Washington D.C. and the surrounding area has undergone a dramatic transformation that has re-cast the area as a dominant retail hub—rivaling for the first time cities like Los Angeles and Boston.
Much of that stems from the city itself, where there continues to be a major push for development from the mayor's office—started under Anthony Williams and continuing under the current administration of Adrian Fenty.
In recent years the city has put up a new basketball and hockey arena in Gallery Place and a new convention center—site of this week's ICSC Mid-Atlantic Conference. New retail has cropped around those sites. And the site of the old convention center—now demolished—will be rebuilt as a mixed-use project.
The next push for the city is to develop the moribund Anacostia River—a historically underdeveloped section of the District of Columbia.
"We have the opportunity to really for first time develop out Anacostia River and we have to take advantage of that," Fenty said in his brief remarks at the conference. "It's an exciting moment. … We need to talk about how we can be involved and make a great city even better."
Other factors have conspired to make the District a more attractive site for retail development. Retail spending in the Washington D.C. region is now $19.2 billion a year—nearly double Boston's figure of $11.2 billion and greater than Los Angeles.
According to Gregory Leisch, founder, CEO and Director of Alexandria-based real estate research firm Delta Associates, the region has 100 million square feet of shopping space—63.8 million square feet of which is in neighborhood and community centers. But a big chunk of that supply is dated. He estimates that 45 percent of the stock is more than 25 years old and 38 percent is 11 to 25 years old. That has created a lot of possibilities for redevelopment.
Moreover, even with that large stock of existing space, sales per square foot in the region stand at $591—much higher than the national average of $336—which Leisch points to as a reason why the area can support more retail space, especially grocery-anchored properties. Vacancy rates are also low—just 2.3 percent for the region. As a result, asking rates rose 5.7 percent in 2006 on top of a 22 percent increase the year before.