March on Washington (2/4)
Feb 4, 2009 12:11 PM, By Riccardo A. Davis
Meanwhile, Washington, D.C.–based Monument Realty previously announced plans to develop a project called Half Street, a 775,000-square-foot mixed-used gateway between Nationals Park and the Capitol. It will include retail in addition to a 196-room hotel. It is unclear when the project will be completed. Monument declined to comment on its project.
Also in the works is Clark Realty Capital’s Poplar Point, a 6.4-million-square-foot mixed-use waterfront community located on the east side of the Anacostia River, directly across from Nationals Park. The Arlington, Va.–based developer was selected by Washington, D.C., as its partner to develop the 110-acre waterfront neighborhood. The development will include a 70-acre park, housing and retail. Clark declined to discuss the project, which is scheduled to be completed in January 2010 according to its Web site. Sean Madigan, a communications director for the deputy mayor for planning and economic development, says the plans call for 405,000 square feet of retail, including specialty anchors that could include a home improvement store and big-box discount retailer.
The Obama boom
The activity on the rivers is part of a larger burst of building in the nation’s capital, one that defies the broader slowdown facing the retail real estate sector nationally. Overall, in Washington D.C., some 1,000 projects are expected to come on-line between now and 2014 according to the Washington D.C. Economic Partnership (WDCEP). The agency estimates that construction pipeline, which includes retail developments, to total $60 billion.
A primary reason for the boom in retailers looking to open additional stores or set up shop in the Capital City is that it has less than 9 square feet of retail per person compared with the national average of 20 square feet, says Jerome.
As a result, WDECP’s president and CEO Steve Moore says many of Washington’s nearly 600,000 residents (most of who are political appointees, with so-called recession-resilient jobs) shop in the neighboring states of Maryland and Virginia. Moore estimates D.C. residents spend more than $1 billion in retail sales annually in the suburbs.
“Historically, northern Virginia and Montgomery County, Maryland, had gotten all the high-quality national retail, but National Harbor has shifted that,’’ says Eric Rubin, principal, at the Madison Retail Group, the third-party arm of Washington, D.C.–based retail developer Madison Marquette, which handles tenant/landlord leasing and investment sales.
Fueling retailers’ past decisions to locate stores in the adjoining states was the exodus of D.C. residents to Maryland and Virginia; not to mention the higher cost and expenses associated with real estate taxes and mixed-use development in the city by comparison to greenfield development in the outlying areas.
To curb developers’ flight to the suburbs, the city instituted some incentives. There is $100 million in tax increment financing available. Last year, it provided a total of $3 million for three projects.
Also among the appeals for Washington D.C., is that in a downturn it has a more stable job base and should be less prone to the effects of the recession than other major cities. The District’s positive job and population growth is expected to accelerate with the Obama presidency. His estimated $850 billion economic stimulus package paves the way for an increase in spending from incoming residents.
The silver lining for D.C. is that it is home to the federal government of the United States, and by virtue of the financial crisis, a shift has occurred where the city now is the focus of the financial markets, says Rubin. The regulatory environment around finance is changing and it will benefit Washington, D.C., as the place to do business. “What that does for retail is people have to spend money to eat, drink and buy stuff,” he says.
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