In the Nation’s Capital, Retail Always Follows Where New Residential Rises
The building height restriction — enacted in Washington, D.C. to preserve picturesque views of the United States Capitol Building and the Washington Monument — helps provide clear and exceedingly stunning views of the multitude of construction cranes that currently dot the vertical landscape of the District of Columbia.
The majority of these yellow-steeled economic generators are being used to develop new residential and mixed-use projects, ranging from the NoMa district to the southeast Waterfront area and weaving through the neighboring suburbs, including Loudoun, Va., and Bethesda, Md. And, where new residential goes, supporting retail always follows, including the trendiest grocery store chains and hottest fast-casual and dine-in restaurant concepts.
In addition, the area’s ever-expanding transportation network that provides a daily lifeline to D.C. and suburban workers is also paving the way for new retail opportunities as our Nation’s Capital continues to retain its reputation as among the most prolific retail locations in the country.
Residential-only or mixed-use projects currently underway in the District are too numerous to mention, but here is a glimpse into the frenetic activity as there appears to be a bottomless appetite for new housing, particularly among Millennials. MRP Realty is developing the 1,600-unit Rhode Island Center adjacent to the Rhode Island Avenue Metro Station. Eckington Yards, a project of The JBG Cos. and The Boundary Cos., will inject approximately 700 apartments and 80,000 square feet of retail space into a site near New York Avenue N.E. and Florida Avenue.
Two iconic entertainment centers are receiving new leases on life in the District. Douglas Development Corp. is redeveloping the Uline Arena into a mixed-use project highlighted by a REI store. At the site of the former Apollo Theater on H Street N.E. is The Apollo, a Whole Foods-anchored project that Insight Property Group is developing. The project will add more than 400 residential units to the region.
Near Nationals Park (home of the Washington Nationals that overlooks the Anacostia River), more than 100,000 square feet of retail space was added within Capital Riverfront, anchored by Whole Foods, with another 150,000 square feet set to come.
The JBG Cos. is planning West Half, a 13-story building featuring 225 condominiums and 200 apartments supporting the Navy Yard neighborhood. PN Hoffman and Madison Marquette also continue to develop The Wharf, a 3.2 million-square-foot, $2 billion project set to open next fall. The Wharf will overlook the Potomac River.
Activity is no less fierce here, which features among the highest consumer demographics in the United States. The “Pike District,” a heavily retailed corridor that extends through Rockville Pike, is still gathering its footing. Several miles to the south, Bethesda emerged with the winning lottery ticket in the Marriott International headquarters sweepstakes, a development that will comprise 700,000 square feet of space and an adjacent 200-room hotel. Think that deal will have some positive retail implications? In the “nothing is too small department,” Kettler is constructing Element 28, a 15-story apartment complex in Bethesda comprising 101 high-end units with ground-floor retail.
Prince George’s County
The $1.3 billion MGM National Harbor, developed by MGM Resorts International, is set to deliver more than 1 million square feet of space in early December. Overlooking the Potomac River and supplementing Tanger Outlets Center, experts expect a steady stream of cars to cross the Woodrow Wilson Bridge from Northern Virginia to interact with the hotel, 125,000-square-foot casino, theater and event space.
Not to mention, what site will emerge as the winner for the FBI headquarters, with Prince George’s County currently holding two of the three remaining ping-pong balls? With 11,000 jobs in tow, the FBI will also become a significant retail driver wherever it lands.
As the Silver Line continues its expansion towards the Dulles submarket, expect to see the continuation of in-fill retail bridging Loudoun with Tyson’s Corner. In the Reston/Herndon market, watch for the conversion (re-zoning) of existing assets into residential product, which will also have a positive impact on retail. Commercial office product remains soft in this region and new housing offers the perfect remedy to this challenge. Recently delivered or currently underway retail or mixed-use projects include Comstock Partners’ 1.3 million-square-foot Reston Station (120,000 square feet of retail); and One Loudoun, featuring more than 700,000 square feet of retail in Ashburn.
Room for Redevelopment
Somewhat covered in dust by all the sexy headlines of new development activity is the no-less-impactful repositioning initiatives that focus on the improvement and re-tenanting of neighborhood shopping centers. One such example is Travilah Square Shopping Center, the Gaithersburg asset that recently attracted Trader Joe’s as its new anchor. Savvy development groups continue to focus at the micro level in the suburban markets to help drive these emerging opportunities.
— By Sean Sullivan, Vice President, Finmarc Management Inc. This article originally appeared in the November 2016 issue of Southeast Real Estate Business.