The Tysons economy appeared to be heading in an encouraging direction to start 2025. Visitations and residential and retail occupancy rates were up, and office vacancies at least held steady instead of rising.
However, the impacts of federal spending and workforce cuts by the Trump administration have yet to emerge in the data tracked by the Tysons Community Alliance (TCA), which released its latest quarterly market report today (Thursday).
Covering the period of January through March, the first-quarter 2025 report highlights the federal government as a “major contributor to Tysons’ economic vitality,” pumping billions of dollars into the local economy primarily through private contractors.
According to the report, the federal government committed $3.1 billion in contracts to companies based in Tysons during the federal fiscal year 2024, which ran from Oct. 1, 2023 to Sept. 30, 2024. That spending was led by the Defense Department, the Department of Homeland Security and the Department of Health and Human Services, which collectively awarded more than half (52% or $1.6 billion) of the obligated funds.
The top three recipients were Booz Allen Hamilton (8283 Greensboro Drive), Mitre (7515 Colshire Drive) and United Capital Investments Group, a United Arab Emirates firm with a U.S. office at 8200 Greensboro Drive.
In addition to the thousands of people employed by those and other contractors, Tysons has approximately 2,000 residents who work directly for federal agencies, per five-year Census data from 2023.
“While these figures underscore Tysons’ strength as a federal contracting hub, recent disruptions in the federal workforce and uncertainty around future appropriations present potential headwinds,” the TCA’s report says. “These shifts may affect both local employers and the broader economic ecosystem that supports federal contract activity.”
A slowdown in federal spending is already starting to emerge, with the report showing obligated federal funds ticking up from October 2024 through January before dipping in February and March. Previous years saw a generally upward trend throughout the year, culminating in a massive spike in spending in September at the end of the federal fiscal year.
While the report doesn’t include data on contractor jobs, two of the three top companies — Mitre and Booz Allen Hamilton — have begun cutting employees, citing a need to adjust after losing federal contracts.
Booz Allen will lay off about 2,500 workers, or 7% of its workforce, the consulting firm’s leaders shared in a late May earnings call. Mitre filed a notice in early April indicating that 442 Virginia employees, most of them based at its Tysons headquarters, would be laid off, effective June 3.
In its quarterly market report, the TCA said it will monitor the federal contracting landscape “closely to assess their implications for Tysons’ long-term economic outlook.”
For now, though, the booster organization expressed confidence in the Tysons economy and its ability to presevere through the disruptions currently threatening the D.C. region.
“While Tysons is not immune to regional economic headwinds, its performance continues to reflect strong underlying fundamentals and steady demand across key sectors,” TCA Vice President of Strategy and Research Drew Sunderland said in a press release. “Residential occupancy remains high, retail vacancy has dropped, and total visitation is on the rise — all of which point to a district that is both resilient and evolving.”
Office vacancies flat, other sectors stay strong
According to the market report, the office vacancy rate for the first quarter of 2025 was 20%, the same rate reported for the same time frame in 2024. Vacancies remain well above pre-pandemic levels (13% at the beginning of 2020), but the net absorption rate for Q1 2025 was positive, with tenants leasing 63,964 more square feet of office space than they vacated.
The office vacancy rate is also skewed by the massive office building at 1750 Tysons Central Street. Formerly known as Tysons Central, the 24-story, 388,206-square-foot building has been completely empty since developer Foulger-Pratt finished constructing it in 2022.
As reported by the Washington Business Journal, The Meridian Group announced this week that it has acquired Tysons Central and rebranded it as Boro Central. Integrating the property into its existing The Boro development, Meridian hopes to boost leasing by offering tenants more flexibility and enhancing the building’s amenities, including with a new conferencing center.
“Boro Central is a perfect complement to the diverse workplace options across The Boro District,” Meridian Group Chief Investment Officer Gary Block said in a press release. “We’re excited to reintroduce this building to the market as an inspiring environment for companies seeking to elevate their space and offer employees access to best-in-class amenities.”
Outside of the office sector, the TCA’s Q1 2025 report found a year-over-year uptick in residential occupancy, from 92% to 94%, with rents averaging $2,704 and condominiums selling for a median price of $465,300.
Retail vacancies are also down, dipping from 2.3% in the first quarter of 2024 to just 1.8% in the first quarter of this year. Visits to Tysons, including by residents and employees, climbed 5% year-over-year, with this past March reaching 94% of March 2019 visits.
Metro ridership has started to rebound, increasing 17% over the first quarter of 2024 and reaching 95% of pre-pandemic levels, according to the report. Capital Bikeshare recorded 7,183 trips starting in Tysons in 2024.
Though the vast majority of travel in the urban center (82%) is still by car, the TCA says data show “modest but meaningful shifts” toward other modes of transportation. About 12% of all trips starting in Tysons on an average weekday are by pedestrians, for example.
“These trends underscore the importance of continued investment in multimodal infrastructure to keep pace with growth and evolving travel patterns,” the report says.
The full report can be found on the TCA’s website. The alliance says more updates and details on future initiatives will be shared at its annual meeting and open house on June 25.
