Weak demand for redevelopment around the Glenmont Metrorail station means prospects for a mixed-use town center are not economically feasible without significant public subsidies, according to a study presented to the Montgomery County Planning Board.
“Market rents are not high enough to cover land acquisition, development costs, structured parking cost and an adequate investor return,” said the study by W-ZHA of Annapolis, a national development advisory company.
The $25,000 report commissioned by the planning department concluded that such a project would fail to attract private developers without county taxpayers shelling out about $47 million to build garage parking.
The study quantifies how difficult it is to attract new development to Glenmont, which has seen little private investment since Metro’s Red Line station opened in 1998. The finances underscore the challenge of writing a new Glenmont sector plan that reflects a vision statement the planning department wrote this spring after months of community meetings.
“We did not revision it,” said W-ZHA Managing Principal Sarah Woodworth. “We tested it. It doesn’t work without the government subsidies.”
The sector plan — which the planning board delayed voting on for a public hearing Dec. 20 until traffic impact revisions are completed — calls for building a town center with residential, retail and office space on the 20-acre site of the dilapidated Glenmont Shopping Center, which dates to 1959. The sector plan covers a 711-acre area that includes the Metro station, its two parking garages and several garden apartment complexes built in the 1960s and 1970s.
Whatever is built in Glenmont will be designed to serve local residents and will not rival intensive transit-oriented development around many other Metro stations in the county.
“We don’t see Glenmont as a regional retail center or a [central business district] like Wheaton or Silver Spring,” said county Planner Michael Brown.
Woodworth’s study — based on zoning requirements for 2,367 garage spaces — said it would cost $289.7 million to demolish the existing 196,381-square-foot strip mall to make room for 1.1 million square feet of residential space, 254,900 square feet of retail space and 169,900 square feet of office space built around a 1.25-acre town square.
Based on rental rates expected in Glenmont, those figures — which do not include land acquisition costs — produce a yield of 6.67 percent, below the 7.5 percent minimum that Woodward said developers require to invest in the Washington, D.C. area.
Woodward’s study suggests that if the county wants to spur new development in Glenmont, it will have to make investments similar to the public parking garages paid for by taxpayers in Silver Spring and Wheaton.
The draft sector plan includes zoning density allowing some buildings as tall as 100 feet tall to encourage new development straddling Georgia Avenue along a 10-block section stretching north from Randolph Road. But that probably will not be enough to attract private investment without a public parking garage, said planning board member Norman Dreyfuss, a developer who recalled his own experience in downtown Silver Spring.
“Nobody’s going to build a high-rise just because they can get the density and lose money,” he said.
Woodward also suggested a plan for phased development, which would allow for smaller projects that would require less investment in parking at each stage.
Staged development is an idea that already has been floated by some of the shopping center’s 12 owners, Brown said.
JBG offers two Bethesda buildings for sale
Broker HFF has listed for sale two downtown Bethesda office buildings owned by the JBG Cos. of Chevy Chase.
The adjacent properties both are within two blocks of the Bethesda Metrorail station.
JBG bought Artery Plaza, at 7200 Wisconsin Ave., for $135 million in 2008. The 11-story property is a class A building offering 274,169 square feet of rentable space.
The property is 88 percent leased, with 64 percent having more than five years remaining under contract, according to an HFF online marketing brochure. The building will be sold without any debt encumbering it.
JBG’s other building, at 7220 Wisconsin Ave., also is offered debt-free and is 95 percent leased to a diverse mix of tenants, including BB&T. The company bought the circa-1960 building for $15 million last year.
The four-story property offers 40,325 square feet of space, including street level retail.
Five retail leases fill Germantown building
Five new leases totaling almost 15,000 square feet bring a Germantown retail building to full occupancy, according to Scheer Partners of Rockville, which represented the landlord.
The tenants at the 30,000-square-foot Churchill Business Center are Food World, a retailer of Indian and other South Asian cuisine, which took 7,200 square feet; Tradewinds, which now occupies 2,100 square feet; and three other tenants — Clopper Beer & Wine, CoMMotion Pilates Studio and Milano’s Pizza & Pasta — which each signed for 1,800 square feet.
The building is at 13220 Wisteria Drive.
Edgewood Management picks up apartment assignment
Edgewood Management announced this week the launch of Vantage Management, which recently was awarded the management contract for the Gallery Bethesda, a 234-unit luxury high-rise owned by the Donohoe Group that is scheduled to open in the fall of 2014.
Vantage Management will focus on an existing portfolio of almost 4,000 market-rate units in Maryland, Virginia and the Washington, D.C. area. Plans are in place to expand Vantage Management's portfolio of properties throughout the mid-Atlantic region during the next year.
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