Wisconsin Ave Corridor report

8/7/2019 Wisconsin Ave Corridor report

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The Tr ansform aTion of WhiTe flinT W ill

connecT iT To BeThesda/ch evy ch ase,

forming a more conTiguous suBmar keT


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W I S C O N S I N A V E N U E C O R R I D O R

WisconsinAvenue

Corridor:


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W I S C O N S I N A V E N U E C O R R I D O

The White Flint area o Montgomery County beganundergoing signifcant suburban development in the 1970s

as the mall opened and ofce buildings emerged later in

response to the Metro station opening in 1984. In the 1970s

and 1980s White Flint emerged as a dynamic suburban node

anchored by the Metro Red Line and surrounded by one o

the wealthiest demographics in the nation.

More signicant second generation land use changesare now emerging as the Montgomery County Councilapproved growth guidelines in March 2010 that permit

higher density development immediately surrounding theWhite Flint Metro station. During the next 20 years, the

county is planning to add over 12,000 new residential unitsand over 7.0 million square eet o non-residential space, o

which approximately 60% could be ofce space, according

to preliminary plans. The county also plans to change the

current street pattern into a walkable environment catered

to pedestrians changing the streetscape rom suburban

to urban.

By the year 2030, this transformation will bring 21,000new jobs and at least as many new residents along Route355 from Bethesda/Chevy Chase to White Flint, inclusive othe National Naval Medical Center (NNMC) and National

Institutes o Health (NIH). NNMC and NIH, two government

hubs located south o White Flint and north o Bethesda/Chevy Chase, are projected to add a quarter o these new

jobs.

NNMC is in the midst o transition due to the Base

Realignment and Closure (BRAC) decision, which will be

completed by September 15, 2011. At this time the expanded

base will be called the Walter Reed National Military Medical

Center (WRNMMC). NIH will continue to grow, as it receives

robust Federal unding due to the current administrations

ocus on health care issues.

As the built environment changes and jobs are added to

this area over the next 20 years, we believe tenants will seek

space in the White Flint area. As projects deliver to White

Flint in phases, tenants will have greater access to Class A

space within a mixed-use walkable center, which is located mile rom a Metro station.

We believe the changes planned or White Flint will, over

time, make it an alternative to Bethesda/Chevy Chase. As

White Flint transorms and demand or space increases,

we believe market perception about the submarkets rom

Bethesda/Chevy Chase to White Flint will transorm as well,

creating a corridor the Wisconsin Avenue Corridor.

We project the evolution o this corridor will be similar

to the evolution o the Rosslyn/Ballston Corridor in Arlington County. As the inventory and product quality

increased in Ballston during the late 1990s and 2000s, tenantshad a viable alternative to Rosslyn. As the Ballston landscape

transormed and demand increased, market perception

changed evolving the submarkets between Rosslyn and

Ballston into the Rosslyn/Ballston Corridor.

W Fl cr b Mr

R L rr b f wl mrc


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I March 2010 h Mmr C Cci adpd a pa ha wi

rafrm Whi Fi frm a car dmia brb a pdria frid

mixd- irm r h x 20 ar.

Proposed Rockville Pike Boulevard and Promenade Cross Section


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Whi Fi Dpm

In March 2010 the Montgomery County Council adopted a plan

that will transorm White Flint rom a car dominant suburb to

a pedestrian riendly mixed-use environment over the next 20

years.

Te plan area totals 430 acres, stretching rom White Flint Mall to the south, CSX railroad tracks to the east, Old

Georgetown Road to the west,and Montrose Parkway to thenorth. The area is serviced by the White Flint Metro station. The

plan area is within a -mile radius o the Metro station.

In the late 1970s an urban mixed-use community was

planned or White Flint upon the opening o the Metro

station. At that time, the plan area ocused on a 200 acre

parcel surrounding the Metro station. The plan called or

a 2.0 FAR, which was enough density at that time to spur

development.

Over the past 30 years, despite the development o

the White Flint Mall during the late 1970s, low-rise uses

dominated the area surrounding the Metro station,

consisting o strip malls with surace parking and low-rise

ofce structures, with limited residential development.

This type o built environment ostered auto dependence,

as there was little development or pedestrian uses.

Currently there are just over 2,300 existing dwelling

units within high-rise structures in the plan area.Non-residential space accounts or 5.5 million square eet,

which translates into 22,800 jobs within the plan area. Witha ratio o 9.8 jobs to 1 housing unit, most workers reside

outside the plan area due to limited residential options.

Planners and developers hope to transform White Flint into a pedestrian friendly, mixed-use center over the next

20 years by providing a walkable grid pattern, similar to Bethesda/Chevy Chase, and reducing car dependence.

The grid pattern planned for White Flint will allow access to the new development from all points within the plan

area and surrounding residential community. Rockville Pike (Route 355), the main thoroughfare, currently dominated

by the car, will be transformed into a walkable grand boulevard, with trees and pedestrian oriented sidewalks.

Whi Fi Pa Ara Bdar

Source: Montgomery County Planning Department; August 2010.

DeveloPMent AnD JoBs HousIng RAtIoWHIte FlInt seCtoR PlAn

a J 2010

ta

Residential Units 2,321

Non-residential square eet (SF) 5,490,000

Estimated number o jobs (based on SF) 22,800

Jobs/Housing Unit Ratio 9.8/1



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Rise in


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During the next 20 years, over 12,000 new housing units

and over 7.0 million square eet o non-residential spacewill deliver in three phases. Within the non-residentialcomponent, approximately 60% could be ofce space,

according to preliminary development plans. The notable

rise in residential units will allow or more people to live

where they work, as the jobs to housing ratio will be 3.4

jobs to 1 housing unit, compared to the current 9.8 jobs

to 1 housing unit. By 2030, the jobs to housing ratio in

White Flint will be on par with the 3.5 jobs to 1 housing unit

projected or Bethesda/Chevy Chase.

This transormation in White Flint, coupled with a walkable

grid pattern with bike paths and trails, will help reduce

auto dependence, as pedestrians will have easy access to

everyday needs.

o encourage such development, Montgomery Countyhas increased the maximum building height in the plan

area. Developers are allowed a 300 oot building height

within a mile radius o the White Flint Metro station.

Within a to mile radius, building heights will rangerom 50 to 250 eet. The plan area FAR will range rom 1.5

to 4.0, to encourage property owners to redevelop.

Rise in ResidentiaL units

WiLL aLLoW FoR MoRe peopLe

to Live WheRe they WoRk

Bhda/Ch Cha Cmpard Whi Fi

During the 1970s, Bethesda/Chevy Chase held a higher

share in residential and non-residential, which includes ofce

and retail inventory. This analysis is based on a mile radius

o a Metro station to remain comparable to the White Flint

plan area, which is within the same distance.

The share o inventory has shited slightly, as Bethesda/

Chevy Chase currently holds 68% o the non-residentialinventory and 82% o the residential inventory.

Given the development planned or White Flint, theshare o both residential and non-residential inventory

will become more balanced with Bethesda/Chevy Chaseby 2030 when many o the mixed-use projects at WhiteFlint are ully built out. By 2030, White Flint will hold 48% o

residential and 45% o non-residential inventory, compared

to currently holding just 18% and 32%, respectively.

Bethesda/Chevy Chase currently holds 71% o the ofce

inventory and 62% o the retail inventory. By 2030,

White Flint could hold 46% o ofce and 56% o the retail

inventory, compared to currently holding just 29% and 38%,

respectively.

DeveloPMent AnD JoBs HousIng RAtIoWHIte FlInt seCtoR PlAn

a 2030

ta

Residential Units 14,341

Non-residential square eet (SF) 12,980,00

Estimated number o jobs (based on SF) 48,600

Jobs/Housing Unit Ratio 3.5/1

Note: Development is either approved or planned.


sHARe oF ResIDentIAl unIts AnD non-ResIDentIAl sF

Bt/c c . Wt ft

ResidentiaL units


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of inventory and quality of product that has

historically favored Bethesda/Chevy Chase

is a result of its walkable/pedestrian friendly

environment and proximity to the District.


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Historically Bethesda/Chevy Chase held a greater share

o Class A ofce space. Notably in 2000, Bethesda/Chevy

Chase held a 79% share o Class A ofce space. White

Flint at this time held only 21% o such space. Given the

Class A ofce development planned or White Flint, the

share o inventory will become relatively balanced by 2030

when many o the mixed-use projects at White Flint are

ully built out.

We believe the imbalance o inventory and quality o

product that has historically avored Bethesda/Chevy

Chase is a result o its walkable/pedestrian riendly

environment and proximity to the District. One o these

advantages will be removed with the White Flint master

plan.

Bethesda/Chevy Chase residential and non-residential

space will always be in demand. However, with space

flling up in Bethesda/Chevy Chase, and the White Flintmaster plan in place, White Flint will be competing on a

more level playing feld.

sHARe oF oFFICe sF AnD RetAIl sF - All ClAssesBt/c c . Wt ft

sHARe oF ClAss A oFFICe sPACe

Bt/c c . Wt ft


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th ei f a Crridr

As the share o inventory and Class A product begins to balancebetween Bethesda/Chevy Chase and White Flint, we believetenants will seek space in White Flint. As the built environment

transorms and demand increases in White Flint, we believe

market perception will change as well and Route 355 between

Bethesda/Chevy Chase and White Flint will become known as a

corridor the Wisconsin Avenue Corridor.

Over the next 20 years, notable population and job growth is

projected or the submarkets along Route 355 in Montgomery

County rom Bethesda/Chevy Chase to White Flint. Companies

are projected to add 21,111 new jobs to this area, a 24%

increase, according to the Metropolitan Washington Council

o Governments. With approximately 76% o these jobs ofce-

using, this translates into a demand o 3.2 million square eet

based on the metro average o 200 square eet per employee.

Given the projected population growth o 27,679 the number

o households in need o housing will rise by 11,849.

R 355 bw B/

C C W Fl wllbcm w crrr

the

Wisconsi

Avenue

Corridor.


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A portion o the employment growth is due to the Federal

Government, as the new headquarters or the Nuclear Regulatory

Commission (NRC), the National Naval Medical Center (NNMC)

and National Institutes o Health (NIH) are located within the

corridor. NNMC and NIH are located just south o the White Flint

plan area and are serviced by the Medical Center Metro station.

NNMC is currently in transition due to decisions made underthe Base Realignment and Closure (BRAC) plan. Under thisplan, the Walter Reed Army Medical Center in the District o

Columbia will close and relocate 1,750 employees to NNMC. An

additional 450 new employees will be added to the expanded

base or maintenance and support. The transition is to be

complete by September 15, 2011. At this time the expanded

base will be called the Walter Reed National Military Medical

Center (WRNMMC).

The Metropolitan Washington Council o Governments predicts

the WRNMMC will add 2,500 new jobs over the next 20 years,

largely through BRAC, a 31% rise. This compares to the 24% rise

in employees in the entire corridor.

NIH will receive a $1 billion increase in Federal budget unding

or fscal year 2011, a 3.2% increase rom the year prior. The level

o unding is expected to remain robust over the long-run, given

the passage o the health care reorm bill in 2010.

Map f Wici A Crridr

Source: Map Point Delta Associates; August 2010.

Given the ocus on health care and attendant Federal unding

the Metropolitan Washington Council o Governments

expects NIH to add over 3,000 new jobs by 2030, a 16%

growth.

Employees transerring to WRNMMC due to the BRAC

decision will take newly constructed space on the base

However, newly created jobs added at NIH will be looking

or space either on the NIH campus, which is limited, or lease

private sector space in the surrounding submarkets.

Currently, there is limited available ofce space within a mile radius o the Bethesda/Chevy Chase and White FlintMetro rail stations.There is a total o 988,000 available squareeet o ofce space in Bethesda/Chevy Chase. Montgomery

County has just over 1.0 million square eet o ofce space

either approved or planned or Bethesda/Chevy Chase

However, with a potential ofce demand o 3.2 million squareeet through 2030 or the Wisconsin Avenue Corridor, tenants

will fnd it difcult to fnd available ofce space in Bethesda/

Chevy Chase, unless more ofce product is built. It will be

more challenging to fnd available Class A space in Bethesda/

Chevy Chase, as there is currently only 575,000 square eet

currently available.

We believe as new ofce product delivers over the next 20

years, tenants seeking quality space in a mixed-use center wil

seek space in White Flint. With 7.4 million square eet o newnon-residential space approved or planned or White Flint

tenants will have numerous options.

As demand intensies and developmenbalances between the two submarkets,

perception o a unied corridor, connectingBethesda/Chevy Chase and White Flint,will develop.

DeMogRAPHIC gRoWtHWIsConsIn Avenue CoRRIDoR1

2010 t 2030

ta

Population 27,679

Employment 21,111

Households 11,849

1 Route 355 Bethesda/Chevy Chase to White Flint.

Source: MWCOG; August 2010.

Bethesda/Chevy Chase

White Flint

NIH/Walter Reed-

Bethesda Naval

355270


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Rosslyn,Clarendon/Courthouse,

Ballstonand

. . . the share o both residential and non-residential inventory is

relatively balanced between the three submarkets.


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Ca sd: RCB Crridr

We believe a corridor is created as the share odevelopment and quality o product is more evenly

dispersed among closely located submarkets. The

same transormation linked Rosslyn, Clarendon/

Courthouse, and Ballston creating what is known

today as the Rosslyn/Ballston Corridor.

During 1970 the share o residential and non-

residential development was greater in Rosslyn. In

1990, the share shited slightly as projects were

developed in Clarendon/ Courthouse and Ballston.

Currently, the share o both residential and non-

residential inventory is relatively balanced between

the three submarkets. The Clarendon/Courthouse

submarket has a slightly larger share o residential

and a slightly smaller share o non-residentialinventory. As residential and non-residential

development occurred in Ballston, the share o

inventory began to balance with Rosslyn. Currently,

Ballston has 3.5 jobs to 1 housing unit.

Rosslyn held a greater share o Class A ofce

space in 1980, at 52% o the inventory. In 1990,the share o Class A space was evenly distributed

among the submarkets, as development progressed

in Clarendon/ Courthouse and Ballston. By 2000,

Rosslyn held the least amount o Class A space,

compared to Ballston.

sHARe oF ResIDentIAl unIts AnD non-ResIDentIAl sF

r . c/ct . Bt

sHARe oF ClAss A oFFICe sPACe

r . c/ct . Bt

3.5 joBs

to 1

housing unit


14/18


During the late

1990s and early

2000s several

tenants vacated

older product in Rosslyn

and leased Class A space in

Ballston as a greater share o

newer space became available

nearby. For example:

greater shareof newer space


15/18


t nr Crc vacated 84,000 square eet at

1815 N. Lynn Street in Rosslyn during 1998, a Class B 1966

building that has now been demolished. The company

relocated to 107,000 square eet o Class A space at 4245

N. Fairax Drive in Ballston a 1998 building.

aes Crr vacated 48,000 square eet at 1001

N. 19th Street in Rosslyn during 2004, a Class A 1989

building. The company relocated to 94,000 square eet

o Class A space at 4300 Wilson Boulevard in Ballston, a

2003 building.

arl Rr Crr vacated 84,000 square

eet at 1530 Wilson Boulevard in Rosslyn during 2002, a

Class A 1990 building. The company relocated to 79,000

square eet 4100 N. Fairax Drive in Ballston, a 2002

building.

amrc ac f scl amrr

vacated 24,000 square eet at 1801 N. Moore Street

in Rosslyn, a Class C 1935 building, during 2003. The

association relocated to 16,000 square eet at 801 N.

Quincy Street in Ballston, a 2004 building.

ac Blr Crcr vacated

20,000 square eet at 1300 N. 17th Street in Rosslyn

during 2003, a Class A 1980 building. The company

relocated to 25,000 square eet at 4250 N. Fairax

Drive in Ballston, a 1998 building.

c m r l c

top row: 4245 N Fairfax Drive, 4300 Wilson Boulevard,bottom row: 4100 N Fairfax Drive, 801 N Quincy Street, 4250 N Fairfax Drive


16/18


Although tenants vacated older product in Rosslyn, the

vacancy rate recovered quickly as tenants seeking space close

to the District core, backflled this space.

We believe as the inventory and product quality balanced

between the submarkets and demand picked up or newerspace in Ballston, market perception changed as well evolving these submarkets into the Rosslyn/Ballston Corridor.

We believe this same trend will occur in White Flint, orming

what will become the Wisconsin Avenue Corridor. As demand

ramps up, tenants looking or newer space will fnd it difcultto lease space in the historically tight submarket o Bethesda/

Chevy Chase. We believe the changes planned or White Flint

will put this area on the same playing feld as Bethesda/Chevy

Chase. As White Flint transorms, market perception about the

submarkets rom Bethesda/Chevy Chase to White Flint will

transorm as well, creating the Wisconsin Avenue Corridor.

CoRRIDoR CoMPARIsonWAsHIngton MetRo AReA

at 2030

R/Ba Crridr

WiciA Crridr

Residential Units 35,300 29,700

Non-residential SF 30,300,000 30,500,000

Jobs to housing ratio 3.8 2.6

Note: Within mile o the metro.

Source: Montgomery County, Arlington County, MWCOG; August 2010.

Rosslyn

Clarendon

Ballston

Source: Map Point Delta Associates; August 2010.

Map f R/Ba Crridr

tenants seekingspaCe CLose to

the distRiCt


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For more information on Delta Associates, please visitDeltaAssociates.com. 2010. All rights reserved.If quoted, proper attribution is required.

ConsultIng AnD ADvIsoRy seRvICesGregory H. Leisch,CREChief Executive500 Montgomery Street, Suite 600Alexandria, VA 22314(703) 836-5700; Fax (703) [email protected]

MARket PuBlICAtIons gRouPAlexander (Sandy) PaulNational Research Director500 Montgomery Street, Suite 600Alexandria, VA 22314(703)299-6373; Fax (703) [email protected]

CoRPoRAte ADvIsoRy seRvICesPhillip McCarthyExecutive Vice President6700 Rockledge Drive Suite 400-ABethesda, MD 20817(301)896-9011; Fax (301) [email protected]

Keith FoeryExecutive Vice President6700 Rockledge Drive Suite 400-ABethesda, MD 20817(301)896-9028; Fax (301) [email protected]

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Wisconsin Ave Corridor report