Presence of Millennials, New Developments Keep D.C. Retail Market HummingThe Washington, D.C. metropolitan area’s retail market is expected to continue to perform as well as or better than any other retail market in the nation. Ranked the seventh-largest Metropolitan Statistical Area (MSA) in the United States, Washington boasts a dizzying amount of retail growth in existing and emerging neighborhoods. Household incomes in the area grew by 42 percent from 2000 to 2013, compared to just 27 percent nationally. The highly educated and affluent population is driving urban mixed-use developments across the region.
According to the National Association of Realtors, Washington led the nation in the Millennials’ share of the local population, at 15.7 percent. Millennials are demanding authentic experiences in residential living, shopping, restaurants and entertainment. Cranes can be seen everywhere with 30,000 apartment units under construction, many with prevailing urban feel above retail.
This trend is common in the redevelopment on H Street, the corridor between Union Station and 17th Street Northeast that has been undergoing redevelopment in the last half dozen years. During this time both Giant Food and Walmart have opened stores under apartment buildings in this neighborhood, which Forbes lists as one of the “hippest” areas in the United States. Insight Property Group just broke ground on a mixed-use development called The Apollo that includes Whole Foods Market, joining a cornucopia of restaurant and bars. The highly anticipated return of D.C.’s streetcar network is expected to spark additional economic development along the H Street corridor and other routes as this type of transit has done in Tampa, Seattle and Portland.
Washington has a great deal of energetic neighborhoods that, when combined with the increased discretionary spending and demand for retail goods and spaces, make the area a hotbed for opportunity. The 14th Street Corridor has been the most sought after address for the last five years, featuring fantastic dining choices including Masa 14 by Richard Sandoval, Tico by Michael Shlow and Le Diplomate by Stephen Starr, just to name a few.
CityCenterDC, the 10-acre mixed-use neighborhood built on the former D.C. convention center site, is buzzing following September’s grand opening of Del Frisco’s Double Eagle Restaurant. Georgetown has seen quality improvement in its tenant mix, which has always been a favorite for tourists and locals alike. The opening of Fiola Mare by Maria and Fabbio Trabocchi in Washington Harbour is a milestone event. Even Adams Morgan, which was left in the cold for neighborhoods mentioned above, is on the upswing with the future construction of a hotel by The Sydell Group to be called The Line Hotel.
In June 2014, developer WC Smith began construction in Capitol Riverfront at 800 New Jersey Ave. S.E. for another Whole Foods Market-anchored mixed-use development. Capitol Riverfront, which includes the Nationals Park baseball stadium, NOMA (North of Massachusetts Ave.), and Brookland near Catholic University has experienced a number of luxury apartment buildings opening with retail and public components from Canal Park to Artswalk, but it is important to note that this activity has not just been in D.C. proper.
Virginia is for Developers
There is 1.4 million square feet of shopping center space under construction in Northern Virginia and 4.4 million square feet of planned space where plans are drafted and permits and financing have been requested. The Silver Line Metro opened this summer, extending the existing Metrorail system 12 miles into Northern Virginia and amping up already strong development in the Tysons-Reston Corridor. Kiddar Metz and Rushmark Properties recently signed the first new grocery store in the city of Falls Church in a number of years to be built directly on Route 7. This project, called West Broad, will include 286 apartment units complemented by a 60,600-square-foot Harris Teeter above.
This region is also home to Loudoun County, which has potential for retailers and developers because it is the wealthiest and second-fastest growing county in the nation, according to the 2013 U.S. Census Bureau. Loudoun County features the massive mixed-use development called Village at Leesburg, which is anchored by Wegmans, and continues to blossom with new streetscape improvements and dynamic leasing activity on track to sign over 60,000 square feet of retailers in the past 12 months.
The perpetual and energetic retail activity in Washington and surrounding markets properly earned The Wall Street Journal’s acknowledgement of the Washington MSA as a “boomtown”.
— By Henry Fonvielle, President, Rappaport. This article originally appeared in the November issue of Southeast Real Estate Business.