In the fourth quarter of 2013, Arlington reported about $813 million in taxable retail sales in its March economic indicators study today. Over the same period in 2013, Arlington had about $786 million, a drop of 3.3 percent. The change can’t be attributed to the unusually snowy winter, either: nearly all of the snow this winter fell in the first quarter of 2014, after these numbers were recorded.
While the retail industry — which includes everything from restaurants to grocery stores to stands in the Fashion Centre at Pentagon City — lost $27 million in sales year-over-year, Arlington’s workforce grew 1.4 percent while its unemployment rate dropped from 3.9 percent in January 2013 to 3.3 percent in January.
In addition, housing prices were up across the board this February compared to last year, with a 2.2 percent bump in single family detached house prices, 3.7 percent for single family attached (like townhouses and duplexes) and a 4.7 percent jump in condominium prices, from $410,339 to $430,115.
Local retail broker John Asadoorian, of Asadoorian Retail Solutions, said the numbers don’t raise any alarm just yet.
“It’s hard to really discern what the drop means,” Asadoorian told ARLnow.com. “The only thing I could say is there hasn’t been that much new retail space delivered in Arlington, which means there hasn’t been a whole influx of new tenants, which means the mix in Arlington is stable. If it’s stable, is it still competitive with other jurisdictions that may be growing?”
Asadoorian referred to Tysons Corner and Georgetown as two areas whose growing retail options could be poaching customers from Arlington’s shops. However, several buildings under construction in Ballston and Rosslyn figure to bump the retail number back up in the coming years, he said.
While those buildings may help the retail market, they may not do wonders for the office vacancy rate in Arlington, which ballooned to 19.9 percent over the past year, a 3.7 percent jump over 2012. A significant chunk of that is from the 35-story 1812 N. Moore Street building in Rosslyn which is still looking for its first tenants.
The office vacancy rate in Rosslyn grew 8.4 percent year-over-year and sits at 25.2 percent, now the highest area in the county. Crystal City, still smarting from BRAC closures, is the second-most vacant neighborhood at 24.7 percent. Only the Clarendon-Courthouse corridor gained more office tenants than it lost last year, with its vacancy rate falling from 11.2 to 9.0 percent.
Those in and around the retail industry say the recent trends toward mixed-use, urbanized development and the growth of “milennials” among consumers in the post-recession years add up nicely for Arlington.
Bruce Leonard, a managing principal at Streetsense, a real estate, retail and marketing firm, gave a lecture at George Mason University’s Arlington campus last month called “the changing face of retail.” He contended that the retail market is catching up to the real estate market in seeking urban, walkable centers.
Downtown areas were the dominant retail markets at the turn of the century, he said, until “construction of the interstates it moved away from the cities.”
“Now, ironically, we’re coming back to more urban- and downtown-focused retail,” Leonard said. “So for the [Rosslyn-Ballston] corridor, that’s really a good thing because it’s really urban. It’s relevant to the consumer in that it has the ability to provide an immersive and engaging environment… which is what [the consumers] are looking for.”
Kevin Shooshan, who oversees the leasing for The Shooshan Company in Ballston, said that’s why Arlington will still have an advantage over Tysons Corner when the Silver Line opens.
“I think specifically in the Courthouse-Clarendon-Ballston area, it’s more that it’s a walkable area, even more than Tysons,” he told ARLnow.com yesterday. “In Ballston, in Courthouse, in Clarendon, you can go on a leisurely four-block, five-block walk, passing ground floor retail with every step, with options to grab a paper, grab coffee, meeting with someone. It’s not just a walk down a Metro access corridor. I do see that as a huge asset.”
As the D.C. area apartment rental market continues to surge, that retail market can be key for attracting tenants. Most of the new buildings have fitness centers, pools, computer lounges and other amenities, but the shops in the neighborhood are every bit as much of the pitch to a tenant these days.
“Retail, in these markets, is really becoming an amenity,” Leonard said. “We’re seeing the conversation is ‘what kind of retail will I get that will match the demands of my tenant?’ Co-tenancy is going both horizontal and vertical, and that’s a really new trend.”
Billy Buck, the vice president of Buck & Associates, said the Rosslyn-Ballston corridor sells itself.
“In a 10-minute conversation, it’s mentioned in the first minute or two by the client before we have to bring it up,” Buck said. “It’s not something you have to sell. The client or the purchaser or the tenant, they get to us because they’ve already realized that all those things are super important to their use.”
Lastly, the top trend Leonard said the retail market will see, both locally and nationall, is continued downsizing of big retailers. With online shopping and a shift in consumer behavior, chains that had giant, big box stores are looking for spaces sometimes half the size as before.
Most national retailers have square-footage requirements for any space they are looking for, Buck said, but that never prevents them from squeezing themselves in Arlington.
“These retailers are smart enough to realize that it may not fit their corporate mold, they know better than to skip Arlington,” he said. “You’re not going to just pass on Arlington in general, it’s just a bad business decision.”
The top 8 retail centers in Arlington, including the Fashion Centre at Pentagon City and Ballston Common Mall, alone house 644 stores. Arlington retailers recorded a total of $3.27 billion worth of taxable sales in 2012.
The holidays are obviously a crucial time for retailers, providing on outsized portion of annual sales and profit. But with retail sales growth sluggish compared to the growth in online sales, and with the large regional malls in Tysons Corner and outlet stores elsewhere continuing to lure shoppers, the holidays could be a struggle for some local stores.
Ground Floor Retail Exemption Granted — At its meeting yesterday (May 21), the County Board granted an exemption to the policy of requiring ground floor retail space, for the office building at 3701 N. Fairfax Drive. The building formerly housed the Defense Advanced Research Projects Agency (DARPA), which had received a retail exemption due to security concerns. The Board granted the exemption this time due to the space’s lack of access and visibility from the street. [Sun Gazette]
AIRE Goal Exceeded — Arlington County has exceeded its 2007 Arlington Initiative to Rethink Energy (AIRE) goal of a 10 percent reduction in greenhouse gas emissions from government operations by 2012. The county has reduced its emissions by 11.7 percent since 2000. “This is an important milestone in Arlington’s efforts to build a more sustainable future for all our residents and businesses,” said Arlington County Board Chairman Walter Tejada. “The County has made great strides in improving the energy efficiency of our buildings and of our fleet and services, and we will continue to look for ways to reduce emissions and reduce spending on energy.” [Arlington County]
Sales Tax Holiday Begins Saturday — Virginia’s annual Hurricane Preparedness Sales Tax Holiday begins on Saturday, May 25, and runs through Friday, May 31. The tax holiday allows residents to prepare for hurricane season, which begins on June 1, by eliminating sales tax on purchases of emergency supplies. Items such as batteries, generators, bottled water, duct tape, cell phone chargers and radios are included. [Virginia Emergency Management]
Parents of Gymnasts Want New Facilities — Despite a tight county budget, parents of Arlington gymnasts are calling on the County Board to fund new gymnastics facilities. Heather Cocozza, a representative of the Arlington Tigers competitive boys gymnastics team, claims that a new gymnastics facility can actually make a profit for the county. [Arlington Mercury]
APS Ranks Among Top High Schools — Arlington’s public high schools have ranked in the top 2 percent of all high schools in the country, according to the Washington Post’s “Challenge Index.” In the Washington region, H-B Woodlawn ranked #4, Washington-Lee #10, Yorktown #14 and Wakefield #62. [Arlington Public Schools]
Vacant Retail Space May Become Conference Facility — A vacant 13,000 square foot retail space on the ground floor of the new 800 N. Glebe Road office building in Ballston would become a conference facility, under a proposal that’s under consideration by the Arlington County Board. The nearby Bluemont Civic Association has expressed concerns about the change. [Sun Gazette]
Mystery Surrounds Eden Center Shooting — Questions still surround the murder and suicide that occurred at the Eden Center in Falls Church on Saturday night. The victim, meanwhile, has been identified as 51-year-old Tai Phan, of Annandale, who at the time of the shooting was on his way to a gig as a bass player at a restaurant. [Washington Post]
Board May Drop Retail Requirement for Condo Complex — The Arlington County Board is poised to reverse a requirement it set 9 years ago for the Woodbury Park condo complex to reserve interior space for a convenience store. The store would have been located inside the 364-unit complex, with no outside signage and no easy access for non-residents. Nobody has stepped up to rent the space, so county staff is recommending the Board drop the retail requirement and allow Woodbury Park to build a condo unit in its place. [Sun Gazette]
Library, Bayou Hold Instagram Photo Contests — Arlington Public Library and Bayou Bakery restaurant (1515 N. Courthouse Road) are both holding photo contests aimed at smartphone users. Entrants to both contests are encouraged to enhance — and, in the case of Bayou, submit — their photos via Instagram, the photo sharing and special effect service recently acquired by Facebook. The library’s contest is entitled the “Steve Jobs Memorial Juried Cell Phone Photo Show,” while the Bayou contest is called “Bayou by You.” [Arlington Public Library, Bayou Bakery]
Flickr pool photo by Ddimick
International developer and construction company Skanska is working on the five story building at 1776 Wilson Blvd, which will contain both retail and office space.
To earn LEED certification, a developer must earn credits in six categories called Sustainable Sites, Water Efficiency, Energy & Atmosphere, Materials & Resources, Indoor Environmental Quality, and Innovation in Design & Regionalization. The rating system has a total of 110 points, and 80 are necessary to receive platinum certification.
Some of the green features included in the new building are ultra-efficient plumbing fixtures that offer a 40 percent reduction in the typical amount of water used, and water efficient landscaping that doesn’t require a regular irrigation system. Solar panels will be part of the effort to reduce the building’s annual energy costs by 24 percent, and high performance glass will prevent heat gain in the building.
There will also be a green roof terrace on the fourth floor. The garage will feature preferred parking for fuel efficient vehicles, and will be outfitted with power outlets to accommodate electric cars.
The building is scheduled to be mostly completed by August, and the hope is that tenants can move in this fall. Already, the building is 50 percent pre-leased.
A plan to revamp part of Virginia Square has been approved by the Arlington County Board. The development is planned for the site that houses the old Arlington Funeral Home (3901 Fairfax Dr) building.
BDC Crimson LLC is the developer for the nine story mixed-use commercial building, which will include offices, ground floor retail and a 12,985 square foot black box theater. The theater will cost $3.7 million to build, and will be leased to the County for 30 years, at $1 per year. It will hold 150 people.
“This project brings us closer to realizing the community-crafted sector plan’s vision of Virginia Square as a center for arts, culture and education,” said Arlington County Board Chair Mary Hynes. “The public plaza will enliven Virginia Square, and the Black Box Theater will add a significant cultural destination to this part of the Metro corridor.”
The County will collaborate with groups like the Arlington Commission for the Arts to devise a business plan for operating the theater. They’ll look at cost, use and operational alternatives for review by the County Manager in the preparation of future budgets.
The new plan also includes a 12,325 square foot public plaza along North Quincy Street. The County will hold a workshop so stakeholders and the public can give input on some components of the final plaza design, such as pattern and asphalt color.
The office building will have 250 parking spaces that will be available to the public on nights and weekends. Six additional spaces will be provided for retail customers and 17 for the theater. The developer will provide free four hour parking to theater patrons.
BDC Crimson LLC will seek LEED Gold certification from the U.S. Green Building Council, and will contribute $1 million to the County’s Affordable Housing Investment Fund, plus $1 million to nearby Quincy Park or other open space improvements and park amenities. These contributions let the developer have nearly 70,000 square feet of additional space for the project.
This plan has been in the works in various forms since 2004, with some major revisions in 2007. Previously, the facility was designed to include residences and a new funeral home. The County Board voted unanimously to approve the current plan.
Earlier this year, all signs pointed to The Papery (2871 Clarendon Blvd) going out of business. The high-end Clarendon stationery store was perpetually low on stock, the entire inventory was 50 percent off, the landlord had the Papery’s space listed for lease and the store’s website was no longer functional.
Well, what a difference a couple of months make. The store was recently restocked and, as of this morning, its website is back up.
“We’re a family-owned business and for awhile we had a very, very rough period,” admitted Shana, a store manager. But the family has now recommitted to the store — the last of what were once five D.C.-area Papery stores.
“They all pulled together their resources and they’re going to make this store work,” Shana said. “We’ve been part of this community for a long time, and we intend to stay here.”
The Papery’s offerings include custom stationery, custom wedding invitations, business cards, baby announcements, greeting cards, paper goods and gifts.
In due time, the big hole in the ground next to Ballston Common Mall will be filled with development and the view from the soon-to-open Rustico will be even less rustic.
Founders Square, located across Wilson Boulevard from the Liberty Center development (also owned by the Shooshan Company), will consist of two high-rise office buildings, one high-rise residential building, a large hotel, and a smaller building reserved for retailers.
Among the Founders Square office towers, one will be a secure building with a single tenant: the Defense Advanced Research Projects agency, which is relocating from Virginia Square. DARPA signed its lease more than a year ago. The other office building is still leasing.
The hotel, meanwhile, is expected to be a Residence Inn, at least according to architectural sketches. It was originally intended to be a residential building, but its use has since been switched to a hotel by the developer. The change still needs to be approved by the county.
The county’s site plan review committee will discuss the hotel proposal at a meeting tonight in Rooms 109/111 at Courthouse Plaza (2100 Courthouse Road). The county board is expected to take up the site plan amendment necessary for the hotel’s approval in December.
Developers argue that the Ballston area is in need of more hotels.
All told, Founders Square will consist of 1.1 million square feet of office, residential, hotel and retail space. The development could be ready for occupancy as soon as 2012.
It used to be a sleepy street full of warehouses and warehouse stores. Now the three blocks of Fern Street between 12th and 15th Streets are starting to come to life thanks to high-end apartments and a growing roster of ground-level retailers.
The block’s main attractions at this point are the Costco on the north side of the street and the Gramercy and Millennium at Metropolitan Park luxury apartment buildings on the south side. The relatively recent addition of a Dunkin’ Donuts has helped the block attract some more lunch and breakfast foot traffic — adding to the brave souls who patronize an old greasy spoon called Nell’s Carry Out, which resides in a trailer across from the old DHL warehouse.
Slowly but surely, though, more retail is arriving. A dry cleaner and a bank moved into retail bays at the Gramercy around the same time as Dunkin’ Donuts. A UPS Store is under construction down the block. And the U.S. Post Office that’s currently on Eads Street will eventually be moving to the ground floor of the Millennium.
There’s plenty more space to fill. One retail bay of special interest is a specially-designated restaurant space in the Millennium. The building’s leasing agent has been entertaining nibbles from some restaurateurs. We hear that Lost Dog Cafe has expressed interest, as has an Italian restaurant, identity unknown.
A half block off Fern Street is a privately-constructed park with lots of potential. The neatly-landscaped open space — courtesy of Kettler, the developer behind the Gramercy and the Millennium — is big enough to be much more than the defacto dog toilet that it currently serves as. In June, Kettler used it for a party that included “live music, local vendors, a tricycle race, food, drink and a variety of fun activities.” Next summer, management tells us, it will host a series of outdoor concerts.
“Rosslyn has seen a surge in residential and retail development,” the Washington Examiner opined over the weekend. “Nearly 600 new housing units have opened in the past year and more than 500 are under construction.”
According to the Examiner, Rosslyn has experienced a “transformation” over the past decade that has made it “cleaner and greener” and a more attractive place to live.
“Rosslyn is becoming much more mixed use,” Rosslyn BID finance director John Seal told the paper. “There are so many things to do here that people tend to overlook.”
Between the DC skyline views and the proximity to downtown, Rosslyn is the “the high-end living destination in Arlington,” one local real estate broker said.
Another selling point: Artisphere, the shiny new cultural center set to open in October in the old Newseum space. (The article incorrectly lists Busboys and Poets as a tenant — in fact, Busboys dropped out and the county is trying to find another restaurant to take over.)
Yes, there’s more housing in Rosslyn as of late, and yes, Artisphere will bring more culture to the area, but retail? The article’s case for a retail resurgence seems much more thin.
Rosslyn-ites, what do you think of your neighborhood’s development?
As we’ve reported before, Arlington’s unemployment rate has stayed remarkably low during the course of the recession. But in case you needed further proof of the resilience of the county’s economy, look no further than the way money is being spent in Arlington.
A newsletter from Arlington’s economic development authority reveals that local spending on restaurants and retail goods is up significantly compared to 2009.
The meals taxes payed by Arlington restaurants jumped by 9.2 percent for the first three months of the year, according to Arlington Economic Development. In addition to the booming restaurant receipts, retail sales rose 11.2 percent in March.