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Slowed Down, but Planning Big
Despite Setbacks, Kettler Is Confident Prince William Project's Time Will Come

By Cecilia Kang
Washington Post Staff Writer
Monday, March 10, 2008

Perhaps nowhere else in the Washington region has the real estate slowdown come to roost more than Prince William County. And yet developer Robert C. Kettler continues to have faith in the slumping eastern corridor of the county.

Kettler, head of the development firm that bears his family name, won approval during the recent housing boom for a plan to transform the area into an upscale Potomac River community featuring a luxury town center, 4,000 homes and a 400-slip marina.

He's already sunk $200 million into Harbor Station to assemble the land, build roads, lay sewers and construct an 18-hole golf course designed by Jack Nicklaus -- setting the table for work to begin on actual buildings.

Then the mortgage meltdown hit. Credit markets seized up. And work stalled, another casualty of an economic slowdown that has put more homes into foreclosure here than anywhere else in the region.

Kettler has been pressing to make progress ever since.

He's still negotiating to sign a builder to put up the project's first rooftops. He's stuck in talks with Marriott to run a hotel and conference center that bears its name. He's working on bringing an upscale grocer.

One bright spot: He's secured public financing to build the Cherry Hill commuter rail station.

"The project is in a holding pattern due to capital market disruptions in investment real estate," Kettler said. "The housing and town center components will begin when we can launch several product lines simultaneously."

Like other big developers in the region with projects underway, Kettler has little choice but to ride out the slowdown and hope he can be in position to cash in when the market recovers.

"In the land business, if you look at it as short term, you are dead. This is still the single best piece of land I've ever bought with the most potential of anything I've ever bought, period," he said.

Still, he has made perhaps the biggest bet of anyone on the eastern corridor straddling Route 1, and many have retreated. Two Giant grocery stores are closing this spring because of slow sales. Indoor flea market Hi-Mart is half vacant and trying to reinvent itself.

If there's hope, it's in recently announced plans for luxury condominiums near Kettler's mega-project, by a firm involved in the development of the Watergate complex. Elsewhere in the area, a Wegman's high-end grocery is on track to open soon.

"It's definitely taken longer than we thought to start construction but we're starting and we still believe 100 percent in Prince William County," said Carlos Cecchi, head of the condominium project, called Rivergate, for development firm IDG.

The Great Build

Kettler's vision for Harbor Station fit squarely with the county's aspirations to revive the beleaguered eastern corridor and erase its image as a collection of low-brow retail outlets and cheap tract housing.

In fall 2002, with the real estate engine of the Washington region running at full tilt, he walked onto the littered and sandy shoreline of the 2,500-acre lot for sale and saw gold. The Cherry Hill Peninsula of hardwood forests and two miles of riverfront had been largely overlooked. It was considered too close to the 15-mile stretch of Route 1 in Prince William, a busy four-lane highway with no sidewalks, huge parking lots that backed into cheap retail and at least a dozen auto dealerships.

"I've grown up in Woodbridge and one thing that has never changed is Route 1," said Paul Kim, who runs an auto body shop near the Rivergate condo project.

Yet as higher-income families came to Prince William looking for bigger homes with bigger yards, that image seemed to be changing. In 2002, the county hired the nonprofit Urban Land Institute to come up with a blueprint for future development.

The county decided that two new museums -- a science museum and the Marine Corps heritage museum -- would serve as bookends for redevelopment in the eastern edge. In between, at least three mixed-use commercial and residential projects would bring trophy homes, upscale groceries and department stores into town centers where residents could walk to public transportation, restaurants and shopping.

When the application to build a Wegman's grocery store came to a vote in February 2006, dozens of residents came to the board of supervisors meeting with "Wegman's Now" buttons pinned to their shirts.

A small army of developers and entrepreneurs began to take notice, hoping to get a piece of what one dubbed the Great Build. Big plans were hatched. The region was on its way.

And then the subprime-mortgage crisis hit and momentum stalled.

The proposed science museum is still $40 million short of funding. Down a few miles, plans for the Marumsco Plaza, a largely vacant shopping center stuck in a 1960s time warp, have been scaled back from a mixed-use town center with condos and apartments to include just retail. Instead of luxury retail, a coin-operated laundry and two dollar stores have appeared in the last year at the Featherstone Mall.

"As the process slows, it is quite possible Prince William County will never get back to where it wanted to go because as it waits, the old image of the area, old forces like lower-cost development, will reemerge and other places will have gained on them," said Stephen Fuller, director of the Center for Regional Analysis at George Mason University.

These fears keep Robert Chung and Carl Runk, owners of an Anytime Fitness franchise, on edge. They opened their small fitness center at the River Oaks mall in May 2007, excited by all the activity they saw at Kettler's nearby projects. They liked their location, near a Giant Food, and within the first six months reached their target of signing 400 members.

Last month, however, they learned the Giant is going to close this spring because of weak sales. And gym memberships are slowing.

Runk, a martial arts expert, said that if he could have predicted the extent of the housing downturn along Route 1 and if he had known of Giant's plans to close, he would not have chosen Woodbridge for his fitness center.

"We're looking around us and seeing some really bad signs. There's a huge level of disappointment," Runk said.

Attention to Detail

Runk still sees hope in Harbor Station, if for no other reason than Kettler has a track record to pull off such a project.

Kettler transformed Lorton in south Fairfax County, which was best known for the county's penitentiary, with sprawling developments of luxury single-family homes and town homes that have pushed the ceiling on prices for middle- to upper-middle-class buyers in the area. He brought executive homes to the rolling cattle farms of western Prince William County where his Piedmont subdivision has attracted higher-end retailers like a Harris Teeter grocery.

Borrowing from lessons of his father, who developed the planned community of Montgomery Village, Kettler, 55, is fond of creating subdivisions with the themes and amenities one might find at a vacation resort. He pays attention to detail, hand-picking street light designs and reviewing landscapes. At his Port Potomac development along Route 1, the $12 million clubhouse hosts wine and cheese tasting parties, while his nearby Potomac Club, which appeals to young professionals, has a three-story rock-climbing wall.

Driving his black Suburban down the winding concrete golf cart path of the Signature Jack Nicklaus golf course several weeks ago, Kettler talked enthusiastically about the expensive grass seeds needed for the putting greens compared with the bluegrass sod on the fairways. Each hole on the course, he said, was designed with the idea that golfers like to feel they are descending a terrain.

"Psychologically, people don't want to look up at a hill, it's bad for their game and they don't feel good about the course," he said.

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