Less than a mile north, extensive construction at Pike & Rose
shows the new successor to the ’70s strip center. Here, the 76,000-square-foot Toys ‘R’ Us was demolished in 2012 to make way for the mixed use retail, office and residential development. Federal Realty Investment Trust is planning to start the second phase of the massive redevelopment of the former Mid-Pike Plaza.
Farther north along Route 355, Lakeforest Mall, which ranked as one of the largest retail property sales in the region last year, appears to be readying plans for a makeover of its own. Earlier this month, the mall’s owner, Five Mile Capital Partners of Stamford, Conn., announced that real estate investment firm Hines, which is currently overseeing the development of CityCenterDC in downtown Washington, will join Five Mile in mapping out plans for the mall.
Over the past four quarters, the Interstate 270 corridor, which stretches from the Beltway in North Bethesda, through Rockville, Gaithersburg and Germantown, has seen between 252,000 square feet and 520,000 square feet of retail space under construction at any given time. The only D.C. area submarket clusters to have more retail space under construction are both in neighboring Prince George’s County: the 350,000-square-foot Tanger Outlets underway at National Harbor, and Towne Centre at Laurel, a 285,000-square-foot shopping center project in the northern part of the county.
Overall, demand for additional retail space has been lackluster. Retail vacancy has slowly declined in the Washington market, dropping from as high as 5 percent in the first quarter of 2013 to 4.6 percent at the beginning of the fourth quarter of 2013.
Judging by the construction in these key areas, confidence is increasing among retail developers that stores will pay to locate in prime new space in these traditionally strong suburban retail markets when the substantial increase in inventory reaches completion.
Kirstie Boatright is a research manager for CoStar Group in Washington. For more information, please visit www.costar.com.