Construction of a new apartment complex which will contain 460 units, in addition to a five-story hotel, continues on what was formerly a surface parking lot at Springfield Town Center. The development of the land by Pennsylvania Real Estate Investment Trust (PREIT)– the owners of Springfield Town Center and the surrounding land – was approved at two meetings of the Fairfax County Planning Commission on November 16 and November 30, 2022. No members of the community were present for comment at either meeting.1 The development came to fruition as a result of PREIT selling two parcels of land that form part of the parking lot to InterMountain Management, who will build the hotel2, and Hanover R.S. Limited Partnership, who will build the apartment complex.3 In addition, the parking garage near JCPenney will also be expanded and receive a fifth floor, and a pedestrian bridge to connect the apartment complex with the parking garage.4 PREIT is aiming for the development to be completed and ready for occupancy by 2026.5 The project has been described by some as having potential to lead to the “rebirth” of Springfield Town Center and commercial district, as well as the potential to relieve housing and amenities gaps in the Springfield area. Indeed, denser, mixed use developments could be seen as a positive in an area usually well known for its sprawled-out and unwalkable nature. New apartment complexes could also be beneficial to help revitalize Springfield Town Center, which exists in a sector that is increasingly being dominated by e-commerce platforms such as Amazon. However, a closer look at the investment trust that owns Springfield Town Center, PREIT, provides a small glimpse into the US real estate crisis and the associated cost of living crisis in Northern Virginia.

PREIT was founded in 1960 and was one of the first real estate investment trusts in the country.6 By 2001, PREIT was listed on the New York Stock Exchange and managed nearly 27 million square feet of retail and multifamily properties in more than 10 states.7 However, the office and commercial real estate industries were heavily impacted by the COVID-19 pandemic, and PREIT is one such investment trust that struggled to meet conditions on loans and ran the risk of insolvency. Real estate trusts like PREIT that specialize in shopping mall management and other brick and mortar commercial real estate properties were already struggling in the 2010s due to the advent of e-commerce, which provided for stiff competition in this sector. In 2020, PREIT filed for Chapter 11 bankruptcy, and entered into a restructuring plan which was agreed to by 95% of their creditors. This agreement, which included selling off properties it owns to help service its debt of $919 million, would also see them gain access to “$150 million in new borrowing”.8 Properties sold in this restructuring plan include the land parcels sold to Hanover and InterMountain, where the future apartments will stand. The deal with Hanover closed for $15.3 million, and one source stated that PREIT was only able to gain $30 million to service their debt, leaving well over $1 billion still remaining.9 As such, the development of the land parcels at Springfield Town Center are “critical to PREIT’s capital raising efforts by transforming underutilized land into value-enhancing real-estate.”10

In December 2022, PREIT was delisted from the New York Stock Exchange as a result of failing to meet their listing standards. PREIT was advised in February of that year that they ran the risk of being delisted. The listing standard included a requirement to maintain an average global market capitalization of at least $15 million over 30 consecutive trading days. As a result of being delisted from the exchange, PREIT moved their shares to being sold over the counter, and did not have plans to appeal the delisting.11 By 2023, PREIT’s debt had ballooned to over $1.1 billion, and despite the restructuring plans, insolvency still remained a major risk as of late that year. John Saunders, president of Saunders Property (PREIT’s largest shareholder with a 10% stake) wrote to PREIT’s Board of Trustees in a highly critical July 2023 email in which he blasted PREIT’s management, stating, “Over the last 5 years, the vast majority of the shareholders’ asset value has been lost, yet management and the Board continue to pay themselves handsomely. The Board seems content to let the company drift until it inevitably falls into the hands of its creditors, leaving little or nothing for the shareholders. This is not in the best interests of the shareholders, and the Trustees should resign (again) immediately.”12

The conflict between PREIT and its shareholders (such as Saunders) exposes both the contradictions present within the capitalist class and the heterogeneity of capital – in this example, commercial and financial capital. Financial capital (represented by large banks and other creditors) seeks to extract value via interest on loans to other sectors of finance capital, such as real estate investment trusts like PREIT. By selling off tracts of land to developers to build ‘luxury apartments’, PREIT attracts wealthier residents to live in these apartments, which then attracts more retailers (commercial capital) to take up shop in Springfield Town Center and pay rent to PREIT. Ultimately, the pressure of these rent-seeking activities falls onto the working class locals, who are faced with rising costs of living as Northern Virginia becomes increasingly unaffordable as property developers and local governments conspire to raise property values in the name of “revitalization.” The construction that is typically branded to the community as ‘revitalization’ is in reality, gentrification and the opening of new opportunities for rent-seeking and other forms of capitalist exploitation.