Prepared for Carlyle Plaza LLC Retail Assessment and City of Alexandria of Carlyle Plaza One December, 2009 and H. Blount Hunter Retail & Real Estate Retail Development Recommendations Research Co. and for Eisenhower East Chapman Consulting 512 Colonial Avenue Norfolk, VA 23507 757.626.0757 FOREWORD This report was prepared for Carlyle Plaza LLC and the City of approximately half built-out. At build-out in 2030, the area is Alexandria to assess retail merchandising strategies for Carlyle expected to include 9.5 million SF of office space, nearly 5,500 Plaza One and the Eisenhower East Small Area Plan. residential units, almost 1,000 hotel rooms, and approximately 684,000 SF of retail, food service and entertainment space. The purposes of this study were four-fold: The report presents conclusions and recommendations based 1) to quantify the demand for retail, food service and upon the internal and external market capacities to support entertainment uses there both in the short run and convenience retailing, shoppers goods’ retailing, and upon build-out food/beverage sales within Eisenhower East. 2) to evaluate the current amount, composition and configuration of existing retail, food service and entertainment uses within the area 3) to develop retail, food service and entertainment strategies for several designated sites within the area; 4) to evaluate the extent to which the goals and objectives for retail, food service and entertainment uses in the Small Area Plan can be realized. This report summarizes a detailed evaluation of the retail, food Blount Hunter service and entertainment market within the Eisenhower East H. Blount Hunter Retail & Real Estate Research Company area of the City of Alexandria, VA. Eisenhower East was the subject of a Small Area Plan first published in 2003 and John Chapman updated in 2006. The Study Area encompasses approximately Chapman Consulting 230 acres in the southern end of the city abutting Fairfax County and features a mix of uses including offices, residential December, 2009 units, a movie theater, and retail space. The development is 1 LIMITATIONS AND CONDITIONS OF USE H. Blount Hunter Retail & Real Estate Research Co. and While this analysis contains what we believe are realistic Chapman Consulting provide, to the best of their abilities, perspectives of “supportable” retail footage, we have not accurate and complete analysis using techniques consistent performed “feasibility assessments” to refine the “theoretical” with accepted retail site evaluation models. We believe the perspective of supportable square footage. Assessing sources upon which this report is based to be reliable although “feasibility” is only possible when proposed developments some data has not been directly verified. H. Blount Hunter incorporate specific merchandising elements. Retail & Real Estate Research Co. and Chapman Consulting provide interpretations and opinions based current data and The planning horizon for this analysis extends to 2030. This market conditions. Both are are subject to change. The constitutes a long time in the world of retailing and projections conclusions and recommendations reflect individual and based upon today’s industry and market dynamics could easily collective experience. The companies will use their best efforts become obsolete. Broad shifts in consumption may occur over to correct any errors found in this report; however, H. Blount time, and consumer spending patterns associated with today’s Hunter Retail & Real Estate Research Co. and Chapman challenging economy may become permanent. Sector-leading Consulting will not be liable, either in contract or tort, for any retailers in 2009 may disappear by 2030 to be replaced by loss, injury, or damages (including direct, special, incidental, or stores that do not even exist today. A rise in energy costs may contractual) incurred as a result of any error or omission in the re-shape the balance of personal auto use versus transit report or data upon which the report is based, whether caused ridership, thereby changing the trade area boundaries of by H. Blount Hunter Retail & Real Estate Research Co. or today’s dominant shopping centers. And, assumed changes at Chapman Consulting or otherwise. Potomac Yard, Landmark Mall, and Springfield Mall may never materialize or have different impacts than expected on Some conclusions in this report are based upon projected Eisenhower East’s retail positioning. population and income levels that may not occur. Estimates have been prepared for “supportable square footage” for This report is to be used as one basis for decision-making and Eisenhower East’s “town center” serving two shopping may be used without restriction within the client’s business functions. The results are “theoretical” since they are based organization. Any reproduction or other use of the materials upon general assumptions about merchandise content. contained in this report by anyone other than the party for Potential development scenarios for “town center” are subject whom the report was prepared without written consent of the to competitive market realities that cannot be ignored. client is prohibited as a violation of federal copyright law. 2 TABLE OF CONTENTS Conclusions………………………………………………4 APPENDIX……………………………………60 Overview of Analytical Process…...............................7 Eisenhower East Overview………………………….....8 Eisenhower East’s Three Subareas………………….12 Current State of Retail in Eisenhower East………….13 On-Site Segments as Sources of Internal Demand..18 Evaluation of Retail Element of Eisenhower East….28 Carlyle Subarea Retail Evaluation……………….…..33 Hoffman Subarea Retail Evaluation……………….…38 South Carlyle Subarea Retail Evaluation……………44 South Carlyle Subarea as a Retail Site……………...46 Retail Element of Carlyle Plaza One………………...49 Eisenhower East’s Probable Residential Trade Area—2009 Perspective……………………….51 “Town Center” Development Scenarios……………...56 3 CONCLUSIONS AND RECOMMENDATIONS 1. Eisenhower East has excess retail capacity today and internal demand is also not likely to support a broader range will continue to have excess capacity relative to of “comparison retail goods” but will continue to support sales internally-generated demand. of “convenience retail goods” and food/beverage establishments. Eisenhower East accommodates a dense mix of uses in a scale that is consistent with historic development patterns in While Eisenhower East is served by Metro, transit here will Alexandria. Its grid street system honors pedestrians while its continue to drive high density office and residential highway access and mass transit accessibility bode well for development without serving as a major source of sustained growth as an employment center and residential “destination” patrons for shops and restaurants. neighborhood in a future where private vehicle ownership may be less important than today. 2. Significant physical impediments prevent the Carlyle Subarea from evolving into the functional equivalent Eisenhower East encompasses more than 230 acres in three of Market Common at Clarendon or Reston Town distinct subareas. The vast size of the development has been Center. celebrated from an economic development perspective and as an urban planning opportunity. However, this plan does The Carlyle Subarea has the most “retail” space today, but its not adequately incorporate the perspectives of a retail “master 29 percent vacancy appears to be chronic reflecting design developer” or merchants. Eisenhower East lacks the flaws. Carlyle’s highly decentralized retail base results in cohesiveness of a planned shopping node. Eisenhower East weaker performance by existing merchants. The Carlyle has excess “retail” capacity today in its Carlyle Subarea, and Subarea has evolved in a manner that created physical mandates for more retail space promise to perpetuate or limitations on its ability to become a retail node capable of exacerbate this condition. Future development will add capturing a significant amount of externally-generated workers and residents largely in the Hoffman Subarea; this spending potential. The physical deficiencies are so will not solve the problems facing the inherently poor retail fundamental as to preclude retrofitting the Subarea into the spaces in the Carlyle Subarea. functional equivalent of Reston Town Center or The Market Common at Clarendon. Internally-generated consumer spending is insufficient to sustain Eisenhower East’s inventory of “retail” space; this 4 3. With a traditional grocery store as the likely anchor, goods” retail anchor will not attract “comparison goods” retail the Hoffman Subarea can accommodate a limited tenants that might be attracted to a cohesive, well-integrated amount of new food and beverage merchants and “shopping center” at this site. convenience-oriented retailers that serve the needs of office workers and residents. New retail 4. The South Carlyle Subarea is the weakest location development will work best if it connects with the within Eisenhower East for retail and restaurant existing node established by the AMC theater and uses. Residents and workers in this emerging adjacent restaurants. Small tenant space added in subarea would be better viewed as sources of conjunction with a new grocery store will function support for businesses in the nearby Carlyle best if it is physically oriented in a manner that the Subarea than as a robust source of spending storefronts have maximum accessibility by grocery potential for businesses located in South Carlyle. store patrons.