Will CityCenterDC rekindle downtown retail?

April 10, 2011

In the long-fought effort to create a vibrant retail corridor in downtown Washington, CityCenterDC, promising 325,000 square feet of stores and restaurants on the site of the old convention center, could be the centerpiece that pulls it all together.

Bound by New York Avenue and Ninth, H and 11th streets NW, the $700 million, mixed-use project that broke ground last week is surrounded by disjointed pockets of retail. Areas such as Gallery Place and the F Street fashion corridor draw crowds but lack the synergy needed to be considered part of a cohesive shopping hub. CityCenterDC hopes to bridge that gap.

Over the next four years two condominiums, two apartments, two office towers and a hotel will rise on 10 acres of land, developed by Hines Interests and Archstone. Retail will snake around a latticework of pathways leading to a public plaza.

“When this comes on, it will create the critical mass needed for destination retail,” said Richard Bradley, executive director of the Downtown D.C. Business Improvement District.

Much of the success of CityCenterDC’s retail will rest on its merchandising mix. Plans call for health clubs, specialty shops, home furnishings, grocery stores, a super club, clothing boutiques and eateries. Howard Riker, vice president of development at Hines, envisions varied chef-driven restaurants, preferably run by local operators to enhance the already vibrant downtown food scene.

Clothing stores are a different matter. Downtown is home to an odd mix, be it trendy fashion retailers such as Zara, more traditional brands like Ann Taylor or the department store Macy’s. Riker would like to move upscale with more aspirational retailers (think Burberry or Coach).

“Most of the tenants [downtown] have been value-oriented or geared to the daytime office sector. We aspire to raise the product positioning and price point,” Riker said, noting deals should be announced in the next six to nine months. “Our focus has been to talk to national and international brands that don’t have much of a presence in D.C., or source local operators looking to start new concepts.”

Including a few big national tenants such as Gap could go a long way to attract a cross section of shoppers, said Len Harris, vice president of retail leasing and project development at Vanguard Realty Group. Downtown, he argued, needs the kinds of stores found in malls to create a marketplace to support specialty retailers.

In its heyday in the mid-1960s, the downtown area had a bevy of shops and restaurants, even four department stores. The area, though, gradually lost its luster following the 1968 riots and growth in the suburbs. When developers began to take notice again in the 1980s, most could only envision office buildings, Harris said.

Verizon Center served as a catalyst for retail, which evolved in fits and starts. The city rezoned the area in 2001 to encourage more stores, eventually creating a $30 million pool of tax increment financing [TIF] that secured H&M and Forever 21.

CityCenterDC sits outside of that TIF district, but Riker is confident tenants will nonetheless flock to the project in part because “the market has found its footing.”

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