Dulles Town Center sold 

Future plans call for mixed-use development

 Audrey Carpenter

Dulles Town Center Mall in Sterling sold Dec. 19 to Virginia Investment Properties (VIP), a commercial real estate company based in Chantilly, for $46 million. The company had already previously purchased Sears, Lord & Taylor and JCPenney before acquiring the mall. 

Once valued at $300 million in 2008, Dulles Town Center’s assessed value had dropped to $183.6 million by 2018, according to County tax assessment records. In 2020, health insurer Cigna and Lerner Enterprises, Cigna’s local operator which managed the mall for two decades, turned the keys over to New York Life Insurance to avoid foreclosure. The property’s value at that time had plummeted to $55 million.

In an interview with the Blue Ridge Leader, Srinivas Chavali, VIP’s president and CEO, said this is the second mall he has purchased. His company also acquired Iverson Mall in Hillcrest Heights, Md. in March 2022 and sold it in January 2023. “I acquired the non-performing note from the bank and conducted a foreclosure auction,” he said. That sale garnered $20 million.

VIP’s commercial portfolio and focus includes hospitality, industrial, office, retail, flex, and multi-family housing. Chavali said he has big plans for the ailing Dulles Town Center, which has lost several anchor stores, tenants and perimeter restaurants since COVID-19 and a consumer shift to online shopping. 

Across the U.S., department stores are shrinking or shuttering altogether. In 2011, U.S. department stores employed 1.2 million employees across 8,600 stores. But in 2020, there were fewer than 700,000 employees in the sector, working across just over 6,000 locations,” according to the research firm IBISWorld.

Since the Great Recession began in late 2007, discount chains like TJ Maxx, Ross, and Dollar General have become more popular than full-price department stores like Macy’s and JCPenney designed to cater to the middle class, IBISWorld stated.

Online shopping has put a hurt on brick and mortar stores. Since 2017, Amazon reported it has captured 53% of all online sales. As a result of the overall decline in retail sales, both shopping malls and department stores are experiencing high rates of closure. According to Business Insider, around 15% of U.S. malls are expected to fail or convert to non-retail space by 2024.

Despite all this, Chavali has jumped in with both feet, and says he has a plan to bring Dulles Town Center back to life.

$100, a plane ticket, and a dream

Srinivas Chavali comes from humble beginnings. After growing up in India and attaining his master’s degree in computer science, he came to the U.S. in 1999, at the age of 26 to be a software engineer in IT. He worked for the Virginia state government for seven years and the State Department for eight years before leaving the IT sector altogether and switching full to commercial real estate. 

“I had no family in the U.S., but I had a couple of my classmates over here. I came to the U.S. with two bags and $100 in my pocket, but I had a job offer from a company that paid around $60,000 salary,” Chavali told the Blue Ridge Leader. 

“Once I got my green card, I started working two IT jobs and selling houses on weekends. Once I had some savings, I started buying foreclosure houses at the courthouse steps in Loudoun and Fairfax during the financial crisis in 2007 & 2008. I did residential flips until 2013 and sold more than 200 houses. After that I switched to commercial real estate and started buying distressed commercial assets from foreclosures, bankruptcy sales and auctions,” he said.

“I heard America is a land of opportunities so I came here to explore it and, after that, I never looked back. I always have the burning desire to succeed in life and do something spectacular,” he recalled. 

Chavali said he emulated and followed in the footsteps of the most successful people in real estate like Ted Lerner, Gary Rappaport, and Milt Peterson, the founder of Peterson Companies. “All of them started with a couple of thousand dollars and became legends,” he said.

Meeting Ted Lerner

“I came to this country in 1999 and that’s when the Dulles Town Center mall was opened,” Chavali said. “I went with my friends to the grand opening and was truly amazed to see a brand new, 1.5 million-square-foot mall. I came from India and had never seen such a huge mall until then.”

After learning Ted Lerner founded Lerner Enterprises in 1952 by borrowing $250 from his wife, Chavali knew he could also build his company into something successful. Lerner developed his company into the largest private real estate developer in the Washington region, building and managing Dulles Town Center.

Mr. Lerner’s first shopping center, the open-air Wheaton Plaza, now Westfield Wheaton in suburban Maryland, was dedicated in 1960. He opened Tysons Corner Center, a national model for enclosed, climate-controlled malls, in the late 1960s, followed by the Galleria at Tysons II in the late 1980s.

Lerner would go on to acquire the Nationals baseball team in 2006 and turn it into a championship team. In February 2023, at the age of 95, Lerner died. By then, Chavali was a success in his own right.

Future of Dulles Town Center

Chavali said he immediately plans to fill the vacant stores in Dulles Town Center, but not necessarily with traditional retail stores. He envisions attracting entertainment-style venues such as a bowling alley, pickleball or go carting. He wants the feel to be “a destination experience for families.”

For the several vacant restaurant pads on the perimeter of the mall, he said, “I am planning to give it to wineries or breweries or restaurants for a short term lease of three to five years.” 

He also would like to get some of the 132 acres rezoned to build townhouses and apartments around the mall. That will help the mall and generate more foot traffic, he said.

“Dulles Town Center lacks housing at this time and we believe that by leveraging amenities already in place we can create a more vibrant community and be a win-win for the retailers, residents and the property owners,” Chavali said. 

“Adding these additional property uses with urban and outward elements while bringing additional experiential retail services will increase the daytime and night-time populations, which will drive more shopping visits. Restaurants, bars, food hall, upscale bowling/dining/bar concept, live music, yoga, fitness centers, hair salons etc. are experiential features that can’t be replicated on the internet,” he said.

“I live 15 minutes from the mall and I know the area well. I believe I know what consumers want in a mall experience, and I hope to deliver that to them.”