As real estate developers in Montgomery County pitch their plans to build new projects and neighborhoods, many use a similar refrain:
It’ll be like Bethesda Row.
Few developments in the county have been so successful. The 534,000-square-foot development, at the corner of Arlington Road and Bethesda Avenue, blends three uses — retail, office and residential — charges high rents, and is the hub of nightlife for a community whose households within three miles take home on average more than $150,000 a year.
There isn’t going to be another Bethesda Row. But there is White Flint in Rockville. Comprised of 430 acres bisected by Rockville Pike, all within three-quarters of a mile of the White Flint Metro Station, it is a sea of parking lots, older office buildings and strip shopping centers.
Montgomery County is targeting the jumble to create a new county model for city living that could drive its commercial development for coming decades. The county’s plan — similar to Fairfax County’s vision for Tysons Corner — is to turn the traffic-riddled corridor into an urban, walkable place. But now it will largely fall to a half dozen major land owners to turn that vision into reality.
Those developers, including B.F. Saul, Federal Realty Investment Trust, the JBG Cos., LCOR, Lerner Enterprises and the Tower Cos., can take heart in the fact that Bethesda Row wasn’t built overnight. In 1994, when it was purchased by Federal Realty, the area was a collection of auto repair shops and light industrial uses. It was developed in 10 phases over 17 years, landing a succession of retail anchors, from Giant Food to Barnes & Noble to the Apple Store. Donald Wood, Federal Realty’s president and chief executive, said his company used Bethesda Row as its “laboratory” for mixed-use development.
It was a long road. In White Flint, a new plan has been in place for 18 months, and everyone is at the starting line.
Rollin Stanley, director of planning for Montgomery County for the past three years, is a strong backer of urbanizing suburban areas that, like White Flint, enjoy access to public transit. A native of Canada, he often raves about the planning of Toronto when speaking at real estate conferences and he writes a blog on the county Web site in which he extols the way traffic is handled in place likes London, St. Louis and Portland, Ore. A favorite slogan of Stanley’s is: “No place is worth visiting that doesn’t have a parking problem.”
But he sometimes found himself at odds with residents, who were concerned that adding so much density would produce more car traffic and deplete open space.
A turning point came, he said, during debate over North Bethesda Market, a 600,000-square-foot project featuring a Whole Foods grocery store that JBG proposed across the street from the White Flint mall. The project included 400 luxury apartments in a 24-story tower, what would be the tallest building of any kind in Montgomery County.
As JBG’s plans began to take shape, Stanley said bigger buildings began to be viewed as something people could walk to, rather than something that would add more traffic; the economic argument for more density gained steam.
“All of a sudden it put into reality to the people around Rockville Pike that you needed to give the major property owners an incentive, a reason to start canceling leases,” Stanley said.
The incentives were density and transportation improvements, which translated to higher land values. Gregory W. Trimmer, of JBG Rosenfeld Retail, calls North Bethesda Market “the first truly mixed-use project, in terms of vertically integrated, in White Flint.”
A month after it opened, JBG and its partner, MacFarlane Partners, sold their stake for $200 million to a Chicago private equity firm.
In many ways the transformation of White Flint runs on a parallel track to that of Tysons Corner. Although Tysons is much larger in land size and will have three more Metro stations than White Flint, both areas have urban-oriented master plans, both require expensive transportation improvements and both are being counted on to drive their respective county governments into financial stability.
A slew of developers — B.F. Saul, Federal Realty, LCOR and Lerner among them — own major stakes in both areas.
But there is also one big difference, developers say: Everyone is getting along better in White Flint. The major landowners of White Flint formed the White Flint Partnership and went to bat for a plan that would allow all of them more density. On top of that, they all agreed to tax themselves an extra 10 percent to pay for a street grid and a redesign of Rockville Pike that could accommodate public transportation, but they have avoided the sort of affordable housing requirements that have been put in place in Tysons.
They all happily pat one another on the back.
“Each one has contributed just a tremendous amount of time and energy in creating this vision, and frankly I think the product will reflect that effort,” said Francine Waters of Lerner Enterprises.
“By working together we really have the ability to create grids of streets, create infrastructure,” Federal Realty’s Evan Goldman said.
“I’ve been doing development now for almost 30 years, and I have never seen ... so many competitors sit down and work for a common goal,” said Robert Wulff of B.F. Saul. “Very rare.”
Soon the White Flint land owners may be moving from comrades to competitors as they chase many of the same apartment renters, office tenants, condo buyers, shoppers and, in some cases, financing partners or buyers.
Three development teams have begun seeking zoning changes for their developments, and at a time when retail expansion is slow, entertainment could take center stage.
Federal Realty, for instance, has submitted a plan for the first phase of redevelopment of its Mid-Pike Plaza shopping center into a mixed-use project called Pike & Rose. A luxury movie theater will serve as its anchor.
JBG, meanwhile, has submitted plans for North Bethesda II, the phase to follow the Whole Foods project. JBG Rosenfeld’s Grant Ehat would not disclose specific retail plans for North Bethesda II, but he hinted that “people will always want to have a place where they can gather, get together, meet, see a movie, see a show.”
Other developers are moving more cautiously. Wulff confirmed that B.F. Saul is assembling land, but he declined to elaborate on deals that were not fully complete. “We are positioning ourselves for when the market signals that it is ready to redevelop,” he said.
Michael J. Smith, vice president at LCOR, said the company plans to break ground on a 341-unit apartment building, the Aurora, by the end of the year, with completion scheduled for early 2015. LCOR has nearly completed a 14-story office tower for the Nuclear Regulatory Commission.
The elephant in the room may be White Flint mall, jointly owned by Lerner Enterprises and the Tower Cos., anchored by Bloomingdale’s, Lord & Taylor and its own movie theater.
Waters, managing director of transportation and smart growth for Lerner Enterprises, said plans for the mall would include a mix of uses and public open space. She would not say whether the companies would propose demolishing all or part of the mall, but said they plan to seek zoning changes in coming months.
Whether sufficient incentives exist right now for Lerner and Tower to redevelop the mall is unclear. But given the pace of development at Bethesda Row, they have time.