Developing The Mid-Atlantic
Maryland, Virginia and Washington, D.C. are experiencing a tremendous boom in all types of development, including lifestyle centers, mixed-use communities and urban revitalization.
Lara Fuller

While politics may be on the minds of many in the Mid-Atlantic region, new retail development is garnering its share of attention. The area is seeing a boom in development due to three main factors: the close proximity of several major cities, the stability of federal government-related jobs and the high level of disposable income. With a number of cities and suburban areas surrounding Washington, D.C., there is ample opportunity for developers and retailers to tap into the market. A good percentage of the population in the area is affluent, with more ‘spending money’ found here than in other areas of the country. With many federal government operations in and around the nation’s capital, there is also a steady job market, regardless of what is happening in the rest of the country.

“The Mid-Atlantic has proven to be something of a recession-proof region, fueled by regional ports, technology and federal, state and local government-related offices and agencies,” says Mark Bomse, vice president with Owings Mills, Maryland-based Greenberg Commercial.

Shopping Center Business recently spoke with several developers and investors to find out what kinds of projects are well suited to the Mid-Atlantic region and what the future holds in terms of new retail concepts.

Dynamic Demographics

Retailers have long been attracted to the Mid-Atlantic region because of the area’s strong demographics. The abundance of federal government-related jobs makes Washington, D.C. and the surrounding areas one of the most affluent areas in the United States. The average household income in the Washington, D.C. metropolitan area is approximately $74,221, according to DC.Gov.

“Stronger employment opportunities equal higher disposable incomes,” says Jamie Lanham, vice president, director of real estate, with Baltimore-based Struever Bros. Eccles & Rouse. “The Mid-Atlantic states’ proximity to Washington, D.C. provides retailers with a solid shopper base with higher base salaries than most other regions of the country.”The median disposable income in the Washington, D.C. area is currently $36,271. With an unemployment rate of 3.1 percent, compared to 5.4 percent nationwide, the economy in the Mid-Atlantic area is flourishing.

“The market’s low unemployment, high income and high education levels are driving sales, which in many cases are among chain stores’ best in the nation,” says David A. Ward, president of Timonium, Maryland-based H&R Retail, Inc., a ChainLinks Company.

Low unemployment and high income levels are just what most developers are looking for. As a result, the Mid-Atlantic is seeing a surge in the development of new lifestyle centers, the de-malling of existing centers and urban revitalization in the cities.

Greenberg Commercial’s new town center concept.

“De-malling will continue, as good development sites become rarer and certain malls as they age become less competitive,” says Dicky Darrell with Columbia, Maryland-based Manekin. “Lifestyle centers are increasing in popularity as the population income levels increase and leisure time also increases.” With a focus on giving consumers a retail experience beyond the standard strip mall, Manekin is currently developing Park Avenue in Bel Air, Maryland. The 190,000-square-foot project will feature retail and restaurant sites in a pedestrian-friendly environment. The development will also feature open spaces with benches, fountains and sculptures. 

Mixed-use projects take lifestyle centers one step further. The aesthetic appeal of an open, pedestrian-friendly shopping center is enhanced by office and living space. “Consumers in the area are expressing a strong desire to live within developments containing shopping, restaurant, entertainment and/or work opportunities,” says Bomse. “In a number of instances, regional malls are being converted to mixed-use developments.”

In Hunt Valley, Maryland, Greenberg Commercial is redeveloping the old Hunt Valley Mall into a 2 million-square-foot town center.

Intown Turnaround

While lifestyle center developments are popular in more suburban areas, there is also a transformation going on inside the cities of the Mid-Atlantic region. Struever Bros. has seen an increase in urban communities. “As more people migrate back to the cities, and more and more neighborhoods are revitalized and positioned as cosmopolitan districts, the age-old adage that retail is the lifeblood of smart, mixed-use communities will prevail,” says Lanham.

Baltimore-based Struever Bros. Eccles & Rouse is developing Brewer’s Hill, a 750,000-square-foot mixed-use project along the Inner Harbor waterfront in Baltimore.

Struever Bros. is currently developing three mixed-use projects in Baltimore: Harbor East, Harbor Point and Brewer’s Hill. The 1 million-square-foot Harbor East project will feature apartments, condominiums and 250,000 square feet of retail space. Harbor East is part of a 65-acre, 7.4 million-square-foot mixed-use district in Baltimore, which will feature six hotels, more than 600 luxury residential units, 1 million square feet of office space and 2,700 parking spaces. Harbor Point is the second phase of the project. This portion of the development will feature 1.8 million square feet of commercial and retail space and a 250,000-square-foot office building. The third project, Brewer’s Hill, is located near the historic Fells Point and the Inner Harbor waterfront in Baltimore. It will feature 750,000 square feet of mixed-use space on 24 acres.

Struever Bros. Eccles & Rouse is developing Harbor Point, a 1.8 million-square-foot project in Baltimore.

“While lifestyle centers will long remain principals in the real estate marketplace, more and more urban communities are rising up and down the Mid-Atlantic corridor of the East Coast,” says Lanham.

Connecting the Dots

Federal Realty Investment Trust’s Rockville Town Square in Rockville, Maryland, will include 175,000 square feet of retail space when it opens in late 2006.

“Transportation and mass transit is built very well within Mid-Atlantic cities,” says Lanham. Developers are taking advantage of this, with many new developments focused around mass transit hubs. “The interconnectedness of cities along the I-95 corridor, and a collection of highly-concentrated, affluent communities, present easy access and quick transport from bordering states,” says Lanham.

Rockville, Maryland, and Clarendon, Virginia, are two cities where mixed-use developments are popping up around transit stations. “We are seeing a lot of development around mass transit hubs,” says Don Briggs, director of development with Federal Realty Investment Trust in Rockville. “Infill of old suburban strips — first- and second-tier suburbs — is now happening. These centers are converting into more dense nodes both by adding uses to traditional surface parked strip shopping centers and converting under-utilized land into more dense retail environments.”

Federal Realty is very active in its hometown of Rockville, Maryland.

“Today’s smart cities are investing in more advanced methods of mass transit to shuttle people in and out of cities,” says Lanham. “Cities can ‘work’ with the right combination of residential, office and retail use.”

What’s Next?

As Washington, D.C., continues to grow, the surrounding areas will remain hot spots for new development. “Ten years ago, Washington was defined by a 20-mile radius from downtown,” says Barry Carty, director of acquisitions with Federal Realty. “Today that ring is probably closer to 30 miles. Developers and retailers are extending farther outside of the core urban areas to find opportunities.” Some of the major developer and retail hubs right now include Loudoun County, Virginia, and Charles County, Maryland, adds Carty.

“There is seemingly an endless population growth along with availability of developable land in Maryland and Virginia for new or rejuvenated residential and workplace submarkets and the services that follow,” says Bomse. “The northern Virginia market has and will remain a hot area for the foreseeable future. Prince William, Fairfax and Loudoun counties in particular are experiencing tremendous growth.”

University Town Center in Hyattsville, Maryland (Prince George’s County).

“We are seeing successful lifestyle centers being developed,” says Malachi. “The Simon Property development, Bowie Town Center, and the Cordish Company development, Capital Center on the Boulevard, are our newest retail developments — each extremely successful in providing retail across all price points.”

Some other developments in the area include the 488-acre Konterra project, featuring a 400,000-square-foot civic center, 2,800 residences, a 650-room hotel, 1.2 million square feet of retail space and 675,000 square feet of office space. The project is expected to create more than 30,000 new jobs for the county as well. National Harbor is another large-scale mixed-use development in the area. It will feature 7 million square feet of retail space, 500,000 square feet of office space, a 1,700-room hotel and a 400,000-square-foot convention center.

“Our proximity to the District of Columbia and the federal government job market with its supporting service-oriented job market is key,” says Malachi. “It creates a ‘white collar’ employment within the region.”

David & Dad’s Charles Street Café is one of many retailers and restaurants lining the pedestrian-friendly streets in Baltimore.

Another emerging market, says Ward, is Gainesville, Virginia. There, Regency Centers is developing Virginia Oaks, a 250,000-square-foot center in the pre-leasing stage. Virginia Oaks, located on Route 29, is expected to open in summer 2006.

While some developers are focused on developing urban communities, others are looking out toward the suburbs for new opportunities. “The secondary suburbs are especially hot right now based on rapid residential growth,” says Maddux. Either way, the Mid-Atlantic region will remain a popular and populous region, attracting new residents followed closely by new developments.