The Washington region led the nation last year in luring major retailers and will continue to dominate this year as large stores repackage themselves for the now-lucrative urban market, a new report says. The area’s speedy recovery and urban revival is drawing retailers like Walmart, Target and Harris Teeter as major chains return to cities more than 50 years after packing up and leaving downtown neighborhoods.
“There’s only one place in America with more spending power than stores to spend it in and that is basically in our downtowns and cities,” said Ed McMahon, senior resident fellow at the Urban Land Institute.
| Shrinking the big boxes | |||
| Retailer | Big box size | New location | New size |
| Walmart | 185,000 sf | Tysons Corner | 79,000 sf |
| Walmart | 185,000 sf | Brightwood (D.C.) | 102,000 sf |
| Target | 135,000 sf | Georgetown Park | 60,000-100,000 sf |
| TBD; opening 150 | |||
| Best Buy | 30,000 sf | stores nationwide | 1,500 sf |
| Source: Delta Associates Washington Area Retail Outlook | |||
As a result, suburban retailers are downsizing as they focus on fitting into urban environments and are creating a boom in Washington, according to a report by Delta Associates, a real estate research firm in Alexandria. The region has the lowest shopping center vacancy rate among all metro areas, the report said.
Last year, Walmart announced it would open four urban-style stores in the District. Grocery stores have been targeting the city for several years as Safeway, Whole Foods and Harris Teeter have opened new locations in the District and more are on the way. Target is also building on the success of its Columbia Heights store and negotiating for a second location in the Georgetown Park mall.
Still, the report says D.C. residents remain underserved by retailers compared with their counterparts in Maryland and Virginia. And that, combined with the region’s overall economic strength, is drawing retailers to the city.
The D.C. area added 13,600 retail jobs between February 2010 and February 2011, according to the report. The gain is a 5.6 percent increase compared to a less than 1 percent increase nationwide.
Delta’s report found that it’s not just the urban crowd attracting retailers to cities — stores are actually generating more revenue per square foot at the smaller locations. In addition, Rene Daniel of Towson-based Trout Daniel & Associates noted cities are luring major chains with tax breaks and other concessions.
The big box downsizing isn’t limited to downtown, though, as suburban developments such as National Harbor, Bethesda Row, downtown Silver Spring and, more recently, Rockville Pike’s redevelopment have been on the forefront of the trend of reshaping suburban space into urban main streets. Wegmans has seized upon the Washington suburban market for its latest expansion, the most recent opening being in Prince George’s County.
But George Mason University economist Stephen Fuller noted the suburbs aren’t losing development to the cities.
“It’s an expansion into an underserved market versus a relocation, which is what happened 50 years ago … when they moved out of downtowns lock, stock and barrel,” he said.
