The Washington, D.C., retail market is conservative yet stable. “I would not categorize this area as a trendsetter, but it is clearly a leading market in terms of stability and growth,” says KC Whang, senior broker associate with Sperry Van Ness. “However, the ethnic makeup of the population is changing dramatically. Washington is slowly catching up with ethnic demographic shifts seen in some larger markets like Los Angeles and New York City.”

D.C. retail has seen continued strong trends and polarization between big box discount retailers and specialty niche marketers. A new breed of ethnic market niche retailers, from Oriental grocery stores to gift shops, is becoming more visible in the marketplace. On pad sites, many of the “mom and pop” convenience stores are going by the wayside. Even what appeared to be relatively successful, stand-alone franchise convenience stores are closing down and giving way to gas plus convenience store/deli formats.

The Cordish Company is developing a mall at the former U.S. Air Arena, which was torn down over the December 14 weekend. “The results of this project could transform how people perceive of retail in Prince George’s County, Maryland, which, in many of my colleagues’ opinions, has been a sleeping retail giant,” notes Whang. The success of Arundel Mills Mall may change the course of some future malls of any significance. This mega enclosed retail outlet mall in Maryland that seems to be blurring the lines between outlet and regional malls.

The redevelopment of downtown Silver Spring, Maryland, which is literally annexing and reshaping entire city blocks adjacent to the original City Place Shopping Mall, is a development to watch. “With the amount of investment going into this project, it will be interesting to see if money can indeed solve its lackluster history,” says Whang.

Another notable project is Beatty Development Company’s Travilla Village Center in Potomac, Maryland. This new high-end, grocery-anchored neighborhood strip center has a promenade flair. “It should be interesting to see how both the existing demographics and competition will react to Travilla,” Whang notes. “The new project is in the midst of a high-end residential subdivision, over 1.1 million square feet of new office development (including the Human Genome Sciences headquarters) and next to Thomas Farms, a significant new mixed-use development with its own grocery-anchored neighborhood shopping center.”

Besides the projects mentioned above, most new developments are occurring outside the Washington Beltway. Within striking distance from the Beltway, vacancy rates are very low. Most owners are going to attempt to upgrade tenant mix or increase rents to improve cash flow performance. “I would imagine that the latter would be true for those investors who recently purchased properties at or below 8 percent cap rates,” says Whang.

Vacancy rates clearly appear to be in the low single digits. According to Kimco Realty Company, vacancy throughout Columbia, Maryland, a strong and stable market, is at 2 percent. “Many other landlords I have spoken to recently make similar claims,” Whang says. Howard County and northern Montgomery County in Maryland continue to grow at a fast clip. The Leesburg area to its west, from Dulles Airport in Virginia, will continue to grow despite the “tech bust.”

Kwang Chul “KC” Whang is a senior broker associate with Sperry Van Ness.


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