Washington D.C. Lands as Top Retail Market

Discussion
Mar 29, 2011
Tom Ryan

Washington D.C. topped ChainLinks Retail Advisors’ list as the
top retail market in 2010. The retail-focused commercial real estate organization
said retail demand has “skyrocketed” in the district over the last
two years, current shopping center vacancy levels are low, and unemployment
is lower than in any other major market in the country.

Coming in second was
San Francisco. ChainLinks Retail Advisors stated in its U.S.
National Report Spring 2011
report. “Though the San Francisco market
currently has unemployment levels above the national average, the city’s already
light vacancy levels, high retailer demand and expected strong job growth in
2011 helped to propel it to number two on our list.”

Meanwhile, the next
three on the list — New York City, Boston and San Diego — all are “markets
that are forecast for strong employment growth in 2011 and that have lower
levels of shopping center vacancy and continued strong retailer interest.”

Rounding
out the list were San Jose, Baltimore, Philadelphia, Seattle and Pittsburgh.

In
making its analysis, ChainLinks Retail Advisors said it looked at existing
shopper center vacancy, ongoing construction, rental rate trends and the amount
of retailer demand in the area. It also looked at overall economic indicators
such as unemployment, housing starts, forecast in-migration and income growth.

The
organization stated, “These rankings are not based on which market
will boast the lowest vacancy, the highest levels of occupancy growth, or the
strongest rental rate growth. Instead we are ranking what we see as the general
health of the marketplace.”

Discussion Questions: What are some of the better-known as well as lesser-known factors that contribute to a healthy retail marketplace? Which ones are most undervalued when stores look into opening or expanding into new regions?  How does such analysis differ for national chains versus independents?

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8 Comments on "Washington D.C. Lands as Top Retail Market"


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Bill Emerson
Guest
Bill Emerson
10 years 1 month ago

It’s hardly a surprise that DC is the strongest retail market. The one thing that has grown substantially over the last 10 years is the size and spending by the government. This is, after all, where they print the money.

While there are lots of factors to consider, population trends are probably the most important when it comes to forecasting success. More specifically, what are the trends for the specific demographic being targeted?

The factors that should be looked at more closely are the complete costs for doing business in the marketplace. Manhattan, for instance, has terrific demographics, population density, and high disposable income. It also has high taxes, high employment costs, onerous regulations, and a predatory bureaucracy. One chain I’m familiar with had a big store in Manhattan that was #1 in volume. It was, however, way behind a much smaller store in rural Wisconsin when it came to 4-wall profitability. It’s about more than volume.

Dick Seesel
Guest
10 years 1 month ago

One obvious answer is that the “industry” in Washington, D.C. is remarkably recession-proof no matter what is going on in other centers of commercial and retail activity like New York. You could make a case that employment prospects during a period of governmental activism like this one have never been better, but the growth of other industries (defense contractors, IT providers, etc.) has been skyrocketing for many years. So it’s a natural place to see parallel growth in the retail and service sectors too.

Paula Rosenblum
Guest
10 years 1 month ago

It’s hard not to be snarky about this factoid. Are our leaders out of touch with the rest of the nation?

Roger Saunders
Guest
10 years 1 month ago

The macro trends for the metropolitan area around Washington D.C. are promising for retail–better educated, more affluent, highly mobile consumers are continuously introduced to the “swamp.” New ancillary businesses in the tech and service support space create added jobs and opportunity. Those patterns lead to added infrastructure growth, and investment in commercial and residential space. Top this off with some tax advantages that can be/are offered to these investments, and retailers/service providers will continue to flock to meet demand.

And, D.C. offers these retailers a degree of risk mitigation, as well. When the “Gold Rush” was over, “Dust Bowls” occurred, as companies could determine they could build cars in other locales, as tax-hungry states or cities became greedy–companies and consumers could effectively migrate away.

The center of government is not likely to shift from D.C.–it has a solid 50-60 year run-up going for it. The money is there. Consumers will continue to follow. And, retailers will be certain to follow too.

Cathy Hotka
Guest
10 years 1 month ago

OK, time for a native Washingtonian to weigh in here.

DC’s economy is red hot, in part, because the foreclosure crisis had only minor effects here. This highly-educated workforce wasn’t easily taken in by the tricks the banks used to try to snare people who obviously couldn’t afford the homes they purchased. Another factor is the huge contracts the government is handing out to Beltway bandit consulting firms.

Bring it on, retail!…my Borders is closing and there’s some prime real estate available on Wisconsin Avenue.

Ben Ball
Guest
10 years 1 month ago

Coincidentally, I was speaking with the President of the Fairfax County Chamber of Commerce last night. I was a little surprised to learn the size and scope of their operations–including 77 paid member events a year. That is, until we started discussing the memberships composition–over 90% government contractors. Need we say more?

Bill Robinson
Guest
Bill Robinson
10 years 1 month ago

What I find startling about the DC leadership in retail markets is the list of also-rans. Not a single southern city!! No Atlanta, Charlotte, Houston, Dallas, Raleigh, Miami, Orland, Tampa, etc.

Have the retail developers so completely saturated the South that no a single one would rise into the list of leaders? Has the southern city sprawl finally stifled retail development? Is this a trend or simply a market adjustment?

Ed Rosenbaum
Guest
10 years 1 month ago

Washington, D.C. being the Top Retail Market reminds me of when Detroit many years ago could find no fault with the cars it was producing when the rest of the country was clamoring for the new foreign cars being imported. The Auto Execs could not understand what the reasons were for this new love affair (because the cars they drove were being serviced daily and parked in heated garages while the rest of the country was experiencing service problems).
It was mentioned earlier in the responses that the Government is a large growing “industry” with no cut backs or layoffs. So, of course D.C. will experience retail growth. This is like one of those survey reports when the answer is obvious before the results are released.

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