There are 7 questions about Real estate/business, each of them need watch a small video or reading a material. For each questions only need answer one paragraph.
Therefore, 7 questions, 7 video/reading, 7 paragraph.
Real Estate economicsbusiness
1. Why is Des Moines on the rise?
2. Please describe the City of Boston’s competitive advantage(s).
3. What are some of the scenarios where TIF’s do not work?
4. What is the highest and best use for the landover mall?
Reading will be attached
5. List the sources of information included in the City of Frederick’s Master Plan.
Reading will be attached
6. Was amazon seeking a de facto special economic zone with is HQ2 Request for Proposals?
7. What are the environmental risks involved in the Howard University offering?
Reading will be attached
Landover Regional Shopping Center:
The Perceptions and Realities that Caused a Mall to Fall
A Senior Thesis Submitted to the
Growth and Structure of Cities Department
of Bryn Mawr College
December, 2006
Alexis Leventhal
Class of 2007
Haverford College
Abstract
Built in 1972, the Landover Regional Shopping Center, located Southeast of
Washington, D.C. in Prince George’s County, Maryland, was once the archetypal
suburban shopping mall for the Washington, D.C. area. With four anchor stores, 1.3
million square feet, and a convenient location directly off the newly completed Capital
Beltway, Landover mall was a retail force to be reckoned with. Filled with modern day
amenities and high-end retailers, Landover mall was venerated by shoppers and envied
by neighboring malls. By the mid-1980s, however, this image of Landover was replaced
by a much darker one. Landover had lost much of its appeal as the structure was
neglected and its high-end retailers moved out. By 2002, the mall had closed and was
demolished a few years later. The transformation of Landover from a boom to a bust
seemed to take place almost over night. But how was this possible? And why did it
happen?
The answer lies in another transformation that was taking place in the mall’s
surrounding area: the composition of the county’s population from majority white to
majority black. The coinciding of the changing population and the deterioration of
Landover mall is no coincidence. This was due to strong, negative perceptions of African
Americans and, in turn, the areas in which they live. This perception is one of crime and
poverty and is a perception that can affect the economic viability of the area such as the
stability of Landover mall. Landover mall fell victim to the unfair and unwarranted
perception projected onto it by the surrounding population, despite the reality that the
area was otherwise viable and desirable for retailers. Although other factors are at work
in generating the mall’s premature decline, namely benefits from tax laws, perception
was the major contributor and, more importantly, a factor that should not have
contributed to Landover’s failure.
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Table of Contents
Dedication………………………………………………………………………………i
Acknowledgements…………………………………………………………………….ii
Introduction
Landover Mall in the Context of the American Suburban Shopping Mall…………..1
Chapter I
History and Benefits:
Developing Landover Regional Shopping Center in Prince George’s County………8
Chapter II
The History of Landover Mall…………………………………………………………17
Chapter III
The Black Middle-Class: Perceptions and Realities……………………………….…22
Chapter IV
The Role of Perception in Landover’s Decline……………………………..…………26
Chapter V
The Intensification of Failure and Closing of Landover Mall……………….………32
Conclusion………………………………………………………………………………37
Bibliography……………………………………………………………………………40
Dedication
For my parents and sister.
Acknowledgements
My deepest thanks and appreciation to the professors of the Department of the
Growth and Structure of Cities at Bryn Mawr College for their support, guidance, and
insight throughout the thesis process as they have never failed to be anything but. Thanks
and congratulations are also due to my fellow majors at Bryn Mawr College and
Haverford College.
1
Introduction
Landover in the Context of the American Suburban Shopping Mall
Landover Regional Shopping Center, more commonly known as Landover Mall
or simply Landover, is located southeast of Washington, D.C. in Prince George’s County,
Maryland. Originally a bustling shopping destination for residents all over the greater
Washington, D.C. area, the mall is now a pile of rubble with nothing marking the
existence of this once-great shopping center. Landover Mall was unable to adapt, reinvent
itself and stay competitive, in turn, causing the mall’s failure. In addition, other forces
were working against the success of the mall that motivated those charged with the mall’s
success to prohibit the mall from making the crucial changes needed for it to succeed.
These forces were the powers of negative perception and prejudice in response to the
area’s growing African American population. Landover mall, therefore, is not so much
an example of a mall that failed because it could not adapt, but one that failed because of
a conscious decision by the developer, owner, and manager, Lerner Enterprises, not to
allow change at the mall because it was already perceived as unable to succeed. To
understand the difference between the voluntary and involuntary failure of this mall, the
importance of the ability to adjust in the success of a shopping mall must first be
understood in the larger context of the history of shopping malls.
Most industries to stay competitive must adapt, reinvent themselves, and innovate
as the environment around them changes. The result of this in the retailing industry is the
movement away from the downtown Main Street and towards suburban shopping centers.
This transformation of where and how people shop is a response by retailers to the
changing American lifestyle. Urbanization, suburbanization, and technological
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advancements are factors that the developers of twentieth century shopping malls had to
recognize and adapt to in order to capitalize on the markets within this constantly
changing environment. With American shopping malls accounting for 29% of the
world’s total retail space, competitive with entire continents such as Asia which houses
37% of the world’s total retail area and Europe which holds 10%,1 the ability of
developers to capitalize on changing markets has turned into the dominance over them.
However, as the American landscape continues to change, as it has before and will
continue to, American shopping malls must react and project accordingly to remain
viable industries.
The change in how people shop from the downtown department store to the
shopping mall has a direct correlation to the urbanization before World War I and
subsequent suburbanization occurring after World War II. Between the Napoleonic Wars
and World War I, 35 million immigrants entered the United States from Europe alone.2
In addition to the millions of American citizens who immigrated from rural areas and
immigrants from other non-European nations, cities were booming and retail was
changing to take advantage of it all. The classic two-part commercial block, with retail
on the ground floor and clearly separated residences above, was making way for the two
and three-part vertical block.3 These buildings also have retail on the ground floor, but
only business spaces above. They are taller to accommodate increased density and the
rising cost of downtown land values.
1 Chung, Chuihua Judy and Sce Tsung Leong. Harvard Design School Guide to Shopping. Köln: Tashcen
GmbH, 2001. Pg. 52, 53.
2 Nelli, Humbert S. “European Immigrants and Urban America” in The Urban Experience, Eds. Raymond
A. Mohl and James F. Richardson. Pg. 61.
3 Longstreth, Richard. The Buildings of Main Street: A Guide to American Commercial Architecture.
Lanham, MD: Rowman and Littlefield Publisher, Inc. 1987. Pg. 93.
3
These buildings began to change as America experienced economic prosperity in
the 1920’s to both attract and accommodate more customers. The downtown streets of
cities were busy with pedestrians, and big windows with flashy displays were the way to
grab their attention. Carrara glass used together with Vitrolite, pigment structural glass,
to cover both exterior and interior wall surfaces was incorporated into retail structures to
open up the storefront in an attempt to grab the eye of a passerby.4
New materials and building designs were the methods retailers used to maintain
competition with each other. This competition turned the commercial center into “a
collage, a panoply of competing images embodying the rivalry of the marketplace”
thanks to “facades serving as advertisements for the businesses within” and “buildings
conceived as monuments to the industriousness of the people who commissioned them.”5
This style of department store continued to thrive without major changes up until the
1930s and 1940s. These buildings, along with those before them made huge adjustments,
adaptations, and complete transformations to keep up with an increasingly bustling and
modernizing public. They also attempted to attract and keep people downtown in a
tireless battle of staying ahead of the competition.
The world of retail began its more drastic transformation after World War II,
when “America’s birth rate rose, and millions of young families with children abandoned
the crowded central cities and invested in suburban homes with yards large enough to
accommodate a sandbox and a swing set.”6 Until this point, suburbs had been mostly
4 Longstreth, Richard. Pg. 132.
5Longstreth, Richard. Pg. 13.
6 Teaford, Jon C., “Trumpeted Failures and Unheralded Triumphs” in the The Unheralded Triumphs.
Baltimore, Maryland: Johns Hopkins University Press, 1983. Pg. 98.
4
communities available to only those who could afford to move and travel in and out of
the city, but this also was changing. Before World War II,
Only 43 percent of travel in Baltimore was by car, and in
Philadelphia private motor vehicles accounted for only 31 percent
of all trips. But in every city reliance on the automobile was
increasing, and public transit patronage was declining. Freed from
the slow-moving, centripetal transit lines and devoted to the greater
flexibility of the automobile, Americans now migrated farther from
the urban core and often chose their residence without regard to bus
routes or streetcar lines.7
This growing dependence on the private automobile and the ensuing pattern of
moving away from urban areas was eased and encouraged with the passage of the
Federal-Aid Highway Act of 1956, which authorized the construction of 41,000 miles of
interstate highways and subsidized 90 percent by the Federal government.8 This
government supported pattern of outward growth, for retail, translated into the
simultaneous slowing of one market in cities and the flourishing of another in the
suburbs. Because “the ideal shopping center location optimizes access to maximum
market potential for the tenant merchants, or, conversely, access to merchandise for the
shopping public,”9 the face of retail would change again.
“As more and more Americans responded to the advantages of suburban life,
retailers joined the outward migration in hot pursuit of the suburban dollar. But retailing
had to adapt to the suburbanite’s devotion to the automobile, and the shopping center was
born.”10 There had been shopping centers dedicated to the motorist before the 1950s,
such as the Kansas City’s Country Club Plaza built in the 1920s, but, as the name
7 Teaford, Jon C., Pg. 99.
8 Teaford, Jon C., Pg. 99.
9 Tucker, Grady. “The New Economics of Shopping Center Location and Scale” in Shopping Centers:
U.S.A. Eds. George Sternlieb and James W. Hughes. New Brunswick, NJ: Center for Urban Policy
Research. 1981. Pg. 41.
10 Teaford, Jon C,. Pg. 105.
5
suggests, they were not targeting middle-class families in America’s new suburbs. The
year 1956 marks the birth of the first modern shopping center: Victor Gruen’s Southdale
Shopping Center located in Minneapolis, Minnesota.11 Southdale was one of 1,600
shopping centers built in 1956 in addition to the 2,500 more being planned or in
construction phases.12 With each new road, new suburbanite, and new shopping mall,
more of each would follow.
The shopping mall phenomena first hit the Washington, D.C. area in the late
1960s and early 1970s. In 1968, Washington, D.C. suburbs opened their first suburban
mall, Montgomery Mall, in Montgomery County, Maryland. Montgomery Mall was
soon followed in 1969 with the construction of Tyson’s Corner in Fairfax County,
Virginia, then Landover Mall in 1972 located in Prince George’s County, Maryland.
Mall construction boomed throughout the 1970’s with Springfield Mall, Lake Forest
Mall, Fair Oaks Mall, and White Flint Mall all opening by 1977in metropolitan
Washington, D.C.13 These malls arose out of the same population growth patterns and
economic forces seen throughout the country created by mass suburbanization and
technological advancements in shopping mall design.
Suburban shopping centers have been the product of as well as the catalyst for
America’s suburbs. However, there is a recent and growing trend in which a younger
generation is looking to return to the urban core. Predictably, the world of retail will
respond and influence accordingly, as it has done for over one hundred years and will
continue to do. Retail and economic specialists have been aware of this trend for over a
11 Chung, Chuihua Judy and Sce Tsung Leong, Pg. 116.
12Teaford, Jon C., Pg. 105.
13Schoenherr, Steven E. Evolution of the Shopping Center.
http://history.sandiego.edu/gen/soc/shoppingcenter.html, accessed Feb. 17, 2006.
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decade now, as a 1990 article revealed that the average time shoppers spent in malls
dropped by half from 1980 to 1990.14 Old retail pro, Stanley Marcus, Chief Executive
Officer of big-box retailer Wal-Mart, David Glass, along with old retail, along with other
retail experts are predict that 50 to 75 percent of present retail will be extinct within a
decade.15 “Regional malls clearly have a life cycle, and a lot of them are in their last
throes. By 2010, 55% of the nation’s shopping [is predicted to] be conducted in nonstore
venues—online services, direct mail, catalogues, 800 numbers, and the like.”16 It appears
as though the mall may be disappearing as American’s preferences towards shopping
styles change, unless mall can appeal to those changing preferences and keep customers
coming to them, like many suburban Washington, D.C. shopping malls have been able to
do.
Shopping centers in the greater Washington, D.C. metropolitan area have not
followed the perceived national trend of mall decline and eventual disappearance. In
fact, more malls have been built in Washington, D.C. as well as in its surrounding
suburbs during the 1980s when mall fervor was diminishing in other areas of the country.
Additionally, current malls are, for the most part, thriving in the region. Lakeforest Mall,
Forest Village Park Mall, Laurel Center Mall, White Flint Mall, Ballston Common,
Potomac Mills, and Tyson’s II are all examples of malls built during the 1980’s
throughout the greater Washington, D.C. area; all are, to varying degrees, continuing
successful retail ventures despite projections that suburban shopping malls would have a
14 Hassell, Greg. “Malls Slipping as Shopping Meccas,” Houston Chronicle. October 9, 1996. Pg. 1.
15Lewison, David M. Retailing. New York: Macmillan, 1994. Pg. 3.
16 Labich, Kenneth. “What will it take to Keep People Hanging Out at the Mall?” Fortune, May 29, 1995.
Page 103.
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severely less prominent place in retail. 17 In addition to these newer malls being built,
older malls continue to thrive such as Tyson’s Corner and Montgomery Mall. However,
the success of both these older malls and the newer malls is likely due, in part, to their
ability to adapt to “meet the competitive challenges they face and evolve into more
sustainable community assets.”18
The ability to adapt as seen throughout the development of the suburban shopping
mall is the ability to survive. As noted, the conditions that led to the creation of shopping
malls and have continued to sustain them are beginning to or have changed. Markets,
demographics, competition, traffic patterns, and crime are all factors that malls respond
to in order to keep and attract more customers; the failure to adapt is the failure of the
mall.
For Landover Mall, the changing racial composition of its customer base from
white to black posed its greatest obstacle in maintaining a successful mall. Although
there is also a strong tax benefit factor adding to Landover’s ability to succeed, which
will be thoroughly discussed later, Landover Mall’s failure can be mostly attributed to
two, inter-related reasons: First is the perception of this changed population enhancing
the already growing negative image of Landover Mall, discouraging both local and
regional consumers from shopping there. Second is Landover Mall’s inability and
unwillingness to confront and actively transform its negative image, only further
exacerbating the negative perception and causing further decline.
17 Zibert, Eve, “The Malls, the Merrier a Shopping List in Time for the Season,” The Washington Post,
November 20, 1987.
18 Beyard, Michael D., et al., “Ten Principles for Rethinking the Mall,” Washington, D.C.: Urban Land
Institute, 2006. Pg. viii.
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Chapter I
History and Benefits:
Developing Landover Regional Shopping Center in Prince George’s County
The 1960s marked the beginning of a transformation in Prince George’s
County, Maryland. This transformation included dramatic changes in population size,
ethnic makeup, and household income. Between 1960 and 1970, Prince George’s County
underwent several major changes in its population. The first was a nearly doubling of the
population from 355,000 in 1960 to 600,000 in 1970.19 Due to an out-migration of over
6,000 whites, the proportion of black residents located in the greater Landover area
increased from approximately 30 percent of the population in 1960 to nearly 70 percent
by 1970.20 In addition to the increased black population, black median family income
was on the rise, becoming slightly higher compared to their white counterparts at $12,450
(about $37,200 in today’s dollar value) in 1970.21 Prince George’s County was growing
more populated, was more minority dominated, and was wealthier every year.
The increases in population and purchasing power created both the residents’
need for more commercial space and the developers’ desire for new and broader markets
to invest in. The Landover Mall Regional Shopping Center (Landover Mall) was the
resulting product of these new needs and desires. The mall was not devised as solely a
place for local residents to spend their growing incomes, but as a contributing factor in
attracting other high intensity commercial uses, such as a “regionally serving office
19 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 17.
20 Maryland-National Capital Park and Planning Commission (M-NCPPC), “Development Potential Model
Neighborhood Area Prince George’s County Planning Area 72,” Gladstone Associates Economic
Consultants, Nov. 1971. Pgs. 14-15.
21 M-NCPPC, “Development Potential Model Neighborhood Area Prince George’s County Planning Area
72.” Pg. 17.
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complex and successful high-rise apartment development.”22 The developer of Landover
Mall itself, Lerner Enterprises, brought this speculated development to life as the
company later built a Marriott Hotel as well as 3,000 apartments units in the county.23
The county had a new composition of residents that held a new and untapped potential
for economic prosperity.
The development of Landover Mall hinged on its viability in the Landover area as
a destination for residents from all over the greater Washington, D.C. area to shop. This
is because developers must illustrate that the area for proposed project has sufficient
numbers of tenants and customers to support it in order to receive credit to finance its
creation.24 To discern the sustainability of their project, developers rely on demographic
information and examine the accessibility of the area in selecting project sites. Thus,
confidence in the area of an economic venture is key in investing in that venture,
particularly malls where physical location and the location’s qualities usually determine
their success. Therefore, the selection of Landover, Maryland as the site for a regional
mall speaks directly to the quality and viability of the area.
The developer of Landover mall, Lerner Enterprises along with the presidents of
the four would-be anchor stores of the mall (Hecht’s, Sears, Garfinckel’s and Woodward
& Lothrop,) expressed their confidence in the viability of the Landover area by initiating
negotiations with the Prince George’s County Council about developing Landover Mall,
22M-NCPPC, “Prince George’s County Trendlines,” Pg. 17.
23 Nakamura, David, “Mall’s Comedown Taints Lerner Image: Resentment of Nats’ New Owner Lingers in
Pr. George’s,” The Washington Post, May 16, 2006, Metro B01.
24 Blackmar, Elizabeth, “Of REITS and Rights: Absentee Ownership in Periphery,” Diefendord, Jeffry and
Kurk Dorsey Ed., City, Country, and Empire: Landscapes in Environmental History. Pittsburgh, PA:
University of Pittsburgh Press, 2005. Pg. 83.
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estimated to cost in excess of $60,000,000.25 This confidence is further supported by the
businesses practices of Lerner’s President, Theodore N. Lerner, who stressed the
dependence of his own instinct in determining what projects to pursue.26
Both Lerner Enterprises and Prince George’s County had persuasive reasons for
building in the town of Landover as both parties stood to benefit from development of a
regional shopping center. The County Council projected that Lerner’s proposed mall
would result in:
Approximately 100 local merchants to open private business, result
in the creation of approximately 3,000 jobs, will provide an
additional $500,000 per anum in property taxes, will yield
approximately $3,250,000 per anum in sales taxes, will create a
new source of State and County income tax and revenues and will
help to create substantial work and employment for County-based
contractors and their employees.27
Lerner’s development of the Washington, D.C. area’s largest mall, Tyson’s
Corner, four years earlier established him as a successful mall developer. Lerner’s past
mall success, in addition to the benefits the county stood to receive with the building of a
regional mall, made the Landover Mall project appear to be a sound business venture.
On Lerner’s side of the business deal, the past decade of population and economic growth
in Prince George’s County and its projected future growth in addition to the area’s
accessibility, served as adequate evidence for the developer to pursue Landover as the
project site. Other benefits to Lerner provided by the county such as tax credits or the
providing of land for the project were not mentioned in the County Council’s approval
process of the project. In addition, the county was promised that the proposed mall
25 Resolution No. 1-1971. Prince George’s County Council Hearing. Feb. 9 1971, accessed at the Prince
George’s County Public Documents Reference Library, Oct. 16, 2006.
26 “Developer’s Empire Based on Instinct,” The Washington Post, Aug. 21, 1981.
27 Resolution No. 1-1971. Prince George’s County Council Hearing. Feb. 9 1971.
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would “remain open for business for a period of not less than thirty years.”28 Ultimately,
Landover Mall began as the product of different interests finding a common project to
fulfill their separate symbiotic goals. All parties involved with the building of Landover
Mall stood to benefit from its construction, but did some parties stand to benefit more
than others? And would those benefits come at a cost to others?
Mall Financing, Accelerated Depreciation Values, and Landover’s Decline
The change in depreciation values changed the motivation driving the
construction of shopping malls and raised the above questions as well as the question of
whether the benefits of Landover Mall were the reason it was allowed to decline? Since
the first appearance of the generic shopping mall in the 1920s, developers have searched
for ways to make these ventures increasingly profitable. Methods initially included
creating shopping centers that attracted the most customers, increasing sales and, in turn,
increasing the rents of shops within the centers. However, due to a 1954 change in the tax
laws the strategies to make malls cost-effective shifted from the profitability of sales and
rents to the profitability of the depreciation of the structure itself.
Depreciation enables property and building owners to deduct a fraction of the
profits from that property to be used to replace or repair structures and machines
inherently necessary to the success of the business. This deduction is not taxable because
it is expected to be reinvested back into the property. Federal officials acknowledged the
need for business owners to account for depreciation and the original income tax
legislation of 1913 permitted businesses to deduct from their taxable profits a “reasonable
allowance for the exhaustion, wear and tear of property arising out of its use or
28 Resolution No. 1-1971. Prince George’s County Council Hearing.
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employment in the business.”29 “Reasonable allowance” refers to a fair and rational time
period for which a building or machine integral to the practices and success of the
business is considered useful. The change in the definition of “reasonable allowance” is,
specifically, what has created the shift in the reasons that determine which shopping
malls are lucrative investments.
From 1934 until 1954 the estimated useful life of a building was forty years as
defined by the Treasury Department. Owners could deduct from profits 1/40 of the
original cost of the building. Therefore, a new forty-million-dollar mall, had an annual
depreciation deduction of a million dollars30 that went back into the pockets of the
developer to be held for building replacement. But there was no requirement in the tax
law to force investors to use the deducted money for that purpose. In essence, investors
could use the money for anything they wished including investing in other similar
building ventures.31 The passage of the Internal Revenue Code of 1954 made the benefits
of this tax law greater and increased the attractiveness of investing in shopping malls.
With the country experiencing a minor recession in 1953, the 1954 tax law
included several tax breaks designed to stimulate economic development and investment,
namely the acceleration of the depreciation deduction.32 Accelerated depreciation
replaced the straight-line approach created in the 1930s to a 200% declining balance and
a “sum-of-the-years’-digits” depreciation. These two new formulas used to calculate
29 Wehrly, Max S., “Trends for Modern Communities,” Urban Land, 12 (September 1953): 1, 3-5; Hoyt,
“Impact of Suburban Shopping Centers,” 4, in Hanchett, Thomas W., “U.S. Tax Policy and the Shopping-
Center Boom of the 1950s and 1960s,” The American Historical Review, Vol. 101, No. 4, Oct. 1996, Pg.
1092.
30 Gladwell, Malcolm, “The Terrazzo Jungle: Fifty years ago, the mall was born. American would never be
the same,” The New Yorker, May 3, 2004.
31 Hanchett, Thomas W., “U.S. Tax Policy and the Shopping-Center Boom of the 1950s and 1960s,” The
American Historical Review, Vol. 101, No. 4, Oct. 1996, Pg. 1093.
32 Hanchett, Thomas W. Pg. 1094.
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depreciation shifted tax deductions toward the first years of a project’s life, enabling
investors to reap the benefits early on. Investors began building structures for which
profits were greater from accelerated depreciation than they were for the use of the
building; thus developers found it more profitable to take advantage of the tax-free
income while it was the highest in its first few years of operation, then selling the
building at a higher price than the initial investment.33 This pattern of investment became
quickly and exceedingly popular among large-scale retail real estate development. In
addition, with the accelerated depreciation value only applicable to new, not renovated
buildings, the emphasis on new construction was concentrated in the suburbs. Building
on untouched and unpopulated land instead of in dense urban areas was cheaper for the
developer and resulted in a change from “consequent” to “catalytic” development.34
Ultimately, the 1954 tax laws changed the types of incentives considered in developing
buildings and made constructing large, suburban shopping malls easy, quick, and
profitable business investments.
This type of investment, done for the purpose of benefiting from tax laws, created
distinct new business practices. In addition to the general construction of suburban
shopping malls, “quick turnover was the hallmark of the new depreciation game”35 as
investors found such ventures most profitable when sold in five to seven years. The
money made from those transactions would often fund the construction of a bigger
building.36 New projects became larger because such structures were more expensive to
build, requiring more materials, laborers, and time. The motivation in building malls
33 Hanchett, Thomas W. Pg. 1095.
34 Hanchett, Thomas W. Pg. 1098.
35 Hanchett, Thomas W. Pg. 1098.
36 Hanchett, Thomas W. Pg. 1100.
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bigger than ever before arose from the fact that the more costly the structure, the higher
the depreciation allowance.37 This general pattern of suburban mall development for the
primary purpose of untaxed income is important in considering the intentions of Lerner
Enterprises’ construction of Landover Mall and the mall’s subsequent deterioration. Was
Landover Mall’s decline solely based upon Lerner’s ability to profit from the mall
regardless of its success? If so, was this the reason for Landover’s long history of neglect
and deterioration?
The intentions of Lerner Enterprises in building Landover Mall, if done primarily
for the tax benefits, would not be disclosed by the company because of its ownership of
many other malls in the greater Washington, D.C. area. For Lerner to admit that its
purpose in building shopping malls was to take advantage of a large tax loophole would
create a negative image of the company and, in turn, could cause general backlash on
current malls and future investment plans. However, by comparing the business practices
of Lerner with the practices of developers who build malls for the sake of accelerated
depreciation the above question may be answered.
Lerner Enterprises agreed before the mall’s construction to keep Landover open
for a period of thirty years. Lerner not only fulfilled that promise, but also maintained
ownership of the property throughout that entire time, which was uncharacteristic of the
quickly-build, quickly-sell practices of developers looking to maximize profits through
accelerated depreciation. In addition, Landover was built in response to the area’s
growing populations and buying power within a defined suburban and increasingly
urbanizing area, not in the outer-most cheapest rural areas characteristic of catalytic
development. These two aspects of the pre-construction decisions of Landover Mall
37 Gladwell, Malcolm.
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suggest that accelerated depreciation was not the sole incentive behind its being built.
However, this does not mean that accelerated depreciation or even depreciation in general
was not a factor in Lerner’s decision to allow Landover to decline.
There are aspects of Landover’s development that both physically and fiscally
support the premise that the mall was created out of self-interested, depreciation-driven
practices. One of these factors includes the mall’s sheer size. Landover mall was a 1.3
million square foot structure, costing about 600 million dollars to build and offering a
significant depreciation value. Even with straight-line depreciating, Landover may have
been profitable by its sheer existence. In addition to the impressive square footage,
Landover’s decline was timed with a tax cut, further encouraging investment in new
structures and neglect of existent past projects.
Included in President Ronald Reagan’s 1981 tax cut was a significant change in
depreciation values. Replaced by the Accelerated Cost Recovery System (ACRS),
depreciation values of standard reasonable allowance decreased to fifteen years.38 Under
this new tax system, developers could collect up to 31% of the buildings cost within the
first three years of a project’s completion. Although ACRS was replaced in 1986 with
the Modified Accelerated Cost Recovery System (MACRS) that returned the years of
useful building life to 40 years, from 1980 through 1985 there was a strong renewed
interest in developing new malls that coincided with the beginning of Landover’s
decline.39 Not all of Lerner’s malls suffered decline as a result of this tax policy. In fact,
Lerner reinvested in many of its other malls in the late 1980s to ensure their future
success as profitable retail and entertainment centers, not just profitable structures to
38 Hanchett, Thomas W. Pg. 1106.
39 Riley, Malcolm R., “The Reality Behind Retail Overbuilding,” Shopping Center World 20, May 1991, in
Hanchett, Thomas W. Pg. 1106.
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own. Because of this, it is possible that Landover suffered at the success of Lerner’s
other investments, using its depreciation value to cover or subsidize the cost of
revamping their other malls.
Lerner Enterprises benefited from its relationship with and management of
Landover mall in terms of profit-producing tax benefits. However, there is evidence not
only that other factors besides benefits created by tax laws could have contributed to
Landover’s untimely deterioration and but also that both tax law and these other factors
are not completely independent of each other. Although not as clear cut and tangible as
the direct correlation of tax-free deduction to increased profit, these factors are equally
important in both the decision not to reinvest in Landover and the rate of its decline. A
study by Hunter Interests Inc. found that Landover’s image was an equal contributor to
the mall’s failure and is surrounded by a community that could support the shopping
center and some.40 This does not dispel the affects of fiscal policies on real estate
development, but accounts for the reasons behind why Landover suffered its fate as
opposed to other malls owned by Lerner Enterprises. It is possible that Lerner needed to
sacrifice one of its malls to help the others succeed and selected Landover because of the
image of the area. Whatever the intentions and reasoning of Lerner, Landover Mall was
ultimately a victim to two, likely interrelated factors: economic factors and an image
distorted by prejudice. These forces worked both independently and reinforced each
other to bring down Landover Mall.
40 Curry, Wayne K. Donald E. Hunter, Marvin F. Wilson, and M.H. Jim Estepp, “”Proposals for Stadium
Area Include Entertainment Center; Prince George’s Officials Seek Development,” The Washington Post,
June 11, 1997, B03.
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Chapter II
Up and then Down, Down, Down: The History of Landover Mall
In its earlier years, Landover Mall was a living monument to modernized and
high-end shopping. Although outdated and unwelcoming today, its design was state of
the art from top to bottom, inside and out when first constructed. In addition to the mall’s
initial physical appeal, it also adhered to several principles that contributed to the success
of shopping malls. These principles, as devised by the Urban Land Institute, address the
causes of failure and success amongst retail spaces and include a mixture of stores and
uses based upon type, quality, and locality in order to attract both local and regional
markets.41
Although the exterior was generally bland, as U.S. malls of the 1970s usually
were, but its sheer size, 1.3 million square feet of general merchandise and specialty
shops all housed on an 88-acre site put customers in awe. 42 The interior was equally
impressive with the integration of fountains, trees and other greenery, and a strong
emphasis on glass usage on the second level. The effects of these interior design
techniques created an interesting yet soothing and clean environment conducive to
shopping.43 In addition, the inside connoted a feeling of refinement and stylishness,
created in part by the high-end stores luring shoppers within. The mall was built to
accommodate the growing population and incomes of residents in the Landover vicinity.
The area’s population transformation of the 1960s continued through the 1970s
and intensified in many respects. Although the total population experienced minimal
41 Beyard, Michael D., et al., “Ten Principles for Rethinking the Mall,” Washington, D.C.: Urban Land
Institute, 2006. Pgs.
42 Urban Land Institute, “Landover Mall and Vicinity: A Technical Assistance Panel Report,” Washington,
D.C.: Urban Land Institute, 2006, Pg. 8.
43“Architects Concept of Landover Mall,” The Washington Post, May 7, 1972, Pg. AS8.
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growth over the 1970s from 660,567 in 1970 to 665,071 in 1980, the racial composition
continued to change drastically. By 1980, Prince George’s County’s white population
had been almost halved from 561,476 in 1970 to 391,427 in 1980; whereas the black
population had more than doubled from 91,808 in 1970 to 247,860 in 1980.44 Median
family income also experienced dramatic change throughout the 1970’s, increasing from
$12,450 in 1970 to $25,450 in 1980.45
Between 1972-1982, Landover Mall was consistently the second or top source of
retail sales in the county with a 188.6% increase in sales during this time period. 46 These
profits are due to Landover’s many stores and many functions. Landover was the only
mall in the entire Washington, D.C. area with four high-end, local and national anchor
department stores: Hecht’s, Sears, Woodward and Lothrop (Woodie’s), and Garfinckel’s;
and it also housed the NTI Landover 6 Theatres, an MVA Express Office, and at least
two sit-down restaurants. Landover Mall was not just full with a constant high
occupancy rate into the early 1980s, it was full of a variety of products to consume and
entertain. However, as the mall entered the mid-to-late 1980s, it entered into the
beginning stages of its long decline.
The economic and racial makeup of the county continued its pattern of increased
African Americans and wealth throughout the 1980s to 1990. The pattern, however, was
less intense then the drastic overhaul of the county’s demographics of the 1960s and
1970s. Between 1980 and 1990 the total population grew from 665,071 to 729,268, a far
44 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 3.
45 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 17.
46 The Maryland-National Capital Park and Planning Commission, “Retail Trade in Prince George’s Count:
Sales Trends, Current, Directions, Supportable Space,” June 1985, Pg. 25.
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less drastic increase compared to the near doubling of the population during the 1960s. 47
During the 1980s, the white population continued to decline, but only by a few tens of
thousands from 391,427 to 314, 616 in 1990.48 The black population, on the other hand,
continued its rapid growth, although less intensely than that of the 1970s, increasing by
over 100,000 people over the 1980s to 369,791 by 1990.49 For the first time in Prince
George’s County history, African Americans comprised the majority of people residing
within the county.
Per capita and median family income continued to increase throughout the 1980s
as well. Per capita income increased by $10,006 to $20,326 between 1980 and 1990 (an
increase of over $4,000 in 1992 dollars, an increase of almost 25%).50 Per capita income
in Prince George’s County was comparable to the greater Washington, D.C. area,
although it was slightly less and the discrepancy did grow slightly during the late 1980s.51
Median family income jumped from $25,525 in 1980 to $48,471 in 1990.52 In addition,
retail sales steadily increased countywide throughout the 1980s from $2.666 billion in
1983 to $4.287 billion in 1990.53 Paradoxically, Landover began its slow, intensifying
decline during these years of economic prosperity and high retail sales.
The decline of Landover Mall begins with the increase of crime in Prince
George’s County beginning in 1985 and peaking during the early 1990s.54 Crime is a
very important aspect for area retailers as “nearly 70% of shoppers are affected by
47 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 2.
48 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 3.
49 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 3.
50 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 8.
51 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 9.
52 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 9.
53 M-NCPPC, “Prince George’s County Trendlines,” April 1995. Pg. 35.
54 Washington Post.com: Crime Reports, Prince George’s Violent and Property Crimes, The Washington
Post, 1998, http://www.washingtonpost.com/wp-srv-local/longterm/library/crime/cpg.htm
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security concerns and choose their destinations accordingly.”55 Security concerns do not
just refer to problems within the mall, but extend to the area’s larger crime problems as
part of the mall’s image. Although crime in Prince George’s County generally followed
the same pattern of ups and downs experienced by the greater Washington, D.C.
metropolitan area, the increases in crime particularly tarnished the image of Landover
Mall. The reputation of the mall’s surrounding area, described by police as one of the
county’s “worst areas for open drug trafficking and related shootings,”56 had become the
reputation of the mall itself as crimes reported by The Washington Post in the Landover
area often referenced Landover mall as a familiar landmark and point of reference. This
is illustrated by one incident of a “drug-related shooting Friday of five persons occurred
in an apartment complex across the street from the shopping center.”57
Crime was also spilling over into the mall itself which, combined with the area’s
crime, enhanced the negative image of the mall. The reputation of the mall itself as a
crime-ridden space most likely began with a well-publicized incident in 1984 where three
youths allegedly were beaten by mall security. Other Landover Mall related crimes
further promoting the mall’s crime-infested image, include the beating and robbing of a
woman leaving the mall from a day of shopping.58 These stories, read by thousands
throughout Washington D.C. and its suburbs, helped to create and proliferate an image of
the mall that, deserved or not, would pose serious obstacles for the mall’s ability to stay
in business.
55 Anonymous, “Retailers Shop for Winning Formulas,” Building Design & Construction, Chicago: Jan
1998, Vol. 39, Issue 1, Pg. 11.
56 Pressley, Sue Anne, “Area Violence Doesn’t Help Mall’s Image,” The Washington Post, January 26,
1988.
57 Pressley, Sue Anne, “Area Violence Doesn’t Help Mall’s Image.”
58 Milloy, Courtland, “Crime and Punishment and Race,” The Washington Post, Sep 23, 1990, Pg. D3.
21
The crime and resulting deteriorating image of the mall would prove detrimental
as it scared off shoppers and retailers alike. In 1989 Landover Mall had only one vacant
shop space; but by 1994 that number increased to 28.59 Not only had more stores left the
mall, typically higher-end stores that draw wealthier and higher numbers of customers,
were leaving and being replaced by less prestigious stores or nothing at all. Garfinckel’s,
occupying 89,000 square feet of the mall and a major draw for customers seeking fine
men and women’s clothing, closed in 1989 and was left unoccupied after.60 Woodward
& Lothrop left Landover mall in 1993 to be replaced by the more generic J.C. Penney,
which in turn vacated a few years later in 2000.61
Overall, crime played a large role in the decline of Landover Mall in creating the
mall’s poor image that, ultimately, caused and reinforced very real and very negative
effects. The 1990s left Landover mall a shadow of the great retail triumph it had been in
its early years: the movie theatre was closed, the MVA Express was gone, the high-end
clothiers had left and either been replaced by discount stores or remained empty, the
fountains had been turned off, and the greenery allowed to die. By the close of the 1990s,
the image of Landover Mall as a low-quality, high-crime shopping space was its reality.
In 2002, the doors of Landover Mall closed forever, against pleas to keep the mall open
made by local residents and politicians,62 and demolition began two years later. By
summer’s end in 2006, Landover mall was nothing more than a pile of rubble slowly
being cleaned up, so that not one physical remnant of the mall would remain.
59 The Maryland-National Capital Park and Planning Commission, “Shopping Center Directory,” 1994, Pg.
119-122.
60 Nakamura, David, “Mall’s Comedown Taints Lerner Image; Resentment of Nats’ New Owner Lingers in
Pr. George’s,” The Washington Post, May 16, 2006, Metro, B01.
61 DeMarco, Donna, “JC Penney Closing Outlet Store at Landover Mall,” The Washington Times, Dec 4,
2000.
62 Schwartzman, Paul, “Dream Gone Bad: At Landover Mall, It’s Nearly All Over; As
Stores Close, Neighbors Mourn,” The Washington Post, Mar 2, 3003, Pg. C05.
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Chapter III
The Black Middle-Class: Perceptions and Realities
There is a strong correlation between the rising African American population of
Prince George’s County and the decline of Landover Mall. This coincidence,
substantiated by the state of the mall during the 1980s compared to the demographic
changes in the county of that time, seems illogical as increased income levels were also
characteristic of this time period. In addition to the disconnect between increased county
prosperity and Landover’s decreased success, the rising black middleclass of the 1970s
had proven itself a valuable market to retailers. In the 1970s, middle-class blacks spent
larger percentages on the types of retail goods and at the types of stores found at
Landover Mall.
Compared to their white counterparts, middle-class blacks, characteristic of the
growing African American population in Prince George’s County during the 1970s, spent
larger percentages of their household income on most of the same categories of goods.
These categories include household items, school supplies, personal care products, and
clothing.63 The middle-class is identified by, among other things, the quantity and
quality of goods it consumes. Prestige and image are intertwined with consumption and
were particularly important to middle-class African Americans so as to identify
themselves as such. This emphasis on image explains the percent of income spending
differences between whites and black on items that illustrate their social standing such as
clothes,64 and these were the items most likely to be purchased at expensive stores.
63 Landry, Bart, The New Black Middle Class, Los Angeles: University of California Press, 1987, Pg. 162.
64 Landry, Bart, The New Black Middle Class, Pgs. 158, 163.
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The black middle-class concern with prestige in its purchases strongly influenced
preference for location of shopping. Larger percentages of middle-class blacks compared
to their white counterparts, shopped more frequently at expensive clothing stores65 such
as Landover’s Woodward & Lothrop, Raleigh’s, Woolworth, or Garfinckel’s. Slightly
more than 25% of both blacks and whites of the middle-class shopped at either expensive
or good clothing stores prevalent at Landover mall, and more whites than blacks from
this income bracket shopped more often at discount stores such as Kmart,66 stores not
typically found at Landover Mall until much later.
Consumption is a large part of the black middle-class culture. The consuming of
specific goods from specific places helps this population to create prestige and define
status. It also makes them a great potential source of spent retail money and, in turn, an
attractive market for retailers to target. This characteristic of the 1970s black middle-
class further emphasizes the incongruence between the rise of the black middle-class in
Prince George’s County coinciding with the deterioration of Landover Mall. In theory,
the mall should have thrived as more and more middle-class blacks entered the county
during the 1980s, but this was not the case.
Money cannot buy everything. Image and status, although the goal of middle-
class African Americans, could not be purchased to the extent that perception would
change. Unfortunately, America’s lengthy history of racism, classicism, and inaccurate
stereotypes has long been a severe obstacle for the social mobility of African Americans
and has reinforced an unjustified negative perception of them. This perception not only
holds consequences for African Americans pursuing the American Dream, it extends to
65 Landry, Bart, The New Black Middle Class, Pg. 163.
66 Landry, Bart, The New Black Middle Class, Pgs. 162, 163.
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the image of the larger area where these populations reside and the general emotions
evoked by that image. For the Landover Mall area and the mall specifically, this image
became one of ridden with crime and of low levels of affluence and buying power.
Together, these perceptions of the mall and its surrounding neighborhood account for the
disconnect between the steadily increasing incomes and population within the mall’s
surrounding area and the steadily declining quality and viability of Landover Mall.
Neighborhood racial composition directly influences fear of crime.67 This fear is
heightened by rapid changes in racial makeup of an area, such as Prince George’s
County. Fear of crime, however, is not coupled with nor caused by increased
deterioration of the physical neighborhood or increased numbers of unsupervised
teenaged groups.68 It is caused simply by the movement of African Americans, of no
specified class, into an area at rates faster than considered historically normal. The roots
of this fear are not fully known, but are assumed to have originated from historically
racist practices that did promote high levels of crime in largely black neighborhoods.
This unsubstantiated fear may also be rooted in the stereotype of blacks as aggressive or
violent by nature.69 Whatever the origins of the fear of crime as associated with African
Americans may be, the fear itself is largely unfounded, yet prevalent amongst both white
and black populations. In addition, this unjustly perceived fear poses real threats to the
viability of African American communities and their immediate surrounding area as seen
in the detrimental affects on Landover Mall.
67 Covington, Jeanette and Ralph B. Taylor, “Community Structural Change and Fear of Crime,” Social
Problem, Vol. 40, Number 3, August 1993, Pg. 389.
68 Covington, Jeanette and Ralph B. Taylor, “Community Structural Change and Fear of Crime,” Pg. 391.
69 Peffley, Mark and Jon Hurwizt, “Whites’ Stereotypes of Blacks: Sources and Political Consequences,”
Perception and Prejudice: Race and Politics in the United States, Grand Rapids, Michigan: Yale University,
1998, Pg. 62.
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In addition to the undeserved perception of fear of crime, African Americans are
also perceived as impoverished. The association with blacks and poverty is rooted in the
link between growing urban problems caused by insufficient funds to correct these
problems and the overwhelmingly black populations that occupy these urban spaces.70
Although it is true that on average African Americans have lower incomes than whites, it
is far from a universally proven principle that all whites are wealthier than all blacks or
that all blacks are poor. The high-income levels of Prince George’s County’s black
residents prove that. Perception can be stronger than reality, however, and can hold
strong consequences for black communities and the businesses within them such as the
success of Landover Mall in Prince George’s County.
70 Peffley, Mark and Jon Hurwizt, Pg. 59.
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Chapter IV
The Role of Perception in Landover’s Decline
Beginning in the mid 1980s, Landover Mall began to suffer from two, reinforcing
factors: crime was growing increasingly pervasive and the mall’s physical appearance
was becoming dated. This cycle prescribes to the Broken Windows theory in which
disorder and crime are inextricably linked.71 In the case of Landover, if the mall
continues to appear to be uncared for, crime will follow. In turn, increased crime will
result in poorer upkeep and fewer improvements. Also acting upon this cycle, and
exaggerating the crime factor, was the negative perception of African Americans that
reside in the Landover area and increasingly make up the majority of its residents.
As mentioned before, a safe shopping space is crucial to customers in deciding
where to shop. Between 1984 and 1989 Prince George’s County experienced an increase
in both property and violent crime.72 This trend was representative, however, of the
increasing property and violent crime occurring throughout Maryland and affected malls
statewide. No mall paid so dearly for these increases as Landover. Other factors could
be contributing to the hard hit Landover took during the mid-and late 1980s such as the
building of other malls in the neighboring counties, but a more likely cause, accounting
for the inflated effect of crime on Landover, is the negative perception of African
Americans.
Bill Connnell, a jewelry store employee transferred to Landover Mall from
Annapolis in 1984, recalls, “I was nervous about it. My first couple of days here I was
waiting for someone to break in with a gun or shoot me or something.” The reality was
71 Wilson, James Q and George L. Kelling, “Broken Windows,” Atlantic Monthly, March 1982, Pg. 2.
72 “Uniform Crime Report for the State of Maryland and Prince George’s County,” Central Records
Division, Maryland State Police, 1975-1999.
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that Connell had only experienced one nonviolent shoplifting incident.73 Connell’s
account of his expected experience and actual experience captures the larger sentiment
that “the county’s quality of life is going down as the black population is going up.”74
People perceive Prince George’s County and, subsequently Landover Mall, as a
dangerous place to be, a place no one wants to shop. Yet the reality, also captured by
Connell, is that the mall is not crime-ridden and the fear of the mall is unwarranted.
In contrast, when the area around mall was mostly white, incidents of crime were
also reported regularly in The Washington Post, but the impact of those reports did not
hold such negative effects on the mall. In 1977, when white accounted for about 80% of
Prince George’s County’s population, The Washington Post reported, “although it isn’t
obvious; a cops and robbers games is played out daily between security guards and those
shoppers who choose to steal rather than buy” and that “the bustling crowds of shoppers
at Landover Mall Shopping Center in Prince George’s County probably never hear the
excited voices of the private security guards speaking into their walkie-talkies.” 75 Crime
is taking place and regularly inside the mall, yet shoppers did not seem to mind in the
1970s. At that moment, Landover was not suffering from crime, at least not in terms of
negative perception and lost costumers. As the county’s demographics shifted, however,
so did the emphasis on crime and the perception of the Landover area and the mall.
If the perception of crime did not stop customers from coming to Landover, the
physical state of the mall would, eventually stop them from coming back. Throughout
Landover’s thirty-year lifespan, its physical elements never experienced any remodeling
73 Marcus, Ruth, “Landover Mall Seeks New Image,” The Washington Post, Dec. 2, 1984.
74 Wynter, Leon, “Tales of Two Suburbs: Celebrating Our Realities Vs. Keeping Them at Bay,” The
Washington Post, Aug. 28, 1983.
75 M-NCPPC, “Development Potential Model Neighborhood Area Prince George’s County Planning Area
72,” Pg. 15.
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or revamping, only operational and non-operational periods. Landover failed to
modernize as styles changed and its upkeep was allowed to wane, counterproductive to
staying competitive and quashing the perception of ramped increased crime. The mall’s
physical environment is the responsibility of owner and manager, Lerner Enterprises,
which had heavily invested in its malls located in other jurisdictions, but had failed to
reinvest in Landover Mall after it opened.76 This implies that Lerner was not unable to
improve Landover, but unwilling to. Lerner, like the general public, bought into its own
mall’s negative image and false perception, prematurely determining the mall would fail
and, in turn, ensuring that it would.
Landover Mall was state of the art when first opened. It was the epitome of
modern-day shopping in the goods and services it provided as well as in the luxurious
and modern environment in which they were offered. Landover was the first mall in the
Washington, D.C. area with four major department stores, each with distinctive
merchandise and shopping styles, in addition to over 140 specialty shops. 77 Although a
standard big-box design, the mall housed many impressive architectural elements
including three-foot geysers located in the central court that could shoot water to heights
of twenty-feet, cubist sculptures framed by water and other landscaping, skylights to
provide natural light, a coffered ceiling, and a glass balustrade on the second floor. The
collective effect of these elements was an environment that attempted to make shoppers
comfortable and stimulate their enthusiasm towards merchandising.78
76 Nakamura, David, “Mall’s Comedown Taints Lerner Image; Resentment of Nats’ New Owner Lingers in
Pr. George’s,” The Washington Post, May 16, 2006, Metro B01.
77 “Landover First Mall With 4 Major Stores,” The Washington Post, Sep. 6, 1972.
78 “Architect’s Concept of Landover Mall,” The Washing Post, May 7, 1972, AS8.
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By the mid 1980s, Landover was not the sleek, ultra-modern mall it had been a
decade before. The mall suffered from simple maintenance problems ranging from litter
outside of the mall, to larger aesthetic problems such as leaving inoperable the prominent
fountain décor and leaving up signs of businesses that had vacated the mall. In addition
to the substandard upkeep of Landover that was common during the 1980s, Landover’s
standardized design with predictable architectural elements, layout, and stores was
increasingly unattractive to customers. In general, customers were seeking “authenticity
and a deeper sense of connection to their community, culture, climate and daily lives,”79
all of which Landover was offering less and less of.
Landover was not just dilapidated compared to its former self of the 1970s, but it
was becoming increasingly less competitive compared to other shopping malls. During
the 1980s the retail industry had been shaken by a “wave of takeovers, buyouts and
mergers” creating “more pressure for profits, less room for error and a greater risk of
failure.”80 This heightened sense of competition made it more important than ever for
Landover Mall to reinvent itself to attract and regain its customer base as older malls are
particularly vulnerable to large shifts in retailing.81 Owners of many of the Washington,
D.C. area’s shopping centers went on a remodeling binge focusing on adding new
services, facilities, and stores.82 The race to remodel spanned across the entire
Washington, D.C. as Tyson’s Corner in Fairfax, Virginia, underwent $150 million in
79 Beyard, Michael D., et al., “Ten Principles for Rethinking the Mall,” Washington, D.C.: Urban Land
Institute, 2006. Pg. v.
80Sun, Lena H, “Competition Gives Retail Landscape a New Look,” The Washington Post, Dec. 4, 1988,
H1.
81 Sun, Lena H.
82 Potts, Mark, “Mall Makeovers: D.C. Area Shopping Centers Go Upscale in a Big Way as They Vie for
Customers,” The Washington Post, Nov. 13, 1989, E1.
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renovations over two years;83 Prince George’s Plaza, near Landover Mall, was in the
middle of a complete facelift in 1989; and Montgomery Mall, owned by Lerner
Enterprises, constructed a Nordstrom and 40 smaller stores.84 In contrast to the
rejuvenation efforts to other malls, Landover’s physical appearance was “dark and
severe, with a polluted pond as a centerpiece, its picturesque wishing-well pennies lying
among cigarette butts, plastic forks, and foam under an oily slick.”85 Landover’s old
image could not compete with those of surrounding malls.
Theodore Lerner, President and CEO of Lerner Enterprises, claimed to have a
personal interest in and personal responsibility for the state of his malls. He boasted his
personal commitment in ensuring the aesthetic quality of his malls by anonymously
inspecting his malls once a month with a tape recorder in-hand looking for “tenants
whose walls are smeared with fingerprints or whose tile floors are improperly laid.”86
Lerner would send curt letters of admonition to tenants whose storefronts or general
maintenance was not to Lerner’s standards. Lerner’s dedication to the state of his malls
does not seem to match up with the obvious decline Landover began to suffer in the
1980s. Lerner’s commitment to high standards of his malls’ physical environment, then,
must not apply to Landover. Is it possible that perception had tainted even the owner’s
view of his mall?
Criticisms of Lerner include that he is “an almost ruthless type of guy who walks
over dead bodies to get what he wants,” that “he tends to treat people like, ‘I come first,’”
83 Snoddy, William, “Remodeled Tyson’s Corner Reopening,” Daily News Record, Oct. 25, 1988.
84 Potts, Mark.
85 Kowinksi, William S., The Malling of America: An inside look at the great consumer paradise, New
York: William Morrow and Company, Inc. 1985, Pg. 159.
86 Boodman, Sandra G. and Thomas Gruibisich, “Developer’s Empire Based on Instinct,” The Washington
Post, Aug 2, 1981, A1.
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he’s “unsympathetic to the retailer,” and “money comes before everything.”87 In
addition, Lerner himself has claimed that he bases business decisions on instinct, a
methodology open to personal bias and prejudice. In light of these criticisms and
Lerner’s subjective business practices, it is reasonable that Lerner would have been
affected by the negative image of Landover Mall as created by the larger perception of
the area and, in turn, he may have deemed the mall a bad investment. This would explain
Lerner’s actions in allowing the mall to stagnate until the contract with the county
expired and the property could be redeveloped. Although Lerner is not responsible for
pervasive crime in the area or the negative perception of African Americans, the
company is responsible for allowing an undeserved negative image to destroy the mall by
not taking any action to make basic improvements to keep shoppers, community
residents, and mall tenants happy. Because the relationship between crime and disorder
is cyclical and requires active resistance and change to interrupt its detrimental effects,
Lerner’s mismanagement of Landover laid the groundwork for the mall’s continuing
failings into the 1990s.
87 Boodman, Sandra G. and Thomas Gruibisich.
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Chapter V
The Intensification of Failure and Closing of Landover Mall
The 1980s solidified Landover Mall as a blighted area overrun by violent
criminals. Opportunities arose again and again for Lerner Enterprises to rejuvenate
Landover Mall and capitalize on new, complimentary development and plummeting
crime rates. Lerner continued to neglect the mall, however, reinforcing its 1980s image
and the cycle of perception transforming reality. These opportunities, including
drastically improved crime rates, the development of nearby Fed-Ex Field, and the
continued growth in local family incomes, signaled the Landover area was a viable
market. Regardless of the area’s continued and heightened viability, Landover Mall was
continually overlooked for improvements and raised concerns and eyebrows throughout
the Landover community as to why Lerner would pass up on a sound business
investment. Towards the end of the 1990s, Prince George’s County officials and citizens
increasingly believed that Landover’s decline was not only premature, but also
preventable and that the mall’s failure was a direct result of the image of the county.
Despite an improving environment for retail, the perception of Landover had been
solidified and was in an irreversible cycle of decline. Lerner had sealed Landover’s fate.
In the mid-1990s, Prince George’s County experienced a sharp decrease in crime.
The violent crime rate declined 19% and homicides decreased 42%, the lowest it had
been in ten years.88 Yet, this decline meant little for Landover Mall whose name had
already become synonymous with danger and crime. In addition to the mall’s informal
name of “Landover,” automatically associating it with the area of Landover and its
88 Masters, Brooke A and Michael D. Shear, “Frightened Communities Search for Reasons, Relief,” The
Washington Post, April 5, 1998, AI.
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separate problems, the mall was too often an unfair target of reports on crime as it was
used as a point of reference regularly in The Washington Post. Such references are
exemplified here: “…Glenarden Apartments, a complex near Landover Mall that police
describe as an open-air drug market”89 and, “a suburban Maryland banker was kidnapped
at knifepoint on his way to work…Events began about 10 a.m. near the Landover
Mall…”90 Crime is not happening at the mall, but is being associated with the mall and
projected to thousands of shoppers across the greater Washington, D.C. area who, in turn,
perceive the mall as a dangerous place where crimes are committed. This perception is
something that even drastically falling crime rates could not change, as business was
continuously bad for merchants and the mall’s physical state continued to decline.
The continued perception of crime goes hand-in-hand with Landover’s ever-
growing perception of lacking good retail, a perception that became the mall’s reality,
reinforcing the mall’s image as poor in addition to dangerous. By the 1990s, both
Woodie’s and Garfinckel’s had gone out of business, leaving Landover without two of its
anchor stores and finer men’s and women’s clothing stores. Although J.C. Penney
replaced Woodie’s in the late 1990s, the national retailer left only a few years later due to
dwindling sales. By 1998, the mall had over a 30% vacancy rate, the highest of any mall
in the Washington, D.C. region.91 In addition to the high vacancy rate, remaining stores
targeted low-income shoppers such as Payless Shoe Source, a dollar store, and numerous
fast food chains.92 These stores did not appeal to the residents of Prince George’s county
89 Yorke, Jeffry, “Glendening Tours ‘Crack Alley,’ Vows to Combat Drub Problem in Glenarden Complex
Called ‘Unacceptable,’ The Washington Post, Nov. 24, 1987.
90 Stevens, Joann and Martin Weil, “Banker Escapes 2 Kidnappers After 2 Ransom Deliveries Fail,” The
Washington Post, Feb. 9, 1980.
91 Stoughton, Stephanie, “The Decline and Fall of a Mall; Landover is Seen as a Drag on Retail Efforts,”
The Washington Post, Aug. 4, 1999. M14.
92 M-NCPPC, “Prince George’s County Planning Department Shopping Cneter Directory,” 1994.
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whose median family income averaged $61,900 by 1998 and preferred high-end
retailers.93
This disconnect between wealthy residents and a poor mall did not go unnoticed,
particularly with the building of Fed-Ex Field in 1997. The football stadium, located
across the beltway from Landover Mall, is home to the area’s pro-football team, the
Washington Redskins. During the construction of the stadium, studies were conducted
by consulting firm Hunter Interests, Inc. to investigate the viability of the county
investing money in the Landover area to spur economic development. The study revealed
that the building of the Fed-ex Field would not guarantee a new customer base for
Landover Mall, but rather solidified the viability of the current customer base and
highlighted Landover mall’s inability and unwillingness to serve it. A Washington Post
article captures the relationship of the 1980s reputation of the mall and its affects a
decade later:
Even as the neighborhoods have improved and the county’s wealth
has risen, the mall can’t seem to shake its old image. The vacant
stores, dressed up with artwork and advertisements, are a reminder
that perceptions continue to haunt the mall.94
By the end of the 1990s, Landover Mall was more neglected, blighted, and
vacant than at any other time in its history.
Landover Mall’s neon blue and white sign, squatting on a grassy
hill off Interstate 95, looks like a remnant from the ‘70’s…The
shopping center is clean, but the dark tiles inside are scuffed, the
lighting is dim and the number of shoppers is small even on the
weekends.95
93 Stoughton, Stephanie.
94 Stoughton, Stephanie.
95 Stoughton, Stephanie.
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The mall was outdated, uninviting, and unsuccessful. The exterior echoed the
interior, projecting an image of the area. The image, of rundown and unsafe, did not
project the true characteristics of the area, but rather provided a negative perception
caused by the area’s population. Lerner supported this perception by allowing low-end
retailers to replace high-end retailers and refusing to renovate or remodel the mall. These
two choices reinforced each other and proved, again and again, to work against the mall’s
success. The story of J.C. Penney at Landover Mall illustrates this cycle.
Before leaving the mall all together, the J.C. Penney department store became an
outlet because storeowners believed sales would rise by carrying discounted items, but
the shift to an outlet did not produce an increase in sales. 96 Nearby residents could afford
higher-quality, higher-priced items and were willing to shop elsewhere to get them. In a
few years, the outlet failed and the national retailer vacated the mall. J.C. Penney along
with Lerner allowed perception, not fact, to educate them on their customer base and as a
result J.C. Penney failed, left, and was never replaced. Lerner had denied the mall’s
success by tolerating and enabling its decline. Landover had become a shadow of itself
compared to its heyday of the early 1980s. The perceptions of the mall had become its
reality as a dangerous, run-down shopping mall with no desirable retailers. Landover had
become a dead mall.
In 2002, with Lerner’s 30-year contract with the county fulfilled, Landover Mall
closed its doors. Likely influenced by the fact that Landover’s depreciation value had
reached its full potential, the mall was no longer profitable by remaining open. After the
malls closing, the mall was used for spill over parking from footballs games at Fed-Ex
96 Stoughton, Stephanie.
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Field.97 Eventually the mall was only a liability and loss of money to Lerner as well as
an eyesore to the residents of Landover, and the decision to tear down the mall was
made.98
Demolition began in the summer of 2006 and was completed in late fall of the
same year. Although no formal plans for redevelopment of the site have been made, the
Urban Land Institute conducted a survey and panel report of the site and the surrounding
area to investigate the possibility of redeveloping the vacant property where Landover
Mall once stood. The panel found the site to be viable for many redevelopment purposes,
namely residential building, noting its proximity to the District of Columbia, the large
amount of existing infrastructure, and the growing population and household incomes.99
The panel acknowledged, however, a strong constraint to redeveloping the site. The site,
although highly desirable in some respects, is located in an area in which “the
marketplace perceives as having fewer services, fewer jobs, and less discretionary
income.”100 This perception, whether deserved or not, is an obstacle that investments in
the area must overcome in order to succeed. Unfortunately, the area’s reality and positive
economic attributes are not enough to guarantee sustainability. The case of Landover
Mall illustrates that perception is capable of destroying otherwise sound economic
ventures.
97 Kahn, Michael W., “Free parking for Redskins fans vanishes at mall,” The Associated Press, Nov. 11,
2004.
98 Fult, Tony, Lerner Management Manager of Landover Mall in its last years before closing, Personal
Interview, Oct. 16, 2006.
99 Urban Land Institute, “Redevelopment of Landover Mall and Vicinity: A Technical Assistance Panel
Report,” Pg. 19.
100 Urban Land Institute, Pg. 19.
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Conclusion
Prince George’s County was increasingly wealthy, its residents consumed goods,
its population was growing; and much of it was easily accessible to residents all over the
greater Washington, D.C. area—all signs of an area capable of supporting a regional
shopping mall. However, this was exactly what the county and more specifically the area
of Landover, Maryland, could not do. There are some implications that Landover’s
snowballed decline was the result of tax laws that made malls profitable solely by being
in operation, regardless of their present state. These laws did contribute to Landover’s
decline in that economics dictated business decisions, but other factors reinforced these
business decisions and assisted in the mall’s premature deterioration and closing.
Other contributing factors included increased competition and crime. During the
1980s several malls were built attempting to capture the same greater Washington, D.C.
shopping population as Landover Mall. This correlated with increases in crime
throughout Prince George’s County and deterred shoppers from coming to Landover
Mall. The overall effects of these factors on the mall, although independently not
responsible for its decline, were exaggerated by the perception of the area and, in turn,
brought about Landover’s end.
The decline of Landover Mall coinciding with the growing African American
population within the county is more than a simple coincidence. Negative images and
assumptions associated with African Americans were the main force behind Landover’s
decline. Too often African Americans are perceived, although unfairly and undeservedly,
as poorer than their white counterparts, and their communities are perceived as more
prone to crime and disorder. This perception of the area was, in turn, projected onto
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Landover Mall the result of which deterred owner and manager, Lerner Enterprises, from
investing more consideration for and money in Landover. Lerner’s actions, or more
appropriately inaction, crippled the mall’s ability to remain competitive. Landover
received no renovations and did not actively retain or seek high-end retailers, causing
only more decline and reinforcing the projected image of the area. Landover entered
into a cycle of this perception, inaction, and decline until its closing and eventual
demolition. Although it is not certain that had Lerner continued to invest in Landover
and treat the mall as a viable shopping mall the mall would be a booming retail center
today. However, what is clear is that by not investing in Landover at all, Lerner ensured
the mall’s failure. Overall, Lerner cannot be blamed for crime rates or the perception of
African Americans, but the company is responsible for the management of its retail
properties and for making business decisions based upon factual information such as
family incomes and consumer preferences, not unfounded prejudicial perceptions.
Perhaps the most detrimental result of Landover Mall’s fate was not its actual closing, but
that its closing continues to reinforce the idea that investing in African American
communities is fruitless and, in turn, further perpetuates the perception of these types of
communities because the mall did fail in such a community although not because of it.
The failure of Landover Mall holds other implications for African American
communities.
If perception can have such detrimental effects on a shopping mall, what other
effects might perception produce? Could it threaten the entire economic viability of
Prince George’s County? Could it threaten the viability of other services, such as the
providing of public facilities and services or even quality education? The implications of
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what kind of contract would force a developper not to make lerner’s mistakes. force reivestment???? in the quadruple bottom line
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the power of perception are widespread and frightening to consider, but they are crucial
to investigate and understand if African American communities are to succeed, especially
with black suburbs emerging and expanding rapidly throughout America’s metropolitan
regions.101
In addition to understanding the breadth of influence perception can have,
understanding how to change this perception is equally valuable in finding solutions for
the problems that perception can cause. But how can the perception of a population be
changed? Projects like Landover Mall or other equally significant economic ventures
may begin changing these perceptions by proving that African American communities
are viable places for such investments. However, such projects must first question the
truth of the perception itself and take risks and invest regardless of the image they would
otherwise avoid. In addition, the project must actively fight the negative image in order
to disassociate it from not only the project to ensure its success in order to eventually
separate it from the population from which the perception originates. Unfortunately, the
decision makers behind these economic opportunities are the most unwilling to risk
investment in black communities. With black-owned businesses more than double
between 1977 and 1987 and business ownership stabilized communities,102 perhaps the
change in perception will have to come from within these communities themselves.
Whatever the fate of Prince George’s County and future projects similar to Landover,
they will continue to be strongly dictated by their image, an image that is in need of
repair.
101 Cashin, Sheryll, D., “Middle-Class Black Suburbs and the State of Integration: A Post-Integrationist
Vision for Metropolitan America,” Cornell Law Review, Vol. 86, Issue 729, May 2001, Pg. 7.
102 Pressley, Sue Anne, “Black Firms Prosper in Prince George’s,” The Washington Post, May 11, 1987.
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THE FREDERICK RETAIL MARKET
Creating sustained retail success is an art and a science
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 2
Contents
EXECUTIVE SUMMARY …………………………………………………………………………………………………………………………………………………………………………… 3
Frederick Market Overview ……………………………………………………………………………………………………………………………………………………………………. 4
Demand Drivers ……………………………………………………………………………………………………………………………………………………………………………………. 5
Retail Trends ………………………………………………………………………………………………………………………………………………………………………………………. 11
Retail Site Selection Dynamics ………………………………………………………………………………………………………………………………………………………………. 14
The Frederick Retail Marketplace ………………………………………………………………………………………………………………………………………………………….. 17
The Retail Leasing Landscape…………………………………………………………………………………………………………………………………………………………. 18
The Trade Areas ………………………………………………………………………………………………………………………………………………………………………………….. 20
Retail Market Profile …………………………………………………………………………………………………………………………………………………………………….. 24
Who is The Frederick Consumer? ………………………………………………………………………………………………………………………………………………………….. 25
The Retail Opportunity Areas ……………………………………………………………………………………………………………………………………………………………….. 28
How Frederick Competes ……………………………………………………………………………………………………………………………………………………………………… 33
Best Practices………………………………………………………………………………………………………………………………………………………………………………………… 36
Target Audiences for Retail Attraction …………………………………………………………………………………………………………………………………………………… 47
Retailers to Target ……………………………………………………………………………………………………………………………………………………………………………….. 51
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 3
EXECUTIVE SUMMARY
Communities generally desire to establish a quality of life that is appealing even compelling to residents, businesses and visitors. Retail is an important part of that
equation. Like many industry sectors, retail is experiencing a shift. This is in response to consumer, economic and demographic changes and consumer and shopping
trends and preferences. The shift is affecting retailers, property owners and communities alike, including intensifying the competition for retail attraction.
Creating sustained retail success is an art and a science. It requires constructing a balance between existing economic and locational assets and aspirational
goals. A region, county, city or neighborhood hoping to attract specific types of retailers must create, and then efficiently and effectively project positive,
strategically differentiated images and messages about all the wanted elements and components. Ultimately, it must do so in a manner most likely to generate
the awareness, interest, response and interaction necessary to bring the targeted retailers to the table and, ultimately, to sign a lease, and develop space.
Communities must also keep track of market trends and retailers changing site requirements, which are
relatively fluid today and influenced by market shifts.
Frederick is the most unique and vibrant small city in the region in which to live and work. The City boasts low unemployment dominated by desirable and creative jobs in
diverse industries with deep local roots offering family supporting wages and benefits. The community, residents, business and public leadership seeks to strengthen and
expand its retail offerings to build a more sustainable retail base and provide its citizens the quality of life they desire. To succeed in the near and long-term building of a
sustainable retail base, Frederick must focus on achieving the following:
Raise the visibility of the City among target audiences, with positive benefit driven messaging and imagery.
Generate a positive, signature “buzz” within the retail community that Frederick is the ideal location in the region for retailers expanding and independent
retailers seeking a synergistic environment
.
Build a messaging platform that includes salient metrics about the economic and business climate.
Educate the overall retail industry about the many benefits of investing in Frederick now and in the future.
Continue to build the city’s consumer base by attracting residents, businesses, employers and visitors.
Expand relationships with target retailers and their representatives via outbound contact and in-person at retail industry events.
Gain an understanding of individual retailers’ requirements and the factors that trigger site location decisions today, including the role of technology and
distribution.
Identify and cultivate strategic partners in the retail attraction and marketing effort.
Maintain a seat at the table for any city, county and select statewide initiatives aimed at promoting and attracting retail to the region and Maryland.
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 4
Frederick Market Overview
Frederick is one of America’s great small cities, so says CNN and Livability.com.1 As
the second largest city in Maryland, it offers residents and businesses a location
that is easily accessible, with strong opportunities for employment and an
affordable lifestyle. The city enjoys easy access within the region, thanks to a well-
connected network of roads, highways and transit, including the Marc Station.
Accessibility and affordability along with a lower cost of real estate is enhancing the
city’s appeal as a business location and residential community.
The city is extremely competitive when ranked against other competitive regional
and like markets (Leesburg, Fredericksburg, Lancaster City and Bethlehem)
especially for retail. It benchmarks well against these markets that compete for
similar independent and destination retail and eateries. Frederick benefits from an
excellent financial position while many communities, especially smaller ones face
budget challenges. Its bond rating is AA+ and it has a nearly $2 billion tax base.
The city has enjoyed continuous residential growth while many other small towns
are retracting. The estimated rate of growth from 2010 – 2015 is 4.7%, above the
U.S. rate of 3.3% for the same period. Projections indicate that the population will
continue to grow through 2020, though at a slightly slower rate of 4.25% for a
similar period (2015-2020). As the population expands, it is also getting younger.
The median age drops by several years the further from Downtown you travel.
Part of what makes Frederick unique is its citizens. Residents and local
stakeholders share a strong sense of pride and interest in ensuring the city
maintains its appeal and a compelling commercial and retail base. Organizations
such as the Downtown Frederick Partnership serve as an advocate of local
businesses and play a strong role in marketing the city and its assets.
Market Snapshot
Within15 Minutes from Downtown
Population 123,513
Employees 90,167
Households 47,086
Average HH size 2.57
Family Households 81.60%
HH w/kids under 18 35.80%
Rate of home ownership 60.90%
BS or Graduate Degree 40.00%
Median age* 35.7
Millennials* 24.20%
Average HH income* $82,136
HHs with income over $100,000 34.20%
Average home value $320,434
Recent investment in Bio/life sciences $1.5 B
Development in the pipeline 2.5M+ SF
*Citywide
1 CNN, Livability, Forbes
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 5
Demand Drivers
Frederick enjoys a regional reputation as a great shopping destination. The
combination of independent shops, boutiques and restaurants in Downtown Frederick
and national brands such as Wegman’s, HomeGoods and Talbots draw shoppers from
the local market and the greater region. Downtown Frederick, the city’s most walkable
neighborhood, with eateries such as Volt, the nationally acclaimed restaurant by
Bryan Voltaggio, is a magnet for residents and visitors alike. Downtown events, such
as First Saturday, a monthly happening, draws over 14,000 people to the market,
many who also patronize businesses outside of the core.
Steady residential and employment growth, tourism and visitors to the city drive
demand for retail. Frederick’s retail landscape has evolved in recent years to
accommodate this growth. Newer mixed-use projects such as Clemson Corner and
Market Square are pedestrian friendly, creating density and vibrant contemporary
environments. Market Square at Frederick, the first project to be awarded site
plan approval under the Frederick’s new mixed-use zoning district, is a main street
style project located north of Downtown Frederick. It features 194,000 square feet
of retail, over 275 residential units, and contemporary design and spaces that
appeal to current tenants and consumers of all ages.
Frederick has several older commercial corridors, each with its own personality
and opportunities. East Frederick and the Golden Mile (Route 40) offer the
greatest potential to repurpose the existing retail base. Route 40 is comprised
primarily of neighborhood and regional centers, dominated by larger tenants and
fast casual and family style restaurants. The Frederick Towne Mall, located at the
heart of Golden Mile. is being redeveloped and rebranded. Forty thousand square
feet of new small shop space at the front of the center will help create a lifestyle
environment and a destination for retailers eyeing the market.
The city has over 650,000 square feet of gross leasable retail space, yet there are
still gaps and opportunities to establish a more diverse merchandise mix. Specific
retail opportunities include a grocer in Downtown Frederick, entertainment retail
uses, and more general merchandise outside the core.
What is Driving the Retail Market in Frederick?
Population growth, employment growth, commercial development, tourism, rising
incomes and an increase of quality retail choices, including in Downtown
Frederick.
28%
13%
14%
45%
Residents Households Students Employees
$450M $47M
Total Retail Demand Demand for F&B
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 6
Employment
A community’s workforce is a vital component of retail consumer base. The type,
location and concentration of jobs can Influence spending and retail location
decisions, especially for food, apparel, and convenience retail related uses.
Commuter patterns can also influence retail, including the location of
convenience oriented tenants, grocers, and restaurants.
The city’s location provides companies access to a large and diverse labor force
and residents’ easy access to a wide variety of employment options. The 3,400
businesses located in Frederick provide employment for nearly 49,000 workers.
There are over 90,000 workers within fifteen minutes of Downtown Frederick.
Just over twenty percent of city residents work in the city, sixty five percent work
close by in either Frederick or Montgomery counties. A significant portion of the
workforce commutes in from nearby communities such as Hagerstown, DC,
Virginia, West Virginia and Pennsylvania, bringing buying power with them.
Frederick’s workforce is concentrated in several areas across the city. Over 600
businesses are located in the Downtown Frederick area, which is the center of
local government including the courthouse, retail businesses and young tech
and creative companies. The I-270 corridor is home to the second largest cluster
of life sciences and biotech companies in Maryland. The jobs associated with
these industries generally offer above average wages.
Frederick continues to attract corporate and institutional investment from the
National Cancer Institute’s new Frederick National Laboratory for Cancer
Research to Flying Dog Brewery’s proposed 31-acre facility. This iscomplemented
by ongoing investment and expansion by existing firms such as AstraZeneca and
Stulz Air Technology Systems.
The inviting downtown and the
city’s historic building stock is
attracting young technology and
creative companies and food
operators drawn to imaginative
spaces such as The Glass
Factory. All of this investment
will help to diversify and expand
the daytime population
(employment and visitors) and
strengthen retail demand.
42.5 37.1 34.8 42.
1
93.6
93.2 92.6
94.7
65.1 66.6 66.
5
70.9
. 5 M i l e 1 M i l e 3 M i l e s 3 0 M i n D r i v e
P
e
r
c
e
n
t
Employment & Education
% of BS Degree or Higher % of Civilian Employment % of White Collar Jobs
90,167
Workers within a 15 min drive
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj954u_2ubJAhUDmx4KHUEADjsQjRwIBQ&url=http://ngreen.com/PDF Files/GF206 &psig=AFQjCNFl41xC3rD6YFIrwCYY70aBbciWWQ&ust=1450572663941617
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 7
Residential
The residential and household composition varies by neighborhood.
Residents
Frederick has benefitted from a steady increase in population over that past fifteen
years. More than 15,000 new residents moved to the city since the year 2000, an
increase of twenty-nine percent. The population is projected to continue to expand
through 2020 to 71,318, at a 0.85% annual rate of growth.
Today, 68,347 people call Frederick home including 16,347 Millennials2 who are
entering their peak spending years. The diverse residential base is well employed
and educated. Over forty-percent have at least a BS degree, more than sixty-five
percent hold white-collar jobs. These empty nesters, singles and families generate
over $470 Million of retail demand.
Households
Household composition and spending varies greatly by geography. Households in
the core (.5 miles from W. Patrick & Market Streets) tend to be smaller with the
highest concentration of single member households. The population here is less
diverse and older with a median age just over forty. The rate of homeownership is
lower here than within other neighborhoods, largely due to higher percentage of
rental properties.
Residents in the core tend to spend more on apparel and food away from home
than others households. When they do eat out, it is almost 3:1 at full service
restaurants as opposed to limited service eateries. They also shop at more
traditional grocery stores than specialty ones with a preference for fruits,
vegetables, meat and fish, and baked goods. They tend to watch movies at home
using streaming and renting of DVDs rather than at a theater, probably a result of
their walkable lifestyles.
2 “Millennials Coming of Age in Retail” Goldman Sachs
123,513
Residents w/in a 15 min. drive
.5 Miles
1 Mi
le
3 Miles
30 Min Drive
0
50000
100000
150000
200000
250000
300000
350000
400000
2010 2015 20
20
Residential Population
.5 Miles 1 Mile 3 Miles 30 Min Drive
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 8
Household income and size rises the further out from the core you travel.
Households further than 2 miles from Downtown Frederick tend to be younger and
have the highest concentration of incomes over $100,000. These households tend
to be larger families with higher mortgage obligations and less overall disposable
income.
As might be expected, this consumer group spends far more on apparel, mostly on
kids and menswear (work and sporting wear). They spend more on food than their
downtown neighbors do, with a prevalence for food at home, spending almost
twenty percent more than what they spend away from home.3 Spending on snacks
and miscellaneous foods is almost twice as much than on fruits and vegetables.
When they do go out, they are likely to spend money at limited service restaurants.
When they patronize full service restaurants, it tends to be family style chains.
The middle tier (between a 15 min. walk and a 1-mile ring), is most intriguing. This
population is slightly older than the outer tier, but younger than the core. Their
households are larger and their homes a bit less expensive than those in the core.
Their incomes are slightly less, yet their disposable income is about the same as
households within the core.
3 Includes prepared meals from traditional grocers
These residents tend to spend more on food and general merchandise than those
in the inner core but not as much as the outer tier. They are well connected, have
subscriptions for movies and TV, and like gadgets. They are most likely to have the
latest technology, which coincides with their affinity for creating admirable
impressions. These residents are well educated, fairly well employed, enjoy a bit
more flexibility than the others, and are clearly enjoying life in the city.
Those within a 15-minute walk from Downtown tend to spend the most on apparel,
food, their mortgage, childcare and entertainment. They also tend to have the
highest income within the middle core and trend toward family HHs. They still spend
more at home than away from home and at a higher level than those within the
core, and opt for natural and organic products, with a preference for stores such as
Trader Joe’s and Whole Foods. When the consumers in the middle core do eat out,
they do not differentiate as much between full service restaurants and limited
service ones. These residents are the strivers, and appearance is important. They
work out, tend toward name brands and happily spend money on clothes, jewelry
and apparel.
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
0
0.5
1
1.5
2
2.5
3
0.5 Miles 1 Mile 2 Miles 3 Miles 15 Min 30 Min
A
xi
s
T
it
le
H
o
u
s
e
h
o
ld
s
iz
e
Distance from the co
re
Household Composition
Average HH Size Average HHI
57%
62%
77%
86%
17%
21%
22%
30%
49%
41%
31%
22%
.5 Miles
1 Mile
3 Miles
30 Min Drive
D
is
ta
n
c
e
f
ro
m
t
h
e
c
o
re
Household Composition
Family HHs HHs w Children Single Person HHs
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Housing
For a small city, Frederick offers an extremely wide range of residential choices from
urban walkable neighborhoods comprised of historic row houses to more
traditional
suburban developments with larger houses and yards, often preferred by families with
young children.
Residential development in the city has been somewhat modest in recent years,
expanding by only 1,200 units from 2010 – 2015. Recent sales and leasing patterns
show the stability of the market. Growing interest in walkable communities is driving new
multifamily investment. Nearly 10,000 new housing units are planned or in the pipeline,
many in new mixed-use projects and neighborhood developments such as The Renn
Farm, Market Square, and Carroll Creek in Downtown Frederick.4 The 3,500 new units
that have been permitted include a combination of single-family homes, town homes and
multi-family units (sale and rental).
Housing prices remain below the cost for competitive markets in the MSA, contributing to
Frederick’s reputation as an attractive residential destination.The average home value in
the core of Downtown Frederick is $303,618, easily affordable to a variety of household
types. Prices rise commensurate with size
as you travel away from the downtown
area. Home ownership has dropped
slightly across the city following a pattern
found in other markets. This is partly due
to construction of new multi-family
inventory and Millennials delaying first
time home purchases.
4 Frederick Office Planning Annual Report, Dec. 2014
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
0
10
20
30
40
50
60
70
80
90
100
M
e
d
ia
n
H
o
m
e
V
a
lu
e
2
0
1
5
P
e
rc
e
n
t
Homeownership & Value
% Owner Occupied % Renter Occupied Median Home Value
Walk Score 90
Downtown Frederick
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Tourism, Visitors & Students
1.4 million tourists. Nearly three-quarters of all annual visitors to Frederick County come to
Downtown Frederick during their journey.
Tourism is an important component of the local economy and has a significant
impact on the local retail market. Frederick boasts a solid tourism and visitor
market with an estimated two million visitors annually, contributing nearly 6,500
industry related jobs. Frederick’s rich heritage, award winning historic district,
along with a diverse mix of art, culture and public spaces draws daily visitors
from the tristate region attracting even those travelling nearly two hours.
One of the chief attractions is Downtown Frederick’s dynamic 40-block historic
district, with its nationally renowned architecture, variety of historic sites, two
hundred retailers and antique shops, and forty restaurants. The monthly First
Saturday series attracts 14,000 people on average. On twenty-two weekends
each year, Downtown Frederick and the neighboring 54-acre Baker Park play
host to special events including concerts, gallery walks, children’s theatrical
performances, and other events that celebrate seasons.
Complementing the Downtown district are attractions such as the National
Museum of Civil War Medicine, Mt. Olivet Cemetery, and the Weinberg Center for
the Arts. The economic impact from just the arts and cultural attractions is $6.5
million.5
Several institutions of higher education bring several thousand students to the
city. Many of these students live on campus (Hood College) others commute in
or rent apartments, especially in neighborhoods near and adjacent to Downtown
Frederick. The students patronize local restaurants, bars and retailers as well as
cultural and sporting venues. The students also provide a pipeline of workers for
employers in the region.
5 DED, Frederick Tourism Website
The Downtown Hotel & Conference Center will bolster overnight visitors to the city.
Concept rendering provided by Plamondon Hospitality Partners
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 11
Retail Trends
Where people shop and how they shop is changing.
Retailers are responding to these changes by experimenting with new store
formats. The line between online and brick-and-mortar retailers continues to blur,
as more retailers adopt omni-channel strategies.
Smaller footprints continue to trend. As tenants shrink their footprints, they are
also rethinking merchandising from multiple level presentations to showrooms.
This is driving efficiency and opening up new market, especially for larger format
stores such as Target and Walmart, both are building stores at less than half their
typical footprint. While some retailers are shrinking their real estate, others are
just starting theirs. Warby Parker and Amazon, once only accessibly online, are
just two of the retailers opening stores. Once online retailers are building on
market share attained through Internet sales. Brands such as Tory Burch are
abandoning once exclusive distribution with major department stores to open their
own boutiques.
“Click and pick-up” strategies make convenient locations a priority. Retailers
across all sectors are now offering delivery services. Some such as Ikea and
Target are integrating in-store purchases with same day delivery. Many retailers,
grocers and restaurants are using third party distributors, including Uber, as a way
to answer customers’ craving for immediacy.
These new approaches and smaller prototypes enable retailers to accommodate
the shift underway in American cities to urban living. Retailers now can gain entry
to markets that were once off limit due to lack of suitable space. A good example
is Restoration Hardware, which is building grand “showrooms” one-third the size of
their traditional stores for a much smaller level of investment. These “showrooms”
feature less inventory than traditional stores and customers are encouraged to
shop online from inside the store.
Mergers, acquisitions and consolidations are increasingly common, influencing
market share, shopping patterns and retail site location protocol. The elimination
6 Deloitte’s American Pantry Report
of some brands is creating
opportunities for others. CVS’s
recent purchase of Target
Pharmacies and Kroger’s
acquisition of Harris Teeter have
resulted in market overlap, while
enhancing their brands’
distribution channels. While
mergers can result in market
saturation and vacancies, they can
also open up market opportunities
for other tenants.
Rebranded concepts at lower price points targeting younger urban consumers are
adding a fresh dimension to the retail offerings Bloomingdales recently launched
an outlet concept. Forever XXI just opened three F21 Red stores at price points
even lower than their main store. J Crew just launched a similar price conscious
concept, JC Mercantile.
The grocery industry in the U.S. is undergoing some of the most dramatic shifts
since supermarkets emerged in the 1940s. Whereas a single store once served all
of shoppers’ food and beverage needs, consumers today shop at five different
types of stores on average to fulfill their grocery needs6 including farmers markets
and boutique food stores. In addition to urbanization, the focus on fresh foods and
organic products has forced many grocery chains to rethink their brands and
merchandise. The experience is equally if not more important than pricing. Several
grocers have introduced beer and wine bars available to customers to make food
shopping a more enjoyable experience. Private labels and local products are
gaining popularity, with sales projected to grow 62% in 2016,
Trends in Retail
Consolidations
Urban prototype
Smaller footprints
Multi-level stores
Shops within shops
One-day delivery
Omni-channel marketing
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 12
Online sales represent less than 7% of retail sales today7; this is expected to rise to 10% by 2017.
Specialty grocers are readily responding to these trends and rising interest in
healthy eating and living. New store concepts entering this space are provoking
industry leaders such as Whole Foods to rethink their brands. Their new smaller,
lower priced store, 365, targets younger food conscious consumers with a more
cost effective mix of organic, local and artisanal items. Earth Fare and Sprouts,
two new specialty grocers, are now competing in the space. Both stores have a
smaller footprint than Whole Foods (20– 30,000 sq. ft.) as does Aldi/Lidl, which
makes them extremely attractive for urban sites.
“Retailers are learning how to fundamentally
transform their business models, ones that have
been built for maximum efficiency and scale, and
transform them into more nimble, effective ones.”8
Increased taste for artisanal fare and local food is opening up opportunities for
local and product centric stores (olive oil, charcuteries, bakeries, etc.). This has
also resulted in growth of local wineries, breweries and even “bourbon”
distilleries9, prompting communities to review their licensing and liquor and food
production policies.
Health-conscious consumers are also driving the growth at health-oriented tenants
from fitness retailers to healthier restaurants concepts. Restaurants at all price
points are responding to urban and young consumer preferences, retooling their
menus and ordering platforms. In the Mid-Atlantic, area chains such as Silver
Diner and Chick-fil-A are introducing new hip urban concepts in locations they
once avoided. Owners are augmenting offerings and scaling up technology to
enhance ordering and takeout and convenience.
7 National Retail Federation (NRF)
8 National Retail Federation (NRF)
9 Technically to be called Bourbon it must be distilled in Kentucky
10 “Millennials Coming of Age in Retail” Goldman Sachs
11 Deloitte Retail Trends Report 2015
Convenience is paramount for consumers at both end of the spectrum. Tech savvy
consumers are propelling the integration of technology into traditional
merchandising and ordering delivery policies. Many national tenants now
encourage shopping online, and pick-up in the store. Many retailers have
introduced same day delivery, even using third party distributors including Uber.
Millennials, one of the largest and fastest growing consumer groups, have no
brand loyalty.10 Trendiness often trumps price and convenience, requiring retailers
and brands to refresh their products more often and deliver more time relevant
goods.
On the contrary, two thirds of retail spending growth is expected to come from
shoppers aged fifty-five plus in the coming decade.11 This is creating an interesting
balancing act for retailers. While addressing the growing demands of the baby
boomers, retailers still must attract the interest, and spending power, of the
younger generation. Today’s customer is looking for an experience that feels
authentic, even innovative and offers more variety in an appealing environment.
Used and temporary goods are gaining prevalence from home furnishings to
apparel. Younger consumers tend to be less interested in expensive furniture
brands or antiques, preferring cheap even repurposed and artful furniture, rather
than the solid staples of their parents who attained items at marriage and held on
to it for eternity. College debt and delayed home purchases are partly driving this
change.
The market for what for “throwaway” goods especially apparel is rapidly
expanding. National brands such as H&M and century 21 are dominating this
market, but local chains are also becoming competitive. Price, technology, and
smaller living quarters are influencing this growth. It is simply not desirable to be
caught in a selfie wearing the same dress. After all, “why buy the Missoni dress or
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 13
Gucci tie when you can simply rent it for on evening or an interview at Rent the
Runway.”
A rise in entrepreneurship is fueling the growth of local and unique retail and
business concepts. Millennials and older individuals are opening businesses at a
faster rate than past decades, attracted by limited employment and a desire for
flexibility.12
New financing tools, including crowdsourcing, are proving useful to launch
concepts as well as build immediate market share, especially in small
communities and urban environments where access to capital is often more
limited.
Advances in shared spaces and infrastructure at incubators and accelerators are
also powering startups from fashion design to food contributing to authenticity.
Retailers are looking for growth opportunities, not just sites.
Retail Growth 2014-2015
• Fitness/Health/Spa Concepts
• Drug Stores
• Thrift Stores
• Grocery (Smaller Format)
Discount, Ethnic, Organic, Upscale
• Fast Food
• Fast Casual Dining
• Automotive
• Discounters
• Dollar Stores
• Off-Price Apparel
• Pet Supplies
• Sporting Goods
• Wireless Stores
Retail Contraction 2014-2015
• Bookstores
• Video Stores
• Do-It-Yourself Home Stores
• Mid-Priced Apparel
• Mid-Priced Grocery
• Office Supplies
• Stationary/Gift Shops
• Shipping/Postal Stores
Location Factors:
• Visibility
• Accessibility
• Regional exposure
• Population density
• Population growth
• Adequate parking
• Adequate signage
• Operational convenience
• Safety and security
12 NRF, IRA, CUEED
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 14
Retail Site Selection Dynamics
Creating sustained retail success is an art and a science.
In the aggressively competitive, modern American marketplace
where, alongside, TV, radio, direct mail and other, traditional
media, the Internet plays an increasingly central role in
providing and promoting information and education about and
access to “things” specifically to the people who want them,
creating sustained retail success is an art and a science.
The same is true when it comes to retail attraction, where many
similar dynamics apply. A region, county, city or
neighborhood
hoping to attract specific types of retailers must create, and
then efficiently and effectively project positive, strategically
differentiated images and messages about all the wanted
elements and components. Ultimately, it must do so in a
manner most likely to generate the awareness, interest,
response and interaction necessary to bring the targeted
retailers to the table and, ultimately, to sign a lease, and
develop space. Communities must also keep track of market
trends and retailers changing site requirements, which are
relatively fluid today and influenced by market shifts.
With respect to gaining knowledge about potential markets,
retailers, developers and their representatives have articulated
their preferences for knowing and understanding a community’s
approach to and strategy for retail attraction and development.
This information is influencing a retailers approach to the
market after a location decision is made.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 15
Matching Appeal to Retailers’ Site Selection Criteria
Part of the process of attracting retailers to Frederick is to understand how the city’s strengths fit into the site selection process and how those strengths translate into
opportunities for the retailers. The quality and validity of market information is also critical. Several national studies have demonstrated that retailers and their
representatives have more confidence in information generated or assembled by non-vested parties.13
Retailers often evaluate soft market information and nontraditional metrics to supplement conventional indicators and narrow their site location options, including:
Traditional
Primary Factors
• Demographics
• Density
• Employment
• Income levels (household and disposable)
• Education
• Competition
Secondary Factors
• Market segmentation
• Traffic patterns, counts, and travel times
• Daytime population and available and affordable workforce
• Cost of land
• Current leasing activity (retailers, square footage, asking rates)
• Absorption and occupancy rates
• Regional and local shopping patterns
• Planned developments
• Business costs & friendliness (tax burden, approval process/time)
Non-Traditional
Somewhat less tangible barometers of the local market also factor into retailers’
site selection decision making, especially in underserved and emerging markets.
Frederick fares well on some when evaluating for non-traditional factors, such as:
• Walkable environments
• Minority populations
• Women – the “mom factor”
• Fine and lively arts creative class
The city is weaker on others:
• Gentrification
• Urban transit-oriented development
• High-density sites
13 ICSC, Penton Media Retail Study, and NRF
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 16
Primary Retail Categories
Neighborhood Goods & Services (NG&S): grocery stores, convenience stores,
drugstores, florists, bakeries, delicatessens, butchers, dry cleaners, salons,
tailors, laundromats, spas, liquor stores, shoe repair, shoe shops, and stores
of similar tenants. These types of retail establishments draw shoppers within
a quarter mile trade radius. They are places people would run a Saturday
errand.
Food & Beverage (F&B): sit-down restaurants, take-away food, cafes, bars,
coffee shops, sandwich shops, ice cream shops, fast food restaurants, and
similar types of tenants. Food and Beverage uses are used by local residents
within a half mile radius, but their draw extends beyond this, especially for
unique concepts.
General Merchandise, Apparel, Furnishings, and Other (GAFO): clothing stores,
furniture stores, discount stores, bookstores, jewelry stores, gift stores, pet
supply, home décor stores, music stores, sporting goods stores, craft stores,
mattress stores, electronic stores, auto parts stores, hardware stores, and
similar types of tenants. GAFO includes all other retail and is the largest
category. Retail stores in the GAFO category are usually bigger in size and
tend to draw shoppers who make big purchases, but less frequently.
Therefore, GAFO draws shoppers outside a one-mile trade area.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 17
The Frederick Retail Marketplace
Frederick boasts many strengths and appears to be well positioned to appeal to local and national tenants and remain competitive in the near and long term. The market
also faces certain challenges that must be acknowledged and/or addressed in retail attraction.
Market Strengths
Strong demographics and market indicators.
Continued residential and employment growth.
Strong tourism and visitor market, with new facilities that will bolster
growth.
A solid base of retailers with demonstrated success already operating in
the market, (local and national).
Several established clusters of retail with fairly stable activity.
Retail lease prices that are well below competitive markets, especially
appealing to smaller chains and independent tenants – even in newer
spaces and for those testing the market.
Historic building stock which sets the stage for really creative retail uses.
New mixed-use developments that are architecturally current with
compelling components and space.
A stable market, with above average disposal income.
Access to a regional consumer and employment base.
Downtown Frederick which is walkable and physically appealing with its
historic buildings and public spaces.
Opportunistic gaps that exist in the current retail mix.
A range of potential retail development sites, including surface parking
lots, new mixed-use projects, historic buildings, and redevelopment sites,
all of which present an opportunity for retailers considering the market.
Constraints & Challenges
A lack of suitable retail product for retail tenants.
Older retail property that has not been well maintained or is obsolete
(East end of Downtown and Golden Mile area).
New development in markets to the south are creating clusters of
retail, food and entertainment, which distract the current consumer
base, especially those living and commuting south.
Extremely aggressive marketing and competitive positioning of nearby
jurisdiction and markets. North Bethesda and Rockville Pike, two
communities that have established a collaborative marketing
program, and Downtown Bethesda, are perhaps the most aggressive.
Lack of connectivity of retail properties, especially outside the core,
largely due to auto-oriented centers along older retail corridors.
Misperception about the sophistication of the market, availability of
parking (primarily in Downtown) and distance – especially for those
unfamiliar with the city from markets such as DC and Baltimore.
Inconsisten retail traffic.
Physical and organic boundaries, including along Route 40 and 26
and coming off I-270.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 18
The Retail Leasing Landscape
Frederick is gaining a reputation as a HIP city, with a growing foodie culture,
creative class, artists and related activities. An influx of upscale, empty nesters,
including in Downtown, indicates potential opportunity for nontraditional retail
and retail that appeals to a range of youthfully oriented and diverse audiences.
Lease prices and terms make Frederick an extremely attractive market for small
independent and regional tenants, even national ones testing the
market.
Frederick boasts a compelling mix of national and local retailers. Signature
retail tenants such as Wegman’s and Talbots add credibility to the market, and
national acclaimed restaurant VOLT creates a compelling story and
demonstrates credibility of the market to other tenants.
Frederick’s Downtown is one of the more robust retail environments in the city
with over 200 retail businesses. Many of these businesses are local and help
to influence a truly vibrant environment that draws customers from as far away
as Fredericksburg. However, the lack of new building product in the downtown
area, and a large inventory of buildings with small footprints have limited the
type of tenants that come into the neighborhood. Newer developments in
Downtown Frederick offer up-to-date space that many of today’s tenants
require.
Rents in the city start at a low of $10/sq. ft. for space in Downtown Frederick to
the low 30’s for new space coming online in the market (under 5,000 sq. ft.).
Retail space in the core, along the primary commercial streets and in built
centers, tends toward a range of $15 -$20/sq. ft. Average asking rents are
slightly higher, but have held steady since 2013, at $22.65/sq. ft. NNN.14 The
overall average retail rent attained is $18.50/ sq. ft./NNN.15
Typical retail lease terms begin at five years, and generally have renewals in five-
year increments. Some of the spaces including new buildings on the Creek, are
offering space for shorter than average terms (36 months), this is ideal for
young businesses, tenants in transition or new to the market and independent
retailers, who may not be ready to commit to a longer lease.
14 LoopNet October 2015
15 CBRE Qtr2MD Market Report
Average Asking Rents
$22.65 SF Frederick
$23.12 SF Suburban MD
$25.57 SF NOVA
$10
$17
$45
$40
$50
$30
$30
$50
$100
$80
$200
$65
$- $50 $100 $150 $200 $250 $
300
Frederick, MD
Baltimore, MD
Bethesda, MD
Rockville, MD
Washington, DC
NOVA
Price per Square Foot
Range of Average Asking Rents, 2015
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 19
Size of the current retail inventory may also be limiting new tenants. In
Frederick, the average lease is approximately 3,100 sq. ft.16 There are currently
thirty-five active retail listings in the market (30 buildings)17 though some of the
space listed as retail is really flex space, and four of the listings are in planned
projects. The majority of the available spaces in the city are below 2,500 sq. ft.
According to a 2013 survey of nearly 20,000 retailers focusing on location and
site selection requirements,18 fifty percent of retailers require more than 5,000
sq. ft. and twenty percent want more than 10,000 sq. ft. The gross leasable area
(GLA) tends to be higher across all built center types than street front retail and
national chains often have higher space requirements than local and
independents retailers.
Frederick’s retail vacancy rate falls between 8.2% – 10.5%, depending on the
neighborhood. The variation occurs depending upon who measures it and how it
is measured. The rate is slightly higher on the Golden Mile because of the Mall,
which is currently being repurposed. The city’s retail vacancy rate, though higher
than some markets, is lower than the U.S average, currently at 13%. The
vacancy rate is higher than other competitive markets including Bethesda at
2.3% and Montgomery County at 4.3%19 and the overall Baltimore Metro Retail
Market20, which is at 5.6%.
Understanding how Frederick fits within the retail
market nationwide and regionally helps to create
perspective on the market.
The United States is the world’s largest retail market with personal consumption
expenditures of $3.5 trillion annually (excluding services)–roughly $11,300 per
person for its 314.2 million citizens. According to the National Retail Federation
in the 1rst quarter of 2015 there were 68,283 retail establishments in
Maryland. These account for $23 million of direct impact on the state’s GDP
and a total impact of $46 billion on GDP.
The U.S. also leads the world in shopping center Gross Leasable Area (GLA) per
capita at nearly 23 square feet per person, well ahead of other countries.21 ICSC
estimates that average range of built retail space for falls anywhere from 10 – 32
sq. ft. per capita. The rate varies depending on location and type of community.
The City of Frederick has 650,352 sq. ft. of built retail GLA22 or nearly 9.5 sq. ft.
per capita.
16 MacRo Report Qtr12015
17 LoopNet, CityFeet October 2015
18 NREI
19 CBRE Qtr2MD Market Report
20 Baltimore City and the counties of Frederick, Carroll, Harford, Cecil, Howard, and Anne
Arundel
21 Cushman Wakefield 2014; ICSC Shopping Centers Today
22 Frederick Retail Centers Report 2014
8.5%
Average Retail Vacancy Rate
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 20
The Trade Areas
Trade areas help communities to understand which retailers to target and why. A
Primary Trade Area represents seventy five percent of consumers from within
three miles or less. These are smaller in dense marketsand are critical for basic
goods and services, groceries and some food and beverage.
A Secondary Trade Area draws ten to twenty percent of consumers from three to
seven miles. These can extend further in areas where there is less housing and
retail. These are critical for evaluating the market for food & beverage.
The Tertiary Trade Area has the fewest consumers and can extend past twenty
miles. These are important when evaluating a market for GAFO (Big box,
department stores, specialty stores, and home furnishings). Theaters have their
own trade areas, and typically include a minimum three-mile distance from
competitors, mandated by distributors. These distance requirements
sometimes
shrink in very dense environments.
In a market such as Frederick, you must factor in the destination element of the
Downtown, and the surrounding geography and adjacent communities, which are
less dense, spread out, some still with agricultural uses.
Retailers typically analyze markets and trade areas using rings and walk/drive
times. For the purpose of this study, we used the intersection of West Patrick and
Market Streets as our center point. We examined the city using a variety of
geographies, each with individual strengths. The core market for Downtown is
within .5 miles of this intersection. The primary trade area (PTA) is 1-mile radius –
which accommodates walkability. The secondary trade area lies within the 3-mile
radius. The tertiary trade area is within a 30-minute drive time and represents the
regional market.
For marketing purposes, the sensible approach is to use those geographies that
retailers and developers are comfortable with in site evaluation. Other data and
metrics can be used to augment this information and highlight nuances of the
market. Common metrics used by retailers consider in evaluating a market include
population, household data, educational attainment, age, income and ethnicity.
.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 21
The core market for Downtown is within
a half mile of the intersection of West
Patrick and Market Streets. The Primary
Trade Area (PTA) is a one-mile radius
from this intersection and
accommodates walkability.
.
Walk Times: .25, .50, .75 miles
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 22
The Secondary Trade Area lies within
the 3-mile radius of the intersection of
West Patrick and Market Streets
Distance: 1, 2, 3 Mile Rings
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 23
The tertiary trade area is within a 30-
minute drive time of the intersection of
West Patrick and Market Streets. This
reflects the broader buying power within
the regional market.
Drive Times: 15, 30, 45 Minutes
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 24
Retail Market Profile
The profile offers a snapshot of the Downtown Core
Market, and the Primary, Secondary and Tertiary Trade
Areas. The metrics reveal the composition within the
various geographies and how these compare.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 25
Who is The Frederick Consumer?
Frederick Consumer Profile: Tapestry Segmentation
We examined the psychographic profile of residents in the Primary and Secondary
Trade Areas to gain a better understanding of the residents’ spending habits and
preferences. Several distinct tapestry groups are dominant in the market, titled by
ESRI as “Emerald City”, “Set to Impress”, “Metro Renters” and “Enterprising
Professionals.”23
These groups prevail across the various geographies. Each has distinct
characteristics, but there is overlap and there are dominate traits, trends and
preferences that stand out.
Set to Impress, Emerald City, and Metro Renters are the most common segments
within the core – The Primary Trade Area, anything with in the 1-mile area.
Enterprising Professionals is the single most common, and dominate segment
beyond the 2-mile mark, or the Secondary Trade Area.
Just What Does This Mean?
The psychographic analysis undertaken evaluates the current population and,
using a series of indicators (income, age, education, employment, etc.), provides
reliable insights into these consumers’ wants and needs. The psychographics of
needs and wants segmentation operate on the theory that people with similar
tastes, lifestyles, and behaviors seek and cluster with others having the same
profile (“Birds of a feather flock together”) and that these behaviors can be
measured, predicted and targeted.
Retailers understand these tendencies and use this information to profile,
categorize and understand consumers in markets they are evaluating. They also
use it to determine whether prospective consumer segments are an ideal fit for the
goods and/or services they sell. Segmentation is a critical facet of retail site
selection and central to the process of looking for the best locations for new stores
23 ESRI 2015 Community Tapestry
and evaluating the success of existing locations. Segmentation is also used to
select merchandise suited to customer preferences and direct advertising with the
right messages and images to the right audience. ESRI’s current Community
Tapestry, builds on its foundation of proven segmentation methodology.
Hallmarks of Community Tapestry and any effective segmentation methodology are
accuracy and stability. Each neighborhood is analyzed and sorted by more than
sixty attributes, including income, employment, home value, housing type,
education, household composition, age and other key determinants of consumer
0 5 10 15 20 25 30
35
Boomburbs
Bright Young Profs
Emerald City
Enterprising Professionals
Metro Renters
Metro Fusion
Parcs N Rec
Savvy Suburbanites
Set to Impress
Percent of Classification
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Comparison of Segmentation Across Trade
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30 Mins Drive Time 3 Miles 1 Mile 0.5 Miles
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 26
behavior. ESRI’s Community Tapestry segmentation system combines the “who” of
lifestyle demography with the “where” of local neighborhood geography to create a
model of various lifestyle classifications or segments of actual neighborhoods with
addresses–distinct behavioral market segments.
An accurate customer profile illuminates and helps define customer behaviors. The
profile can also pinpoint a retailer’s core customer groups, as well as opportunity
groups.
Trade Area Geographies Segmentation
All U.S. households fall into one of sixty-six lifestyle segments. The following is the
Community Tapestry for Frederick’s primary and secondary markets.
Primary Trade Area
Emerald City Median Age is 36.6; Average HH size 2.05
Residents live in lower density urban areas, often row houses, in neighborhoods
that are older primarily built before 1960. Nearly fifty percent are renters and over
fifty percent of the households are single person and nonfamily types.
They tend to be well educated, fairly well employed, even self-employed, and their
income comes primarily from wages rather than investments. They are well
connected and use on the Internet for entertainment. They work out, trend toward
food culture and are conscientious about nutrition often buying organic and
natural products. They are also environmentally sensitive. They place importance
on learning, and are interested and enjoy music and art.
Their spending reflects these priorities; they spend more on education,
entertainment and housing than apparel. They also spend close to the average on
food and the same level for pensions and SS. They are more likely to shop at
Whole Foods and Trader Joe’s than Giant Foods. They will happily pay someone to
clean so they can go to yoga.
Set to impress Median Age is 33.1; Average HH size is 2.1.
They tend to live in multifamily buildings and rental complexes, with lower than
average rents. Their homes are often nestled in neighborhoods that are comprised
of single-family homes, commercial businesses and older infill buildings. Renting
is more common than home ownership and mostly located in urban areas. Nearly
one in three is between the ages of 20 – 34. They maintain close relationships
with families.
Their income levels are generally below average, many are working in food service
while attending school. This group is very image conscious and use the latest
fashions to bolster their appearance. Though they prefer name brands, they are
always looking for a deal and will go generic if it is a better price. They shop at
Walgreens, and discount retailers as Marshalls, TJX, and Nordstrom Rack.
They spend more on education, than food, housing transportation and
entertainment. They generally own used imported vehicles and only have cell
phones. For leisure, they go to concerts, clubs and outdoor venues such as the
zoo.
Metro Renters Median age is 31.1; Average HH size is 1.66.
Residents are highly mobile, value education and creativity, are interested in fine
arts and strive to be sophisticated. Renters dominate at around 80% of the
market. The majority of the households are singles and they live alone or with
roommates in older urban apartments and condominiums in the urban core. Their
neighborhoods are dominated by 20+ unit apartment buildings surrounded by
offices and businesses.
Their income is close to the U.S. average (Median HHI $52,000). They tend to
spend a lot of their income on rent, clothes, services and the latest technology.
The majority of their budgets go to education, and they spend equally of food and
housing, than entertainment and transportation. They shop for clothes at Banana
Republic, Gap and Nordstrom.
These savvy consumers use the internet to educate themselves before making
purchases. They prefer Macs and tablets, which they use for reading and
entertainment. They are partial for organic foods and shop at Trader Joe’s and
Whole Foods. In addition, they like wine bars and restaurants. They like physical
activity including yoga and skiing and get around by walking, biking and public
transit.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 27
Secondary Trade Area
Once you go outside the 1-mile or 15-minute drive time – two segment categories
dominate the market. The other groups account for roughly the same percentage
of consumers.
Enterprising Professionals Median age is 34.8; Average HH size is 2.56
Enterprising Professionals dominate the market outside of 1-mile mark. Their
income levels (Median HHI $77,000) are easily 1.5 times the average U.S. This
young population group is well educated, over 50% has at least a BS, they are
climbing the professional ladder, and many work in STEM professions.
This population groups is one of the fastest growing and most diverse. Asians
comprise close to twenty percent of the population. Almost half of households are
married couples, and thirty percent are single person households. They reside in a
range of housing from suburban single-family homes, row homes, and larger multi-
unit structures. Fifty percent are still renters – partially as they change jobs a lot.
They are early adopters of tech and spend a lot of time in front of a computer.
They like the latest gadgets, use tablets for reading books and newspapers, and
shopping. Their money goes to pensions, education, housing, food, transportation
and entertainment. They spend more on apparel than other peer groups in the
market, with a penchant for name brands, but still below the U.S. average.
Convenience is key and they frequent the dry cleaners, Starbucks and Amazon.
Families will eat out at Cheesecake Factory and Chick Fil A.
For leisure, they watch movies and TV on demand and HDTV and happily pay for
faster connections. They also frequent the beach, museums and even gambling.
Savvy Suburbanites Median age is 44.1; Average HH size is 2.83
This group is well educated, well read, and well capitalized. Families include empty
nesters and empty nester wannabes, who still have adult children at home. They
typically live in established neighborhoods found in the suburban periphery of
large metropolitan markets. An overwhelming majority owns their own homes
(91% home ownership), primarily single-family homes with a median value of
$311,000. Their suburban lifestyle includes home remodeling and gardening plus
the active pursuit of sports and exercise. Nearly fifty percent of them are college
graduates, and seventy-six percent have some college education. Nearly two thirds
of this group actively participated in the labor force and over sixty-five percent of
the HH have two incomes resulting in a median HHI of $104K.
They are well-connected consumers that appreciate technology and make liberal
use of it for everything from shopping and banking to staying current on new
brands and deals to communicating. They are foodies, enjoy good food and wine
and like to cook with a preference for natural or organic products. Gardening and
home remodeling are priorities, and they are likely to grow some of their own
produce and herbs. They like amenities including high tech gadgets, live
performances and cultural events. Residents prefer late model, family-oriented
vehicles: SUVs and minivans.
They are not afraid of debt; many households carry first and second mortgages,
and home equity credit lines. Their busy lifestyles are also lend toward extensive
use of housekeeping and personal care services even gardening services. They
are physically fit, actively participate in a range number of sports, from skiing to
golf, and are happily willing to invest heavily in sports gear and exercise
equipment.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 28
Retail Opportunities
Sectors
Retail sales were compiled by expenditure type within the Frederick primary study
area. Because the geographies vary greatly, we benchmarked against the national
average, which is 100. Indices over 100 in individual category indicates spending is
above the national average; below 100 indicates spending in a particular category is
below the national average.
The categories of retail studied include:
• Grocery
• Food/beverage
• Apparel
• Entertainment (General, Admission Fees, Dating Services)
• Personal Care
• Household Furnishings & Equipment
• Shelter
• Education
• Childcare
• Transportation
110 109 113 108 110 114 105 107 109 120
95 94 98 90 92 98 78 91
104 102
97 96 99 94 95
100
87
9
4
104 103
108 105
109
103 106
110
99
104
111 103
141 139
1
45
144 124
128
156
140
158 161
0
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200
300
400
500
600
700
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Index Comparison: Spending on Retail Goods
& Services by Category
30 Min 3 Miles 1 Mile 0.5 Miles Citywide
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 29
Food related expenditures were indexed separately because of Frederick’s strong
restaurant climate and consumer interest in more and better food retailers and
grocers. This analysis suggests that there is an exceedingly strong market opportunity
in the Downtown and primary trade area for specialty retail stores, entertainment,
grocers and regional businesses. A detailed break out is provided in the Appendix to
this report. The charts on the following page demonstrate demand within the trade
areas in study area, and then a detailed breakout by retail category.
110 109 113 117 108 110 109 109
95 94 97
105
94 96 93 94
97 96 98
105
96 97 95 96
108 105
108
113
104 106 105 105
141 139
146
149
138
141
138 138
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300
400
500
600
700
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Axis Title
Index Comparison: Spending on Food
By Category
Citywide 0.5 Miles 1 Mile 3 Miles 30 Min
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 30
Supply (retail sales) estimates sales to consumers by establishments. Sales to
businesses are excluded.
Demand (retail potential) estimates the expected amount spent by consumers at
retail establishments. This is based on residential population only and does not
account for daytime population or visitors.
All supply and demand estimates are in current dollars.
Total Retail Demand: Frederick Primary & Secondary Trade Areas
.5 Miles 1 Mile 3 Miles
.30 Min Drive
Total Retail Trade &
Food Drink (NAICS
44-45,722)
$240,481,155 $454,237,677 $2,018,320,379 $4,219,434,762
Total Retail Trade
(NAICS 44-45)
$220,726,179 $415,060,981 $1,832,432,279 $3,820,552,313
Total Food & Drink
(NAICS 722)
$19,754,976 $39,176,695 $185,888,100 $398,882,449
The sales and indices only tell part of the story. The strength of the regional
population and visitors to the area indicate there is room for growth.
The research suggests that a sizable portion of the retail sales are leaving the
market in certain categories. The Leakage/Surplus Factor presents a snapshot of
retail opportunity. This is a measure of the relationship between supply and demand
that ranges from +100 (total leakage) to -100 (total surplus).
A positive value represents ‘leakage’ of retail opportunity outside the trade area
(Define “leakage” as consumers who leave the trade area for goods and/or services
that they want, but cannot find, in it.). A negative value (red) represents a surplus of
retail sales, a market where customers are drawn in from outside the trade area to it.
The Retail Gap represents the difference between Retail Potential and Retail Sales.
ESRI uses the North American Industry Classification System (NAICS) to classify
businesses by their primary type of economic activity.
Retail establishments are classified into twenty-seven industry groups in the Retail
Trade sector, as well as four industry groups within the Food Services & Drinking
Establishments subsector.
The following demonstrates the leakage and surplus with in the Frederick PTA and
STA. A negative amount (red) indicates that sales are coming from outside the area.
Positive numbers (green) indicate that consumers are leaving the market to shop
and opportunity.
Retail Demand, Supply & Leakage: Frederick Primary & Secondary Trade Areas
.5 Miles
1 Mile
3 Miles
.30 Min Drive
Total Retail
Demand
$75,372,816 $163,946,411 $887,834,384 $5,286,339,893
Retail Supply
$270,481,155 $454,237,677 $2,018,320,379 $4,219,434,762
Retail Gap
$165,108,339 $290,291,266 $1,130,485,995 $1,066,905,131
Leakage Factor
-52.3 -47 -38.9 11.2
seydi
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 31
SOM Guest
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 32
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 33
By Geography
The analysis has revealed three distinct submarkets in the city with the greatest
prospect to support new retail growth.
Downtown Frederick
The Golden Mile
East Frederick
These areas were identified based on current and projected demand, recent and
estimated residential growth, traffic patterns and volume (pedestrian, vehicular),
the availability of sites (land and buildings), new development in the pipeline,
and community and political will. There are obvious geographic synergies
between the downtown area and East Frederick. The Golden Mile benefits from
exceptional access and a broad regional audience.
There are discreet opportunities for food uses, general merchandise, apparel
and boutique offerings even more creative uses such as artisanal tenants within
each area.
SOM Guest
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SOM Guest
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 34
How Frederick Competes
Benchmarking Frederick against similar communities reveals how Frederick
competes against other markets retailers are considering. Some of the
communities selected are locally competitive (Fredericksburg, Leesburg and
Bethesda); others are competitive due to demographic and psychographic
profiles, adjacency to major metro areas and the mix of neighborhoods and
assets (Lancaster City, Bethlehem PA). The cities selected are potential
competitive markets that desirable retailers might consider for expansion.
Economic and social characteristics demonstrate how each individual markets
are distinct and parallels that exist. Bethesda and Leesburg are wealthier, older,
less diverse (race and age), and have strong retail environments. Bethesda
boasts one of the strongest retail markets in the region with a healthy mix of
national tenants and boutiques and independent retailers. Lancaster City has the
least wealth, yet education levels are above the U.S. average. It is also the most
diverse, and is has a very strong local business and retail climate. However, the
quality of jobs and retail tend to be at the lower scale of pay and rank.
Frederick fares well against Bethesda and Leesburg on key metrics retailers are
looking at today: age, education, income, percent of millennials, diversity, and
household type. Though Frederick’s median HHI is a bit lower than some other
markets in the region, it is commensurate with the local cost of living.
Based on the number of families, it may also be due to a higher concentration of
households with only one full-time working parent. The cost of goods and housing is
considerably lower than in Bethesda and Leesburg as well, thus individuals at
comparable incomes have more disposable income.
0
5
10
15
20
25
30
35
40
45
50
0
0.5
1
1.5
2
2.5
3
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4
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Household Composition – 2015
Avg. HH Size Avg. Family Size % of All HH w/Kids
–
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Comparison of Population
2015 Population # HH 2015 # of Families 2015
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 35
0
10
20
30
40
50
60
70
80
90
100
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Comparison of 2010 Household Composition
% of Family HH – 2010 % of All HH w/Kids -2010 % of Single Person HH – 2010
0
10
20
30
40
50
60
70
80
90
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
P
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In
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Comparison of Income & Education- 2015
Median HHI % of HH Income over 100K % of Pop w/BS or Higher
0
10
20
30
40
50
60
70
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
P
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h
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In
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Comparison of Homeownership & HH Income
2010 HH – Owner Occupied 2015 Owner occupied 2015 Median Home Value
0
10
20
30
40
50
60
70
80
90
P
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Ethnic Composition & Diversity
White Only Hispanic Black Divsersity Index
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 36
Best Practices
Communities build credibility by using reliable data and resources accepted by the industry
(BLS, ESRI, and Claritas).
Retail is an important asset that contributes to a community’s economic vitality.
Cities of all sizes are deploying a variety of tools and tactics to expand and
improve their retail merchandise mix.
Communities that are successful in attracting retail investment generally have
strong demographics and tend to be proactive in marketing and targeted
outreach. They also tend to create a physical environment that is suitable and
appealing and a business climate that eases and even simplifies the approval
process.
Distinct approaches work better in individual environments. We identified best
practices and approaches that any city could emulate and modify.
The following is a summary of successful marketing and public relations
strategies, and financing, incentives and recruitment tools to support
sustainable retail. Not all programs are relevant. Frederick can adopt and
customize best in class tools, tactics and approaches.
Enhance Access to Data and Information
Inventory of Available Retail Sites Site inventories are most effective if they are
online, for ease of access. The best inventories are sortable by size and use as
well as other metrics used by industry including preferred rent, minimum square
footage, and unique features such as ventilation, loading and parking. Though
sometimes this can be a challenge keep current, an online database can help to
maximize exposure to potential tenants and investors.
Communities can also utilize industry-listing services such as LoopNet and
Costar. You do not have to be a member to do a basic search or list properties
here.
Two good examples include
WDCEP
(http://wdceprss.dc.gov-image
to the right ) and
Philadelphia Retail
Marketing Alliance
(www.philadelphiaretail.com).
Appleton Wisconsin has taken
advantage of one of the basic
listing services to present current
listings, for sale and lease, in a
simple list with corresponding map
(right).
SOM Guest
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SOM Guest
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 37
Maintain Current Market & Demographic Information Access to data is easy
today with the plethora of online tools. However, sometimes the information is
out of date, or a potential tenant may be looking at a market incorrectly or at the
wrong geography. A community can enhance consideration of local sites by
making current market data readily available on targeted and priority
geographies and make the due diligence process just one-step simpler.
Some cities provide a simple demographic snapshot on their local website
others post these on Facebook. A few communities take access to data
collection to a higher level with searchable platforms and access to third party
market data such as ESRI. Interactive platforms can be cumbersome and time
consuming, especially for a small community.
Lancaster City provides visitors an
exported PDF report that automatically
downloads with one click, (left).
A Retail Web Portal “Your website is the window to your community”.24 The
Internet and social media are an increasingly important part of any community’s
ongoing communications. Retail centric web portals are becoming more popular
with communities and economic development organizations.
Retail web portals can make intelligence gathering easy by creating a “One Stop
Shop” of retail centric data and information. Retail web portals are typically
24 Planitzen
populated with market, demographic and site Information, news about the
market, information on incentives, new projects, and important contacts.
It is important to keep this updated, fresh, and accessible with new
technologies, which also keeps users coming back. Some portals simply
convene data and links from partners and organizations working to support
retail and business attraction.
The Philadelphia Retail Market Alliance website www.philadelphiaretail.com
convenes essential
data and market
intelligence that was
scattered across
multiple city
websites. The single
portal merges all
relevant information
about the retail
market.
Denver’s site
www.thedenverretailscene.com is a very
effective site integrated with video.
http://www.philadelphiaretail.com/
http://www.thedenverretailscene.com/
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 38
Financing & Incentives to Attract Retail
As competition increases communities have become more creative in
structuring financing and incentive packages that support independent retail,
retail attraction, individual retail marketing and even start-ups and new deals.
Communities have used tax incentives to capture anchor tenants such as REI
and Bass Pro-Outlets. Chicago IL, Washington, DC and Portland Oregon offer
property tax abatements to private food vendors (grocers and supermarkets)
who invest in underserved areas also frequently referred to as food deserts.
Being able to bridge a gap between the property owner and a tenant with
funding fit-out (TFO) can sometimes result in securing a tenant for a challenging
space or a young retailer. Larger, national tenants often seek training funds to
underwrite costs associated with sizeable hiring. The sources of funding vary
from Federal and State funds, which often carry rigorous requirements and time
constraints. Select foundations including the MacArthur Foundation and the
Kresge Foundation provide support for retail investment.
Business Loans and Grants A variety of loans and grants are being used
successfully to support retail investment and entrepreneurs. These range from
traditional loans based on common bank lending rules to forgivable ones that
are forgiven if the business remains in place for three to five years.
The Denver Office of Economic Development (OED) recently launched a new
incentive program aimed at strengthening the city’s retail sector, adding jobs
and boosting retail sales tax revenues. The new “Retail Attraction Program,”
funded initially with $200,000, provides an incentive pool for the OED to attract
prospective retailers to Denver. The program supports small to mid-sized
retailers, “first-in-market” retailers, locally unique stores and those that fill a
particular gap. The retail funding is part of a larger portfolio of resources
including a business personal property tax credit, site selection assistance and
workforce development services, such as job fairs and custom training.
Great Streets Retail Small Business Reimbursement Grants, The Government of
the District of Columbia through the Office of the Deputy Mayor for Planning and
Economic Development (DMPED) administers the fund, which provides
competitive grants of up to $50,000 for qualified small business owners who
wish to improve their place of business.
The purpose of the
grant program is to
support existing small
businesses, attract
new businesses,
increase the District’s
tax base, create new
job opportunities for
District residents, and
transform emerging
commercial corridors
into thriving and
inviting neighborhood
centers. These grant
funds can be applied
towards hard costs
including build-out of
new or vacant space
and for underwriting
heavy equipment and
interior and exterior improvements.
The College Park MD: Business Retention Fund This fund was created to help
retain high-quality retail tenants; the program is now open for its second cycle of
funding. The program offers up to $5,000 in grant funds for leasehold
improvements of existing, locally owned retail businesses.
The reimbursement grant will cover up to 50% of the total improvement costs for
qualifying businesses. Applicants are ranked on various criteria with the highest
scoring applicants receiving grants. A hard application deadline helped to
encourage applications.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 39
Tax Incentives and Abatements
The Los Angeles Business Tax Freeze is a unique program tailored to retail
attraction. Under this initiative, businesses can receive a business tax waiver of
$500 and have business taxes frozen at the current rate for five years.
Businesses new to the Empowerment Zone startups and those relocating from
outside the City of Los Angeles pay only $25 yearly for five years. Loan funds
and grants once used primarily for façade renovation are now being used for
working capital, tenant fit-out and even services such as training.
Tax Increment Financing (TIF) appears to be the preferred incentive used to
underwrite the cost of development, land assemblage and infrastructure
(parking garages, and roadways). Dallas, TX and Washington, DC have
established programs using TIF to fund tenant fit-out, facade renovation and
other start-up costs that may be out of reach for new or less well-capitalized,
independent retailers and used as an incentive that “makes” rather than breaks
a deal.
DC used a TIF to underwrite infrastructure and façade improvements of the
historic Woodies Building in Downtown that resulted in attracting Forever XXI,
West Elm and a museum.
Cleveland used a TIF to secure a
Heinen’s Fine Foods (right) that
opened in the former Ameritrust bank
building in 2015. The bank space had
been empty for years. The grocer
serves as an anchor and features a
good mix of staples and takeout food,
is drawing residents, workers and
visitors. The investment was intended
to catalyze the attraction of other
tenants. A new clothing store opened
in October and several other tenants
are negotiating leases.
Supermarket Tax Exemption Washington, DC’s Supermarket Tax Exemption
exempts the owner of a
qualified store from sales
taxes on the purchase of
building materials and
equipment for construction or
substantial rehabilitation. To
qualify a supermarket must
be located in a priority
development area. It also
exempts the qualified
supermarket from the
payment of license fees,
personal property taxes and
real property taxes levied on
the supermarket for 10
years. Baltimore recently adopted similar legislation intended to stimulate
grocery development in food deserts.
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Miscellaneous Financing Tools
Short-term Start-Up Subsidies Landlords in Charlotte have used subsidies
provided through a program sponsored by the Charlotte Center City Partners
(BID) that addresses gaps in rents to encourage retail leasing. A similar tool
The Lease-Subsidy Program (the “Program”), was implemented in Downtown
Vancouver in the Eastside neighborhood. Utilized on a case-by-case program, it
is intended to bring essential retail into the neighborhood and offset costs in
the first three years, allowing a business to become financially sound. The
Lease-Subsidy Program is managed by the Vancouver Economic Development
Commission (VEDC) in consultation with Real Estate Services, Planning and
representatives from the community.
Cleveland’s Neighborhood Retail Assistance Program
(NRAP) provides a comprehensive suite of tools for
local retailers and restaurants. The program has a
working capital local program, a vacant property
initiative intended to activate empty storefronts, and a
job creation incentive program. Businesses
participating in NRAP also have access to the general
economic development loan program.
The Vacant Property Initiative helps overcome barriers
in the full reuse of abandoned, idled or underutilized
commercial and industrial properties within Cleveland.
Eligible activities are property acquisition,
environmental site assessments, site clearance and
demolition, “as is” and “as completed” property
appraisals, new construction and renovation.
Assemblage Strategies Many communities have large inventories of
commercial buildings with outdated infrastructure and clusters of buildings
with small footprints. Tenants and owners are becoming more creative, even
assembling multiple buildings, to establish spaces to accommodate larger
tenants. Others have assembled multiple buildings only to tear them down and
build new retail centers.
Public resources can be used to underwrite the cost of assemblage. The most
common funding source is CDBG funds. DCUSA and the H Street Connection,
two urban retail projects in DC, were both completed with CDBG funding.
Master leases are
sometimes
executed across
multiple properties.
CB2 lease in
Georgetown is a
master lease that
covers three older
structures. The
lease has
covenants requiring
replacement of
structural components and walls upon lease termination.
Trader Joe’s
(right) has
prominent
space in the
Brooklyn
Heights
neighborhood
using a master
lease. The
lease covers a
traditional
storefront and a
former bank
building. The corner location provides them exceptional visibility and the
combined space enables a large enough footprint for all of their operations.
The store was designed with minimal interruption between the two building
structures. The bank space, with high ceilings and large arched windows
affords a very appealing selling environment with considerable natural light.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 41
Marketing & Outreach & Recruitment
Strategic retail marketing is essential to ensure a community is accurately
delivering its message to its target audience. For Frederick this is retailers,
brokers, investors and the media. Demonstrating economic viability and
promoting economic opportunities is also an important part of this process.
The Internet and social media are useful tools to amplify a market to its
intended audience. Yet retail is still a relationship-based business, whether
between the consumer and the retailer, or the community and the retailer.
Retail Recruitment A city’s dedicated retail attraction team, focused entirely on
new retailer attraction and existing retailer expansion, can significantly and
positively influence retail investment and retail location decisions and, along
the way, accelerate process timing. To succeed, these retail staffs have to be
laser-focused on marketing and promoting information of interest to retail
prospects and on marketing to those prospects.
Retail recruiters should have
(1) a clear and realistic mission;
(2) An equally as clear and realistic understanding of the marketplace’s
data and profile (including strengths, weakness, opportunities and
challenges);
25 ICSC
(3) have applicable skills in and marketing tools for economic
development and real estate and,
(4) have a demonstrated ability to sell and follow through.
Portland, Oregon has established the position of Downtown Retail
Development Manager at the Portland Alliance (The BID) and supplemented
that service with a part-time recruiter with experience in retail leasing and
property management. The retail recruiter is focused on recruiting targeted
retailers and restaurants, providing business outreach regarding financial
incentives and leasing opportunities, supporting the retention of current
downtown retailers and harnessing the energy of private sector leaders to get
behind the “call to action.” Cities and Bids including Washington, Philadelphia
and Orlando also have retail recruiters, some funded through BIDs. Some
cities outsource this to local brokers or consultants such as Atlanta and New
Orleans.
Collateral & Proactive Tactics Cogent, compelling, cohesive, proactive
marketing, online and offline, is essential to successful retail attraction and
development. There simply is no other way to drive awareness, interest and
sustained
interaction that
results in real
conversations about
a city’s
opportunities,
consumers,
neighborhoods, and
funding programs
that retailers want
and need to know to
make informed
decisions.
Cities that undertake a direct, strategically driven and energetic approach to
retail recruitment enjoy significantly and measurably better results than those
that are reactive.25 Cities that are successful tend to utilize a variety of tools to
support these efforts.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 42
Examples include:
vertical advertising to targeted retail real estate and merchandising
decision makers and influence audiences
general marketing and retail centric marketing packages
targeted mailers announcing new businesses or sites
State-of-the-art and Internet websites with retail orientation or
subsections;
retail contact databases for e-mail and hard copy direct marketing
earned media and print coverage
special events and tours
participation in trade shows.
NY, Philadelphia, Chicago,
Portland (Oregon), Lancaster
City, Washington, DC and
Baltimore’s Downtown
Partnership have all
developed outreach marketing
packages tailored to retail.
Feedback from brokers and
retailers suggests that this
collateral is well received by
the industry. Many use this
information in their own
presentations
Consumer and Retail Surveys A survey can help a community gauge consumer
preferences and shopping and spending patterns. A well-designed survey can
be instrumental to collect primary market research that will support retail
attraction and expansion. Electronic media and programs such as Survey
Monkey often improve capture rates. The results can be very persuasive when
presented to target tenants.
Many communities now use preference surveys so support recruitment efforts.
Stafford EDA, The Downtown DC BID, New York City and Austin have used
preference surveys to gain an audience with retailers. Drexel University
recently surveyed their student body to learn how often they eat off campus
and how much they spend on food. The data helped to shape the
merchandising plan for a redevelopment project.
Buy Local Campaigns These types of campaigns are helpful to promote local
retail and shopping districts and keep retail dollars within the community.
These types of marketing initiatives have the added benefit of enhancing
competitiveness and sustainability of
area businesses.
Some communities have introduced
loyalty programs as part of these
campaigns to keep customers coming
back. National and local organizations
that work together can strengthen
independent businesses as well as
downtown and commercial areas.
Often driven by retailers themselves or
business associations, these campaigns have proved helpful in driving traffic
into stores and business-to-business exchange and include advertising,
collateral material and websites.
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There is a lot of interest today in the concept of community reward programs.
Loyalty programs today are more successful if interactive. Technological
advances make this more affordable to small stores. A recent survey indicated
the 59 percent of people would be more likely to join a loyalty program that
offered a smartphone app. Their interest is driven primarily by the ability to
save money. Portland Oregon established a loyalty program that is especially
important for independent companies. North Vancouver residents get a
discount by showing their membership card at participating businesses.
Media & PR – Building Buzz Effective buzz in retail must be centered on
growth and expansion, new business development, and demographics, all
issues retailers want to know about it. You can use PR to enhance tourism and
visitor traffic, an important component of Frederick’s retail consumer base. A
community such as Frederick that has a destination downtown attracts many
consumers from outside the immediate market. You can also use PR to build
awareness about a market.
Newark, NJ used trade media to capture the attention of national grocers
when no other means was
seeing results. Several
strategically placed articles
resulted in eight calls from
full service food stores and
their representatives about
opportunities, leading to a
new Shoprite and Whole
Foods. Atlanta used media
to position several
emerging neighborhoods in
front of the industry,
Regardless of your target,
you need to tailor the
message.
Courting travel and food
writers is another way to
gain continuous exposure about key destinations and food and retail offerings
in the city. The combination of attractions in Downtown Frederick along with
agricultural and cultural assets will capture travel writers’ attention.
The Greater Philadelphia Tourism Corporation targeted writers with outlets in a
two-hour drive time just close enough for a day trip. The editorial focused on
free and family oriented cultural attractions, shopping and eating. They
secured repeated placements in the Washington Post, NY Times, the
Baltimore Sun, and a series of local papers and magazines. Lancaster City has
also attained this type of coverage.
Lists and Blogs Today’s tech savvy consumer is just one click away from the
latest list, ranking and blog. SEO optimization can be useful to capture the
attention of these lists, for there are too many in the market to capture.
Targeting a select few is an ideal way to raise Frederick’s profile in front of
intended audiences.
Examples include Livability.com, The List are you on it, TheListAreYouIt.com –
a local blog re shopping and entertainment;
Eater DC for food; and. USNews.com’s best small towns;
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Industry Associations & Trade Events
Membership in the International Council of Shopping Centers (ICSC) is one of
the best ways a community can build relationships with retailers and stay
current on trends in the industry. ICSC conferences offer a variety of venues
for a community to herald its strengths and market sites. Communities can
also participate in ICSC social media channels including Twitter and LinkedIn
to reach retail audiences.
A smaller community such as Frederick
can accomplish their goals at regional
shows such as the Mid-Atlantic Idea
Exchange and NYC Deal Making
conference, which is attended by many
national tenants.
Booth space at these shows can be expensive, but small communities can still
attain a presence on the floor by collaborating with local stakeholders or in the
Public Pavilion. Many brokerage firms are happy to designate a table for the
local economic team. It provides easy access to decision makers for their
clients and makes their booth look well trafficked.
Retail Live! This is a
new model of retail
trade show formed in
2014. This similar to
many regional
networking events;
there is an exhibit
part of the program
as well as a
reception. The ONLY
exhibitors at Retail
Live are retailers.
The founders launched this initiative as a slightly counter culture to the larger
ICSC shows that are often oriented to the development community. Primary
attendees include retailers, brokers and investors, and communities – though
more limited. The founders are planning one for the Washington Metro Area in
2016 or 2017.
“The opportunity to engage face to
face with so many national, regional
and local retailers is unsurpassed in
any other event I have attended”
David Darling
VP of Leasing
Ramco Gershenson
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 45
Incubating Retail
From food to fashion, incubators and accelerators are becoming the rage.
Retail incubators are great for launching new retail concepts and gaining a
presence in the marketplace, as well as for filling otherwise empty spaces on a
temporary basis.
A retail incubator’s main
purpose is to catalyze
the process of starting
and growing retail
business. A strong
model will provide
entrepreneurs with the
expertise, networks, and
tools they need to make
their ventures
successful. Retail
incubators are also useful to commercialize and test ideas, build wealth and
create jobs, and build wealth. Reduced rates can help new businesses
manage the costs of ramping up during the first few years. They can also be a
creative way to fill empty space.
Hatch Detroit was
created in 2011 to give
others the opportunity
to have a role in the
redevelopment of
Detroit). Designed as a
contest, it was built on
an idea called “Crowd
Entrepreneurship”
where residents have a
role in voting for the
type of retail they want in their community and determining the winner of the
Hatch Contest. Since 2011, twelve Hatch Alumni businesses have opened up
storefronts. Now in its fifth year, Hatch Detroit has expanded its retail role into
six neighborhoods as part of Detroit Living for the City Initiative.
Food incubators have emerged in recent years driven by demand for specialty,
locally produced and artisanal foods, sometimes referred to as the cottage
food business. Food incubators can help entrepreneurs get started in a
licensed kitchen at a fraction of the price of leasing their own space.
FOOD-X is a New
York-based business
accelerator focused
on launching food-
related
businesses with a
multi-stage evergreen
fund SOS ventures. It
collaborates with
early-stage food;
beverage and health
food companies
to help them successfully take their products and services to market. The
program provides up to $50,000 in funding in return for 8 percent equity, as
well as regular sessions with food and tech luminaries.
Union Kitchen in DC
(is an accelerator
intended to grow and
promote small
businesses in the food
industry. Union
kitchen is providing a
low-cost, low-risk, full-
service kitchen for
local businesses to
establish their
operations, streamline their distribution, and drive growth at every stage of the
entrepreneurial process. Tenants have access to these shared facilities that
for some, allows them to take their business from a home based kitchen to
real commercial distribution.
http://www.referenceforbusiness.com/knowledge/Catalysis.html
http://openhouse.me/nyc-fashion-showroom/
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THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 46
Fashion Incubators are
also popular. Macy’s has
sponsored incubators in
select cities that provide
training, co-working space
and showroom
opportunities (Chicago,
Philadelphia). Many of
these have launched in
conjunction with
universities with fashion and design programs. There are local fashion
incubators that provide retail space and technical training for young designers.
Pop-up Shops Temporary
stores are useful to launch
new brands, test markets
and even fill temporary
space. Initially convened
for traditional retail, these
spaces have morphed into
eateries, garden stores,
even park space, to help
activate underutilized
space and begin to shift
shopping patterns.
Target recently launched
a pop-up store in
Manhattan to boost
holiday sales. Their first
pop-up called Pink
helped to brand a new
line of teen clothing.
Other national tenants
have used pop-ups to
test new markets
including West Elm and
Toys-R-Us.
Many local entrepreneurs
have found pop-ups ideal
as a means of transition.
The Garden District, a
landscaping retailer, used
temporary space on 14th
Street in DC until it could
secure a permanent
location. The space
allowed them to build a
customer base and learn
about urban consumers
preferences.
Retail Incubator,
Grand Rapids, MI
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Target Audiences for Retail Attraction
Four distinct audiences exist that should be targeted by any marketing and retail
recruitment undertaken by the city to stimulate retail attraction and development.
Each of these groups has its own priorities and objectives and often utilizes
different points of access and resources for gathering information. However, all
share two basic conditions:
Frederick desires their awareness, interest and interaction.
Regular, consistent, signature, direct and indirect communications are
required for them to have that desired awareness and interest and to make
the retail site location and spending decisions that put them into Frederick.
Regardless of the audience, providing them with regular information about the
offerings in the city, new and planned, is key to establishing and maintaining top of
mind awareness about Frederick and keeping them engaged as consumers.
Specific information can be tailored to the respective segment audience and
distributed through multiple channels. The city already has a newsletter that
communicates a great deal of information on activities and progress. Consider
adding retail centric content or even create a separate retail-focused newsletter –
even if bi-annual.
Target Audience Segments:
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 48
Recommendations
Immediate Actions:
While interest rates are low and financing is still relatively affordable, encourage owners to renovate Class C & B space to attract higher-end tenants – retail,
commercial and residential.
Develop a retail web portal that includes available space, current demographics and other relevant information. This could be a microsite off the city’s main
website that can be accessed by a direct click or a URL and promoted through partners such as the Downtown Frederick Partnership. It should include current
demographics, incentives and tools, development information, and general news on the city.
Create a site search section on the website (even under the current configuration) even if only a downloadable form to encourage prospective tenants to provide
information regarding their needs. For example: Frederick Retail Site Form: Business type and concept, status (new, Independent, expansion, franchise), preferred
location, desired square footage (range), preferred rent, property requirements (parking, venting, loading, etc.), adjacencies – co-tenants, financing required, timing.
Consider the formation of a retail council or committee that includes representation from area business and real estate organizations as well as community and
professional groups as the Downtown Frederick Partnership and Golden Mile Alliance. Use it to gain consensus on critical issues and to pursue awareness among
broader audience, and establish a dedicated voice to support recruitment and development. Quarterly meetings would probably be sufficient.
Create case studies of retail success stories. Develop case studies documenting local retail successes. Create a template around the “Problem…
Solutions…Measured Results” and include the use of local tools, creative approaches including assemblage, lease structures, unique approaches to design and
cost of the project, including lease rates when possible.
Enhance use of social media, targeted towards retail industry – ICSC, NRF, NRN, blogs and lists, retailers, restaurants and more.
Grow participation at trade shows and on industry events. ICSC is one of the best means to build relationships. The NY Deal Making provides an opportunity to
meet and network with many of the national and regional tenants that attend RECON for less than half the cost.
Encourage short-term leases from six months to two years for older obsolete space and that along corridors under repositioning. This requires minimal
commitment on the part of the retailer or the property owner. Popular uses in other cities include yoga studios, seasonal garden stores and craft stores. The
Washington Ballet used a vacant storefront as studio space, while its new headquarters was under construction.
Explore opportunities for “Pop Up” retail. This is increasingly popular and is often used by national retailers to test markets. The concept is based around short-
term leases (two to three months on average) and used to introduce new merchandise lines, test concepts, and even feature guest designers, local students, or
community groups.
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Encourage retailers, owners and their agents to think out of the box. Experience shows that retailers can be creative in their use of space for overall both layout,
merchandising and storage. Nevertheless, the property owners and their agents must be willing to support such measures and work with tenants, including when
reconfiguration of infrastructure is required to achieve the desired results.
Animate dead retail spaces. One consequence an older market and inventory is an abundance of vacant storefronts. When a tenant space goes empty, it is not
just about the perception or the quality of the shopping experience. It adds to an overall, negative perception of the retail environment.
Increase local market awareness and promote retail opportunities. Equally important to reaching outside of the market, is promoting opportunities within the local
community. Consider hosting quarterly broker meetings focused on market updates and discussions of short- and long-term goals. Invite local retailers, even
national and regional retailers, whenever possible to present at these meetings. Use this forum to engage the real estate community to support ongoing
marketing efforts including those at ICSC.
Ongoing – Long-term
Repurpose obsolete space even with creative nonretail uses that add density and create jobs. Encourage short-term leases as an interim means to activate
vacant space.
Develop an industry contact list comprised of targeted retailers and their representatives, local and national brokers, retail developers and industry media. If
possible, include key leasing and market requirements (space, adjacencies, demographics, parking etc.). Include e-mail addresses, whenever possible. Use this
list to reach out to initiate contact, promote available spaces and good news.
Strengthen relationships with local and national brokers who represent desirable tenants and investors, even those outside the market who may have national
representation – RKF, KLNB, and Cushman.
Establish relationships with architects specializing in mixed-use and retail, who often are the first point of entry for retailers and investors.
Continue to court experienced retail, mixed-use developers into the market. Many in the region have completed projects that could work in Frederick.
Promote the city and new developments through industry organizations and associations (ULI, ICSC, and NMHC) that reach your target audiences.
Incubate local retail. A grassroots approach to building a sustainable retail base is growing local businesses by incubation. Identify potential businesses where
demand exists and there are minimal capital requirements. Identify potential locations for short-term leases to house early-stage retailers, even those that might
combine individual business lines, including food and “green” retail (apparel, jewelry, home goods and furniture, and food).
Leverage the strong food culture that already exists in the area including agriculture and promote related business opportunities. Pay particular attention to what
is commonly referred to as the cottage food industry (those individuals producing food on small scale).
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 50
Consider developing a food accelerator. This could begin with a shared commercial kitchen and grow, as resources are available to a more sophisticated training
and incubation facility.
Encourage the distribution of resources and training programs already in the market to include and focus on this sector, which fits well in independent
environment already established.
Be proactive about PR, and target national and industry media outlets that capture the attention of the retail industry. (Shopping Centers Today, NRF, NREI, Chain
Store Age) and regional media as the Washington Post and Washington Business Journal. Announce all news related to the retail market – including new leases
and openings, major project starts and completions and special events, locally and nationally – to those in the industry, as well as relevant general and trade
media.
Utilize display windows and vacant space for advertising. Several national firms are now programming advertising in vacant storefronts, primarily in downtown
centers. These are temporary solutions, provide some revenue to property owners, sometimes even large fees if with national businesses such as Verizon, and
will not prohibit fit-out if tenants are secured.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 51
Retailers to Target
Column1 Column2 Tenants to Target
Tenant Average SF Site Requirements, Background
Alamo Cinema & Draft 25,000 – 35,000
As the name suggests, it is a theater and draft house. The concept includes higher end smaller theaters with comfortable
seating. Food service is a key component of their brand. They run first and second run movies depending on the market and
competition. The theaters are also available for rent for corporate and local events
ALDI 17,000
ALDI is always looking to continue their expansion. , They are looking for the best locations. Their preferred site requirements
include: ±18,000 SF, a minimum of 85 dedicated parking spaces; 2.5 acre pads for purchase and development; end-cap or
inline space with minimum of 87’ of frontage; signalized, full access intersection preferred; dense trade area population within
3 miles; sites located in community and regional shopping districts with convenient access to population and zoned to allow
grocery use; and daily traffic count in excess of 20,000 vehicles per day.
Balducci’s 20,000
What started as a produce stand run by “Pop” Balducci has now become a gourmet powerhouse, with 6 stores located in
Maryland, Virginia, New York and Connecticut; They offer fresh produce, bakery items, restaurant-quality prepared foods, the
finest imported cheeses and other delicacies, and a variety of meats roasted.
Capital Teas 500 – 1,500
Capital Teas is a locally based retailer. They sell a combination of exotic and foreign teas. They prefer to co-locate near
strong retail and food anchors such as Whole Foods in built centers and street level where there is heavy pedestrian traffic.
Chick Fil A 1 acre site
Seeking new sites for updated prototype. Visibility, parking key. Strong auto and foot traffic. Typically look for 1 to 1.5 acre
sites that can accommodate a freestanding restaurant with a drive-thru, with convenient access and great visibility. In more
dense, urban areas, they have successfully developed restaurants on many differently sized and shaped properties, including
inline, end-cap with drive-thrus, and drive-thru only locations.
Dave & Busters 25,000 – 40,000
White Flint Location is closed; closest to Frederick is Hanover, MD. Company is interested in adding another site. Newer
Dave & Busters have updated bars, and food and beverage offerings as well as places for adults to linger with Wi-Fi.
SOM Guest
Highlight
SOM Guest
Sticky Note
Crittenden retail report
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 52
Tenant Average SF Site Requirements, Background
Earth Fare 20,000 – 24,000
Earth Fare, a specialty organic and natural foods grocery chain that is competing with Sprouts, Trader Joe’s, and
Whole Foods. Their first urban store opened in Atlanta in 2015, which puts an emphasis on freshly prepared foods
such as sandwiches, wraps, juices, smoothies, salads, coffee and in-house sushi. – They just introduced Earth Fare’s
first “Heirloom Organic Cafe and Juice Bar.” Earth Fare carries products that are free of artificial sweeteners, colors,
preservatives, flavors, trans-fats, antibiotics and hormones.
FLOR 1,000 – 1,500
FLOR Carpet Tiles. Seeking sites in urban markets that “are hip” with strong pedestrian traffic. Customers range in
age from college students to businesses. Through an innovative system of carpet squares, you can create custom
rugs, runners, or wall-to-wall designs of any shape or size. If you are not satisfied with the status quo and want to add
a personal touch to your home, FLOR is the place for you.
F21 Red 18,000
The brand has not shied away from innovation and experimentation, implementing a range of different store sizes and
concepts along the way including F21 Red, which is at price points below Forever XXIAs part of the ongoing F21 Red
rollout, a large expansion of stores began in 2015. The average Forever 21 store is 38,000 SF, the largest is
approximately 162,000 SF and the original Fashion 21 store is only 900 SF. F21 Red averages 18,000 SF.
Fresh Market 20,000 – 26,000
Fresh Market needs around 20,000 SF. The Fresh Market is a specialty grocery retailer. It competes with Whole
Foods and Trader Joe’s but tends to have products on the higher-end and variety that you might find at Wegman’s.
The company offers food products focused on perishable categories in a store format. It focuses on perishable product
categories, which include meat, seafood, produce, deli, bakery, floral, sushi and prepared foods. The company’s non-
perishable product categories consist of traditional grocery, frozen and dairy products, as well as bulk, coffee and
candy, beer and wine, and health and beauty. They need dedicated parking and prefer loading. Currently have stores
in MD including Baltimore, Annapolis, Rockville and Towson. Kroger just announced it may buy the firm.
Glen’s Market 8,000 – 10,000
Glen’s Garden Market is focused on providing good food from close by. Glen’s Garden Market offers the very best
food, beer, and wine grown or created within the states of their watershed, which stretches from Virginia to New York.
They build relationships with vendors who treat their land, their animals and their ingredients with respect. The
founders believe produce harvested days – if not hours – ago just tastes better than the stuff engineered to bop across
the country in the back of an 18-wheeler.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 53
Tenant Average SF Site Requirements, Background
iFly 3,000 – 7,000
Indoor skydiving. Concept emulates skydiving with forced air mechanical shafts. Very popular with teens, and young
professionals. Facilities offer opportunities for special and group events.
Ipic Theaters 30,000 – 70,000
This new upscale theater is focused on food and beverage and customer service. For new sites they require 60K pop
– 3 miles; MHHI $80K, sites near major highways;150 parking spaces. The theaters feature hi-res digital screens,
table service and lounge like seats.
Lego Discovery Center 38,000 – 48,000
The center offers customers and opportunity to reach out and touch the stars in the 4D cinema, learn top LEGO
building secrets from the Master Model Builder, join the battle on Kingdom Quest – an interactive LEGO laser ride, and
see iconic landmarks in MINILAND. These centers feature special party rooms and more. Their audience is LEGO
lovers – young and old! The centers have over 2 million LEGO bricks under one roof.
Lidl 36,000
Lidl, which competes with fellow discounter Aldi, has broken ground on a regional headquarters and distribution center
in Spotsylvania County and is actively expanding in the market. Lidl operates nearly 10,000 stores across 26
European countries. It thrives with low prices and a compact store format. Frederick is one of the markets they are
looking at for growth.
Lou & Gray 3,500
Women’s apparel store; new to the retail world, just entering the Mid-Atlantic market. This is one of the ANN brands
(Ann Taylor) owned by Ascena Group (Dress Barn). They have done urban deals and centers and are looking to
expanding growing markets with a strong residential base and tourism and daytime traffic
Nando’s Peri Peri 1,500 – 2,800
The privately held chain, which began in South Africa in 1987, has nearly 1,200 locations. The restaurant is known for
its extra-spicy chicken, which is marinated for a day, then grilled and basted with different sauces. The first restaurant
opening its doors on July 3 on 7th Street in Washington, DC. Since then, 13 more restaurants around the metropolitan
area have opened including locations in the District, Northern Virginia and Maryland their newest nest is open in
Wheaton, MD.
Passion Foods NA
Local restauranteur that tends to build concepts around strong business and cultural markets. Would be a good
complement to Volt. They are rebuilding their portfolio after closing several restaurants in DC. They are looking
outside DC but in the region.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 54
Tenant Average SF Site Requirements, Background
Pinstripes 25,000 – 40,000
Pinstripes offers a unique dining and entertainment experience featuring a bistro with exceptional Italian/American
cuisine and wine; bowling and bocce; a year-round outdoor patio and fire pit; and event space/party rooms
accommodating 20-600 people. They also host special events from birthday parties to corporate events Pinstripes
offers lunch and dinner, live music on weekends; and hosts targeted events such as wine dinners, mom & tot play
dates, clubs and leagues.
RareSweets 1,200 – 2,500
RareSweets® is a modern bakeshop specializing in baked goods, cakes, ice creams and other confections inspired by
the seasons and America’s great tradition of baking. They are currently located in DC and seeking expansion in the
region.
Room & Board 12,000 – 30,000
Furniture store that sells contemporary furniture and home furnishings. Its price point makes it popular with families
and young professionals. Most of their sales are driven by catalogue and online purchases. Willing to do smaller
showroom style venture. Often they own their own real estate and are open to unique buildings, even renovation of
historic structures.
Roots Market 15,000
Roots Market is part of an eco-oriented family of retail stores that they refer to as the Conscious Corner. Their sister
stores include Bark! Pawsitive Petfood (natural and organic pet foods and supplies), Great Sage (casual-upscale
vegan restaurant), and Nest (earth-friendly gifts, housewares, art, toys, and clothing). The independent store, with two
locations, (Olney and Clarksville, Maryland) offers an extensive selection of natural, organic, gourmet foods and
products.
Silver 5,000 – 8,500
Silver Diner’s new concept Silver – is expanding. The menu and decor have been revamped targeted to younger,
urban consumers. Silver Diner is operating 13 Metro DC locations with annual sales of approximately $64M; Last two
restaurants average unit volume of $7.5M, each serving approximately 12,000 guests per week.
Snap Kitchen 800 – 1,800
Snap Kitchen was founded in 2010 and is a fast food/grab and go restaurant concept offering chef prepared healthy
foods. They like being near Whole Foods and Trader Joe’s, Wegman’s, Chipotle, and LuluLemon. No venting or
grease traps required.
Soul Cycle 3,000 – 4,500
Soul Cycle is indoor cycling re-invented. The boutique cycling studio chain, which started in New York by two women,
and is seeking sites for expansion. The trendy cycling company recently announced its plans to go public. They
require very specific facilities, with sufficient plumbing to support showers and toilets and soundproofing to protect their
neighbors from pumping music from 6 a.m. classes.
THE CITY OF FREDERICK RETAIL REPORT, MARCH 2016: THE RIDDLE COMPANY 55
Tenant Average SF Site Requirements, Background
Sprouts 28,000 – 30,000
Competition: Trader Joe’s, Fresh Market, Earth Fare, Whole Foods (including their new 365 concept targeting
Millennials), Mom’s Organic, 100,000+ population within 10 minutes. Easy access with high traffic counts, Minimum of
140+ parking spaces. 150 – 180 foot storefront.
Suit Supply 4,000 – 7,000
Founded in 2000, Suit Supply is a market-defining brand showing tremendous international growth (with over 44
stores in 10 different countries). Their strength lies in their formula – straight, to the point and still personal. Fast and
effective. Combining craftsmanship with flair.
Warby Parker 1,800 – 2,500
This online retailer is just starting to build a bricks & mortar presence. They need strong foot traffic, strong daytime and
residential populations. Open to street front locations and built centers with right tenant mix.
Wylie Wagg 2,800 and 3,200
Wylie Wagg’s emphasis is on natural and higher quality food products and treats, which have a market among more
upscale pet owners. Part of that space in every store is devoted to freezers that store raw pet food, a growing trend in
pet care. They are locally owned and operated.
Solicitation No. RFQ HU-BB-01
RFQ Issue Date: 9/29/201
7
Due Date: 11/21/20
17
REQUEST FOR QUALIFICATIONS
BOND BREAD FACTORY &
WRECO GARAGE REDEVELOPMENT
Letter from the President Page
4
Background
Page
5
Opportunity Page
6
Site Description Page
8
DC Market Page
13
Submission Requirements Page 17
Selection Process Page
22
Schedule Page
23
Terms & Conditions Page
24
Appendices Page
26
Table of Contents
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BondBread.datarooms.com
Letter from the President
Dr. Wayne A. I. Frederick
Dear Potential Development Partners,
I am excited to offer the most transformative redevelopment opportunity in the Shaw neighborhood,
Howard University’s Bond Bread Factory and Washington Railway and Electric Company (WRECO)
Garage site for redevelopment. These parcels represent the latest strategic monetization of Howard’s
underutilized real estate portfolio to support reinvestment in the University’s mission. The rebirth of
these historic structures also presents a unique opportunity to create a vibrant
mixed-use development
in the center of the District’s booming Shaw neighborhood.
In 2017, Howard University celebrated its sesquicentennial as a higher education institution. Through
both academic and facility enhancements, Howard is undergoing a transformation as it prepares for its
next 150 years of distinction. Howard’s dedication to revitalizing its academic and physical structures
requires substantial, sustainable resources. Meeting this challenge requires developing and utilizing
innovative and non-traditional solutions, including imaginative repositioning and leveraging of
Howard’s underutilized real estate assets. I have spearheaded a strategy to diversify and improve
University revenue streams, in part by leveraging Howard’s large portfolio of real estate assets. I envision
the Bond Bread and WRECO site resulting in an innovative transaction that will deliver capital needed to
fund other campus modernization initiatives, while transforming the neighborhood.
The Bond Bread and WRECO site has long been envisioned as playing a key role in the future of the Mid-
City community. Howard is dedicated to revitalizing the Georgia Avenue corridor, as demonstrated by
the recently constructed Interdisciplinary Research Building as well as planned projects to its north and
south. The Bond Bread and WRECO project will serve as the gateway to Howard’s campus, and I envision
it offering a new, mixed-use, urban lifestyle destination in the Shaw neighborhood, which will attract
visitors from around the region and a variety of businesses. The site’s prime location on the rapidly
growing Georgia Avenue corridor allows this project to serve as a center of activity, serving faculty, staff,
students, and neighbors alike through the addition of commercial space as well as quality residential
development.
Howard has established an outstanding real estate development team supported by the industry’s top
advisors to realize this vision. I join our Real Estate Development & Capital Asset Management team, led
by Mr. Anthony Freeman and Mr. Derrek Niec-Wiliams, in inviting your firm to submit your qualifications
and proposed plans to develop this site. The University looks forward to your creativity, innovative
design, and strategic development and marketing to transform this site.
Dr. Wayne A. I. Frederick
President
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Founded in 1867, Howard University is a private, historically
black research university comprised of 13 schools and colleges.
Students pursue studies in more than 120 areas leading to
undergraduate, graduate and professional degrees. To date,
Howard has awarded more than 120,000 degrees in the arts,
the sciences, and the humanities. The historic main campus
sits on a hilltop in Northwest Washington, blocks from U Street
and the storied Howard Theatre.
The University remains committed to further enhancing its
strategic position as one of the top research universities in the
nation. As we celebrate our sesquicentennial in 2017, we are
uniquely positioned to have the next 150 years as glorious as
the past.
To accommodate this growth, transform the University’s
aging facilities, and remain competitive with high-caliber
universities nationally, the University crafted a participatory
and collaborative Campus Master Plan, published in 2011. To
help fund the execution of this vision, the University is
seeking to generate revenue by monetizing underutilized
edge and non-core real estate assets owned by the University
— facilities geographically or philosophically peripheral to the
institution’s mission.
Background
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BondBread.datarooms.com
Opportunity
Howard University (“the University” or “Howard”) is pleased to
present this Request for Qualifications (“RFQ”) to solicit Statements of
Qualification (“SOQs”) from highly-qualified developers (“Respondents”)
to design, build, finance, operate, and maintain a mixed use
development at 2112-2146 Georgia Avenue, N.W., in the heart of the
booming Shaw neighborhood (“Project”).
This premier development offering includes a uniquely large, 2.2 acre
site (“Bond Bread Site” or “Site”) to serve as a gateway between the
vibrant U Street Corridor and Howard University. Situated adjacent to
Shaw’s latest major mixed-use developments, the Site offers an
opportunity to build on the neighborhood’s revitalization momentum.
Also located at the edge of Howard’s campus, this development will
greatly improve the vitality and visual quality of the area while
supporting expanded campus amenities.
The Site was previously envisioned as the Howard Town Center, a
grocery store-anchored mixed-use development. The University recently
prevailed in a legal dispute over the project, freeing the valuable sites
for a new, innovative redevelopment vision.*
The Site contains two existing structures, both of which are listed on the
National Register of Historic Places, offering intricately designed brick
industrial buildings, which are often coveted for their character.
Howard
envisions a creative ground floor destination that will leverage and
honor the historic facades of each building.
The University intends to identify and select the most qualified
Respondent to this RFQ, who demonstrates experience and expertise in
adaptive reuse; historic preservation; partnerships with institutions; and
residential and commercial development. With this partner, Howard will
negotiate an exclusive rights agreement, work collaboratively through
due diligence and the development planning process, and sign a
ground lease or similar agreement that maximizes value to the
University.
* For more information about the legal status of the Site, please visit
BondBread.datarooms.com.
BROOKLAND
NOMA
CAPITOL
RIVERFRONT
DUPONT
SHAW / U STREET
Bond Bread Site
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Redevelopment Objectives
Howard University will serve as the Project sponsor and will select a
development partner (“Selected Developer”) to design, construct,
and operate a newly constructed project that preserves and
adaptively reuses relevant portions of the existing structures.
Howard seeks a development which contributes to the economic and
social well-being of the University as well as the surrounding
community. Howard hopes to achieve the highest and best use for
the Site, but also envisions an energetic, vibrant attraction as a
ground floor use, that creates a 24-hour work, shop, eat, live, play
destination. Examples of such spaces include Reading Terminal
Market in Philadelphia, Foodhallen Food Market in Amsterdam West,
East Village in Houston, and Fulton Market in Chicago.
Preserve and adaptively reuse historic features
Adopt world class design that extends the edge of HU campus
Mitigate environmental challenges at the
Site
Revitalize the Georgia Avenue Corridor and economy
Project
Develop to its highest & best use
Create an innovative trendsetting ground floor destination
Optimize local, minority and HU Alum participation
throughout the process – specifically through equity
ownership and contracting
Employ design that accentuates HU’s brand and statement
Revitalization
Incorporate neighborhood / HU servicing retail businesses
Create jobs opportunities
Adhere to the Duke Land Area Development Framework*
Involve community in planning process
Create innovative solutions to address price-sensitive residents
Value
Obtain maximum land value distributed upfront and through
long term revenue streams
Minimize risk to the University
Retain long-term ownership of parcels
Include the option for Howard University as a partial investor/
financier for the development
Community Attributes
*“Duke: Development Framework for a Cultural Destination for Greater Shaw/U Street” (the “Duke Plan”) can be found in Dataroom.
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Site Description
The Bond Bread Site is located adjacent to Howard
University’s main campus in the heart of DC. Situated on two
parcels, these properties represent the entire block between
8th Street and Georgia Avenue, and V Street and W Street.
The Site is surrounded by several newly completed, under
development, and planned projects that are complementary
to the proposed Project as illustrated in the figure on the next
page. Nearby developments have added over 600 residential
units, with more than 400 under construction, each
commanding some of the highest rents in the District.
In additional to surrounding commercial developments,
numerous University buildings are situated on Georgia
Avenue, including: the Interdisciplinary Research Building,
Howard Center, and Howard University Hospital, generating
significant foot traffic.
Location
Neighborhood
Located in Mid-City neighborhood, in close proximity to many
other neighborhoods in the District, the Site is accessible to
shopping and dining options, adjacent to the U Street corridor,
and walking distance to several entertainment venues,
including the historic Howard Theatre and the iconic 9:30
Club. The Site sits at the nexus of multiple communities
including Shaw, Pleasant Plains, and LeDroit Park. For a
detailed description of the surrounding neighborhoods, please
refer to the Washington DC Economic Partnership
Neighborhood Profiles in this Project’s Dataroom.
Bond Bread also benefits from being in Ward 1, the most
densely-populated area in the District. Limited large scale
development parcels in Ward 1 and the Shaw neighborhood
make the Bond Bread Site a rare opportunity for a truly unique
redevelopment in a highly-sought neighborhood.
9
U Street Metro
Carver Hall
Redevelopment
Slowe Hall
Redevelopment
Multi-family New/ Planned Developments : Mixed Use Student Housing
Sherman Avenue
Apartments
Plaza Towers
Renovation
965 Florida
Florida Avenue NW
9
th
S
t N
W
Atlantic
Plubming
The
Shay
13 / U
Planned by HU
Lot 3
Bond
Bread
Howard
Center
G
e
o
rg
ia
A
ve
n
u
e
N
W
CVS/
HURB-1
Barry Place
Phase 2
Effingham
Manor
4
th
S
t N
W
1
3
th
St N
W
0
.8
M
ile
1.2 Miles
Shaw Metro
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10
The General Baking Company Bakery
(Bond Bread Factory) building is a
three story Art Deco Industrial Bakery
designed by Corry B. Comstock which
features Art Deco styling and
decorative details rare for DC’s
industrial building stock.
The Bond Bread Factory building is
built on 39,072 square feet (0.9
acres) at the corner of Georgia Avenue
and W Street directly across from
Howard University Hospital.
The WRECO garage, designed by
noted architect and Washingtonian
Arthur B. Heaton, is considered to
be the first purpose-built bus
garage.
The WRECO garage is built on
58,607 square feet (1.3 acres) at the
corner of Georgia Avenue and V
street, directly adjacent to the new
Atlantic Plumbing
development.
Existing Structures
The Site is home to two (2) existing structures:
The 1929 Art Deco Bond Bread Factory (2146
Georgia Ave)
The 1930 Washington Railway and Electric
Company (WRECO) Garage (2112 Georgia
Ave)
Historic Designation
Both buildings have been entered into the National
Register for Historic Places at the request of the D.C.
Preservation League. The Bond Bread Factory is
recognized for its significance to the Art Deco
architectural movement and its connection to DC’s
early baking community. The WRECO Garage is
recognized on the basis of its significance in relation
to early railcar transit in Washington DC, and its
architectural significance as the first known purpose
built garage for WRECO’s fleet of buses.
The National Historic Preservation Act of 1966
requires proposed construction plans for buildings
designated as historic to be reviewed and approved
by the Historic Preservation Review Board (HPRB).
The Selected Developer alone will be responsible for
meeting all historic preservation requirements under
Federal and District Laws and Regulations.
Entitlement
The Site is currently in Howard’s Campus Master Plan. Parcel 1, shown on Page 8, was conveyed to Howard through a land swap with the
District of Columbia in 2008, establishing a number of covenants, several of which are worth noting: 1) Development Covenants—development
on the parcel must be consistent with the DUKE Plan. The design and development plans are required to be approved by the District to ensure
conformity to the Plan; 2) Grocery Store Covenant—the Covenant currently requires the development on the Site to include a grocery store, but
this may be modified once the planned development of Whole Foods at 965 Florida Avenue is complete; and 3) CBE and First Source
Agreement—20% of the equity and development participation of the Selected Developer must be comprised of CBEs, and the Selected
Developer must enter into a First Source Employment Agreement with the District of Columbia for the construction.
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Original Uses & Environmental Challenges
Six Underground Storage Tanks (UST) were known to exist beneath
the two buildings, four of which were removed. The remaining USTs
were closed in place and remain unmitigated. The University
submitted a corrective action plan to the District Department of
Energy and Environment, which was approved after review and
comment, but not fully implemented. Full reports can be found in
Dataroom.
The Site will be conveyed to the Selected Developer in an “as is,
conveyed” condition. During the due diligence period set forth in the
anticipated Exclusive Rights Agreement, the Selected Developer will
be required to conduct environmental site assessments, including, but
not limited to, sampling and testing of the soil, sediments and ground
water (if any).
The Selected Developer will be responsible for the removal or
remediation of any hazardous materials that are required by law.
Additionally, the Selected Developer will be responsible for securing all
necessary approvals, with support, as appropriate, from University
staff. If the University is required to serve in the lead role in processing
any additional environmental regulatory compliance, the Selected
Developer shall reimburse the University for costs associated with such
compliance.
Both the Bond Bread Bakery and the WRECO Garage served in-
dustrial purposes over the course of 50+ years beginning around
1930.
The WRECO Central Garage was build to house and maintain a
bus and streetcar fleet for the Washington Railway and Electric
Company, and continued in that use under the Capital Transit
Company and later DC Transit Company until 1949. From 1958
until 1970 the WRECO Bus Garage building was used as a vehicle
maintenance facility and fueling station for the United States
Post Office. The Facility was later used to house Howard’s
Maintenance Facility.
The Bond Bread Factory operated as a commercial bakery under
several owners from 1929 until 1971, and was later used by the
District of Columbia and non-profit groups to offer services to the
impoverished until 2001.
The original uses of each property may pose challenges to the
development and adaptive re-use of this Site.
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BondBread.datarooms.com
The Bond Bread Site is conveniently located and has a variety of
transit and nearby public transportation options. Both the Shaw-
Howard Univ. Metro Station and U Street/African-Amer. Civil War
Memorial/Cardozo Metro Station are located less than half a mile
south and west of the Site, respectively. Both of these metro stops
are serviced by the Green and Yellow lines. Four bus lines (G2, 63,
70, 79) offer stops located less than 0.3 miles away.
The Site is fortunate to front Georgia Avenue NW, one of Ward 1’s
major thoroughfares. Market Planning Solutions, Inc. estimated in
2015 an average daily traffic count at the intersection of Georgia
Avenue NW and W Street NW of approximately 20,130 cars.
The Site is easily accessible in one of the more walkable
neighborhoods in Washington D.C., receiving a Walk Score of 97
(Walker’s Paradise) and a Transit Score of 90 (Excellent Transit).
Transportation & Access
Zoning & Land Uses
The Site is zoned MU-10 (Mixed Use), which permits a broad range
of high density commercial, institutional, and multi-family
residential development. The Site is currently included in Howard’s
Campus Master Plan, and must proceed through further processing
with the Office of Zoning prior to construction. Respondents are
required to independently review verify, and comply with the
underlying zoning requirements applicable to the Site.
Floor Area Ratio
(FAR) – Maximum
Height (ft.)
Penthouse
Height (ft.)/
Stories
Lot Occupancy Rear Yard (ft.) Side Yard (ft.) Green Area Ratio
Zoning Regula-
tion Reference
MU-10
6.0 90 20 75%
A minimum rear
yard of 2.5 in. per 1
ft. of vertical dis-
tance from the
mean finished
grade at the middle
of the rear of the
structure to the
highest point of the
main roof or para-
pet wall, but not
less than 12
ft.
No side setback is
required; however,
if a side setback is
provided it shall be
at least 2 in. wide
from each 1 ft. of
height of building
but no less than 5
ft.
0.
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Subtitle D.
Chapter 3
7.2 (IZ) 100 (IZ) 1 plus mezza-
nine; Second
story permit-
ted for pent-
house me-
chanical
space
100% (IZ)
3.0 (Non-
residential)
N/A
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DC Market
With construction booming, the residential real estate market
remains a bright spot in DC. Growth in Class A property rental rates is
a promising sign of the overall market’s strength. The growth in
young professionals has been the primary driver behind the strong
demand for apartments in DC. Millennials are increasingly renting
apartments rather than owning homes.
As of Q4 2016, the Site’s submarket consists of 30,778 multifamily
units, with an occupancy rate of 96.7%, and an average effective
rent of $2,001 per month. While the submarket is the second-largest
multifamily submarket in the District, based on unit count, it also
performs the best, with a reported occupancy rate of 96.7%.
The table below identifies specific market data for the area
surrounding the Bond Bread Site.
The District of Columbia has experienced consistent growth in
construction of retail, residential, leisure, and hospitality uses
over the last five years, embodied primarily in mixed-use
developments. The District continues to appeal to and attract
prestigious global firms and international investors, while also
showcasing a thriving urban retail and restaurant scene. This
progress is likely to continue according to the current
development pipeline for the District. There are four primary
residential projects recently constructed or under construction
with proximity to the Project and valued well over $1B.
Development Growth
0-1/2mi 0-1mi 0-3mi
Population + Workforce
Total Population 17,473 81,639 388,152
2016 – 2021 Population Growth/Yr 1.76% 2.17% 1.94%
Employed Civilian Population 16+ 10,963 55,243 244,428
Unemployment Rate 5.8% 5.3% 5.5%
2010 Median Age 28.3 31.6 33.2
Education
Bachelor’s Degree 3,695 18,432 79,893
Grad/Professional Degree 3,767 20,061 101,586
Income
Median Household Income $77,476 $81,731 $80,844
Median Disposable Income $55,924 $58,535 $58,641
With residential construction surging, it’s not surprising that
Washington D.C.’s retail market has performed extremely well
over the past few years. According to CoStar, demand has
outpaced supply, and the region’s average vacancy has declined
steadily since peaking in 2010. Furthermore, supply growth, as a
percentage of inventory, is about half of the region’s historical
average. Because of this, rents have risen approximately 5%
over the past four quarters. It is projected that because of the
region’s continued population growth and the immense buying
power of the District’s high-earning individuals, the overall retail
market should continue to remain stable.
With respect to the Bond Bread Site being developed for retail
use, the Site is situated in the Uptown Retail submarket. As of
Q4 2016, this submarket exhibited a vacancy rate of 4.4%,
which is consistent with the vacancy rate reported for the entire
Washington—NOVA—MD Retail Market of 4.5%. Additionally,
the Uptown Retail submarket is the third largest retail market
(out 78 submarkets) and ranks fifth in highest asking rental
rates.
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The Shay, located one block away from the
Bond Bread Site features a mix of high-end
dining and retail and luxury apartments. The
development features 245 residential units,
from Studio to Penthouse. The building’s retail
space has become a hub for fashion and
features an independent organic market and
local coffee chain.
The Shay
The Atlantic Plumbing Project, directly adjacent
to the Bond Bread Site is a Two Building, mixed
use development featuring Class A residential
homes, several casual and fine dining
restaurants, and a six screen movie theatre and
Bar.
The apartment development includes a resort
style pool deck and patio lounge, fitness center
and other resort-style amenities. The
development also includes many smaller retail
units which serve as workspaces and shops for
DC artists and small businesses.
Atlantic Plumbing
Top
Residential
Development
Projects
Near
Bond
Bread
Site
Unit Count: 372 Unit Count: 245
14
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Just two blocks west of the Bond Bread Site,
construction is underway on a large new multi-
use commercial and residential development
anchored by Whole Food Market.
The development group plans on 51,000
square feet retail marketplace, and 350,000
square feet of housing, including 30%
affordable units.
965 Florida 13/U
Centrally located on the U street corridor, less
than one half mile west of the Bond Bread Site.
Eight-story mixed-use building with 130
residential units above ground-floor retail and
48 underground parking spaces.
16,000 square feet fully leased in advance of
project completion.
Unit Count: 428 Unit Count: 130
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BondBread.datarooms.com
Planned
Howard
Projects Near
Bond
Bread
Site
Located just north of the
Bond Bread site, Lot 3 is
currently a parking lot is
envisioned to become a
mixed-use development
containing commercial,
residential, and Howard
uses. The site is zoned
MU-10, intended to be
medium to high-density
mixed-used
development.
Lot 3 Barry Place Phase 1 Effingham Apartments Howard Manor
Located west of 10th Street and
south of Barry Place NW on
Howard’s Campus, the renovated
Howard Towers will provide 1,780
beds for undergraduate and
graduate students.
The West Tower, containing 8
25
beds, reopened in August 2017
after 6 months of renovation. The
East Tower will open in fall 2018.
Howard Plaza Towers Carver Hall
One block from LeDroit Park
Slowe Hall is a former Howard
University student residence hall
planned for redevelopment in a
93-unit apartment building
featuring a large secluded
outdoor courtyard.
Howard entered into a 99 year
ground lease with development
partners in August, 2017.
Slowe Hall
Howard Center
The first phase of Barry
Place, called the Sherman
Avenue Apartments is
near completion. Planned
uses include ground floor
retail and 319 residential
units, 10% of which are
set aside for 80% Area
Median Income residents,
and additional units set
aside for HU faculty and
staff. Future phases are
currently being planned.
Potential uses for the
Howard Center, with a
large retail front on
Georgia Avenue directly
across from Lot 3, are
retail, residential and
institutional uses,
including a conferencing
center. The current
zoning allows for
University uses as a
matter of right.
Located conveniently on
Georgia Avenue at the
north end of Howard’s
campus, Effingham is
envisioned as a multi-
family residential project
with retail on the
ground floor. The
buildings are currently
vacant and are zoned
MU-4, which allows
moderate-density
mixed-use development.
Adjacent to Effingham
Apartments and facing
Girard Street NW to the
north, Howard Manor will
likely be a modernized
residential development.
The site is currently
zoned MU-4, which
permits moderate-
density mixed-use
development.
Once a residence hall for Howard
students, Carver Hall, located at
2nd and Elm Street NW, is being
converted into a 59-unit
apartment building, featuring 15
loft apartments with 16-foot
ceilings, a fitness center, resident
lounge and outdoor spaces.
Howard entered into a 99 year
ground lease with development
partners in August, 2017.
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Submission Requirements
Respondents interested in the Bond Bread Site should provide straightforward, concise information that
satisfies the requirements noted below.
EACH SOQ SHOULD ADDRESS THE FOLLOWING ITEMS, IN THE ORDER LISTED.
A. Cover letter
Respondents should sign and submit the cover letter in Appendix A, which acknowledges that the Respondent
has read and understands all contents of the RFQ and addenda and takes no exception to the materials
provided. The cover letter should be signed by a person that has full authority to bind the Respondent to all
terms and conditions of the SOQ.
B. Team Qualifications
Respondents should provide information that will enable the University to evaluate the qualifications,
experience and past performance in the design, construction, financing, operations and maintenance of a
project of comparable size and scope as this Project. At a minimum, the following items should be addressed in
this section:
Entity name, type of entity, street and mailing address as well as a brief summary of the Respondent’s
organizational history and background.
Identification and qualifications of each member of the development team for all persons or entities that
will engage in the Project and role of each partner/participant with an organization chart of the partners
describing the function of each entity.
Primary contact name, title, phone number, e-mail address .
For each Firm, provide at least three (3), and no more than five (5), examples of projects completed within
the last five years that demonstrate relevant development experience. In particular, provide any projects
that were executed with a public or university partner and required the Respondent to conduct due
diligence, plan, finance, design, construct, operate, and maintain properties in an urban area through any
and all applicable financing structures. Additionally, projects that demonstrate the Respondent’s success
with historic buildings and in receiving approvals and other zoning and regulatory entitlements in the
District of Columbia will be highly regarded. For each example include: date and location of work; role of
the entity; client; relevance to this solicitation; development size by use, financing, and capital structure;
and a description of how the project met schedule and budget expectations.
Howard may be interested in participating as a partial investor/financier for the development. Describe
experience with similar arrangements, including establishing a joint venture with a public institution.
Team experience with Project-specific issues such as zoning and historic preservation
methodologies in the District of Columbia.
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BondBread.datarooms.com
Provide three (3) business references familiar with the submitting firms and their work on projects
described in this section of your SOQ. For each reference include a contact name, company, phone, email,
and the types of services provided.
The University expects the Selected Developer to reflect diversity in both its management and ownership
structures. Respondents should describe plans to achieve diversity in their team’s management and
ownership, as well as diversity among its Subcontracting Entities (including Certified Business Enterprises)
in each phase of the design, development, construction and operation of the Project consistent with
Howard’s social mission. Opportunities for Howard students to be involved in the development,
construction, and post-construction management of the Selected Developer are highly encouraged.
Additionally, Respondents are encouraged to identify and include qualified graduates of Howard on the
team.
C. Financial Capability
This information is requested to evaluate the Respondent’s financial strength and ability to obtain debt and
equity financing.
Financial Stability
Respondents should provide information that will enable the University to evaluate the Respondent’s financial
capability and approach to the Selected Developer. Respondents should provide:
Audited financial statements prepared in accordance with GAAP for the years 2014-2016, if applicable, or
corporate or individual financial statements certified by an officer of the company;
If the entities are publicly owned, provide a copy of the most recent 10K report; and,
Credit Report and, if available, financial rating reports and other documents indicating the financial
condition of the contracting and financially responsible entities and any controlling entities.
Financial Risks
The University will evaluate the financial risks posed by each Respondent that may impact the Respondent’s
ability to successfully execute the development. SOQs should include the following information related to
financial risks for each Firm:
Bankruptcy Information: provide a statement indicating whether the contracting and financially
responsible entities, any controlling entities, any principal personnel or key development team members or
other proposed equity investors have declared bankruptcy during the past five (5) years, and briefly
describe the bankruptcies.
Pending Litigation: provide a statement indicating whether the contracting and financially responsible
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entities, any controlling entities, any principal personnel or key development team members or other
proposed equity investors are involved in any business-related litigation, liens or legal claims, and briefly
describe such matters.
Judgments: provide a statement indicating whether the contracting and financially responsible entities,
any controlling entities, any principal personnel or key development team members or other proposed
equity investors have had a business-related, judgment against it/them during the past five (5) years, and
briefly describe each instance.
Financing Plan
Respondents should provide high-level information that will enable the University to evaluate a Respondent’s
ability to obtain debt and equity financing for the Project and it’s relative cost to Howard:
A description that demonstrates the soundness of the Respondent’s strategy for financing the Project,
including discussion of the risks and benefits of the financing structure, the Respondent’s expectation of
return on equity, and why this strategy is the most advantageous to the University.
The University’s strong preference is that the Project is 100 % privately financed. Identify potential sources
of debt and equity for the Project. For each source, provide entity name, contact name, prior and existing
relationships with Respondents, and letter with a preliminary commitment to provide the required equity
funding.
A description of development fees and expected investment returns.
D. Project Approach
The Respondent approach should include a narrative describing how the Respondent will plan and develop the
Bond Bread Site. The description should include:
A summary of the vision and conceptual development for the Project. Concepts should describe an
innovative commercial space on ground floor that serves as a destination and comment on the potential for
a marketplace with eclectic foods and a wide variety of retail to achieve that goal.
Description of the Site’s highest and best use.
Description of methodology to collaboratively create a Development Plan with Howard.
The mix, size (in gross and net square feet), and location of uses at the Project that maximizes value to the
University and the mix of units in residential components of the
Project.
19
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BondBread.datarooms.com
Concept for including key historical and aesthetic elements of existing Bond Bread and WRECO garage
buildings as required by Federal and District Laws and Regulations.
Respondent must outline a clear approach to working within the historical, planning and zoning, and
environmental constraints of the Bond Bread Site. Responses should include:
Approach to assessing and mitigating environmental hazards and meeting legal and regulatory
requirements related to cleanup
Approach to conforming to all relevant DC zoning, historical designation, and the Duke Plan.
Approach to entitlement, including a response to Howard’s plan to seek further processing of the Campus
Master Plan to allow for an updated development at the Site and preferred paths to addressing the
covenants applied to the parcel conveyed by the District.
Howard has a commitment to providing affordable units in its development projects. Provide an approach to
meeting or exceeding District requirements for affordable housing and making units available to members of
the Howard community.
Howard may be interested in participating as a partial investor in the project. Provide an approach to
collaborating with Howard to create an innovative joint venture entity.
Howard is wiling to enter into a 99 year ground lease , but strongly prefer shorter terms. Describe an
approach to ground leases and your willingness to enter into a shorter term agreement.
Responses shall include conceptual site plan drawings which demonstrate the integration of historic features
with the highest and best use of the existing building (8.5” x11” conceptual drawings)
For teams with multiple firms, include a description of how the Project will be managed and which firm will
serve as Howard’s primary point of contact.
E. Community Relations Plan
Respondents should identify their plan to maintain good relations with all involved parties (including the
University, ANCs, District of Columbia Government, and surrounding community) throughout the duration of
the Project. The Selected Developer will be required to coordinate with various University stakeholders
including, but not limited to, the Office of External Affairs. Respondents should identify local market
knowledge and a community relations strategy applicable to the District of Columbia.
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PAGE LIMIT
Cover Letter One (1) page
Team Qualifications Ten (10) pages
Financial Capability Five (5) pages
Project Approach Fifteen (15) pages
Community Relations Plan Four (4) pages
Appendices (Resumes and relevant information
not required in the sections above) No page limitation
Previous community relations experience should be identified, including any relationships with governmental
entities or community organizations on similar projects. In particular, discuss any projects that were executed
on public or university land, and focus on those located in DC.
F. General Requirements
Respondents interested in the Project should provide straightforward, concise information that satisfies the
requirements noted below. Brevity is appreciated and all SOQs should conform to the following requirements:
Four hard copies and one electronic copy must be submitted. Hard copies should be prepared on 8.5 x 11-
inch paper, though oversized drawings may be folded into an 8.5 x 11 size;
Text portions of the electronic copy of the SOQ must be in a searchable format;
All financial information (including budgets) included within a SOQ must be submitted in Microsoft Excel
with fully functional formulas;
Any submitted SOQ shall remain a valid SOQ for 6 months after the SOQ due date;
All documentation submitted with the SOQ should be contained in a single volume;
Typeface shall be no smaller than 11 point and margins shall be no less than one inch; and,
Expensive bindings, color displays and the like are not necessary.
Extraneous marketing materials are discouraged.
SOQ should follow the format below and should not exceed the following page limitations:
22
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Selection
A. Selection Process
The Selected Developer will be chosen by the University, as
advised by a committee of experts established by the University.
SOQs will be evaluated based on their technical merit and
associated risk ratings, based on the factors below. Once the
University has completed the review of the SOQs, at Howard’s
sole discretion, it may:
I. Identify a short-list of Respondents that will be required
to make an oral presentation to the University
II. Select one Respondent for the exclusive negotiation;
III. Issue an RFP to a short list of qualified Respondents
requesting notional price and program proposals; and/or
IV. Disregard all SOQs.
The University does not intend to meet with Respondents
regarding revisions to their SOQs but may contact Respondents
to clarify certain aspects of their SOQs or to correct clerical errors.
The relative strengths, deficiencies, weaknesses, and risks of
each SOQ will be evaluated.
The Respondent to be selected for exclusive negotiation will be
that Respondent whose SOQ, or subsequent notional proposal
should the University issue an RFP, provides the best overall
value to the University and is determined to be most
advantageous to the University; provided, however, that Howard
may at its option, and without any liability, choose to reject any
and all SOQs and/or proposals or cancel solicitation or award
completely without a requirement for justification
In the event the Selected Developer and the University are
unable to come to an agreement on development, Howard
reserves the right to award the project to the next most-qualified
bidder.
B. Evaluation Factors
Respondents will be evaluated based upon the evaluation
factors listed below. The evaluation factors are listed in
descending order of importance with the first having the most weight
and each of the following evaluation factors having equal or lesser
weight than the one preceding it.
C. Presentations
Respondents may be required to make oral presentations after
submittal of written SOQs to exhibit their understanding of the
solicitation requirements. During the SOQ evaluation process, the
University may submit written questions to the Respondents. The
University will retain responses in its official file as a historical record of
the presentation slides and responses to University questions.
D. Post-Selection
The Selected Developer and University will negotiate an Exclusive
Rights Agreements (ERA) detailing the leasing and development of the
Project.
The Selected Developer will be required to work with Howard to craft a
detailed development plan reflecting the development concept that
incorporates developer-obtained community feedback and reflects the
University’s goals. Howard and the Selected Developer will negotiate a
Ground Lease or similar transaction document. This transaction
document shall include relevant characteristics of the development,
and define all terms and conditions, schedules, and financial
arrangements between the parties.
Factor 1 Qualifications, Experience, and Past Performance
Factor 2 Project Approach
Factor 3 Financial Capability and Approach
Factor 4 Community Relations
23
RFQ Schedule
Bond Bread Site Redevelopment Process and Schedule
Release of RFQ September 29, 2017
Pre-Response Conference
A non-mandatory Pre-Response
Conference will be held via WebEx.
October 17, 2017 10:00am
-11:00am EDT
Site Visit
Grounds are accessible to public. Building
tours will be available between 10am and
6pm. Visitors will enter the buildings at
their own risk.
October 17~19, 2017
10:00am-11:00am EDT
Deadline for Written Questions
Questions may be submitted at any time
through this deadline
November 7, 2017
3:00pm EST
University Reponses to Written Questions
Questions and responses will be available
to all Respondents via https://
BondBread.datarooms.com
November 14, 2017
SOQ Due Date
Four hard copies and one electronic copy of
SOQs must be submitted.
November 21, 2017
3:00pm EST
Post—RFQ Process
Selection / Board Approval
Review SOQs, obtain Board approval of
Selected Developer
Negotiate ERA
Negotiate Exclusive Rights Agreement
Craft Development Plan
Collaborate with Howard Staff and
community to create a development plan
Obtain Board Approval
Obtain Board approval of development plan
Execute Ground Lease
Negotiate and execute Ground Lease
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Terms & Conditions
Disclaimer
Notwithstanding anything contained in this RFQ, neither Howard nor any of its
trustees, officers, employees, attorneys or consultants (collectively its “Agents”) shall
be deemed to make or have made any representation or warranties, express or
implied, regarding the accuracy or completeness of any statements or other
information contained in or attached to this RFQ (including, without limitation, any
representation or warranties as to the condition of the Site or the suitability of the Site
for any purpose). Respondents to this RFQ may not rely on any statements or
information provided by Howard or its Agents, and shall be responsible for satisfying
themselves as to the reliability, accuracy and/or completeness of each such statement
and information and ascertaining all conditions that affect or might affect its
proposed Project.
University Property Rights
The University requires that programmatic and standard-based requirements will be
defined in the planning phase. All designs and plans that are produced by the
Respondent as part of the Project will become the property of the University whether
or not the Respondent is retained to continue beyond the submission stage of the
Project.
Amendments to this RFQ
This RFQ may be amended by formal amendment, document, letter, or email. If this
RFQ is amended, then all terms and conditions that are not amended remain
unchanged.
As-Is Condition
Howard makes no representations, warranties or guarantees concerning any
conditions at the Site (including, without limitation, the presence or possible presence
of hazardous materials or substances). The Site is being offered in an “as-is, where-is”
condition, and the Master Developer will be solely responsible for obtaining, at its sole
cost, all appraisals, surveys, legal descriptions, permits, zoning appeals and approvals,
engineering and environmental studies and the like, as may be necessary for the
design, development, construction and operation of the Project.
Authorizations by Submission of SOQ
Any and all information provided by a Respondent may be used by the University to
conduct credit and background checks. The University is authorized to contact the
individuals listed by the Respondent in the project examples for purposes of
discussing the Respondent’s performance.
Disclosure of Respondent’s Response
This Request for Qualifications specifies the format, required information, and general
content of SOQs submitted in response to this RFQ. The University will not disclose
any portions of the SOQs prior to contract award to anyone outside the University
other than the University’s administrative staff and counsel, representatives of the
State or Federal Government, if required, and the members of the committee
evaluating the SOQs and its advisors. After a contract is awarded in whole or in part, the
University shall have the right to duplicate, use, or disclose all SOQ data submitted by
Respondents in response to this RFQ as a matter of public record.
Restrictions on Communications with University Staff
From the issue date of this RFQ until a Master Developer is chosen and a contract award
is made, Respondents are not allowed to communicate about the subject of the RFQ with
any University administrators, faculty, staff, or members of the Board of Trustees or
advisors except the Designated Point of Contact. If violation of this provision occurs, the
University reserves the right to reject the Respondent’s SOQ.
Teaming Arrangements and Special Purpose Entities
Multiple Team Members may form a joint venture for the purpose of submitting a SOQ in
response to this RFQ. A special purpose entity may be created for the purpose of
submitting a SOQ. The University may require that financial and performance
guarantees be provided by Team Members. Team members of one Respondent may
participate as Team Members of another Respondent (so long as each affected
Respondent gives its consent).
Team Composition
A Respondent may not change the composition of its proposed development team
unless it has given Howard prior written notice of the proposed change. In addition, a
Respondent must provide any financial or other materials requested by Howard to
evaluate the newly proposed composition of the Respondent. Howard reserves the right,
in its sole discretion, to reevaluate the proposed change in composition and to eliminate
the team from further consideration (or to revoke the selection of the Respondent). The
Master Developer must receive Howard’s written approval before changing its team’s
composition; otherwise the Master Developer will be disqualified.
Hold Harmless
By participating in this RFQ process, each Respondent agrees to indemnify and hold
harmless the University and its officers, employees, contractors, trustees and advisors
from and against any and all real estate and other brokerage fees or commissions,
finder’s fees, and any other forms of compensation related in any way to activities
undertaken by any person as a result of such person’s efforts towards and/or
participation in this RFQ process or the submission by such person of a SOQ, and
liabilities, losses, costs, and expenses (including reasonable attorney’s fees and
expenses) incurred by any indemnified party as a result of, or in connection with, any
claim asserted or arising as a result of, or in connection, with this RFQ process. This
includes any and all activities related to the University’s exclusive negotiations with the
Master Developer.
Organizational Conflicts of Interest
When submitting and signing a SOQ, a Respondent is certifying that no actual, apparent
or potential conflict of interest exists between the interests of the University and the
interests of the Respondent. A conflict of interest (whether contractual, financial,
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organizational or otherwise) exists when any individual, contractor, or
subcontractor has a direct or indirect interest because of a financial or pecuniary
interest, gift, legal proceeding for or against the University, or other activities or
relationships with other persons (including business, familial or household
relationships) and is thus unable to render or is impeded from rendering impartial
assistance or advice, has impaired objectivity in performing the proposed work, or
has an unfair competitive advantage.
Cost of Preparing SOQ
Costs for developing the SOQs and any subsequent activities prior to contract
award are solely the responsibility of the Respondents. The University will provide
no reimbursement for such costs.
Attorney’s Fees
In the event that either party deems it necessary to take legal action in connection
with the transaction contemplated by this RFQ, and in the event that the
University prevails, the Master Developer agrees to pay all expenses of such action,
including attorneys’ fees and costs at all stages of litigation.
Code of Ethics and Conduct
It is the policy of the University to conduct itself with the highest degree of
integrity and honesty in all of its dealings. To further this process, its Board of
Trustees has adopted a Code of Ethics and Conduct (the “Code”) that contains a
set of guiding principles and responsibilities governing all members of the Howard
Community. Members of the Howard community (“Howard Community”) include
all Howard employees, corporate officers, and trustees, and the immediate families
and close personal acquaintances of the foregoing. Certain provisions of the Code
deal with the relationship of the Howard Community with those seeking to do
business with the University. In general, the Code prohibits any member of the
Howard Community from receiving or soliciting anything of value in return for
influencing or exercising his or her discretion in a particular way. In addition, no
member of the Howard Community may receive or solicit anything of value
because of any official act performed or to be performed by such an individual.
If a Respondent or the Master Developer violates or facilitates a violation of this
policy, it will not be considered an appropriate party to undertake the Project and
may also be disqualified from doing business with the University in the future.
Such a decision will rest within the University’s sole discretion and may be made on
any basis that the University deems appropriate under the circumstances.
Civil Rights
It is the policy of the University to provide an environment for its students, faculty
and administrative employees that is free from illegal discrimination, intrusion,
intimidation, or exploitation. Therefore, the University will not tolerate any illegal
treatment of a member of Howard Community that is based on race, color, religion,
national origin, sex (including sexual harassment), age, marital status, personal
appearance, sexual orientation, family responsibilities, disability, matriculation, political
affiliation, or on any other classification that is prohibited by law.
All individuals who come onto the property of the University, or who enter property where
the University conducts its business (“University Property”) are expected to conform to this
policy. Respondents will be held responsible for the actions of their employees, officers,
principals, consultants, and agents while on University Property. The University reserves
the right to take all appropriate remedial measures to impose sanctions and to mitigate
against the recurrence of any violation of this policy. In such an event, the University may
bar culpable individuals from University Property. In addition, in lieu of taking such action,
the University may conclude that the Respondent is not an appropriate party to undertake
the Project and may disqualify the Respondent from doing business with the University in
the future. Such decisions will rest within the University’s sole discretion and may be made
on any basis that the University deems appropriate under the circumstances.
Representations and Warranties of Respondents
By submitting a SOQ in response to this RFQ, the Respondent warrants and represents that
(i) if awarded the contract, it will not engage in illegal discrimination in any employment
action on the basis of race, religion, color, gender, sexual orientation, age, national origin,
or on any other basis proscribed by Federal law or the law of the District and (ii) that it has
not offered or given anything of value to any member of the Howard Community in return
for such party’s influencing or exercising his or her discretion in a particular way or
performing any official act.
SOQ Addenda and Rules for Withdrawal
Prior to the date specified for receipt of offers, a submitted SOQ may be withdrawn by
submitting a written request for its withdrawal to the Designated Point of Contact, signed
by the Respondent. Unless requested by the University, the University will not accept
revisions, or alterations to SOQs after the SOQ due date. The University reserves the right
to reject all submittals for any reason. Each firm responding will be notified whether its
submittal is to be shortlisted.
General Conditions
Howard reserves the following specific rights, without limitation, with respect to SOQs:
The right to waive any irregularities or technical difficulties in the SOQ process.
The right to reject any SOQ that the University deems incomplete or unresponsive and
the right to remove the Site from the market and reject all SOQs.
The right to afford unsuccessful Respondents an opportunity to enter into backup
contracts in an order of priority determined by the University in its sole discretion.
The right to re-offer the Site if the University elects not to accept any SOQ.
The right to select a developer whose response may or may not result in the highest
return to the University.
The right to withdraw the RFQ and instead solicit a broader group of developers.
26
BondBread.datarooms.com
Appendix A. Cover Letter
SOQ SUBMITTED IN RESPONSE TO
Howard University Bond Bread Site Redevelopment Project
Response to RFQ HU-BB-01
Mr.
Anthony Freeman
c/o Ms. Michelle Lockley
Real Estate and Asset Management
Howard University
2244 10th Street, N.W.
Suite 402
Washington, D.C. 20059
In accordance with your request for qualifications (RFQ) Number #HU-BB-01, the undersigned, having due authority to submit
the following SOQ with four hard copies and one electronic copy, hereby acknowledges that the terms and conditions under
which Howard University seeks to contract services have been fully read and understood. The firm, its employees and agents,
can and do agree to meet all requirements contained in this RFQ (unless stipulated in the response) and confirm that the
proposed work contained in this response meets the conditions set out in the RFQ.
We hereby certify that in preparing this response we have not been assisted by any current or former employee or agent of
Howard University whose duties relate to this SOQ, other than providing information in response to written requests. No such
individual or his/her immediate family has any financial interest in the outcome of this SOQ.
The University is hereby authorized to request from any individual any pertinent information deemed necessary to verify
information regarding capacity of the firm for purposes of determining responsiveness of the SOQ, or responsibility of the firm
as a prospective contractor.
Corporate Name: __________________________________________________
Corporate Address: __________________________________________________
__________________________________________________
__________________________________________________
Phone ( ) –
Fax ( ) –
Email:
Corporate Entity Type, State Registered _____________________________________
Employer Identification Number _____________________________________
27
Howard University is transforming its administrative, academic,
financial structures to address the needs of its students in the 21st
century. A key pillar of the universities planned improvements rely
on diverse, predictable revenue stream, in part funded by Howard’s
significant, valuable real estate holdings. The University is currently
executing a real estate strategy to capture value from its assets,
largely by partnering with private sector parties. To protect
university interests and set expectations with potential partners
Howard developed the guiding principles below for negotiating
with real estate development entities.
Planning and development approach
– Parties jointly recognize and promote that this effort builds upon
the University’s new and evolving model for University
Development
– Planning/Development Partner commits to delivering on HU’s
vision represented in the Campus Master Plan as well as any
emerging HU vision, objectives, and strategy for the subject area
and corridor
– Planning/Development Partner to present options and
opportunities for consideration by HU. HU has final approval over
the final development plan for the subject area
– A cohesive approach to optimize value — HU branding and
programmatic integration to be prominent throughout the subject
area and corridor
– Dedicated Pre Development team consisting of Planning/
Development Partner and HU representatives to collaborate on the
development plan prior to HU approval
Timing and risk sharing
– HU prefers to receive fair market value (FMV) upfront and require
Planning/Development Partner to assume all market and
development risk
– HU wants to simplify the requirements for managing, monitoring,
Appendix B. Howard’s Development Guidelines
and administering its economic interest over the life of the
ground lease, therefore overly complex deal structures,
ownership structures, and participation are discouraged
Economic value to Howard
– HU must obtain FMV for the ground lease supporting all
development
– HU must receive additional value/benefits in exchange for any
sole-sourced/non-competitive transaction (e.g., premium pricing,
ancillary profit opportunities, etc.)
– HU must safeguard the integrity of any sole source transaction
by protecting against windfall profits through gross revenue
participation and participation in liquidity events
– HU provides NO direct or indirect economic subsidy towards the
construction and operation of any commercial development
components
Link to Howard mission and values
– Planning/Development Partner must demonstrate diversity on
the development team
– Planning/Development Partner must demonstrate a
commitment to coordinated community engagement in
conjunction with HU
– Planning/Development Partner must demonstrate a
commitment to Inclusionary Zoning and/or other HU oriented
housing programs that promote affordability
– Planning/Development Partner to collaborate with HU on
potential acquisition and development opportunities that are
strategic and economically feasible
– Development proposals must have a linkage to and create
sustainable value to HU’s academic mission (e.g., enhances
opportunities and quality of life for HU students, faculty, staff,
and brand)
Additional information is available at
Anthony Freeman
Real Estate Executive, Senior Advisor to the President
AVP, Real Estate Development and Capital Asset Management
Derrek Niec-Williams
Executive Director
Campus Planning, Architecture and Development
BondBread.datarooms.com
http://eastcampus.datarooms.com/