area is depicted in Figure 1. The Urban area is in dark blue. Suburban counties are colored in light blue, and Washington Metro Area Exurbs are colored green. Leesburg and Loudoun County are characterized as Washington Metro Area “Exurbs.”

- 3 -

Table 2

Gross Metropolitan Product Top 10 United States Metropolitan Statistical Areas 2017

Rank Metropolitan Area GMP ($M) 1 New York-Newark-Jersey City, NY-NJ-PA $1,717,712 2 Los Angeles-Long Beach-Anaheim, CA $1,043,735 3 Chicago-Naperville-Elgin, IL-IN-WI $679,699 4 Dallas-Fort Worth-Arlington, TX $535,499 5 Washington-Arlington-Alexandria, DC-VA-MD-WV $529,920 6 San Fransisco-Oakland-Hayward, CA $500,701 7 Houston-Woodlands-Sugar Land, TX $490,071 8 Philadelphia-Camden,Wilmington, PA-NJ-DE-MD $444,975 9 Boston-Cambridge-Newton, MA-NH $438,684 10 Atlanta-Sandy Springs-Roswell, GA $385,542

Source: United States Bureau of Economic Analysis; W-ZHA

The Washington Metro Area is a dynamic region with one of the strongest economies in the nation. The Metropolitan Area ranks 5th among all United States’ Metros in terms of Gross Metropolitan Product. While the Federal government still plays an important role in the region’s growth, the Washington Metro economy continues to diversify. CBRE Research ranks Washington, DC market area #3 in terms of tech talent behind the San Francisco Bay Area and New York markets.1

1 CBRE Research, “2018 Scoring Tech Talent”.

- 4 -

Figure 2 Jobs Washington Metropolitan Area

Source: U.S. Census LEHD Origin‐Destination Employment Statistics; W-ZHA

Jobs are distributed throughout the Metropolitan Area with the highest job concentrations in the District of Columbia and its Suburbs (Prince George’s County, Montgomery County, and Fairfax County). Regional job growth draws talent from across the globe to the Washington Metro Area. Approximately 23% of the Metro Area’s population is foreign-born.

The Dulles Technology Corridor

The Dulles Technology Corridor is an area along and between the Dulles Toll Road (VA SR 267) and Route 7 (VA SR 7). There is a concentration of defense, telecom and technology firms here as well as Dulles International Airport. These firms and data centers take advantage of the fiber optic infrastructure located here.

Dubbed by Atlantic magazine the “Silicon Valley of the East”, the Dulles Technology Corridor is a major economic development asset. The agglomeration of tech companies attracts talent globally and puts Northern Virginia on the tech map. The Dulles Corridor is a hub for cloud computing and cyber-

- 5 -

technology because of the region’s concentration of federal agencies and access to skilled labor.2 The Northern Virginia region has the largest and most active data center market in the United States.3

The Dulles Technology Corridor has taken advantage of, and contributes to, Loudoun County’s racial and ethnic diversity, high income, and above average educational attainment. Well-educated and high earning, tech workers are a potential market for Leesburg’s residential, office, retail, entertainment, and hotel markets.

Dulles Corridor Metrorail – Silver Line Extension Phase II The Washington Metro System’s Silver Line Extension Phase II extends Metro from Reston, VA in Fairfax County to Loudoun County. There are 11 new stations planned in Phase II. When completed in 2020, Dulles International Airport will be accessible via Metro from downtown DC. The Extension will also bring transit to the Dulles Technology Corridor.

Figure 3 DC Metro Silver Line Map

Source: Washington Metropolitan Area Transit Authority

There are two stations planned for Loudoun County, the Loudoun Gateway station just north of Dulles Airport and an Ashburn Village station. Metro is expected to unlock significant transit-oriented development potential. Much of Loudoun County’s future growth and development is projected to occur in and around the Metro station areas and in the eastern part of the county.

2 Washington Business Journal, “Big tech is taking off in NoVa”, February 20, 2019. 3 Data Center Frontier, “Special Report: Northern Virginia Data Center Market Extends Leadership Market” 2018.

- 6 -

Washington Region’s Exurban Growth Trends

Figure 4

Change in Occupied Housing Units Urban, Suburban and Exurban Washington Region 2000 - 2017 250,000

200,000

150,000

100,000 Prince

New Housing Units Units Housing New William

50,000 Loudoun

0 Urban Suburban Exurban

Source: The George Washington University Center for Washington Area Studies, “State of the Capital Region, 2019”, American Community Survey; W-ZHA Figure 4 illustrates how the housing market has accommodated regional growth. Since 2000, the Exurban counties have added more housing units than the Urban and Suburban counties combined, with Loudoun County adding more than any other single jurisdiction.

- 7 -

Figure 5 Number of Occupied Housing Units by Year Built Exurban Market, Loudoun County, and Leesburg Before 2000 and Since 2000 100% 90% 31% 80% 39% 53% 70% 60% 50% 40% 69% 30% 61% 47% 20% 10% 0% Total Exurban Market Loudoun, Including Leesburg Leesburg

Before 2000 Since 2000

Source: The George Washington University Center for Washington Area Studies, “State of the Capital Region, 2019”, American Community Survey; W-ZHA

Loudoun County has led the way on housing growth. The number of occupied housing units more than doubled between 2000 and 2017. Loudoun’s population also more than doubled during this period making it one of the fastest growing counties in the nation. Rapid growth has transformed what was once rural countryside to new residential subdivisions.

- 8 -

Figure 6

Housing by Type Loudoun County Before 2000 and Since 2000

Single Family

2 - 4 Units

5 - 19 Units

20 - 49 Units

50+ Units

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Built Before 2000 Built 2000 and After

Source: The George Washington University Center for Washington Area Studies, “State of the Capital Region, 2019”, American Community Survey; W-ZHA

The single-family home (which includes townhouses) has continued to dominate housing construction in Loudoun County. Over 44% of the households in Loudoun County are family households with children at home. At the same time, half of all households in Loudoun County are one- and two-person households.

Quality of Life and Sustainability A 2018 National Citizens Survey revealed that 87 percent of Loudoun County residents rated the county’s quality of life as excellent or good.4 Aspects of the community where resident satisfaction was higher than the national average included:

• K-12 education (87% rated positively) • Overall economic health (85% rated positively) • Shopping opportunities (80% rated positively) • Place to visit (79% rated positively) • Place to work (76% rated positively) • Employment opportunities (66% rated positively)

4 National Research Center, Inc., “The National Citizens Survey: Loudoun County, Community Livability Report, 2018”

- 9 -

Aspects of the community where resident satisfaction was below national benchmarks included:

• Cost of living (18% rated positively) • Travel by public transportation (19% rated positively) • Quality affordable housing (23% rated positively) • Traffic flow (28% rated positively) • Travel by bicycle (36% rated positively) • Ease of walking (47% rated positively) • Overall ease of travel (54% rated positively)

As might be expected with the level of growth experienced in Loudoun County, affordability and mobility are key challenges facing Loudoun County and the Leesburg community.

Regional economic strength, a pro-growth county, and nearby infrastructure investment (airport, fiber optic, and Metrorail service) contribute to a growing local economy. Because of its unique historic core and town status, Leesburg can define how it will leverage growth to enhance residents’ quality of life and achieve economic development.

DEMOGRAPHIC AND ECONOMIC TRENDS AND PROJECTIONS Fast Growth

Population Trends Washington Metro Area, Loudoun County and Leesburg 2000, 2010, 2017

Change 2000-2010 2010-2017 2000-2017 2000 2010 2017 # % # % # % Washington Metro /1 4,837,430 5,636,232 6,090,196 798,802 16.5% 453,964 8.1% 1,252,766 25.9% Loudoun County 169,599 312,311 374,588 142,712 84.1% 62,277 19.9% 204,989 120.9% Leesburg 28,614 42,616 51,015 14,002 48.9% 8,399 19.7% 22,401 78.3%

1. Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area including both Metropolitan Divisions. Source: 2000 and 2010 Census; 2013-2017 American Community Survey 5-Year Estimates; W-ZHA

The American Community Survey estimates that there were over 51,000 Leesburg residents in 2017. The U.S. Census estimates Leesburg’s 2018 population at approximately 53,900. While Leesburg has not

- 10 -

grown as quickly as the county since 2000, Leesburg’s population increased by approximately 80% over this 17-year period. Table 4

Household Trends Washington Metro Area, Loudoun County and Leesburg 2000, 2010, 2017

Change 2000-2010 2010-2017 2000-2017 2000 2010 2017 # % # % # % Washington Metro /1 1,815,193 2,094,033 2,203,717 278,840 15.4% 109,684 5.2% 388,524 21.4% Loudoun County 59,900 104,583 121,299 44,683 74.6% 16,716 16.0% 61,399 102.5% Leesburg 10,282 14,441 17,026 4,159 40.4% 2,585 17.9% 6,744 65.6%

Like population, the number of households in Loudoun County and Leesburg has grown rapidly. Most of the household growth occurred from 2000 to 2010. The number of households in Leesburg increased by two-thirds between 2000 and 2017.

Families Have Driven Household Growth in Leesburg Table 5

Household Types Loudoun County and Leesburg 2000, 2010, 2017

Loudoun County Change 2000 - 2017 Change 2010 - 2017 Households 2000 2010 2017 # % Change % of Chng # % Change % of Chng Family 45,020 75% 80,494 77% 94,277 78% 49,257 109.4% 80.2% 13,783 17.1% 82% Non-Family 14,880 25% 24,089 23% 27,022 22% 12,142 81.6% 19.8% 2,933 12.2% 18% Total 59,900 100% 104,583 100% 121,299 100% 61,399 102.5% 100.0% 16,716 16.0% 100% Households w/ 27,037 45% 50,189 48% 57,900 48% 30,863 114.2% 50.3% 7,711 15.4% 46.1% Children < 18 Leesburg Change 2000 - 2017 Change 2010 - 2017 Households 2000 2010 2017 # % Change % of Chng # % Change % of Chng Family 7,258 70% 10,522 73% 12,706 75% 5,448 75.1% 81.3% 2,184 20.8% 84% Non-Family 3,067 30% 3,919 27% 4,320 25% 1,253 40.9% 18.7% 401 10.2% 16% Total 10,325 100% 14,441 100% 17,026 100% 6,701 64.9% 100.0% 2,585 17.9% 100% Households w/ 4,472 43% 6,796 47% 7,653 45% 3,181 71.1% 47.5% 857 12.6% 33.2% Children < 18 Source: 2000 and 2010 Census; 2013-2017 American Community Survey 5-Year Estimates; W-ZHA

Over the last seven years, households with children account for less of the household growth rate. This shift is particularly true in Leesburg. In Leesburg households with children at home accounted for

- 11 -

almost half of the growth between 2000 and 2010 and approximately one-third of the growth between 2010 and 2017. Table 6 Average Household Size U.S., Washington Metro, Loudoun County, Leesburg 2017

Average Household Size U.S. 2.63 Washington Metro 2.76 Loudoun County 3.07 Leesburg 2.98

Source: 2013-2017 American Community Survey 5-Year Estimates; W-ZHA

As a result of the household composition , the average household size in Loudoun County is 3.07 persons. Leesburg’s average household size is 2.98 persons. Both Loudoun and Leesburg’s average household size exceeds the United State and Metro average.

Figure 7 Household Size U.S., Washington Metro, Loudoun County, Leesburg 2017 Household Size 40.0% 33.6% 35.0% 29.7% 30.0% 25.0% 20.1% 20.0% 16.6% 15.0% 10.0% 5.0% 0.0% 1-Person 2-Person 3-Person 4+-Person

U.S. Washington MSA Loudoun County Leesburg

Source: ESRI; W-ZHA

Even with a high average household size, half of the households in Leesburg are one- and two-person households.

- 12 -

One Quarter of Leesburg’s Population is Either Hispanic or Asian. Table 7

Race and Ethnicity Loudoun County and Leesburg 2010, 2017

Loudoun County Change 2010 - 2017 Population 2010 2017 # CAGR* % of Chng White, Not Hispanic 194,845 62.4% 216,137 57.7% 21,292 1.5% 34% Black, Not Hispanic 21,934 7.0% 26,970 7.2% 5,036 3.0% 8% Hispanic, Any Race 38,576 12.4% 50,569 13.5% 11,993 3.9% 19% Asian 45,795 14.7% 64,055 17.1% 18,260 4.9% 29% Other 1,471 0.5% 3,371 0.9% 1,900 12.6% 3% 2+ Races 9,690 3.1% 13,860 3.7% 4,170 5.2% 7% Total 312,311 100.0% 374,588 100% 62,277 2.6% 100%

Leesburg Change 2010 - 2017 Population 2010 2017 # CAGR* % of Chng White, Not Hispanic 26,829 63.0% 32,308 63.3% 5,479 2.7% 65% Black, Not Hispanic 3,921 9.2% 3,724 7.3% (197) -0.7% -2% Hispanic, Any Race 7,431 17.4% 8,775 17.2% 1,344 2.4% 16% Asian 2,982 7.0% 3,979 7.8% 997 4.2% 12% Other 194 0.5% 699 1.4% 505 20.1% 6% 2+ Races 1,259 3.0% 1,530 3.0% 271 2.8% 3% Total 42,616 100.0% 51,015 100.0% 8,399 2.6% 100% * CAGR means compound average annual growth rate.

Source: 2000 and 2010 Census; 2013-2017 American Community Survey 5-Year Estimates; W-ZHA

- 13 -

Table 8

Foreign-Born Population Loudoun County and Leesburg 2010, 2017

Loudoun 2010 2017 2010-2017 Growth Total % of Total Total % of Total Total CAGR % of Total Total Population 291,653 100% 374,558 100% 82,905 3.6% 100% Foreign Born Population 63,426 21.7% 89,449 23.9% 26,023 5.0% 31% 2010 2017 2010-2017 Growth Origination Total % of Total Total % of Total Total CAGR % of FB Europe 6,135 9.7% 8,057 9.0% 1,922 4.0% 7.4% Asia 33,295 52.5% 50,091 56.0% 16,796 6.0% 64.5% Africa 3,042 4.8% 5,577 6.2% 2,535 9.0% 9.7% Oceania 210 0.3% 147 0.2% (63) -5.0% -0.2% Latin America 19,833 31.3% 24,516 27.4% 4,683 3.1% 18.0% North America 911 1.4% 1,061 1.2% 150 2.2% 0.6% Total Foreign Born 63,426 89,449 26,023 100.0%

Leesburg 2010 2017 2010-2017 Growth Total % of Total Total % of Total Total CAGR % of Chng Total Population 40,713 100% 51,015 100% 10,302 3.3% 100% Foreign Born Population 7,290 17.9% 11,079 21.7% 3,789 6.2% 36.8% 2010 2017 2010-2017 Growth Origination Total % of Total Total % of Total Total CAGR % of FB Europe 748 10.3% 1,546 14.0% 798 10.9% 21.1% Asia 2,511 34.4% 4,118 37.2% 1,607 7.3% 42.4% Africa 214 2.9% 826 7.5% 612 21.3% 16.2% Oceania 14 0.2% 22 0.2% 8 6.7% 0.2% Latin America 3,689 50.6% 4,401 39.7% 712 2.6% 18.8% North America 114 1.6% 166 1.5% 52 5.5% 1.4% Total Foreign Born 7,290 100.0% 11,079 100.0% 3,789 100.0%

Source: American Community Survey, 2010 and 2013-2017; W-ZHA

Over 20% of Leesburg’s residents are foreign-born. Most of Leesburg’s foreign-born population originated in either Latin America or Asia. Between 2010 and 2017, foreign-born resident growth accounted for 37% of the Town’s overall population growth.

- 14 -

Leesburg’s Households Are Generally Younger Than National and Metropolitan Averages Figure 8 Age of Head of Household United States, Washington Metro, Loudoun County, Leesburg 2017 30%

25%

20%

15%

10%

% of Households Headed by Age Group Age by Headed Households of % 0% 15-24 25-34 35-44 45-54 55-59 60-64 65-74 75-84 85+

U.S. Washington MSA Loudoun County Leesburg

Source: American Community Survey 2013-2017 5-Year Estimate; W-ZHA

As compared to the Nation and Metro, Leesburg has a higher concentration of its households in the “full nest” stage of life – 35 to 54 years old. As of 2017, Leesburg had a lower share of its households headed by persons 65 and older. Table 9

Head of Household Age Trends Leesburg 2000, 2010, 2017

Change 2000 - 2017 Change 2010- 2017 2000 2010 2017 # % % of Chng # % % of Chng Householder 15 to 24 years 374 413 475 101 27.0% 1.5% 62 15.0% 2.4% Householder 25 to 34 years 2,477 2,844 2,649 172 6.9% 2.6% -195 -6.9% -7.5% Householder 35 to 44 years 3,266 3,964 4,141 875 26.8% 13.1% 177 4.5% 6.8% Householder 45 to 54 years 2,101 3,703 4,852 2,751 130.9% 41.1% 1,149 31.0% 44.4% Householder 55 to 64 years 1,160 2,038 2,724 1,564 134.8% 23.3% 686 33.7% 26.5% Householder 65 to 74 years 550 868 1,181 631 114.7% 9.4% 313 36.1% 12.1% Householder 75 to 84 years 325 413 738 413 127.1% 6.2% 325 78.7% 12.6% Householder 85 years and ove 72 198 266 194 269.4% 2.9% 68 34.3% 2.6% Total 10,325 14,441 17,026 6,701 64.9% 100.0% 2,585 17.9% 100.0% Source: Census 2000; American Community Survey, 2006-2010 & 2013-2017; W-ZHA

- 15 -

Most of Leesburg’s household growth has occurred among households headed by persons aged 45 to 64 years old. Over this same period, Leesburg lost households headed by persons aged 25 to 34. This cohort is often targeted because they typically stay in a community to raise families. Figure 9 Age of Head of Household Trends Leesburg 2000, 2010, 2017 35.0%

30.0%

25.0%

20.0%

15.0%

% of Households % of 10.0%

5.0%

0.0% 15 -24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75 - 84 85+

2000 2010 2017

Source: U.S. Census 2000; American Community Survey 5-Year Estimates; W-ZHA

Household age trends indicate that, while young, Leesburg’s household composition has been aging.

- 16 -

The Leesburg Population Is Well-Educated and High Income Table 10 Educational Attainment United States, Washington Metro, Loudoun County, Leesburg 2017 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% % of % Population Over 25 Years Old

U.S. Washington MSA Loudoun County Leesburg

Source: American Community Survey 2013-2017 5-Year Estimate; W-ZHA

Over half (52%) of Leesburg’s population over 25 years old have a college or professional degree. This number is above the Washington Region where 50% have a bachelor’s or above. In Loudoun County, 60% of residents over 25 have a college or professional degree.

- 17 -

Table 11 Median Household Income and Per Capita Income U.S., Washington MSA, Loudoun County, Leesburg 2017

Median Household Per Capita Income Income United States $57,652 $31,177 Washington MSA $97,148 $46,267 Loudoun County $129,588 $50,456 Leesburg $105,844 $42,575

Source: 2013-2017 American Community Survey 5-Year Estimates; W-ZHA

Leesburg’s median household income is lower than the Loudoun County average and higher than the Washington Metropolitan Area average. With relatively large families, Leesburg’s per capita income is below the Metro and county averages. Figure 10 Household Income Distribution United States, Washington Metro, Loudoun County, Leesburg 2017 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% % of Households 10.0% 5.0% 0.0% < $50K $50K - $100K $100K - $200K $200K +

Washington MSA Loudoun County Leesburg

Source: Washington Metro and Loudoun County, ACS 2017 1 Year; Leesburg ACS 2017 5-Year; W-ZHA

Over one-in-five Leesburg households have less than $50,000 in annual income. Another quarter of Leesburg’s households have $50,000 to $100,000 in income per year. While median income is high in Leesburg, a significant share of the Town’s households are not high-income.

- 18 -

Household and Employment Forecasts Indicate Continued Growth Over the Next 20 Years

Household Projections

MWCOG Round 9.1 Figure 11 Loudoun County Planning Areas

Source: Loudoun County

MWCOG Round 9.1 Household Forecasts Loudoun County and Leesburg Planning Area 2020, 2030, 2040

Change 2020-2030 2030-2040 2020-2040 2017 2020 2030 2040 # % # % # % Loudoun County 129,769 137,880 157,982 166,952 20,102 14.6% 8,970 5.7% 29,072 21.1% Leesburg Planning Area na 20,241 24,542 25,213 4,301 21.2% 671 2.7% 4,972 24.6%

Source: Loudoun County, "Loudoun County COG 9.1 TAZ Forecasts"; American Community Survey 5-Year Estimate; W-ZHA

MWCOG forecasts that from 2020 to 2030 household growth will be somewhat slower than it was between 2010 and 2017. From 2030 to 2040 land and regulatory constraints greatly reduce growth to under 10% for the county as a whole and the Leesburg Planning Area.

- 19 -

Envision Loudoun

Population, household and employment forecasts were also developed as part of the county’s Envision Loudoun Master Planning process. Unlike MWCOG’s forecasts, these forecasts were not constrained by land use policy. Envision Loudoun’s forecasts are based on market projections. The Envision Loudoun Plan includes low, medium, and high forecasts for population, households, housing units and employment for the county. The report will refer to the Envision Loudoun forecasts as the “Market- Based Forecast.”

Table 13

Household Projections COG Round 9.1 and Market-Based 2020, 2030, 2040

Change 2020-2030 2030-2040 2020-2040 2017 2020 2030 2040 # % # % # % COG Round 9.1 Forecast Households 121,299 137,880 157,982 166,952 20,102 14.6% 8,970 5.7% 29,072 21.1% Market-Based Forecast Households Low 135,000 164,000 186,600 29,000 21.5% 22,600 13.8% 51,600 38.2% Medium 136,300 167,600 195,500 31,300 23.0% 27,900 16.6% 59,200 43.4% High 137,800 174,300 207,100 36,500 26.5% 32,800 18.8% 69,300 50.3% Source: Loudoun County, "Loudoun County COG 9.1 Forecasts"; Envision Loudoun; W-ZHA

In all scenarios, Market-Based household forecasts far exceed MWCOG’s Round 9.1 forecasts. The Market-Based forecasts do not take into consideration jurisdictions’ land use policies. Where the MWCOG and the Market-Based household forecasts really depart is in the 2030-2040 timeframe.

Figure 12

Loudoun County Policy Areas

Source: Loudoun County

- 20 -

New Housing Unit Forecast - Round 9.1 and Market-Based - Medium Scenario Loudoun County, Suburban/Urban/Transition Districts Policy Areas, and Rural/Town Policy Areas 2020, 2030, 2040

Source: MWCOG Round 9.1; Envision Loudoun; W-ZHA

The table above compares the MWCOG Round 9.1 housing unit forecasts to the Market-Based forecast’s medium scenario. The forecasts are similar in how they allocate growth between the Suburban/Urban/Transition Policy Areas and the Rural/Town Areas of the county. The Market-Based forecast foresees considerable growth, over 20,000 housing units, in the Rural and Town Policy Areas. Leesburg is the likely location for much of this forecasted growth.

- 21 -

Loudoun County has Become a Professional Employment Center over the Last 18 Years Total at-place-of-work employment is not readily available on a town basis. The U.S. Census provides data on non-federal jobs only.

Table 15

Private Sector Primary Jobs /1 Leesburg 2017

Jobs Share Agriculture, Forestry, Fishing and Hunting 2 0.0% Mining, Quarrying, and Oil and Gas Extraction 0 0.0% Utilities 62 0.4% Construction 589 4.2% Manufacturing 413 2.9% Wholesale Trade 132 0.9% Retail Trade 3,894 27.6% Transportation and Warehousing 120 0.9% Information 274 1.9% Finance and Insurance 643 4.6% Real Estate and Rental and Leasing 159 1.1% Professional, Scientific, and Technical Services 1,896 13.4% Management of Companies and Enterprises 290 2.1% Administration & Support, Waste Management and Remediation 522 3.7% Educational Services 317 2.2% Health Care and Social Assistance 1,922 13.6% Arts, Entertainment, and Recreation 175 1.2% Accommodation and Food Services 1,844 13.1% Other Services (excluding Public Administration) 843 6.0% Public Administration 0 0.0% Total 14,097 100.0% 1. This data excludes government jobs.

Source: U.S. Census, LEHD Origin‐Destination Employment Statistics; W-Z

According to the U.S. Census, there were approximately 14,100 private sector jobs in Leesburg in 2017. Jobs are concentrated in the retail industry. There are approximately 1,900 jobs in each of the following industry sectors: professional, scientific, and technical services; health care and social assistance; and accommodation and food services. In addition to these private sector jobs there are public sector jobs including large employers in Leesburg like the Federal Aviation Administration, Loudoun County government, Loudoun Public Schools, and the Town of Leesburg.

- 22 -

Table 16

Employment Trends Loudoun County 2000, 2010, 2018

Change 2000-2010 2010-2018 2000-2018 2000 2010 2018 # % # % # % Jobs 90,876 145,630 170,897 54,754 60.3% 25,267 17.3% 80,021 88.1%

Source: Moody's Analytics (2000 & 2010); VA Employment Commission, "VA Community Profile: Loudoun County" (2018); W-ZHA

From 2000 to 2018, the number of jobs in Loudoun County almost doubled. With 80,000 jobs added over this period, county jobs grew by 88%. As demonstrated in Table 16, most of the new jobs were generated in the 2000 to 2010 timeframe. Table 17

New Jobs Loudoun County 2000 - 2018

2000-2018 # % Chng For, Fishing, and Rel. Act. (1,175) -74.5% Mining 23 11.9% Utilities (76) -32.5% Construction 8,314 98.4% Manufacturing 1,746 29.9% Wholesale Trade 1,664 96.7% Retail Trade 8,846 93.9% Transport & Warehsg 1,048 10.9% Information (3,157) -31.1% Finance & Insurance 1,893 106.7% Real Estate 1,205 115.6% Prof, Sci, & Tech Services 14,868 238.7% Mgmt of Comp 428 42.7% Admin & Waste Services 4,896 103.8% Education Services 2,252 281.3% Health & Soc. Services 8,825 207.5% Arts, Entert, & Rec 2,083 149.1% Accomod & Food Service 9,206 130.1% Other Services 3,243 130.5% Government 13,344 103.5% Total 80,021 88.1%

Source: Moody's Analytics (2000 & 2010); VA Employment Commission, "VA Community Profile: Loudoun County" (2018); W- ZHA

- 23 -

Between 2000 and 2018, most of the county’s job growth occurred in the professional, scientific, and technical service industry sector and the government sector. There was also significant job growth in the accommodation and food service, retail, health care and social services, and construction industry sectors as well. Figure 13 Jobs by Industry Sector Loudoun County 2000 and 2018 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0%

2000 2018

Source: Moody’s Analytics; W-ZHA

The county has shifted from having an information-, transportation and warehousing-, and government- driven economy in 2000 to a professional, scientific and technical service- and government-driven economy in 2018. The construction and retail industries have been consistently strong in the county due to its rapid household growth.

- 24 -

Over the Next 20 Years Loudoun County’s At-Place of Work Employment is Forecast to Grow More Than It Did Over the Last 18 Years. Table 18

Loudoun County Employment Forecasts COG Round 9.1 and Market-Based 2020, 2030, 2040

Source: 2018 Employment, Moody's Analytics, economy.com; Loudoun County, "Loudoun County COG 9.1 Forecasts"; Envision Loudoun; W-ZHA

MWCOG and the Market-Based employment forecasts also differ in terms of at-place of work employment. Like households, MWCOG’s growth forecasts are more conservative between 2020 and 2040 as compared to the Market-Based forecast. Under all scenarios, at-place of work employment is projected to grow significantly over the next 20 years.

Noteworthy Investments and Projects in Leesburg Will Likely Impact the Town’s Economic Position in the County. In 2018, Microsoft bought 332 acres in the Compass Creek project near the Leesburg Executive Airport. Reportedly, Microsoft plans on developing office and data centers on this property.

Across the street, ION International Training Center opened in 2019. ION is an indoor skating complex with a practice rink and a rink with 3,500 seats. The rinks can be covered to accommodate concerts with a maximum capacity of 5,500. The ION International Training Center will draw visitors from across the globe.

Loudoun United is a 2nd division professional soccer team whose stadium has recently opened near Leesburg. Opened in August 2019, Segra Field is located inside Philip A. Bolen Memorial Park. Also planned for the park is a D.C. United (1st division professional soccer team) training center and youth academy.

These investments and others will positively impact Leesburg’s economic development potential.

- 25 -

RESIDENTIAL MARKET POTENTIAL Housing Supply and Trends Table 19 Housing Unit Supply Loudoun County and Leesburg 2017

Loudoun Town of County Leesburg Single Family Detached 53.4% 45.0% Single Family Attached 29.1% 27.0% Multi-Family 16.9% 27.6% Other 0.6% 0.4%

Source: American Community Survey 2013-2017 and 2006-2010; W-ZHA According to the American Community Survey 2017 5-year estimates, there were approximately 17,812 housing units in the Town of Leesburg in 2017. Leesburg’s housing stock is more diverse than the county’s housing supply.

Residential construction trends indicate that the pace of residential construction has slowed over the last 10 years as compared to the prior 10 years. As indicated on the following table, where the average number of dwelling units built per year between 2000 and 2009 was 433 units, between 2010 and 2019 the average dropped to 108 units per year. Reportedly, the slowdown in construction was not a function of market demand, but a function of land scarcity.

- 26 -

Table 20

Residential Construction Town of Leesburg 2000 to 2019

Single Family 2-over-2 Year Homes Townhomes Condos Multifamily Total 2000 392 209 0 0 601 2001 454 238 0 34 726 2002 368 193 0 207 768 2003 304 284 0 5 593 2004 188 187 0 29 404 2005 121 172 0 294 587 2006 60 77 0 114 251 2007 9 33 0 0 42 2008 1 68 0 0 69 2009 0 44 0 243 287 Sub-Total 1,897 1,505 0 926 4,328 % of Total 44% 35% 0% 21% 100% Ann Avg 2000 -09 190 151 0 93 433

2010 3 62 0 121 186 2011 2 59 0 0 61 2012 24 54 0 0 78 2013 53 52 0 0 105 2014 38 60 0 0 98 2015 33 11 0 0 44 2016 8 72 44 0 124 2017 22 78 50 0 150 2018 62 30 48 0 140 2019 41 28 17 5 91 Sub-Total 286 506 159 126 1,077 % of Total 7% 12% 4% 3% 25% Ann Avg 2010 -19 29 51 16 13 108

Grand Total 2,183 2,011 159 1,052 5,405 % of Total 50% 46% 4% 24% 125% Ann Avg 2000 -19 109 101 8 53 270

Source: Town of Leesburg; W-ZHA

A total of approximately 5,400 housing units were developed over the last 20 years in Leesburg. Forty percent of the new units over this period were single family units, 37% were townhouses, and 19% were multifamily units. The 2-over-2 or stacked townhome product is a recent addition to the housing product mix.

- 27 -

Housing Tenure and Affordability Table 21 Housing Tenure Loudoun County and Leesburg 2010, 2017

Washington Metro Loudoun County Leesburg 2010 2017 2010 2017 2010 2017 Own Home 66.2% 63.4% 80.8% 77.9% 74.7% 70.1% Rent Home 33.8% 36.6% 19.2% 22.1% 25.3% 29.9%

Source: American Community Survey 2013-2017 and 2006-2010; W-ZHA

Approximately 30% of the occupied housing units in Leesburg are rentals. Leesburg has a higher share of rentals as compared to Loudoun County. Rentals as a percent of total housing has increased in Leesburg over the last seven years just as it has in the county and the Metropolitan Area. Table 22

Housing Affordability - % Paying 30%+ of Income for Housing Metro Washington, Loudoun County and Leesburg 2017

Metro Loudoun Leesburg % of Hshlds Paying 30%+ of Income for Housing… Own Home 24.4% 22.2% 24.2% Rent Home 46.0% 46.2% 51.6%

Source: American Community Survey 2013-2017; W-ZHA

According to the American Community Survey 2017 5-year estimates, in 2017 over half of all renters in Leesburg were spending more than 30% of their income on housing. Almost a quarter of homeowners were spending more than 30% of their household income on housing. The national benchmark for reasonable housing expense is 30% of income.

- 28 -

Rental Market

In the Town of Leesburg, 60% of renters are one- and two-person households. In terms of age, 28% of renting households are headed by a person under the age of 35 and another 26% are headed by a person 35 to 40 years old. The median income bracket among renters in Leesburg is $50,000 to $60,000. A $50,000 income can afford $1,250 in monthly rent.

According to Trulia.com, a residential database, the median rent for a rental property in Leesburg over the last 12 months was $2,208 per month. This rent level is affordable to households with incomes of $88,000 or more, if no more than 30% of income is spent on housing. The average rent level is above what half of the rental market can afford.

For-Sale Market Figure 14 Number of Sales and Average Sales Price Trend Town of Leesburg 2009 to August 2019

Source: Bright MLS; W-ZHA

The graph above depicts housing sales (in green) and average sale price (in blue) for Leesburg houses from 2009 to 2019. The average sales price for a home in Leesburg has increased from under $400,000 in 2009 to over $550,000 as of August 2019. The number of sales dropped in 2019 due to lack of for- sale housing inventory. According to brokers, prices will likely continue to increase if limited inventory continues.

- 29 -

Table 23

Home Sales Leesburg 2017, 2018, 2019

New Units 2017 2018 2019 Avg Price Price /SF Avg Price Price /SF Avg Price Price /SF 2-over-2 $479,390 $213 $501,365 $215 $431,870 $221 Condominium na na na na $312,225 $362 Single Family Detached $812,860 $221 $782,660 $227 $786,415 $247 Townhouse $512,910 $232 $598,730 $212 $623,948 $207 Avg All Units $537,245 $633,455 $652,320 Not New Units 2017 2018 2019 Avg Price Price /SF Avg Price Price /SF Avg Price Price /SF 2-over-2 na na na na $433,300 $198 Condominium $184,405 $181 $198,525 $197 $215,575 $209 Single Family Detached $527,780 $227 $543,310 $235 $459,200 $249 Townhouse $359,160 $202 $366,280 $212 $399,290 $223 Avg All Units $405,025 $415,920 $446,000

Source: Town of Leesburg; W-ZHA

Prices are high in Leesburg. The average sales price per square foot in Leesburg through July of 2019 was $232 per square foot. New homes sell for an average of approximately $650,000 and older homes, $446,000.

- 30 -

Figure 15 June Active Listings Loudoun County 2010 - 2019 2,500 2,194 2,213

2,000 1,848 1,681 1,697 1,551 1,500 1,420 1,419 1,207 1,084 1,000 June Active Listings

500

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: Dulles Area Association of Realtors, George Mason University Center for Regional Analysis, “June 2019 Loudoun County Market Trends Report”; W-ZHA housing market.xls

The chart above illustrates active June for-sale housing listings from 2010 to 2019. Indicative of limited inventory, the number of active listings has been dropping since 2015. For Leesburg, between June 2018 and June 2019, the number of active listings decreased by 7.9%. Figure 16 Sales Price to Original Asking Price Ratio Loudoun County and Leesburg 2010 - 2019 99.5%

99.0%

98.5%

98.0%

97.5%

97.0%

96.5%

96.0%

95.5% Sales Sales Price to Original Asking Price Ratio 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Loudoun Leesburg

Source: Dulles Area Association of Realtors, George Mason University Center for Regional Analysis, “June 2019 Loudoun County Market Trends Report”; W-ZHA

- 31 -

In August 2019, countywide, the ratio of actual sales price to original listing price was 99.2%! In Leesburg, the ratio was 99.1%. In this market, it is not unusual for home sellers to get their original asking price. A high sales price to original asking price ratio indicates strong demand with limited supply. Figure 17 Median Days on Market Before Sale Loudoun County and Leesburg 2016 - 2019 60 51 50 44 44

40 38

20 16 16 Median Days on Market Days Median 10

0 2016 2017 2018 2019

Loudoun Leesburg

Source: Dulles Area Association of Realtors, George Mason University Center for Regional Analysis, “June 2019 Loudoun County Market Trends Report”; W-ZHA The strength of a market is also demonstrated by the average days a for-sale home stays on the market. The median time on the market before sale for Loudoun County as of June 2019 was 16 days. In Leesburg, it was 14 days. Townhomes in Leesburg stayed on the market for an average of 7 days in June 2019. There is clearly more demand than supply in Loudoun County and Leesburg.

Housing Demand

As described previously, the Metropolitan Washington Council of Governments and Loudoun County’s Comprehensive Plan forecast housing unit growth to 2040. The MWCOG Round 9.1 forecasts are constrained by local land use policy and do not include projected land use changes based on the 2019 Loudoun County Comprehensive Plan update.5 Envision Loudoun, the county’s Comprehensive Plan, forecasts housing units for the county using low, medium, and high scenarios The Envision Loudoun forecasts are based on market demand and were not constrained by local land use policies

5 The Comprehensive Plan’s projected land use changes will be incorporated into MWCOG’s Round 9.2 scheduled for 2020.

- 32 -

(“Market-Based forecast”). For purposes of this analysis, the Market-Based medium forecast is applied.

The table below summarizes the housing unit forecasts from these two sources.

Table 24

New Housing Unit Forecast - Round 9.1 and Market-Based - Medium Scenario Loudoun County, Suburban/Urban/Transition Districts Policy Areas, and Rural/Town Policy Areas 2020, 2030, 2040

Source: MWCOG Round 9.1; Envision Loudoun; W-ZHA

Between 2020 and 2040 MWCOG forecasts that there will be approximately 30,500 new housing units in the county. The Market-Based approach forecasts 60,000 new units over this same time period. The Rural and Town Policy Areas are forecast to capture approximately a third of the housing unit growth or 10,000 to 21,000 new units.

- 33 -

Table 25

New Housing Unit Forecast - Round 9.1 Various Geographies 2020, 2030, 2040

New Units 2020-2030 2030-2040 2020-2040 MWCOG Round 9.1 Forecast Loudoun County 21,042 9,494 30,536 Transition/Suburb/Urban Districts 14,512 5,681 20,193

Rural/Towns 6,530 3,813 10,343 Single Family Detached 4,034 2,424 6,458 Single Family Attached 1,668 486 2,154 Multi-Family 828 903 1,731 Leesburg Planning Area 3,407 1,755 5,162 Single Family Detached 973 366 1,339 Single Family Attached 1,646 486 2,132 Multi-Family 788 903 1,691 Leesburg PA % of Rural/Towns Policy Area 52% 46% 50% Single Family Detached 24% 15% 21% Single Family Attached 99% 100% 99% Multi-Family 95% 100% 98%

Source: MWCOG Round 9.1; W-ZHA

MWCOG Round 9.1 forecasts that the Leesburg Planning Area will absorb half of all new residential development in the Rural and Towns Policy Area between 2020 and 2040. Most of the units forecast for the Leesburg Planning Area are higher-density products – townhouses and multi-family units. Most of the single-family housing is forecast to develop in other towns and the rural areas of the county.

According to the American Community Survey 2017 5-Year Estimates, there were approximately 2,900 multi-family housing units in the Town of Leesburg in 2017. The MWCOG projection of 1,690 new multi- family units represents a 34% increase from the 2017 supply. The projection of 2,130 new single family attached units represents a 44% increase from 2017 supply.

The MWCOG 9.1 forecast was used as a proxy to estimate the Leesburg Planning Area’s housing potential under the Market-Based forecast. MWCOG Round 9.1 capture rates for the 2020-2030 and 2030-2040 time periods were applied to the Market-Based forecast’s medium scenario.

- 34 -

Table 26

New Housing Unit Forecast - Market-Based Forecast and Extrapolated for Leesburg Planning Area Various Geographies 2020, 2030, 2040

New Units 2020-2030 2030-2040 2020-2040 Market-Based Forecast Loudoun County 31,830 28,290 30,536 Transition/Suburb/Urban Districts 21,980 17,010 38,990

Rural/Towns 9,850 11,280 21,130 Single Family Detached 6,320 7,410 13,730 Single Family Attached 2,190 2,460 4,650 Multi-Family 1,340 1,410 2,750 Extrapolation Leesburg PA % of Rural/Towns Policy Area Single Family Detached 24% 15% 21% Single Family Attached 99% 100% 99% Multi-Family 95% 100% 98%

Leesburg Planning Area (Estimate) Single Family Detached 1,524 1,119 2,643 Single Family Attached 2,161 2,460 4,621 Multi-Family 1,275 1,410 2,685 Total 4,961 4,989 9,950 Source: MWCOG Round 9.1; Envision Loudoun; W-ZHA

Applying this methodology to the Market-Based forecasts indicates demand for approximately 9,950 new housing units in the Leesburg Planning Area over the next 20 years. This magnitude of demand is comparable to the amount of housing developed in the Leesburg Planning Area between 2000 and 2017. It is important to note that the Leesburg Planning Area forecast is market-driven only; it does not take into consideration whether there is enough land or zoning to accommodate this level of growth.

Applying this methodology Leesburg’s supply of multi-family units would increase by over half and the single family attached supply would more than double. The single-family detached inventory would increase by a third.

- 35 -

Conclusions

Table 27

Conclusions Leesburg Planning Area Housing Demand 2020-2040

Constrained by Units Land use Policy Market Driven Single Family Detached 1,340 - 2,640 Single Family Attached 2,130 - 4,620 Multi-Family 1,690 - 2,690 Total 5,160 - 9,950

Source: MWCOG Round 9.1 Forecast; W-ZHA

Market prospects for residential are very strong. There will be increasing demand for higher density housing products as baby boomers downsize and as the market seeks more affordable housing options. Higher density housing product is best sited in mixed-use environments where the ability to walk to goods and services is prized.

Given the existing “hot” housing market in the Leesburg Planning Area and a market-based housing unit forecast, there is more housing demand than the Leesburg Planning Area can accommodate. Scarcity will force prices up, making affordable housing a more acute issue.

Demographic factors like an increasing number of smaller households and the need for affordable housing results in a market demanding a wider variety of housing types in the Leesburg Planning Area. Over one-quarter of the net new housing units forecast for the next 20 years will be multi-family.

RETAIL MARKET POTENTIAL Retail Landscape

Leesburg’s Historic District contains restaurants, entertainment venues and specialty shops. Patrons enjoy the district’s historic character and pedestrian-oriented ambiance. The Historic District is a destination.

- 36 -

Table 28

Retail Supply - Historic District and Shopping Centers Leesburg 2019

Sq Ft Historic District (Rough Estimate) 84,000 Downtown Shopping Centers 762,965 Other Shopping Centers 2,176,760 Total 3,023,725

Source: Streetsense, "Retail, Entertainment & Culture Cluster Study, Loudoun County, VA (2016); W-ZHA

There are an estimated 3 million square feet of retail, service and restaurant space in Leesburg’s Historic District and shopping centers. This number translates into 59 square feet of retail per Leesburg resident. Retail supply per person in the United States is 23.6 square feet per person. Leesburg is more than double the national average.

Leesburg is the retail center for western Loudoun County which makes the community market relatively large. For this reason, Leesburg has a relatively high concentration of retail. The only regional shopping center in Leesburg is the Leesburg Corner Premium Outlets.

Figure 18 Leesburg Downtown Area

Source: ESRI; Google Maps

- 37 -

The Downtown Area (as depicted in Figure 18) contains the Historic District (estimated to have approximately 84,000 square feet of retail, service and restaurant space6) and approximately 763,000 square feet of shopping center space.

Table 29

Downtown Shopping Centers Outside of Historic District Leesburg

Center Name Sq Ft Cntr Type Notable Anchors Leesburg Plaza 236,000 Community Giant, Petsmart, Pier 1, Office Depot Shenandoah Square 152,910 Community Vacant Walmart (60,000 SF) Virginia Village 128,650 Community Farmer's Market AutoZone Center 65,980 Community AutoZone, Little Ceasar's, Wells Fargo Bellewood Commons 61,635 Community Eastern World Market, Starbucks, Red,Hot & Blue Crescent Place 30,000 Neighborhood Tollhouse 29,350 Neighborhood La Villa Rome Restaurant, Health By Nature Catoctin Corner 22,135 Neighborhood Jimmy Johns, Family Dentistry, DogGoneNatural Village Square 18,900 Neighborhood Plaza Center 12,065 Neighborhood Plaza Court 5,340 Neighborhood Total 762,965

Source: Internet Research; W-ZHA

All the downtown shopping centers target local patrons. Most of the shopping centers in the downtown were built over 20 years ago. As such, most of downtown’s retail outside of the Historic District is in auto-oriented strip shopping centers. Outside of the Historic District, there is very little high-amenity, walkable retail in downtown Leesburg.

6 A Retail Market Analysis for Downtown Leesburg by Streetsense (January 2016) calculated that the entire Downtown (including the Historic District and excluding Shenandoah Shopping Center and Crescent Place) contained 663,870 square feet. Applying this estimate, the Historic District contains approximately 84,000 square feet of retail and restaurant space.

- 38 -

Table 30

Leesburg Area Major Shopping Centers Leesburg

Center Name Sq Ft Cntr Type Notable Anchors Leesburg Corner Premium Outlets 465,000 Outlet/Super-Regional GAP, Banana Republic, J. Crew, Crate&Barrel Village at Leesburg 400,000 Town Center Wegman's, Cobb Theaters, Bowlero Compass Creek* 190,000 Community Walmart Battlefield Shopping Center 314,270 Community Dick's, Michael's, Ross, DSW Battlefield Marketplace 280,180 Community Kohl's, Target, Costco Fort Evans Plaza I 170,000 Community Home Depot, Hobby Lobby, Petco Marketplace at Potomac Station 152,480 Community Giant, BestBuy Fort Evans Plaza II 70,830 Community Bed Bath & Beyond, Marshalls, Jo-Ann Fabrics Lowe's 134,000 Community Lowe's Total 2,176,760

* 550,000 square feet of retail planned. Source: Peterson Companies website; W-ZHA

Newer shopping centers contain larger, big box stores like Walmart and Costco. Leesburg Corner Premium Outlets draws patrons locally and regionally. The Village at Leesburg is a Town Center-style mixed-use development that offers a unique, walkable experience. Except for the outlets and the Village at Leesburg, all the retail centers outside of the downtown are big-box-anchored community retail centers oriented to the automobile.

Figure 19

Shopping Destinations Near Leesburg

Source: ESRI; Google Maps

- 39 -

The Leesburg Corner Premium Outlets, the Village at Leesburg, One Loudoun and Dulles Town Center Mall are all within 10 miles or a 15-minute drive from downtown Leesburg. Robust regional retail supply will limit Leesburg’s ability to grow regional retail.

Opened in 2011, the Village at Leesburg is a Town Center-style mixed-use development anchored by a Wegman’s grocery store, Cobb Theater, and Bowlero, an upscale bowling alley. Notable retailers in the Village include Orvis, Ulta, and Plow and Hearth. The Village also includes a food incubator, ChefScape, where entrepreneurs have access to a commercial kitchen. The Village at Leesburg offers shopping, dining, and events in a walkable, high-amenity environment.

One Loudoun is a mixed-use community that opened in 2013. One Loudoun is planned to feature over 1,000 new homes, 3 million square feet of office space, and over 700,000 square feet of retail, restaurant and entertainment space. The downtown area of One Loudoun opened in 2013 and currently contains approximately 20 restaurants and 60 storefronts totaling 470,000 square feet. One Loudoun contains the Alamo Drafthouse and Cinema and is mostly restaurants with some retail like Barnes and Noble, Great Gatherings, and some specialty stores. There are several service businesses as well.

Dulles Town Center Mall is Loudoun County’s only super-regional mall. The 1.4 million square foot mall is anchored by Regal Cinema, Macy’s, Lord & Taylor, H &M, and Dick’s Sporting Goods. Unlike the Village at Leesburg and One Loudoun and like the Outlets, Dulles Town Center Mall offers enough retail to comparison shop.

Market Potential

Leesburg’s households are well-educated and high income. The market’s spending index for all types of retail and entertainment is well above average. The Leesburg market will continue to be attractive to prospective retailers particularly specialty retailers seeking markets with high discretionary income.

MWCOG Round 9.1 forecasts retail employment from 2020-2040 by Transportation Analysis Zone. Using the TAZ map, the TAZ’s that comprise the Leesburg Planning Area were identified.

- 40 -

Table 31

Retail Potential - MWCOG TAZ Forecast Leesburg Planning Area 2020-2040

Change 2020-2030 2030-2040 2020-2040 Net New Retail Jobs 1,325 718 2,043 Space /Worker /1 350 350 350 Net Demand 463,800 251,300 715,100 /1 Less: Vacancy 7% 7% 7.0% Retail Space Demand 498,700 270,200 768,900

1. From Loudoun County, "2017 Fiscal Impact Committee Guidelines"

Source: MWCOG Round 9.1 Forecasts; Loudoun County, "2017 Fiscal Impact Committee Guidelines"; W-ZHA

The MWCOG Round 9.1 forecast projects that there will be over 2,000 more jobs in the Leesburg Planning Area between 2020 and 2040. Applying Loudoun County Fiscal Impact Committee Guidelines for space per retail job and long run retail vacancy, the retail employment forecast translates into approximately 769,000 square feet of new retail space.

The Market-Based forecast projects future retail space demand via household spending growth. The analysis herein mirrors the Market-Based forecast’s analytic approach. The Leesburg Planning Area housing unit forecast was applied. The town’s 2019 estimated average income from ESRI was used to estimate gross income. The analysis is in 2019 constant dollars.

- 41 -

Table 32

Retail Demand - Market-Based Forecast Methodology Leesburg Planning Area 2020 -2040

2020-2030 2030-2040 2020-2040 New Households Leesburg Planning Area 4,961 4,989 Average Income /1 $136,633 $136,633 Total Income $677,804,007 $681,639,716

% of Business Category Income Sales /SF Sales Sq Ft Sales Sq Ft Sq Ft Food Services - Restaurants 5.6% $361 $38,160,366 105,686 $38,376,316 106,284 211,971 Supermarkets & Other Groceries 5.0% $423 $33,551,298 79,398 $33,741,166 79,847 159,244 Bldg Material & Supply Dealers 4.5% $268 $30,230,059 112,871 $30,401,131 113,510 226,381 Discount Stores 4.4% $284 $29,891,157 105,362 $30,060,311 105,958 211,320 Other General Merchandise 3.3% $454 $22,638,654 49,830 $22,766,767 50,112 99,942 Clothing 1.6% $284 $11,048,205 38,943 $11,110,727 39,164 78,107 Department Stores 1.3% $284 $8,540,330 30,103 $8,588,660 30,274 60,377 Pharmacies and Drig Stores 0.8% $309 $5,490,212 17,740 $5,521,282 17,840 35,579 Furniture Stores 0.7% $185 $4,744,628 25,578 $4,771,478 25,723 51,301 Convenience Stores 0.5% $237 $3,592,361 15,153 $3,612,690 15,238 30,391 Household Appliances 0.4% $263 $2,846,777 10,830 $2,862,887 10,891 21,721 Sporting Goods & Toy Stores 0.4% $155 $2,778,996 17,959 $2,794,723 18,060 36,019 Home Furnishings 0.4% $284 $2,440,094 8,601 $2,453,903 8,650 17,251 Book Stores 0.3% $145 $2,304,534 15,912 $2,317,575 16,003 31,915 Pet, Hobby & Craft Stores 0.3% $253 $2,304,534 9,111 $2,317,575 9,162 18,273 Shoes Stores 0.3% $284 $1,965,632 6,929 $1,976,755 6,968 13,896 Office Supplies & Stationary 0.3% $309 $1,897,851 6,132 $1,908,591 6,167 12,299 Fitness Centers 0.3% $206 $1,694,510 8,213 $1,704,099 8,259 16,472 Drinking Places - Bars 0.2% $284 $1,626,730 5,734 $1,635,935 5,766 11,500 Jewelry Stores 0.2% $309 $1,491,169 4,818 $1,499,607 4,845 9,664 Specialty Food Stores 0.2% $413 $1,355,608 3,285 $1,363,279 3,304 6,589 Photofinishing 0.2% $356 $1,355,608 3,807 $1,363,279 3,828 7,635 Florists 0.2% $309 $1,152,267 3,723 $1,158,788 3,744 7,467 Gift & Novelty 0.1% $145 $948,926 6,552 $954,296 6,589 13,141 Laundries and Dry Cleaners 0.1% $309 $813,365 2,628 $817,968 2,643 5,271 Theaters 0.1% $361 $474,463 1,314 $477,148 1,321 2,636 New Dealers & Newstands 0.1% $103 $406,682 3,942 $408,984 3,964 7,907 Luggage and Leather Goods 0.0% $361 $67,780 188 $68,164 189 377 Total Supportable Sq Ft from Growth 700,300 704,300 1,404,600 Source: Envision Loudoun, "Appendix: Retail Tables"; W-ZHA

Applying the Market-Based forecast methodology results in demand projections for 1.4 million square feet of retail space. The Market-Based methodology assumes that all new demand will result in new retail development. In fact, some of the new retail spending will occur in existing stores and on-line. For these reasons, the Market-Based methodology likely overstates retail development potential.

- 42 -

Table 33

Retail Demand - Modified Market-Based Forecast Methodology Leesburg Planning Area 2020 -2040

Retail Sq Ft Demand from Growth 1,404,600 Less: Allowance for Market Leakage/Same Store Increased Productivity 30% (421,380) Net Retail Demand 983,220 Vacancy 5% Gross Retail Sq Ft Demand 1,035,000

Source: W-ZHA

In this analysis, it is assumed that 70% of the Leesburg Planning Area’s new retail spending potential will result in new retail space demand. This result in approximately 1 million square feet of new retail space over the next 20 years.

Conclusions

Table 34

Conclusions Leesburg Planning Area Retail Demand 2020-2040

MWCOG 9.1 Market Driven Retail and Eat/Drink Space 769,000 - 1,035,000

Source: MWCOG Round 9.1 Forecast; W-ZHA

Growth will result in increased demand for retail and restaurant space in the Leesburg Planning Area. Demand for between 769,000 and 1 million square feet of retail space is projected over the next 20 years in the Leesburg Planning Area.

The Leesburg market will be attractive to specialty retailers seeking markets with high discretionary income. Specialty retailers like art galleries, boutique clothing stores, and gift shops tend to be smaller tenants that benefit from co-tenancy with other specialty retailers. These types of tenants function well in a town center environment, not a big-box-shopping center environment.

Leesburg’s Historic District is quite small and already well-occupied. Opportunities for small retail expansion is limited here. The Village at Leesburg and small retail clusters like Crescent Place offer opportunities but they are limited. To realize its market potential, Leesburg needs to expand its retail offerings in pedestrian-oriented, walkable environments.

- 43 -

The housing market projections indicate that higher density residential products will be in demand to address Baby Boomers interests in down-sizing and the market’s demand for less expensive housing options. There may be an opportunity to redevelop under-utilized property in the Downtown area into mixed-use, walkable projects with retail, services, entertainment, and restaurant uses on the ground floor with residential and/or office above. Planned properly, redevelopment can serve to expand Downtown’s offerings and, in turn, increase its market drawing power.

OFFICE MARKET POTENTIAL Office Supply and Trends

Table 35

Office Construction Town of Leesburg 2000 to 2019

Grand Year Sq Ft Year Sq Ft Total 2000 0 2010 30,660 2001 144,640 2011 10,650 2002 89,610 2012 30,350 2003 66,300 2013 27,280 2004 0 2014 38,370 2005 15,130 2015 0 2006 0 2016 81,660 2007 75,150 2017 0 2008 238,430 2018 0 2009 129,148 2019 0 Total Sq Ft 758,408 218,970 977,378 % of Total 78% 22% 100% Avg Ann Sq Ft 75,840 21,900 48,870

Source: Town of Leesburg, Office of Planning; W-ZHA

The table above summarizes annual office construction in Leesburg. Office includes both owner- occupied and multi-tenant, for-rent office space. According to town records, since 2000, an average of 48,870 square feet of office has been developed in Leesburg per year. Most of Leesburg’s office construction over the last 20 years occurred between 2000 and 2010. Since 2010 office construction has slowed considerably. Since 2010, only about 219,000 square feet of office have been built (or 21,900 square feet per year).

Brokerage firms track multi-tenant, for-rent office space in Loudoun County and Northern Virginia. The following trends reflect the multi-tenant market only, not the owner-occupied office market.

- 44 -

Figure 20 Multi-Tenant Office Supply by Submarket Loudoun County 2nd Quarter 2019

Route 7 30%

Route 28 North 59% Leesburg 11%

Source: CBRE, “Marketview: Northern Virginia Office, 2nd Quarter 2019”; W-ZHA

There are three multi-tenant submarkets in Loudoun County: Route 28 North, Leesburg and Route 7. The Leesburg submarket contains Leesburg and western region of Loudoun County. With approximately 1.2 million square feet, Leesburg accounts for 10% of the county’s multi-tenant office supply. Leesburg is the smallest multi-tenant office submarket in Loudoun County. The Route 28 North submarket contains approximately 60% of the county’s multi-tenant office space.

Table 36

Multi-Tenant Office Market Northern Virginia, Loudoun, Leesburg/West Loudoun 2nd Qtr 2019

Overall Vacancy Sq Ft Rate Northern Virginia 165,082,272 19.3% Loudoun County 11,579,822 13.7% Route 28 North 6,817,570 14.4% Route 7 3,535,886 16.3% Leesburg/West Loudoun 1,226,366 2.3%

Source: CBRE, "MarketView: Northern Virginia Office, 2019"; W-ZHA

- 45 -

and Route 7. Reportedly, commercial office brokers in Leesburg struggle to fulfill tenant interest because of the dearth of available space.

Figure 21 Vacancy Rate by Submarket Loudoun County 2010-2016, 2019 35.0%

30.0%

25.0%

20.0%

15.0%

10.0% Tenant Office Vacancy Rate - 5.0% Multi 0.0% 2010 2011 2012 2013 2014 2015 2016

Route 28 North Route 7 Leesburg

Source: CBRE, “Western Land Area Market Analysis, August 23, 2016”; CBRE, “Marketview: Northern Virginia Office, 2nd Quarter 2019”; W-ZHA

As illustrated in 2010 to 2016 and 2019 data above, Leesburg’s office market has not always had a low vacancy rate. In 2010, Leesburg’s multi-tenant office market was 31% vacant, higher than both Route 28 North and Route 7. The high office vacancy in 2010 was due to the delivery of office buildings at the Village at Leesburg and the coincident real estate recession. Since 2010 Loudoun County has purchased 182,000 square feet of multi-tenant office space in Leesburg. Thus, as a result of little new multi-tenant office construction over the last decade and the loss of multi-tenant space to county ownership, Leesburg’s office vacancy rate today is very low.

- 46 -

Figure 22

Class A Asking Rents Loudoun County 2nd Quarter 2019

$27.60 $28.00 $27.20 $27.50 $27.00 $26.51 $26.23 $26.50 $26.00 $25.20 $25.50 $25.14 $25.00 $24.50 $24.00 Average Rent per Square Foot $23.50 Class A Rent Overall Rent

Route 28 North Route 7 Leesburg

Source: CBRE, “Marketview: Northern Virginia Office, 2nd Quarter 2019”; W-ZHA

Leesburg’s average Class A rent is higher than the Route 7 submarket and slightly lower than the Route 28 North submarket. Both Route 7 and Route 28 North are in the Tech Corridor where high tech business and data centers proliferate. Leesburg’s relatively high average rent is indicative of its appeal and constrained supply.

Demand

MWCOG Round 9.1 and the Market-Based forecast project the number of jobs that typically occupy office space. The MWCOG forecasts take into consideration local land use policies. As such, these projections may reflect what can be built, rather than what the market can support. The Market-Based forecast’s medium scenario was applied in the demand analysis.

- 47 -

Table 37

Office Employment Forecasts COG Round 9.1 and Market-Based Forecasts 2020, 2030, 2040

Change 2020-2030 2030-2040 2020-2040 2020 2030 2040 # % # % # % COG Round 9.1 Forecast Office Workers 67,528 87,168 106,159 19,640 29.1% 18,991 21.8% 38,631 57.2% Market-Based Office Workers (Medium) 55,190 73,660 91,580 18,470 33.5% 17,920 24.3% 36,390 65.9%

Source: Loudoun County, "Loudoun County COG 9.1 Forecasts"; Envision Loudoun; W-ZHA

Unlike housing, MWCOG Round 9.1 Employment Forecasts are more aggressive than the Market-Based forecast’s medium scenario. This difference is because local zoning may allow for more office than the market warrants.

Table 38

Office Potential - Market-Based Forecast Medium Scenario /1 Loudoun County 2020-2040

Change 2020-2030 2030-2040 2020-2040 Net New Office Workers 18,470 17,920 36,390 Office Space /Worker 215 205 210 Net Demand 3,961,900 3,677,000 7,638,900 Less: Vacancy 13% 10% 10.3% Forecast Office Supply 4,473,920 4,046,410 8,520,330

1. Total square footages are from Envision Loudoun and are slightly different than square footages if calculated.

Source: Envision Loudoun; W-ZHA

The Market-Based approach forecasts office demand by applying average square feet per employee and an office vacancy rate. For the county, the Market-Based forecast’s medium scenario projects demand for 8.5 million square feet of office space in the county between 2020 and 2040.

- 48 -

Table 39

Rural/Town Office Demand -Market-Based Forecast Medium Scenario Loudoun County Rural and Town Policy Areas 2020-2040

Change 2020-2030 2030-2040 2020-2040 Office Demand (Square Feet) 4,473,920 4,046,410 8,520,330

Transition/Suburb/Urban Districts Capture 4,138,370 92.5% 3,596,640 88.8% 7,735,010 90.8% Rural/Towns 335,600 449,800 785,300

Source: Envision Loudoun; W-ZHA

The Market-Based forecast estimates that approximately 90% of the office demand will be captured in the Transition, Suburban and Urban Policy Areas of the county. The opportunity for transit-oriented development in the Urban Policy Area is a significant competitive advantage. Leesburg would likely capture almost all the office demand forecast for the Rural and Town Policy Areas.

The Market-Based forecast’s assumption that the Transition, Suburban, and Urban Policy Areas will capture over 90% of office demand between 2020 and 2030 may be aspirational. While not a major office hub, if the Leesburg Planning Area evolves with a larger, mixed-use walkable core, office potential will likely be enhanced. Small and medium-sized businesses not reliant on Metro and/or access to the greater Metropolitan Area may find Leesburg an attractive location.

Table 40

Leesburg Office Demand - Modified Market-Driven Scenario Loudoun County Leesburg Planning Area 2020-2040

2020-2040 Office Demand (Square Feet) 8,520,330

Transition/Suburb/Urban Districts Capture 7,497,890 88.0% Rural/Towns -- Leesburg Planning Area 1,022,400

Source: Envision Loudoun; W-ZHA

With Leesburg’s potential to expand its historic core to the Crescent District therein creating a larger mixed-use and walkable district, the market-driven projection has been modified to have the Rural and Town Policy Areas capture a higher share of office demand. Rather than capturing less than 10% of the county’s office potential, the Rural and Town Policy Areas in this analysis are projected to capture 12%

- 49 -

of the county’s office potential. Thus, rather than 785,000 square feet of potential, the market-driven projection results in approximately 1 million square feet.

MWCOG Round 9.1 forecasts are available by Transportation Analysis Zone. Using the TAZ map, the TAZs that comprise the Leesburg Planning Area were identified. The MWCOG Round 9.1 forecast projects that there will be over 4,000 more office jobs in the Leesburg Planning Area between 2020 and 2040.

Table 41

Office Potential - MWCOG TAZ Forecast Leesburg Planning Area 2020-2040

Change 2020-2030 2030-2040 2020-2040 Net New Office Workers 2,018 2,016 4,034 Office Space /Worker 215 205 210 Net Demand 432,900 413,700 846,600 Less: Vacancy 13% 10% 11.6% Office Supply 497,600 459,700 957,300

Source: Envision Loudoun; W-ZHA

Applying the methodology employed by the Market-Based forecast, office job growth translates into demand for almost 1 million office square feet in the Leesburg Planning Area between 2020 and 2040.

Conclusions

Table 42

Office Conclusions Leesburg Planning Area 2020-2040

MWCOG: Land Use Modified - Market Policy Driven Office Square Feet 957,300 - 1,022,400

Source: MWCOG Round 9.1 Forecast; W-ZHA

The Leesburg Planning Area’s potential to realize 1 million square foot of office space is largely dependent on two factors: the presence of an expanded, walkable, mixed-use district near the historic core and lease/own office commitments from medium to large companies like Microsoft.

- 50 -

LIGHT INDUSTRIAL MARKET POTENTIAL The industrial product best suited for the Leesburg Planning Area market is light industrial flex space. As its name implies, flex space is suitable for office, warehouse, and light industrial uses. Flex buildings are typically one-story with ceiling heights of 14 to 16 feet. The front of the building contains front entrances while the back of the building can have truck loading docks. Typically set in a business park setting with surface parking, flex industrial space is less expensive to build than conventional office space.

Flex Supply

Table 43

Industrial Space Loudoun County 2nd Quarter 2019

Warehouse Flex Industial Total Sq Ft Vacancy Sq Ft Vacancy Sq Ft Vacancy Route 28/Dulles North 12,050,187 3.8% 8,878,114 3.9% 20,928,301 3.9% Leesburg 139,486 0.0% 402,717 0.0% 542,203 0.0% Outlying Loudoun 60,000 0.0% 20,368 0.0% 80,368 0.0% County Total 12,249,673 3.7% 9,301,199 3.7% 21,550,872 3.8%

Source: CBRE, "Marketview: Northern Virginia Industrial, 2nd Quarter 2019"; W-ZHA

According to CBRE’s Marketview report for Northern Virginia, as of the 2nd Quarter of 2019, there were 402,720 square feet of flex space in Leesburg. Since 2010, Loudoun County has purchased 204,000 square feet of Leesburg’s flex space. Currently, Leesburg’s flex supply is limited. The space in Leesburg is fully leased by light industrial tenants and non-traditional users like gyms and churches that seek less expensive space. There is very little industrial supply currently in Outlying Loudoun County.

Considering Leesburg’s constrained supply, St. John Properties is currently constructing approximately 160,000 square feet of speculative flex space at the Leesburg Tech Park next to the Leesburg Executive Airport. Reportedly, St. John Properties is looking for more flex development opportunities in Leesburg.

There is 300,000 square feet of light industrial planned at Compass Creek also by the Leesburg Executive Airport. In September 2018, Microsoft Corporation bought 333 acres in Compass Creek. It is expected that Microsoft will develop data centers and, potentially, office or flex space on this land.

- 51 -

Demand

MWCOG Round 9.1 and the Market-Based forecasts project industrial employment from 2020 to 2040. MWCOG forecast takes into consideration local land use policies. As such, these projections may reflect what can be built, rather than what the market can support. The Market-Based forecast also projected industrial employment. The Market-Based forecast’s medium scenario was applied in the demand analysis.

Table 44

Industrial Employment Forecasts /1 COG Round 9.1 and Market-Based Forecasts Loudoun County 2020, 2030, 2040

Change 2020-2030 2030-2040 2020-2040 2020 2030 2040 # % # % # % COG Round 9.1 Forecast Industrial Workers 36,130 46,738 51,679 10,608 29.4% 4,941 10.6% 15,549 43.0% Market-Based Forecast Industrial Workers (Medium) 24,960 30,830 35,650 5,870 23.5% 4,820 15.6% 10,690 42.8%

1. Forecasts include heavy industrial and light industrial jobs.

Source: Loudoun County, "Loudoun County COG 9.1 Forecasts"; Envision Loudoun; W-ZHA

The industrial jobs in the table above include jobs in both heavy and light industry. Unlike housing, MWCOG Round 9.1 Forecasts are more aggressive in terms of industrial job growth than the Market- Based forecast. Because the Leesburg Planning Area will likely not grow heavy industry over the next 20 years, this analysis applies Market-Based forecast’s light industrial job forecasts.

Table 45

Light Industrial Space Potential - Medium Scenario Loudoun County 2020-2040

Change 2020-2030 2030-2040 2020-2040 Net New Lt. Industrial Workers 5,640 4,660 10,300 Space /Worker 600 600 600 Net Demand 3,384,000 2,796,000 6,180,000 Less: Vacancy 10% 10% 10.0% Lt. Industrial Space Demand 3,760,000 3,106,700 6,866,700

Source: Envision Loudoun; W-ZHA

The Market-Based forecast projects light industrial space demand by applying average square feet per light industrial employee and then applies a building vacancy rate. Market-Based approach forecasts

- 52 -

demand for approximately 6.9 million square feet of additional light industrial space in the county between 2020 and 2040.

Table 46

Light Industrial Space Potential - Medium Scenario Loudoun County Rural and Town Policy Areas 2020-2040

Change 2020-2030 2030-2040 2020-2040 Lt. Industrial Space Demand 3,760,000 3,106,700 6,866,700

Transition/Suburb/Urban PA Capture (3,008,000) 80.0% (2,330,000) 75.0% (5,338,000) 77.7% Rural/Towns 752,000 776,700 1,528,700

Source: Envision Loudoun; W-ZHA

The Market-Based forecast projects that approximately three-quarters of the light industrial demand will be captured in the Suburban, Transition and Urban Policy Areas of the county. Approximately 1.5 million square feet of new light industrial potential is forecast for Loudoun County’s Town and Rural Policy Areas. As the most developed place, Leesburg would likely capture most of the light industrial demand forecast for the Rural/Town Policy Area if there is land capacity.

Table 47

Light Industrial Space Potential Leesburg Plan Area 2020-2040

2020-2040 Rural/Towns Lt Industrial Demand (Sq Ft) 1,528,700 Leesburg Capture @ 80% Leesburg Light Industrial Potential (Sq Ft) 1,223,000

Source: Envision Loudoun; W-ZHA

It was assumed that the Leesburg Planning Area will capture 80% of the Rural and Town Policy Area light industrial demand. Given this capture rate, there is the potential for approximately 1.2 million square feet in the Leesburg Planning Area.

MWCOG Round 9.1 forecasts are available by Transportation Analysis Zone. Using the TAZ map, the TAZ’s that comprise the Leesburg Planning Area were identified. The MWCOG Round 9.1 forecast projects that there will be over 4,000 more industrial jobs in the Leesburg Plan Area between 2020 and 2040.

- 53 -

Table 48

Light Industrial Potential - MWCOG TAZ Forecast Leesburg Planning Area 2020-2040

Change 2020-2030 2030-2040 2020-2040 Net New Light Industrial Workers 1,256 469 1,725 Space /Worker 600 600 600 Net Demand 753,600 281,400 1,035,000 Less: Vacancy 13% 10% 12.2% Lt. Industrial Space Demand 866,200 312,700 1,178,900

Source: Envision Loudoun; W-ZHA

Applying the methodology employed by the Market-Based forecast, MWCOG industrial job growth forecasts for the Leesburg Planning Area translates into demand for approximately 1.2 million square feet of light industrial space between 2020 and 2040. This forecast is consistent with the Market-Based forecast.

Conclusions

Table 49

Light Industrial Conclusions Leesburg Planning Area 2020-2040

MWCOG: Land Use Modified - Market Policy Driven Light Industrial Square Feet 1,178,900 - 1,223,000

Source: MWCOG Round 9.1 Forecast; W-ZHA

- 54 -

HOTEL MARKET POTENTIAL Hotel Existing Conditions and Trends

Table 50

Hotel Supply Leesburg 2019

Hotel Name Rooms Comfort Suites 80 Best Western Hotel and Conference Center 99 Clarion Inn & Conference Center 120 Hampton Inn 101 Homewood Suites 91 Red Roof Inn 80 Total 571

Source: Visit Loudoun; W-ZHA

There are six national-brand hotels in Leesburg containing 571 rooms. Leesburg’s hotel supply contains economy, select service, and suite products. There are no full-service, luxury or upscale boutique hotels in Leesburg. The last hotel built was the Homewood Suites approximately 10 years ago.

Figure 23

Hotel Locations

Source: ESRI; Google Maps

All of Leesburg’s hotels are located on the eastern edge of downtown or outside of downtown on Route 7. A seventh hotel, another select service product, is under development outside of downtown.

- 55 -

Table 51

Hotel Performance Leesburg 12 Month Average: August to July

Average Revenue per August - July Occupancy Daily Rate Available Room 2016 65.3% $97.48 $63.62 2017 66.9% $100.96 $67.56 2018 65.0% $108.82 $70.69 2019 68.6% $108.82 $74.69

Source: Visit Loudoun; W-ZHA

According to Visit Loudoun’s 2019 Lodging Study transient business travel, corporate groups and association travel account for 41.7% of Leesburg’s occupied room nights. Business-oriented overnight stays are projected to increase with Microsoft, Stryker and EIT n Leesburg.

Leisure travel, weddings, and sports tournaments account for 45.1% of Leesburg’s occupied room nights. This market segment is also expected to grow with the recent completion of ION International Training Center and Loudoun United’s stadium.

Hotel Demand

MWCOG Round 9.1 does not forecast hotel employment specifically. Hotel jobs are included in MWCOG’s “Other” category. To forecast hotel jobs using MWCOG employment forecasts for the Leesburg Planning Area, the Market-Based methodology was applied. The Market-Based analysis assumed that hotel room demand equates to 5% of net new employment.

- 56 -

Table 52

Hotel Potential - MWCOG Projection Applying Market-Based Forecast Methodolgy Leesburg Planning Area 2020-2040

2020-2030 2030-2040 2020-2040 Net New Workers in Planning Area 5,838 3,880 9,718 Hotel Rooms /Employee /1 5% 5% 5% Hotel Room Demand 292 194 486 1. Methodology applied in Market-Based forecast.

Source: MWCOG Round 9.1 Forecasts; Envision Loudoun; W-ZHA

Using this metric and MWCOG Round 9.1 employment forecasts over the next 20 years there will be demand for 486 new hotel rooms in the Leesburg Planning Area.

Table 53

Hotel Room Potential - Market-Based Forecast Rural and Town Policy Areas 2020-2040

2020-2040 Countywide Net New Hotel Room Demand 3,290

Transition/Suburb/Urban PA Capture 2,850 86.6% Rural/Towns 440

Source: Envision Loudoun; W-ZHA

The Market-Based forecast projects hotel room demand for the Transition, Suburban, and Urban Policy Areas of Loudoun County and the Rural and Town Policy Areas. The Market-Based approach forecasts demand for 3,290 hotel rooms in the county between 2020 and 2040. The Transition, Suburban, and Urban Policy Areas were forecast to capture 87% of this demand (or 2,850 rooms), leaving 440 rooms for the Rural and Town Policy Areas. With ION, Microsoft, Stryker, and Segra Field, Leesburg would likely capture most, if not all, of the Rural/Town hotel demand.

- 57 -

Conclusions

Table 54

Hotel Room Conclusions Leesburg Planning Area 2020-2040

Based on MWCOG Employment Market-Based Projections Forecast Hotel Rooms 486 - 440

Source: MWCOG Round 9.1 Forecast; Envision Loudoun; W-ZHA