2012 state of downtown
DowntownDC Business Improvement District purpose of the state of downtown
The State of Downtown report presents the facts about the Downtown economy in order to better inform decisions for many stakeholders: DowntownDC BID members (the General Services Administra- tion, private property owners and tenants), investors, developers, retailers, brokers, theaters, museums, table of non-GSA federal government officials and the DC government’s elected officials and staff. The State of Downtown report collects historic data to highlight trends and compare DC to our regional contents and national competitors. Comparisons are important to gauge competitive threats and opportunities for improvement.
Year in Review 2
Current Development 14
Employment 22
Office Market 28
Population & Housing 36
Hotels, Tourism & Conventions 42
Culture & Entertainment 50
Retail & Restaurants 56
Transportation 60
DC Financial Overview 64
Downtown Fiscal Impact 68
Regional Competition 70
ON THE COVER ABOVE A view of the DowntownDC BID Chinatown’s Friendship Archway at area down F Street, NW, 7th and H streets, NW. looking west. regional impact
The DowntownDC Business MONTGOMERY COUNTY Improvement District had the following impact on the region at the end of 2012: Maryland nn 0.1% of land area nn 0.15% of population nn 2% of retail space DOWNTOWNDC nn 6% of jobs DC BID Virginia nn 9% of hotel rooms Falls ARLINGTON nn 9% of museums Church COUNTY Fairfax nn 9% of theaters PRINCE nn 6% of Zagat-rated restaurants Alexandria GEORGE’S COUNTY nn 14% of 2000-2012 office building FAIRFAX COUNTY development and renovation SF nn 18% of total private and govern- ment office space nn 14% of Metrorail exits nn 50% of professional sports teams
district impact Woodley Columbia Park Adams Heights Howard Morgan University
The DowntownDC Business Kalorama Improvement District had the Eckington following impact on Washington, Dupont Logan Circle Circle DC at the end of 2012: Georgetown Walter E. Shaw Washington Convention NoMa Gallaudet nn 1.3% of population Center University nn 2% of land area West End Mount Vernon CBD Triangle nn 7% of retail space George nn 29% of 1997-2012 building devel- Washington University DowntownDC opment and renovation investment White Foggy Bottom House BID nn 17% of local tax and other revenues Union Station nn 17% of museums nn 23% of theater seats NATIONAL MALL US Capitol Capitol Lincoln Washington Hill nn 15% of Zagat-rated restaurants Memorial Monument nn 25% of jobs Tidal Basin Hill nn 25% of Metrorail exits East Southwest Jefferson W nn 38% of total private and govern- a Waterfront Memorial sh in Capitol ment office space g to Riverfront n nn 35% of hotel rooms C Navy Yard h a Nationals Virginia East n n Ballpark Potomac e Park l P o t o m Poplar a c Point Anacostia Fort R iv McNair e r DowntownDC BID
Center City 0 N 1 MILE The fundamentals of the DowntownDC Business Improvement District (DowntownDC BID) area and DC economies are strong. 2012 was a solid year, even though the DowntownDC BID area experienced slight year performance declines in five out of the seven economic sectors covered in this report. The overall DC economy performed slightly better than the in review DowntownDC BID area economy. DC maintained its 24.1% market share of regional employment, and grew its market share of regional population to 10.9% from 10.8%.
(Thousands) (Thousands) DC Employment 726 732 DC Population 632 800 800 616 602 619 802 600 497 600 650 712 638 487
400 400 279
200 200
0 0 10009080706050 11 12 1900 10 20 30 40 50 60 70 80 90 00 10 11 12
Percent of DC Area Employment Percent of DC Area Population 100% (Region as defined by the Office of Management and Budget in 2003) 86% 80% 60% 56% 49% 47% 60% 40% 38% 40% 24.3% 12% 10.9% 24.0% 24.1% 20% 19% 20% 10.8%
0 0 10009080706050 11 12 1900 10 20 30 40 50 60 70 80 90 00 10 11 12
Sources: Bureau of Labor Statistics and Center for Regional Analysis at George Mason University Sources: US Census and the Center for Regional Analysis at George Mason University
The DowntownDC BID area and DC economies are more stable than those of other large American cities; they experience less of an economic decline in a recession but less growth in an expansion. As a result, the performance of several economic sectors in the DowntownDC BID area and DC declined in 2012 relative to several other large American cities as the national economic cycle continued to improve and the DC region experienced lower growth. The DowntownDC BID area and DC’s performance levels in the employment, office and hotel markets declined relative to New York City, Boston, Denver, Houston and San Francisco. DC, however, held its own in the market rate multi-family housing sector with strong apartment rents and occupancy, condominium pricing, and new building starts.
2 DowntownDC Business Improvement District • 2012 State of Downtown Year in Review
The DowntownDC BID area continues to be one of the city’s economic and fiscal engines, generating employment opportunities for all DC residents and generating a net fiscal impact of $690 million, or 17% of DC gross local revenues. Combined with the Golden Triangle BID area, Downtown generated a net fiscal impact of more than $1 billion dollars, or 25% of DC gross local revenues, which is equal to 125% of the DC non-charter public school budget.
The DowntownDC BID and DC continue to be highly ranked as an investment market by both domestic and foreign investors.
2012 Association of Foreign Investors in Real Estate Rankings
Top 5 U.S. Cities 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998
New York City 1 1 1 2 2 1 1 2 2 2 2 2 1 1 2 San Francisco 2 3 4 3 3 4 4 4 4 4 5 5 2 3 3 Washington DC 3 2 2 1 1 2 2 1 1 1 1 1 4 2 1 Houston 4 - - - 5 ------Boston 5 4 3 4 ------3 3 4 4 Los Angeles - 5 5 5 4 3 3 3 3 3 3 - - - - Seattle - - - - - 5 5 ------San Diego ------5 ------Chicago ------5 5 4 4 - 5 5 Miami/Ft Lauderdale ------5 ------Atlanta ------5 - 5
Top 5 Global Cities 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
New York City 1 1 1 3 3 1 2 3 4 4 4 2 London 2 2 3 1 2 2 1 1 2 2 2 1 San Francisco 3 5 ------Washington DC 4 3 2 2 1 2 4 2 1 1 1 3 Houston 5 ------Sao Paulo - 4 ------Paris - - 4 4 - 4 3 4 5 3 3 2 Shanghai - - 5 - 5 5 ------Tokyo - - - 5 4 - 5 5 3 - - 4 Los Angeles ------5 - -
Milan ------5 - Data for 2000, 1999 and 1998 Boston ------5 was not available.
The unknown impact of sequestration and future federal government action to reduce the federal deficit and slow the growth of federal debt is casting a long shadow over the DowntownDC BID area and DC economies. Due to these uncertainties, along with the significant regional increase in multi-family housing starts and the long-term trend of fewer square feet (SF) per office worker, an era of intense competition with Suburban Maryland and Northern Virginia is projected to last for several years.
The DowntownDC BID area and DC’s major competitive advantages remain: nnProximity to the federal government nnBest regional access to the regional workforce nnBest access to mass transit nnHigh quality culinary, cultural and entertainment amenities
3 major impacts
The following events in 2012 and the first quarter of 2013 are having a major impact on the DowntownDC BID area economy:
nn There was moderate job growth in the DowntownDC BID area. The DowntownDC BID area has a high concentration of professional and business services, which had slight growth. In DC, educational and health services jobs had the most growth in 2012. Because those jobs are located outside of the DowntownDC BID area, the rest of DC had a higher employment growth rate. Higher office-using job growth is required to revive the office market, which is responsible for 15% of the city’s gross local revenue. As of December 31, 2012, the number of new office jobs needed to restore office market equilibrium with a 9% vacancy rate in the DowntownDC BID area and DC is equal to several years of typical office- using job growth.
nn The city’s strong residential growth is fueling increased retail and restaurant demand. This residential growth is strongly supported by the large number of jobs in DC relative to the number of housing units: 732,000 jobs compared to 303,000 housing units.
nn Of particular concern is the decline in occupied office space between year-end 2011 and year-end 2012 (also known as negative absorption). The negative absorption in the DowntownDC BID area during this time was 547,000 square feet (SF), representing 97% of DC’s overall negative absorption of 567,000 SF. In addition, Suburban Maryland had negative The city unveiled its first-ever economic absorption of 250,000 SF and Northern Virginia had negative absorption development of 2.5 million SF. In the first quarter of 2013, DC had slight positive strategy in 2012. absorption, while Suburban Maryland and Northern Virginia had a combined 332,000 SF of negative absorption. Vacancy rates rose in all three markets.
New Office Workers Needed to Re-establish Office Market Equilibrium
40,000 Office Workers DC DowntownDC BID Area 35,800 workers at 150 SF per worker
30,000 20,600 21,500 workers at 250 SF per worker 20,000
22,700 9,000 workers at 150 SF per worker 10,000 2,500
1,600 5,400 workers at 250 SF per worker 0 1Q 4Q 4Q 4Q 4Q 2009 2009 2010 2011 2012
250 SF per worker Projected decline from 250 SF to 150 SF per worker (1)
Sources: Cushman and Wakefield and the DowntownDC BID (1) This push for efficiency accelerated after 2010.
4 DowntownDC Business Improvement District • 2012 State of Downtown nn2012 saw the unveiling of the city’s first-ever economic development Year in Review THE FIVE-YEAR strategy. Mayor Vincent C. Gray’s Five-Year Economic Development ECONOMIC DEVELOPMENT Strategy has five-year goals of 100,000 new jobs and $1 billion in STRATEGY cumulative new tax revenues. In particular, the following goals are FOR THE DISTRICT OF COLUMBIA important to the DowntownDC BID area:
nndiversifying the DC economy to be less reliant on the federal government, nnfunding the hiring of new professionals to retain and attract businesses to DC, nnforming industry councils to assure the city government is in close communication with DC businesses and organizations, nnfocusing on high technology companies that can grow and fill DowntownDC BID area office space, and
nnaddressing current retail leakage in specific sub-markets (downtown has A an estimated $900 million of annual excess retail demand over retail supply). nnBoth the states of Maryland and Virginia, and the Northern Virginia counties and towns have proposed raising taxes for the coming budget year. Some increases are tax rate increases to offset lower assessments, but others are increases for new revenue for transportation and other infrastructure such as an urban street grid and streetscape for Tysons. nnDC’s $417 million surplus in Fiscal Year (FY) 2012 solidified DC’s strong financial standing, and resulted in a rating upgrade, so that all the major rating agencies now rate DC general obligation bonds as AA bonds -- a far cry from the city’s junk bond credit ratings of the mid-1990s. The FY 2012 surplus was largely caused by the growth in individual and corporate income taxes and non-hotel sales taxes. nnThe city’s strong fiscal performance has enabled Mayor Gray to propose a robust FY 2014 budget titled “Investing for Tomorrow” that supports key investments in the neighborhoods, downtown and the rest of the Center City. These investments should assist downtown and DC in growing both job opportunities for all DC residents and the city’s tax base.
Revenue from individual and Massachusetts Court is an corporate income taxes grew the apartment building in the District’s revenue and contributed to DowntownDC BID area a $417 million revenue surplus. that has 371 units. 5 2012 downtown economy review
CityCenterDC Phase One is under With CenterCityDC Phase One well underway and the Capitol construction. Crossing project planning in the final stages, the DowntownDC BID area is nearing full build-out. Beyond CityCenterDC Phase One, only five million SF of development capacity remains on vacant land in the DowntownDC BID area. With limited raw land to develop, new development plans are starting to include a much higher percentage of (a) demolition of existing buildings and new construction, or (b) the adaptive reuse of existing buildings. In March 2013, 624 9th Street NW, the old YWCA building at the southwest corner of 9th and G streets, NW, was demolished to make way for a new and slightly larger building, 900 G Street. In May 2013, the old National Public Radio (NPR) building will be demolished to make way for the new home of the Arnold & Porter law firm. In the Golden Triangle BID, the old National Restaurant Association building has been demolished to build a new home for the Pillsbury Winthrop Shaw Pittman law firm. If the demand for office spaces continues to be sluggish, the DowntownDC BID area may see some older office buildings reborn as hotels, multi- family residential or retail. In addition, there are some signs that current additional education and healthcare users will take former office space in the DowntownDC BID area. development
DowntownDC BID area employment grew to 181,500, an increase of 2,200 since 2010. The rate of growth in the DowntownDC BID area has been steady and modest since 2008, a result of fewer new buildings coming online within the DowntownDC BID area, and the significant slowdown in office employment growth throughout the region. Other professional services, association/non-profit, leisure and hospitality and retail employment grew modestly in the DowntownDC BID area over the past two years, and government, The National legal services, information and publishing, and health services Association of employment declined modestly. The growth of employment Realtors owns and outside of the DowntownDC BID area, specifically in educational partially occupies its services and healthcare services, has outpaced that inside of the 90,000 SF building DowntownDC BID area, which provides a new potential tenant at 500 New Jersey Avenue, NW. base for downtown buildings. From a regional perspective, Northern Virginia recently lost a few corporate headquarters to other states as the entire DC metropolitan region becomes more expensive for both office space and housing relative to the rest of the country. employment
6 DowntownDC Business Improvement District • 2012 State of Downtown Year in Review The Homer Building, a 420,000 SF office building, sold for $754 The DC and the DowntownDC BID area office markets continue per SF in 2012. to be strong relative to the region and the nation, but both had significant negative absorption in 2012, with the DowntownDC BID area’s 547,000 SF representing 97% of DC’s overall negative absorption of 567,000 SF. Suburban Maryland and Northern Virginia had 250,000 and 2.5 million SF of negative absorption, respectively. While the DowntownDC BID area had 466,000 SF of vacant space created by the abrupt dissolution of two large law firms, Howrey LLP in 2011 and Dewey LeBeouf LLP in 2012, both spaces are being backfilled at a steady pace. Because many of the signed tenants will not move until 2013 or 2014, and the lack of lead time needed to market the space, there was negative absorption in both the DowntownDC BID area and DC for the first time since 2009. Additionally, the uncertainties around the federal leasing market caused by sequestration and the reduction in SF per office worker have resulted in a cautious market. In the first office quarter of 2013, DC had minimal positive absorption of 38,400 SF, but the DC vacancy rate rose to 13.2% from 13.0% as new market office space delivered that was not fully leased. Unfortunately, Suburban Maryland and Northern Virginia had negative absorption of 224,000 SF and 98,000 SF, respectively, and their vacancy rates rose to 19.1% and 19.5%, respectively.
Population growth in DC was strong in both 2011 and 2012, with much of that growth occurring within Central DC, but outside of the DowntownDC BID area. That growth is likely to continue, as there are 7,800 market rate units under construction as of March 2013 within Central DC. At the moment, DC has a 24% share of the region’s Class A multi-family construction, but only an 11% share of the regional population. The DowntownDC BID area’s strong apartment occupancy, rental rates and condo prices have supported the growth in multi-family housing around the DowntownDC BID area as downtown land has been priced by office users and, therefore, has been too expensive for multi- family development. Many analysts are concerned with the current historic level of apartment construction in the DC metropolitan region, so it is likely that new construction starts will slow over Farmers markets attract the next 12 months as the market pauses to watch how newly many residents and visitors delivered apartments lease-up. Despite concerns about an into Downtown. apartment market glut in DC, the significant imbalance in DC between employment and housing (732,000 jobs and 303,000 housing units) plus the desire to live near work, bode well for Central DC housing growth. Finally, given that affordable housing population is an important issue for both DC residents and employers, the & housing recent data showing an increase in income tax payers at all income levels of income in DC highlights the importance of new market rate housing to (a) bring in high income tax payers, and (b) relieve pressure on the existing affordable housing stock so that it remains affordable for as long as possible.
7 The Walter E. Washington Convention Center (Convention Center) increased attendance to 1.1 million in 2012 by diversifying its public events. However, hotel room nights generated by the Convention Center declined in 2012. The decline in city-wide conventions to 13 in 2012 from 22 in 2011 was a major factor in the decline in both DowntownDC BID area and DC hotel performance and revenues. While the DowntownDC BID area The USA Science & Engineering hotel revenues declined by 2.7% from 2011, they were still higher Festival was held at the Walter E. than any other year. Upon the completion of the Marriott Marquis Washington Convention Center in Convention Center Headquarters Hotel (Marriott Marquis) in May April 2012. 2014, the Convention Center will have enough meeting space to hold multiple conventions simultaneously, and the number of conventions is expected to increase. Attendance at the National hotels, tourism Mall museums, memorials and monuments increased slightly in 2012. & conventions
The Verizon Center had 2.3 million visitors in 2012. The NHL lock-out reduced Verizon Center attendance by close to 500,000, but increases in attendance of other events offset most of those losses so that the Verizon Center’s attendance dropped only 200,000 to 2.3 million in 2012. The DowntownDC BID area theaters, museums and cinemas continue to bring millions of visitors to Downtown, but had a net decline of 100,000 in 2012 to 6.9 million visitors from 7 million. Thus, overall, the number of DowntownDC BID area culture and entertainment visitors declined by 300,000 in 2012 to 9.2 million. A highlight for 2012 was that the National Theatre signed a new management contract that is expected to increase its attendance substantially in 2013 and culture & beyond. entertainment
The DowntownDC BID area gained two significant shoppers goods retailers in 2012: J.Crew and TJ Maxx. In March 2013, the retail vacancy rate was 9.7%. The announcement of the shoppers goods retail in Phase One of CityCenterDC is expected by mid- Spring 2013. The development is expected to bring exciting new retail to the DowntownDC BID area. If CityCenterDC Phase One’s 185,000 SF of retail can become a regional attraction, it will have a ripple effect on sales for other DowntownDC BID area retailers, DowntownDC BID area hotel weekend occupancy and Retailer TJ Maxx DC employment. While the total number of restaurants open at opened in 2012. the end of 2012 was slightly down from that in 2011, 136 from 138, there were nine restaurants under construction/in development at the end of 2012, so that this decrease is expected to be eliminated retail in 2013 as those nine restaurants open. & restaurants
8 DowntownDC Business Improvement District • 2012 State of Downtown Year in Review WMATA is investing $5 billion in Metrorail improvements to enhance the system's performance and capacity.
Transportation options to and within the DowntownDC BID area continue to be some of the best in the nation. Metrorail ridership has slightly declined since 2009, likely a result of ongoing capital improvements that disrupt service predictability (particularly on the weekends), and an increase in alternative forms of transportation (DC is the leading bike sharing city in the U.S. as of April 2013).
transportation
DowntownDC BID area commercial property tax revenues significantly contribute to DC tax revenues. DC had its 16th consecutive budget surplus in the fiscal year ending September 30, 2012. The surplus for FY 2012 was $417 million. Standard & Poor's recent upgrade of DC's general obligation bonds to AA reflects the strength of DC's finances. Commercial property tax revenues have grown from 12% of total local tax revenues in FY 2000 to 19% in FY 2012. While this is lower than the peak of 23% in FY 2010, commercial property taxes are a significant source of revenue for the city.
dc financial overview
The flagship Walgreens at 7th and H streets, NW, opened in early 2013 and will serve area workers, residents and visitors. 9 The renovation of the Old Post Office will generate $12 million in annual taxes.
The DowntownDC BID area is a major fiscal engine of DC, providing an estimated net fiscal impact of $690 million in FY 2013. This fiscal impact grows to $1 billion with the addition of the Golden Triangle BID area. Phase One of CityCenterDC will bring an additional $30 million in property, sales and income taxes to the DC treasury. The Marriott Marquis will bring another $21 million per year. And, the Old Post Office Pavilion (Old Post Office) renovation will bring an additional $12 million per year.
downtown fiscal impact
The Marriott Marquis Convention Center Headquarters Hotel is under construction.
733 10th Street, NW, sold for $140 million in 2012, leading to more than $4 million in Deed and Recordation taxes for DC.
Downtown’s Net Fiscal Impact, FY 2013
DowntownDC BID Area In Millions DC Local Tax and Other Revenues $1,085 Estimated Fiscal Costs –394 Net Fiscal Impact $690 Downtown is the Fiscal Engine Of DC Golden Triangle BID Area DC Local Tax and Other Revenues $527 4 Estimated Fiscal Costs –190 NW Net Fiscal Impact $337 3 1 5 2 Total Downtown Area NE DC Local Tax and Other Revenues $1,612 6 7 Estimated Fiscal Costs –585 Downtown Net Fiscal Impact $1,027 generates a 8 $1,027 million net fiscal SE Downtown Revenue Share of SW Total DC Gross Local Revenue of 25% budget benefit # Ward Numbers $6.48 billion in FY 2013 per year for Ward Boundaries
Washington, DC Quadrants Source: DowntownDC BID
10 DowntownDC Business Improvement District • 2012 State of Downtown Year in Review
In 2012, two major office moves out of DC were announced: Intelsat is moving to Tysons in 2014 and leasing 188,000 SF, and the law/lobbying firm of Patton Boggs is moving its 18,000 SF back office in 2013 to Tysons as well. Combined, these moves are a bit above the 2009 – 2012 average outflow of 80,000 SF per year.
Regional competition is expected to increase as Intelsat is moving nndensification of office space continues omfr both federal and private from its current office users, location in the District nnsequestration and federal budget and debt pressures reduce the to Tysons in 2014. federal work force modestly, nnthe multi-family housing market sorts out where the 2013 and 2014 demand will occur, and nnjurisdictions invest in transit, urban street grids and placemaking to regional attract both office jobs and multi-family housing. competition In particular, two events in Northern Virginia are of great concern: nnMetrorail to Tysons will open in December of 2013 or the first few months of 2014; and nnthe full effects of the Base Realignment and Closure Act (BRAC) of 2005 are just now being felt in Northern Virginia, which will total 3 million to 4 million SF of negative office absorption.
Finally, it is important to note that many of the transit, urban street grid and placemaking investments are being paid for through nnspecial assessments taxing districts, nntax increment financing , and/or nnan increase in real estate and sales tax rates.
In the short run, these tax increases slightly reduce the cost disadvantage faced by the DowntownDC BID area and DC.
Regional Commercial Real Property Tax Rate Comparison, (1) CoStar moved into Fiscal Year 2014 (Proposed as of March 2013) the DowntownDC BID area from 2.0% Bethesda in 2010. 1.882%
1.5% 1.550% 1.487% 1.474%
1.269% 1.191% 1.224% 1.0% 1.053%
0.5%
0.0 (2) Down- Alexandria Crystal City Rosslyn Tysons Reston Bethesda Silver Spring townDC BID ARLINGTON FAIRFAX MONTGOMERY Virginia Maryland
(1) Includes base tax rate plus BID taxes, stormwater fees/taxes, the Silver Line (2) First $3 million of assessed special assement and tax district, and Arlington and Fairfax transportation taxes. value is taxed at 1.65%.
Sources : DC Mayor's Budget, Virginia Department of Planning and Budget and Maryland Department of Budget and Management
11 concerns
nnSequestration and Federal Budget Pressures: Federal jobs have accounted for between 28% and 30% of all DC jobs over the past 10 years, peaking at 30% in 2010 after the Stimulus and then decreasing to 28% in 2012. To house these federal workers, GSA has approximately 33 million SF of owned space in DC and leases approximately 22 million SF in privately owned buildings in DC, or 19% of all private space. Sequestration and budget pressure could decrease both the number of workers and the amount of leased space as federal workers are consolidated into government-owned space within DC and the region. The resulting vacancies could decrease rental rates and therefore property assessment values, decreasing the $900 million to $1 billion in annual commercial property taxes, as well as taxes from future developments that could be delayed.
nnDensification: Owners and tenants, government and private alike, are finding new ways to maximize the use of their office space and increase the number of workers within their space. The drop in SF per worker is facilitated by both fundamental changes in space needs and new work habits. Back-office space is moving off-site and libraries are shrinking as they have been/are being digitized for on-site access. Flexible hours, teleworking and out-of-office meetings mean that there are fewer workers at their desks during the day. The result is that hoteling, or sharing of unassigned workstations, is becoming more common. Offices may no longer have a one-to-one ratio of workspaces or offices to employees. Additionally, many new workstations are modular and can be easily adjusted for changing space needs. The investments made to renovate and reconfigure space are cost-saving measures further incentivized by high real estate costs. Estimates of the decline in SF per office worker range from an average of 180 to 200 SF per employee today to 160 to 170 SF in the future, or 5% to 15%. With all else held constant, in a private office market of 107 million SF, this would result in negative absorption of several million SF over ten years. Much of this could be offset by tenant growth of 1% to 2% per year. But, this is clearly a new world for office building owners.
nnJob Retention and Attraction: Because of both densification and the possible decrease in federal government leased space, more workers will be needed to fill office buildings downtown and in DC. Retaining current tenants and attracting new tenants will be critical to ensure the strength of the office market and fiscal health of DC. To do so, outreach to current and likely tenants is necessary to be aware of and work toward solutions to their concerns.
nnRegional Competition: Historically, DC has competed with Suburban Maryland and Northern Virginia on cost. However, these suburbs are responding to the challenges of lower tenant demand for suburban-style office parks and, Regional Commercial Income Tax Rates, Fiscal Year 2014 specifically, the vacancies left by (Proposed as of March 2013) BRAC, with capital investments 10% in transportation, placemaking 9.975% and amenities. To fund these amenities and maintain a high 8% 8.25%8.25% level of government service, suburban taxes are rising. Once 6% 6.0% 6.0% 6.0% these investments are made,
the suburban markets will also 4% be able to better compete with downtown’s amenity base. Thus, 2% in the near future the regional competition faced by DC will be 0 both cost and amenity competition DC Alexandria Arlington Fairfax Montgomery Prince George’s as opposed to yesterday’s cost- Virginia Maryland only competition. Sources : DC Mayor's Budget, Virginia Department of Planning and Budget and Maryland Department of Budget and Management
12 DowntownDC Business Improvement District • 2012 State of Downtown nnFunding Research: Year in Review Government leaders, investors, owners, tenants and other decision makers in DC, the region and beyond require impartial and comprehensive data and information to make educated decisions. DC does not yet have a single source for that data, but rather many organizations that produce a wide array of information. A single, comprehensive publication would be a valuable asset for decision makers.
nnFunding Infrastructure and Development Investments: Mobility and access to jobs, housing and amenities are key to the DowntownDC BID area, Center City and DC’s current and continued success. As more people occupy the existing space due to densification and underutilized buildings are repositioned to accommodate more workers and residents, investments must be made to assure the creation of net new demand. For the DowntownDC BID area, the key investments to be made over the next few years are in nnMetrorail, nnStreetcar, nnDowntown parks and public spaces, and nnDowntown retail.
McDermott’s recently renovated space at 500 N. Capitol Street, NW, has modernized attorney offices, with less In 2012, the District Department of space for filing and a desk that can be Transportation continued work to used either seated or standing. bring streetcars back to DC.
conclusion
The DowntownDC BID area and DC have solid economic foundations. Both economies will be faced with many opportunities and many challenges over the next few years. Continuously monitoring the economy -- and the impact the trends highlighted in this report are having -- is critical to adjusting both the city’s economic development and investment strategies. A strong economic development strategy, a robust investment program and phased and contingent moderate commercial property and business tax rate reduction should allow DC to maintain and grow the city’s employment and tax base. The trend of densification in all the regional office markets should lead, over time, to more people and activity in the DowntownDC BID area and DC. Thus, it is critical that the city and its partners intelligently (i) manage the process of turning potential excess office space into occupied office or other space, and (ii) build, maintain and manage a high quality public realm, so that the DowntownDC BID area and DC continue to be attractive to organizations, businesses and residents in the years to come.
13 The DowntownDC BID area is nearing full build out, with only a few large vacant or redevelopment sites with a total of 5 million SF of development capacity remaining, or 6% of existing built and under construction space.
In 2012, seven projects totaling $170 million were completed in the DowntownDC BID area. The two largest projects completed were the Cato Institute’s joint 35,000 SF renovation and 41,000 SF addition on what had been a surface parking lot, and New York University’s new building, the Constance Milstein and Family Global Academic Center, at current 1307 L Street, NW.
development The value of projects under construction in 2012 nearly equaled that of 2006. And as the downtown moves closer to full build out, more buildings will undergo gut renovations or be demolished and replaced, as is the case at 900 G Street, NW and 601 Massachusetts Avenue, NW.
DowntownDC BID Area Projects Completed, 1997-2014 (1) (Billions of $)
$15 $12.5 $11.9 $10.9 $11.0 $12 $10.4 $10.6 $9.6 $8.7 $9 $7.6 $6.7 $6.1 $6 $4.9
$3 $3.3 $2.4 PROJECTION $1.6 $1.9 $1.2 0 $0.4
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (2) By year $0.4 $0.8 $0.4 $0.3 $0.5 $0.9 $1.6 $1.1 $0.7 $0.8 $1.1 $0.9 $0.8 $0.2 $0.3 $0.2 $0.9 $0.6
NUMBER OF PROJECTS COMPLETED PROJECTION 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (2) Total 6918 25 35 51 64 82 98 110 124 139 154 159 166 173 180 182 By year 639710 16 13 18 16 12 14 15 15 57772
Source: DowntownDC BID (1) Numbers may not add up due to rounding. (2) Includes the Marriott Marquis Convention Center Headquarters Hotel.
Total Value of DowntownDC BID Area Projects Under Construction, 1994-2014 (1) (Billions of $) $3.0
$2.5 $1.9
$2.0 $1.2 $1.5
$1.0
PROJECTION $0.5
$0.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Value (Billions of $) $0.3 $0.5 $0.9 $0.8 $1.3 $1.5 $2.1 $2.4 $3.0 $2.0 $1.9 $1.9 $2.2 $1.5 $1.0 $0.2 $1.2 $1.8 $1.9 $1.2 $1.2
# of projects 157121620242725312723211916414 17 12 910
Source: DowntownDC BID (1) Includes the Marriott Marquis Convention Center Headquarters Hotel.
14 DowntownDC Business Improvement District • 2012 State of Downtown Current Development
DowntownDC BID Area Surface Parking Lots and Redevelopment Sites, 1997 and March 2013
N ST. g School Existing and Occupied
Thomas 6TH ST. 5TH ST. Buildings in 1997 12TH ST. 11TH ST. 10TH ST. Circle M ST. Walter E. NEW YORK AVE. Washington Development Since 1997 on: Convention Surface Redevelopment Center L ST. Parking Lots Sites NEW JERSEY AVE. L S T. 395 Remaining Development sites on: VERMONT AVE. 13TH ST. K S T. Mt. Vernon K S T. Surface Redevelopment Square McPherson Franklin Parking Lots Sites Square Square EYE ST. EYE ST. Metro Source: DowntownDC BID CityCenterDC NEW YORK AVE.(Coming) H ST. H ST. 0 N 1000
ette 15TH ST. FEET are General G PLACE Accounting Office G ST. Verizon G ST.
Portrait Center NEW JERSEY AVE. Gallery ite F ST. 3RD ST. use
E ST. E ST. 13TH ST. FBI 2ND ST. 11TH ST. 10TH ST. 6TH ST. 5TH ST.
PENNSYLVANIA AVE. D ST. 1ST ST. Ronald 7TH ST. Dept. lipse Reagan INDIANA AVE. of Labor Buiding C ST. 9TH ST. TION AVE.
The following planned projects will complete the build out of the DowntownDC BID area: nnNPR’s former home at 601 Massachusetts Avenue, NW, will be demolished starting in May 2013 to make way for a new 479,000 SF building being developed by Boston Properties. The new building will house the Arnold & Porter law firm and replace two existing buildings and a surface parking lot. nnThe Old Post Office, a federally-owned office andetail r building, will be renovated into an upscale hotel with 250 to 300 rooms by the Trump Hotel Collection. nnConstruction will begin on Phase Two of CityCenterDC, which will have 350 hotel rooms and 110,000 SF of retail, in late 2014, with completion approximately two years later. nnDouglas Development has two planned projects: nn1000 F Street, NW, will be redeveloped from a two-story retail building into an 80,000 SF office building. nnAn addition behind and on top of 915 F Street, NW, the Equitable Building. nnThe 2.2 million SF Capitol Crossing project includes decking over I-395 between E Street and Massachusetts Avenue, NW, by Property Group Partners. This exciting project creates new land downtown by building over the highway and will bring additional density and vitality to the DowntownDC BID area. nnGould Properties has two major office building sites: 620,000 SF at 900 New York Avenue, NW, (Phase Three of the CityCenterDC project), and 400,000 SF at 600 Massachusetts Avenue, NW. nnThe Franklin School, a former school owned by the DC government, has been vacant since 2008. In April 2013, the city released a Request for Qualifications that will lead to the renovation and repurposing of the historic building overlooking Franklin Square, thus making it a valuable addition to the DowntownDC BID area. nnThe Martin Luther King Jr. Memorial Library, the city’s central library, is scheduled for redevelopment in 2016 and 2017, with the likely addition of two new floors that will help fund the library’s redevelopment. nnThe GSA has received 35 responses to its offer to swap the J. Edgar Hoover Building at 900 Pennsylvania Avenue, NW, with a private developer, who would build a new FBI headquarters building anywhere in the DC region to house more than 10,000 Federal Bureau of Investigation (FBI) employees. The redeveloped downtown site would be an exciting opportunity to add activity and vibrancy to this inactive stretch of Pennsylvania Avenue.
Many of these planned opportunities will involve continued public and private sector cooperation and innovation.
15 CityCenterDC is the capstone project of the DowntownDC BID area and is the result of a land subsidy provided by the city in exchange for affordable housing units and a greater mix of uses.
CityCenterDC Project Summary Source: DowntownDC BID
Use Phase One Phase Two Phase Three Total Investment $700 million $140 million $200 million $1,040 million Office 520,000 SF – 560,000 SF 1,080,000 SF Hotel – 350 Rooms – 350 Rooms Retail 185,000 SF 110,000 SF 40,000 SF 335,000 SF Apartment 458 Units – – 458 Units Condominium 216 Units – – 216 Units Retail/Public Parking 525 Spaces 225 Spaces 0 Spaces 750 Spaces Office/Residential Parking 1,045 Spaces 110 Spaces 330 Spaces 1,485 Spaces Groundbreaking Date April 4, 2011 1Q 2014 Not Established NA Completion Date 3Q 2013 Office 4Q 2015/ Not Established NA 4Q 2013 Retail/ 1Q 2016 Phase One of Residential CityCenterDC is nearly Developer Hines Hines Gould Property completed.
As previously mentioned, the $1.3 billion Capitol Crossing project will build over the I-395 highway. It is important to note that this project will reconnect the traditional downtown with the Capitol Hill North sub-market, Union Station and the NoMa BID area.
Capitol Crossing Project Summary (I-395 Air Rights) Platform North Block Center Block South Block Total
Use $300 million $430 million $170 million $350 million $1,250 million Office - 888,250 GSF 276,688 GSF 698,062 GSF 1,863,000 GSF Retail - 22,064 GSF 20,623 GSF 20,000 GSF 62,687 GSF Residential - - 150 Apts - 150 Apts Holy Rosary Church & Casa Italiana (1) - - 22,954 GSF 50,214 GSF 73,168 GSF Parking - 1,146 spaces - - 1,146 spaces Groundbreaking Date 2013 2014 2016 + 2016 + - Capitol Crossing will Completion Date 2016 2016 2018 + 2018 + - deck over the I-395 highway. Source: DowntownDC BID (1) Entails moving existing buildings and constructing new space.
Capitol Crossing will reconnect the traditional downtown with the Capitol Hill North sub-market.
16 DowntownDC Business Improvement District • 2012 State of Downtown Current Development
Marriott Marquis Convention Center Headquarters Hotel Overview
$550 million project 1,175 rooms 128,000 SF Ballroom/Meeting Space Six restaurants/bars 779 seats total 31,000 SF of retail A rendering of the completed 400 parking spaces Marriott Marquis Convention 1.3 million gross SF Center hotel. 83,000 SF parcel of land Underground walkway to Convention Center Bordering the DowntownDC BID area, the Marriott Marquis is under 14 floors construction and, once completed, will add 1,175 hotel rooms to Groundbreaking date: Nov. 10, 2010 Downtown. Upon opening in May 2014, the Marriott Marquis will not only Projected completion date: 2014 provide enough supplementary meeting space to host multiple conventions Source: DowntownDC BID simultaneously at the Convention Center, but it will employ approximately 800 workers and generate $21 million in annual taxes.
Old Post Office Project Summary
$200 Million Project
375,000 SF Renovation
250-300 Hotel Rooms
Plans include restaurants, banquet, ballroom and meeting facilities, the Spa at Trump®, a library, a curated museum, an exhibition gallery, and indoor and outdoor gardens A rendering of the Trump International Hotel. Groundbreaking: 2014
Completion: 2016
Developer Partner for GSA: The GSA selected the Trump Hotel Collection to redevelop the Old Post Trump Hotel Collection Office in February of 2012. The project will activate the south side of Source: DowntownDC BID Pennsylvania Avenue and generate $12 million in annual tax revenue.
LIGHTWELL PENTHOUSE & NEW SCREEN BEYOND LEVELS Martin Luther King Jr. NEW
Library Project Summary LEVELS 6 6 TENANT $200-350 Million Project 5 5 LEVELS 440,000 GSF renovation 4 4 LIBRARY Possible 100,000 GSF Addition LEVELS 3 3
225,000 GSF Library 2 2 LIBRARY GREAT TENANT LOBBY 1 G PLACE LOBBY HALL 215,000-315,000 GSF Other Use G STREET 1
Groundbreaking: 2015-2017 A A Completion: 2017-2019 PARKING B B Developer Partner for DC: TBD LIBRARY NON-LIBRARY USE Source: DowntownDC BID
Mayor Gray’s FY 2014 proposed budget has $103 million designated toward planning and renovating the Martin Luther King Jr. Library ($50 million in 2016 and $50 million in 2017). Because the 40-year-old library needs between $200 and $250 million in renovations, a private partner will most likely be engaged to provide additional funding. This option was proposed by an Urban Land Institute (ULI) panel, which reviewed and assessed the library’s value in November 2011.
17 Largest Development Projects in DowntownDC BID Area Since 1990 Size 2012 $ SF Date of Project Name (Millions) (Thousands) Completion
1. Ronald Reagan Building and International Trade Center $1,448 2,200 1998 2. Walter E. Washington Convention Center 1,256 2,300 2003 3. CityCenterDC Phase One 700 1,300 2013 4. Verizon Center 593 560 1997 5. Marriott Marquis Convention Center Headquarters Hotel (1) 520 980 2014 6. Newseum 486 497 2008 7. National Portrait Gallery and Smithsonian American Art Museum 379 380 2006 8. Gallery Place (Office, Housing, Entertainment and Retail) 368 715 2004/5 9. Terrell Place (575 7th St, NW) 236 476 2003 10. 1101 New York Avenue, NW 205 390 2007
Largest Development Projects in DC Since 1990 Located in the DowntownDC BID area.
1. Ronald Reagan Building and International Trade Center $1,448 2,200 1998 2. Walter E. Washington Convention Center 1,256 2,300 2003 3. Capitol Visitors Center and Expansion 718 580 2008 4. Nationals Park 707 NA 2008 5. CityCenterDC Phase One 700 1,300 2013 6. Constitution Square Phase One (Office, Hotel, Apartments and Retail) 630 1,600 2010 7. Verizon Center 593 560 1997 8. Marriott Marquis Convention Center Headquarters Hotel (1) 520 980 2014 9. Newseum 486 497 2008 10. Coast Guard Headquarters at St. Elizabeths West Campus 450 1,180 2014
Source: DowntownDC BID (1) Included in the DowntownDC BID area for this table's purposes.
Six of the city’s 10 largest development projects since 1990 have occurred within the DowntownDC BID area. The second largest project located within both DC and the DowntownDC BID area was the Convention Center, which was completed in 2003.
Because there is only five million SF of development capacity remaining in the DowntownDC BID area, most of the future growth and large development projects will occur elsewhere in the Center City (which includes NoMa, the Capitol Riverfront, the Southwest Waterfront, Poplar Point and St. Elizabeths), and the outer city neighborhoods. The value of projects completed in the DowntownDC BID area from 1997 to 2012 accounted for 29% of total DC development values, but only 8% of the planned projects—46% of the planned projects will occur in the rest of the Center City.
DC Development Overview: Past, Present and Future, March 2013
Completed Projects Under 1997–2012 Construction Planned Billions Share of DC Billions Share of DC Billions Share of DC DowntownDC BID (1) $11.0 29% $1.9 19% $3.5 8% Rest of Center City 15.1 40% 3.7 38% 19.5 46% Rest of Central DC (2) 6.1 16% 1.3 13% 4.0 9% Rest of DC 6.0 16% 3.0 30% 15.3 36% Total DC $38.2 100% $9.9 100% $42.3 100% Share of All Development 42% 11% 47%
(1) Includes the Marriott Marquis Convention Center Headquarters Hotel. (2) Central DC includes the area to the north of Center City bounded to the west, north and east by the Potomac, Georgetown, Columbia Source: Washington DC Economic Partnership and the DowntownDC BID Heights, 20th Street and Benning Road NE, Hill East and the Anacostia.
18 DowntownDC Business Improvement District • 2012 State of Downtown Current Development
Development Use Overview for DowntownDC BID Area, 1997-2018 (1)
Under Construction Completed 1997-2012 at 12/31/12 (2) Planned % of SF % of SF % of SF Total Development # By Use # By Use # By Use Number of Projects 173 projects 12 projects 24 projects Dollar Value $11.0 billion $1.9 billion $3.5 billion Square Feet 34.7 mil SF 100% 4.7 mil SF 100% 7.4 mil SF 100%
New Projects – Square Feet 24.2 mil SF 70% 2.6 mil SF 56% 4.5 mil SF 61% Renovated Projects – Square Feet 10.5 mil SF 30% 2.1 mil SF 44% 2.9 mil SF 39%
Private Office Space – New 11.3 mil SF 33% 0.5 mil SF 10% 2.7 mil SF 37% Private Office Space – Renovated 4.8 mil SF 14% 0.6 mil SF 13% 0.5 mil SF 7%
Residential Units – New 3,506 units 674 units 370 units 3.7 SF 11% 0.8 SF 17% 0.4 SF 5% Residential Units – Renovated 40 units 385 units 0 units 0 SF 0% 0.2 SF 4% 0 SF 0%
Hotel Rooms – New 992 rooms 1,175 rooms 660 rooms 0.6 SF 2% 0.8 SF 18% 0.3 SF 4% Hotel Rooms – Renovated 4,329 rooms 807 rooms 0 rooms 2.4 SF 7% 0.6 SF 12% 0 SF 0%
Convention Center (3) 2.3 mil SF (3) 7% 0 mil SF 0% 0 mil SF 0%
Arts, Entertainment and Museums – New 0.8 mil SF 2% 0 mil SF 0% 0 mil SF 0% Theaters 1,264 seats – 0 seats – 0 seats – Cinemas 23 screens – 0 screens – 0 screens –
Arts, Entertainment and Museums – Renovated 0.4 SF 1% 0 SF 0% 0 SF 0%
Retail 1.6 mil SF 5% 0.3 mil SF 6% 0.3 mil SF 4%
Federal and City Projects – New 2.9 mil SF 8% 0.1 mil SF 2% 0.1 mil SF 2% Office 2.8 mil SF 8% 0 mil SF 0% 0 mil SF 0% Other 0.1 mil SF 0% 0.1 mil SF 2% 0.1 mil SF 2%
Federal and City Projects – Renovated 3.0 mil SF 9% 0.7 mil SF 16% 1.8 mil SF 25% Office 1.6 mil SF 5% 0.7 mil SF 16% 1.3 mil SF 17% Other 1.4 mil SF 4% 0 mil SF 0% 0.6 mil SF 8%
To Be Determined NA NA NA NA 1.0 14%
Other 0.7 mil SF 2% 0.1 mil SF 2% 0.2 mil SF 2%
(1) Numbers may not add due to rounding. (2) Includes the Marriott Marquis Convention Center Headquarters Hotel and Capitol Crossing. (3) Including 703,000 SF exhibit space; 150,000 SF meeting space; 40,000 SF registration space; 2,650 SF of office and a 52,000 SF ballroom.
Source: DowntownDC BID
Among the planned projects within the BID area is 600 Massachusetts, a Gould Property Company development. The office building will total 400,000 SF and is designed to blend into the existing rowhouses.
Walter E. Washington Convention Center under construction in 2002 19 (1) The Herbert Federal Projects in DowntownDC BID Area and DC, 1998–2021 (Millions of $) Hoover Building DowntownDC BID Area $3,077 is undergoing $3,000 Cumulative total value of federal projects extensive Value of GSA projects by year $2,414 renovations. $2,500 Value of Non-GSA projects by year
$2,000
$1,500 $2,042
$1,000
$500
0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Under Planned GSA Funding as Construction a Total of 100% 100% Federal Funding 53% 45% 20% 100% 0% 100% 93%
Total GSA Projects are 70% of Total Federal Projects To Date. $11,920
$12,000 Rest of DC Cumulative total value of federal projects Value of GSA projects by year $9,000 Value of Non-GSA projects by year $4,994
$6,000 $3,491
$3,000
0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Under Planned Construction GSA Funding as a Total of Federal Funding 88% 10%12% 96% 14% 100% 29%20%0% 87% 69%
Total GSA Projects are 33% of Total Federal Projects To Date.
(1) Includes GSA, Smithsonian, National Park Service, Architect of the Capitol and Supreme Court.
Sources: Washington DC Economic Partnership and the DowntownDC BID
Since 1998, including projects currently under construction, the federal government -- largely driven by GSA investments -- has constructed new buildings or renovated existing buildings totaling $2.4 billion in the DowntownDC BID area and nearly $5 billion in the rest of DC. These projects include everything from facility security improvements to energy retrofits to new office buildings, museums and public spaces. The renovations and new projects funded by the federal government have improved the quality of the buildings and the space in the DowntownDC BID area and DC.
The Moultrie Courthouse is undergoing a renovation and addition that includes federal funding.
20 DowntownDC Business Improvement District • 2012 State of Downtown Current Development green buildings
The DowntownDC BID has 42 LEED certified existing buildings, or 39% of DC’s total, with another 32 registered to be certified. Most existing buildings require financial investment to achieve the energy efficiencies required for higher LEED certification. These investments are usually done in conjunction with renovations to maximize return and minimize disruptions.
While new construction and major renovations in the DowntownDC BID area are required by the Green Building Act of 2006 to be built to achieve LEED Certified, the most basic level of certification, the market is seeing the majority of properties certify at the Gold or Platinum levels. DowntownDC BID area tenants are also renovating spaces and evolving workplace habits to be more energy efficient for both cost savings and environmental reasons. There are 32 commercial interior spaces with LEED certifications totaling nearly 1 million gross SF.
The DowntownDC BID area’s two largest projects have significant energy saving components. CityCenterDC has received a Gold certification for LEED® Neighborhood Development (ND) in the U.S. Green Building Council’s (USGBC) pilot ND program. The office buildings at CityCenterDC have achieved LEED pre-certification at the Gold level and its residential buildings are targeting a LEED Silver rating. Capitol Crossing will be the first USGBC LEED Platinum-certified, urban air rights development in the United States. The development will have advanced systems and technology and an on-site cogeneration plant that could also serve surrounding facilities.
LEED Registered And Certified Projects in the DowntownDC BID Area, 2003–2012 (1)
Bars represent number of Lines represent cumulative total number (2) Dotted lines represent cumulative total registered projects each year. of registered projects in each category. number of certified projects in each category.
7575 Existing 5075 Core & 75 New 75 Commercial Buildings Shell Construction Interiors 60
6060 73 4060 60 60 42 4545 3045 45 45 32 21
3030 2030 30 30 11 1515 1015 7 15 15
00 00 0 0 03 04 05 06 07 08 09 10 11 12 03 04 05 06 07 08 09 10 11 12 03 04 05 06 07 08 09 10 11 12 03 04 05 06 07 08 09 10 11 12
000000411 10 17 0 0000142000010000001 0012325847
Total number of projects certified in each category. (1) There is a 12 to 36 month lag from registering a project and receiving certification. Sources: U.S. Green Building Council and the DowntownDC BID (2) Includes those projects that have been certified.
In February 2013, DC released its Sustainable DC plan, which contains 32 goals for sustainability. As part of this initiative, DC has awarded $4.5 million to DC agencies, including funds to plan or construct agency-specific green projects. One project will be a structural assessment survey of existing District-owned buildings. A plan for the city’s first “Living Building,” as part of the international Living Building Challenge, will apply the most ambitious green- building standards in the world.
21 employment
Employment in the DowntownDC BID area grew by 2,200, or 1.2% in 2011 and 2012. The increase was slightly larger than that from 2008 to 2010, which was 1,600 jobs, or 0.9%. Annual employment growth within the DowntownDC BID area has averaged 1,100 jobs since 2006. Over the past two years, other professional services, association/non-profit, leisure and hospitality and retail employment grew modestly. Government, legal service, information and publishing, and health services employment declined modestly.
The number of jobs in DC increased by 5,600, or just shy of 1%, in 2012; and by 14,100, or 2%, in 2011—a total of 19,700 over two years, or 2.8%, as job growth was greater in the rest of DC than in the DowntownDC BID area. Federal government employment in DC declined as the Federal Stimulus ended and talks of budget cuts began. Growth in DC private sector employment more than offset the decline in federal employment as professional and business services, excluding legal services, food service, construction, health services and non-profits/associations all had modest increases.
The city’s unemployment rate dropped significantly in 2012, and the number of unemployed residents dropped by 2,900. The city has made a major effort, through its One City One Hire program, to reduce DC unemployment.
Also, the city saw a significant increase in the number of employed DC residents—both from people coming off the unemployment rolls and those with jobs who moved into the city. (In 2010, the most recent data available, 28% of employed DC residents had jobs outside of DC).
Since 2010, the DowntownDC BID area has accounted for 11% of DC’s increase in jobs. Between 2006 and 2010, the growth in DowntownDC BID area jobs accounted for 22% of DC’s job growth. As the DowntownDC BID area becomes built out, the areas with opportunities for the largest employment growth DowntownDC BID Area Employment 189 will move out to the Center (Thousands) 182 City. The number of jobs in 200 Center City increased by 7,700 from 2010 to 2012, and accounted for 38% of the job 150 174 178 179 growth in DC over that time 162 period. 100 136 118 Overall, 25% of the jobs PROJECTION in DC are located in the 50 DowntownDC BID area.
0 96 01 03 06 08 10 11 12 13 14 15 16 17
Years analyzed by Center for Regional Analysis at George Mason University
Sources: Center for Regional Analysis at George Mason University for 1996, 2001, 2003, 2006, 2008, 2010 and 2012. DowntownDC BID for 2013-2017.
22 DowntownDC Business Improvement District • 2012 State of Downtown Employment Unemployment Rate for DC, Region and Nation, 1990–2012 Despite decreases in the unemployment rate, the (As measured in December; not seasonally adjusted) number of unemployed DC residents has remained 12% DC Regional (1) National stubbornly high. The rate decreased to 8.6% in 10.5% December 2012, from 9.5% in December 2011. While the decrease is a positive trend, the unemployment 10% 9.7% 8.6% rate is still higher than the lowest unemployment rate of 5.5% that occurred in 2007. This relatively high 6.6% unemployment rate is consistent with the region and nation. 8% 5.9% 5.5% 7.6% The number of unemployed residents has averaged above 32,000 since 2009, which is 9,000 to 15,000 6% higher than the number of unemployed residents over 6.0% 3.7% 4.6% the period 2000 to 2008. This is partially because, 6.4% 5.2% as there are more DC residents, the natural churn will 4% increase the number of unemployed, and partially 3.9% because of a skills mismatch between existing jobs and residents. As the growth in resident-serving subsectors, 2% 2.9% like food service, educational services, and health 2.4% services, increases and construction jobs continue to return, there is an opportunity to take advantage of the 0% churn to fill those jobs with DC residents. The city’s 90 92 94 96 98 00 02 04 06 08 10 12 One City One Hire program is designed to do this.
2009 2010 2011 2012 There are twice as many jobs in DC as there are DC 10.5% 9.6% 9.5% 8.6% employed or unemployed residents. Some residents Region 6.4% 5.8% 5.4% 5.2% hold jobs outside of DC, and as transit options improve, DC residents will have more access to regional job Nation 9.7% 9.1% 8.3% 7.6% options outside of DC similar to what occurs in the San DC as % of nation 108% 105% 114% 113% Francisco region. DC as % of region 164% 166% 176% 165% Region as % of nation 66% 64% 65% 68%
(1) 2012 regional unemployment rate uses the preliminary December data.
Source: Bureau of Labor Statistics DC Jobs Available to DC Residents, 2012
731,800
490,000 Jobs held by non-DC Number of Unemployed DC Residents, 2000–2012 residents that (Annual average; not seasonally adjusted) are potentially 40,000 32,300 available for DC residents
32,300 30,000 87,400 20,700 35,200
20,000 DC Residents: 241,900 Unemployed 17,500 17,800 Employed 10,000 outside DC Employed in DC JOBS IN DC DC WORKFORCE 0 00 01 02 03 04 05 06 07 08 09 10 11 12 (1) Data for DC residents employed outside of DC is 2010 annual Census information. All other data is the annual average, not seasonally adjusted. Source: Bureau of Labor Statistics
Sources: Bureau of Labor Statistics, US Census and DowntownDC BID
23 Employment DowntownDC BID Area Greater Downtown City Center DC By Sector and Location, 2012 Share of Share of Share of Share of Employees Area DC Employees Area DC Employees Area DC Employees Area DC Total Government 74,100 41% 31% 108,200 28% 45% 189,300 41% 78% 242,500 33% 100%
Federal Government 68,900(1) 38 33 NA NA NA NA NA NA 208,000(2) 28 100
Total State and Local Government 5,200(1) 3 15 NA NA NA NA NA NA 34,600(2) 5 100
Legal Services 18,700 10 63 27,000 7 91 27,000 6 91 29,800 4 100
Other Professional & Business Services 31,900 18 26 89,100 23 72 85,200 18 69 123,500 17 100
Associations & Other Services 15,700 9 23 45,100 12 66 43,800 9 64 68,100 9 100
Information & Publishing 8,000 4 46 15,900 4 92 16,100 3 93 17,300 2 100
Food Services 6,900 4 16 20,200 5 47 23,200 5 54 42,900 6 100
Accommodation 6,100 3 39 12,400 3 80 12,600 3 81 15,500 2 100
Retail Trade 3,300 2 18 7,900 2 42 7,800 2 42 18,700 3 100
Financial Services 2,900 2 17 13,700 4 81 13,100 3 77 17,000 2 100
Health Services 2,700 1 4 16,900 4 26 14,600 3 23 63,900 9 100
Construction 2,200 1 16 3,300 1 24 7,100 2 53 13,500 2 100
Real Estate Services 1,800 1 16 7,700 2 69 8,100 2 72 11,200 2 100
Educational Services 1,600 1 3 6,200 2 12 6,100 1 12 50,900 7 100
Arts, Entertainment & Recreation 1,100 1 16 2,300 1 33 4,900 1 70 7,000 1 100
Other 4,500 2 45 7,500 2 76 7,100 2 72 9,900 1 100 Total 181,500 100% 25% 383,400 100% 52 % 466,000 100% 64% 731,800 100% 100%
(1) DowntownDC BID estimate. (2) Bureau of Labor Statistics data. Sources: InfoUSA, Center for Regional Analysis at George Mason University, Bureau of Labor Statistics and the DowntownDC BID
The DowntownDC BID area has a high concentration of government, legal services, professional and business services and non-profit/association employment. It has the highest concentration of legal services employment in the city, which has not yet returned to pre-recessionary levels. In 2008, there were 4,700 more legal services jobs in the DowntownDC BID area and 1,700 more in the rest of DC than there are today. Most of the legal services job loss occurred between 2008 and 2010 because of the recession and financial crisis. More recently, however, regional law firms have opened offices in DC, adding some jobs to DC’s legal sector.
The loss of legal services jobs in the DowntownDC BID area was offset by growth in other professional and business services, non-profit/association and leisure and hospitality, which includes accommodation, food services and arts and entertainment employment. The diversification of employment in the DowntownDC BID area is positive and dampens the overall impacts of cyclical changes.
The DowntownDC BID area has a broad range of jobs and wages that provide employment opportunities Number of Jobs by Annual Wages in for everyone, from those without a high school DowntownDC BID Area, 2012 diploma to those with multiple PhDs. Assuming a 5% turnover factor, the churn in the DowntownDC BID Less than $50,000 29,400 area’s 181,500 jobs provides 9,000 new employment $50,000 to $75,000 63,600 opportunities each year. $75,000 to $90,000 38,900
More than $90,000 49,700
Sources: InfoUSA and Center for Regional Analysis at George Mason University
24 DowntownDC Business Improvement District • 2012 State of Downtown Employment
(1) Employment Change in DC, Change
2000-2012 and 2008-2012 2012 2011-2012 2008-2012 2000-2012
Jobs Jobs % Jobs % Jobs % Total Government 242,500 -4,600 -2% 7,700 3% 18,500 8% Federal Government 208,000 -4,200 -2 14,200 7 24,400 13 Total State and Local Government 34,600 -300 -1 -6,400 -16 -5,800 -14 Legal Services 29,800 -400 -1 -6,400 -18 -4,100 -12 Other Professional & Business Services 123,500 3,300 3 7,300 6 23,600 24 Associations & Other Services 68,100 1,100 2 2,800 4 11,100 19 Information & Publishing 17,300 -1,000 -5 -3,600 -17 -8,200 -32 Food Services 42,900 2,600 6 7,300 21 15,000 54 Accommodation 15,500 200 1 400 3 500 3 Retail Trade 18,700 100 1 200 1 1,200 7 Financial Services 17,000 -100 -1 300 2 -2,100 -11 Health Services 63,900 1,200 2 7,900 14 17,300 37 Construction 13,500 1,400 12 500 4 2,200 19 Real Estate Services 11,200 600 6 -200 -2 300 3 Educational Services 50,900 700 1 4,800 10 10,100 25 Arts, Entertainment & Recreation 7,000 300 4 -100 -1 1,800 35 Other 9,900 100 NA -1,100 NA -5,800 NA Total 731,800 5,600 0.8% 27,900 4 % 81,500 13 % Average Yearly Increase NA 5,600 6,975 6,792
Source: Bureau of Labor Statistics (1) Annual average; not seasonally adjusted.
Outside of the federal government, DC has had strong growth in food services, health services and educational services since 2008. Health services and educational services jobs are located primarily outside of the DowntownDC BID area so the growth has not been proportional inside of the DowntownDC BID area. But the market dynamics have been changing as office building owners and brokers look for non-traditional users, and services look to move closer to concentrations of office workers. Two education users are now, or will be, occupying office-building space in the DowntownDC BID area: the BASIS DC charter school at 412 8th Street, NW, Employment in DC, and Georgetown University’s School of Continuing Private and Government Shares, 1990-2012 Studies, which will open at 640 Massachusetts (Annual average; not seasonally adjusted) Avenue, NW, in late 2013. Some health services Private Sector Federal Government Local Government employers have shown increasing interest in finding a central, traditional office location, including Medstar, 80% 65% 67% which is looking for 80,000 SF in a downtown location. 66% 60%
The federal government is responsible for 28% of 60% DC’s employment and its employment has grown by 18,500 for the period 2000 through 2012, including a decline of 4,600 jobs over the past two years. 32% Its continued growth is uncertain, and there is a 40% 30% 28% possibility that it will decline. The lack of growth or 28% continued decline will flatten or decrease the amount of federal leasing in privately-owned office space. 20% This could be exacerbated if the federal workforce is 8% 6% 5% 5% consolidated into federally-owned space. The entry of educational services, health care services and other non-traditional office users into the DowntownDC 0 90 92 94 96 98 00 02 04 06 08 10 12 BID area market is important to protect against any downward shift from federal leasing. Source: Bureau of Labor Statistics
25 Regional Job Change, 1997-2012 (1) (Thousands) 351.6
153.9
64.6 60.0 44.2 -20.7
DC Suburban Northern DC Northern Maryland Virginia Suburban Virginia Maryland Microsoft opened its 1997-2006 2007-2012
Downtown Policy and (1) Annual average; not seasonally adjusted. Innovation Center in 2012. Source: Bureau of Labor Statistics
Regional job growth, which includes DC, declined in 2012 to 34,000 from 45,000 in 2011. Still, it was strong—with more than 30,000 jobs per year each year. The 2011 job growth may have existed partially because of employers filling positions caused by hiring delays during the recession. Regional employment growth is projected at 30,000 to 45,000 for the next five years, with DC at approximately 5,000 per year.
DC has 24.1% of the region’s jobs, but this percentage is projected to decline slightly to 23.6% in 2017.
DC’s business attraction and retention program is an important effort to reach out to current and potential tenants so that DC can maintain its share of regional employment, which fills office buildings and creates new residential demand.
Regional Employment Change DC Employment Change (1) History and Projection, 1991-2017 History and Projection, 1991-2017 (1)
Increase or Decrease in Jobs (Thousands) Increase or Decrease in Jobs (Thousands) DC Suburban Maryland Northern Virginia 25 PROJECTION 120 20
15 90 2012 total gain: 33,900 jobs 10 60 5
30 0
-5 0 2012 gain: 5,600 jobs -10 PROJECTION -30 -15
-60 -20 91 93 95 97 99 01 03 05 07 09 11 13 15 17 91 93 95 97 99 01 03 05 07 09 11 13 15 17
(1) Annual average; not seasonally adjusted. (1) Annual average; not seasonally adjusted. Sources: Bureau of Labor Statistics and the Sources: Bureau of Labor Statistics and the Center for Regional Analysis at Center for Regional Analysis at George Mason University (projection as of March 28, 2013) George Mason University (projection as of March 28, 2013)
26 DowntownDC Business Improvement District • 2012 State of Downtown Employment Regional Job Change by Year, 2007–2012 (1) (Thousands) Suburban Northern DC Maryland Virginia
27.8 26.4 23.5
14.1 12.3 10.1 10.5 6.2 5.6 5.8 4.4 4.8 3.5
-2.3 -3.9 -6.5
-21.5 -25.3 The Hamilton is a 37,000 SF 07 08 09 10 11 12 07 08 09 10 11 12 07 08 09 10 11 12 restaurant and music venue that
(1) Annual average; not seasonaly adjusted. employs 350-400 people in the Source: Bureau of Labor Statistics DowntownDC BID area.
Employment in the DowntownDC BID Area, DC and the Region, 1996-2012 (1)
Employment (Thousands) 2010-2012 Change 1996-2012 Change
2012 2010 2008 2006 2003 1996 Thousands % Change Thousands % Change
DowntownDC BID Area 182 179 178 174 162 118 2 1% 64 54% Rest of Downtown 202 200 195 192 193 190 2 1 12 6 Downtown Total 383 379 373 366 355 308 5 1 75 24 Rest of DC 348 333 331 322 310 315 15 5 33 11 DC Total 732 712 704 688 666 623 20 3% 109 17% Suburban Maryland 947 938 969 968 940 814 9 1 133 16 Northern Virginia 1,354 1,304 1,314 1,294 1,167 943 50 4 412 44 Region Total 3,033 2,954 2,987 2,949 2,772 2,379 79 3% 654 27%
(1) Data for the downtown geographies is produced every two years.
Sources: InfoUSA and Center for Regional Anaylsis at George Mason (DowntownDC BID and total Downtown) and Bureau of Labor Stastics (DC, MD and VA)
Employment History and Projection for DC and Region, 1991-2017 (1)
DC Suburban Maryland Northern Virginia
Number of Jobs (Thousands) 1,474 Employment Market Share 1,354 1,500 50% 45% 45% 42% 1,162 36% 34%
1,200 999 40% 947 813 758 31% 31% 925
900 30% 34%
30%
600 732 763 20% 24% 24% 24% 677 654
300 10%
PROJECTION PROJECTION
0 0 91 93 95 97 99 01 03 05 07 09 11 13 15 17 91 93 95 97 99 01 03 05 07 09 11 13 15 17
Sources: Bureau of Labor Statistics and the Center for Regional Analysis at George Mason University (projection as of March 28, 2013) (1) Annual average; not seasonally adjusted.
27 The DowntownDC BID area and DC office markets were resilient during the office recession, but more recently have been affected by a number of factors: (1) the dissolution of two large law firms, (2) uncertainties surrounding federal market spending and therefore federal leasing, and (3) the trend by both public and private office users toward densification. This resulted in 547,000 SF of negative absorption in the DowntownDC BID area and 567,000 SF total in DC in 2012. Despite increases in vacancies and negative absorption, the price per SF of office sales and asking rents continue to lead the region. In addition to higher values and rents, vacancy rates are lower in the DowntownDC BID area and DC than in the suburbs. Nationally, several other large city downtown office market performance measures are now better than DC’s as they are enjoying the typical post-recession expansion cycle and growth spurts in high technology and energy services employment. Nevertheless, both the DowntownDC BID area and DC are highly ranked in standard measures of office performance: asking rent, vacancy Occupied Office Space History, and sales price. 4Q 2007–4Q 2012 (Millions of Square Feet) While both the DowntownDC BID area and DC vacancy DowntownDC BID Area (1) DC rates have increased over the past few years, it is a Occupied Total Occupied Total result of new supply rather than a long-term trend of SF SF SF SF negative absorption. In the DowntownDC BID area, 4Q 2012 31.9 36.2 92.7 106.6 the office space inventory has increased by 2.3 million 4Q 2011 32.5 36.3 92.5 105.0 SF from December 2007 to March 2013, but occupied 4Q 2010 32.3 36.1 90.9 104.0 4Q 2009 31.8 35.6 87.1 101.6 space has increased only 400,000 SF. For DC, the 4Q 2008 32.0 34.9 88.4 96.1 office space inventory has grown by 11.5 million SF 4Q 2007 31.6 33.9 88.4 95.1 from December 2007 to March 2013, while occupied Change 4.4 office space has increased by only 4.4 million SF. 4Q 2007–4Q 2012 0.4 2.3 11.5
(1) DowntownDC BID uses Cushman and Wakefield’s East End office In the first quarter of 2013, the DowntownDC BID area market as the DowntownDC BID office market. vacancy rate declined slightly to 11.7% from 11.8% Source: Cushman and Wakefield caused by positive absorption of 77,000 SF. The DC vacancy rate, however, did rise to 13.2% from 13.0% as 260,000 SF of new or renovated office space DowntownDC BID Area Total Office Space: came online. The non- 65.5 Million SF DowntownDC BID areas of Private (46.1 MM SF) Government (19.4 MM SF) DC experienced negative absorption of 38,000 SF. DC Government 3% Rented to Non GSA Non-GSA Federal The performance of the 3rd Parties Government 1% 49% office market is very Foreign Government, important to the city’s International Organizations and Other Local finances as office buildings Governments 3% are estimated to account for Owner- $900 million to $1 billion in Occupied annual tax revenue. Further 10% GSA occupies 34% of declines in the DowntownDC the office space in the DowntownDC BID area. BID area and DC office GSA 23% buildings could lead to a Rented to GSA 11% Source: DowntownDC BID decline in city revenues.
28 DowntownDC Business Improvement District • 2012 State of Downtown Vacancy rates in the DowntownDC BID area and Office Market in DC have increased since 2011, and are likely DC Overall Vacancy Rate Analysis, 1999–2013 to increase in 2013, but not quite to 2009 levels.
New construction deliveries will shift tenants 18% from existing spaces that may no longer suit their 14.3% 13.6% needs, and those spaces will be reconfigured or 15% renovated to be more attractive for modern office tenants. This transition may cause some short- term disruptions in rents, concessions and vacancy 12% rates. But the DowntownDC BID area and DC’s 13.0% central location, federal government concentration, 9% transportation options and highly educated 5.0% workforce provide stability for the long term. 6%
PROJECTION
3%
0 Ronald Reagan Building and 99 00 01 02 0403 05 06 07 08 1009 11 12 13 (1) International Trade Center is 2.2 million SF of the 15 million (1) Assumes that 50% of the 1.7 million SF under construction or renovation at the end of 4Q 2012 delivers in 2013 and is 50% leased. SF of GSA owned space in the DowntownDC BID area. Sources: Cushman and Wakefield and the DowntownDC BID
GSA Office Space Analysis As with DC’s employment, the January 2010 Owned Leased Total federal government is the largest SF % of SF % of SF % of single user of office space in the (Millions) Region (Millions) Region (Millions) Region DowntownDC BID area and in DC, DC 33 SF 79% 22 SF 41% 55 SF 58% with the GSA accounting for 34% Suburban Maryland 6 14 11 21 17 18 of all DowntownDC BID area office Northern Virginia 3 7 20 38 23 24 space and 32% of DC’s office space Total 42 SF 100 % 53 SF 100 % 95 SF 100 % as of 2010. % of All Space 44 % 56 % 100 %
Source: General Services Administration (GSA)
DC Office Market Overview DowntownDC BID Rest of DC DC Total Millions Share Millions Share Millions Share of SF of Total of SF of Total of SF of Total TOTAL SPACE INVENTORY 65.5 100% 108 100% 173 100%
PRIVATE Rented to GSA 7.1 11% 14 13% 22 12%
Rented to Non-GSA 3rd Parties 32.0 49 52 48 83 48
Owner-Occupied 7.0 10 5 5 12 7
Total private space 46.1 70% 71 66% 117 68%
GOVERNMENT GSA 15.0 23% 18 17% 33 19%
Other Federal Government 1.0 1 7 6 8 5
Foreign Government 0.2 <1 4 4 4 2
International Organizations 1.2 2 5 4 6 3
DC Government 1.7 3 3 3 5 3
Other Local Government 0.4 <1 0 0 <1 <1 Source: DowntownDC BID Total government space 19.4 30% 37 34% 56 32%
29 DowntownDC BID area Class A office building average sale price per SF set a new high in 2012, though this is based on only a few transactions. 733 10th Street,NW, was sold by Skanska, the building’s developer, for more than $800 per SF, and Hamilton Square, 600 14th Street, NW, sold for slightly less than $800 per SF. The DC Class A average declined slightly in 2012 to $560 per SF from $594 per SF in 2011, and the overall average declined to $479 per SF in 2012 from $499 the previous year.
DowntownDC BID Area and DC Office Sales Price Per SF History, 1997-2012 (Average price per square foot) (1) (2) (2) DowntownDC BID Area Class A $688 All DC $700700 $700700 All DC Class A $594 $560 $572 $502 600 600 All DC Sales
500 $636 500
400 400 $284 $499 $479 300 300 $432
200 $295 200 $244 100 100
0 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
(1) DowntownDC BID uses Cushman and Wakefield’s East End office market as the DowntownDC BID office market. (2) Sales data was not broken down by class in 1997.
Sources: Cushman and Wakefield and Real Capital Analytics (DC Sales, 2001-2012)
The December 2012 sale of the Nassif Building at 400 7th Street, SW, for $734 million ($526 per SF) accounted for 22% of the 2012 DC office sales volume.
Office Sales Data DC National (1) By Year, 2004–2012 Properties Total SF Volume Price Properties Total SF Volume Price (#) (Millions) (Billions) per SF (2) (#) (Millions) (Billions) per SF (2) 2004 37 9.6 $3.5 $362 1,348 337.2 $59.7 $198 2005 48 11.1 4.8 432 1,298 405.0 84.0 223 2006 63 14.2 5.3 455 1,893 483.8 116.4 252 2007 52 10.5 5.0 475 2,456 610.3 188.1 306 2008 23 4.1 2.3 565 624 162.0 44.4 304 2009 11 3.3 1.2 440 234 63.9 12.3 223 2010 30 7.1 3.1 482 471 149.9 37.1 265 2011 32 7.2 3.6 499 665 225.4 53.9 264 2012 29 7.3 3.4 479 873 272.2 65.8 279
Source: Real Capital Analytics (1) Includes sales larger than $20 million, including partial interest sales and portfolio transactions. (2) Amount per SF analysis does not include estimated prices.
In the first quarter of 2013, DC office building sales totaled only $334 million, or 10% of the 2012 dollar transaction volume.
(1) (2) Office Sales in Top 10 Downtown Markets, 2005–2012 (Ranked by 2012 price per SF)
Price Per Square Foot Dollar Sales Volume (Billions) % Change in 2012 from Average 2012 2011 2010 2009 2008 2007 2006 2005 2011 2010 2005 2012 2011 2010 2005–2012 1. Manhattan $570 $568 $479 $376 $793 $789 $612 $469 0.4%19%22% $10.20 $12.90 $7.90 $13.01 2. San Francisco 515 295 293 349 362 496 365 318 74 76 62 5.33 2.63 1.81 3.37 3. DC 479 499 482 440 565 475 455 432 -4 -1 11 3.42 3.57 3.14 3.58 4. Seattle 464 326 159 133 – 377 282 237 42 192 95 3.43 0.94 0.09 1.49 5. Boston 320 479 460 421 361 422 453 361 -33 -30 -11 1.67 1.88 1.42 3.13 6. Houston 278 308 217 – 215 184 95 170 -10 28 63 1.25 1.48 0.69 1.10 7. Denver 270 241 235 201 226 240 222 170 12 15 59 0.74 0.68 0.17 0.88 8. Dallas 256 73 – 110 256 147 135 126 249 NA 103 0.14 0.38 – 0.52 9. Los Angeles 247 266 332 – 285 378 300 229 -7 -25 8 0.97 0.22 0.21 1.10 10. Chicago 161 232 292 311 244 235 216 188 -30 -45 -14 2.56 2.34 2.06 3.02
Source: Real Capital Analytics (1) Includes sales larger than $20 million, including partial interest sales and portfolio transactions. (2) Amount per SF analysis does not include estimated prices.
30 DowntownDC Business Improvement District • 2012 State of Downtown Class A asking rents increased in the DowntownDC BID in 2012. The rates are higher relative to those in the Office Market emerging markets in DC, such as Mount Vernon Triangle, NoMa and the Capitol Riverfront. In January 2013, Arnold & Porter announced it will be moving from 555 12th Street, NW, to the soon-to-be developed 601 Massachusetts Avenue, NW, on the site of the former NPR building. This move pushes the boundary of traditional law firm locations farther North and East.
Regional Class A Office Asking Rent Per SF Comparison, 1994–2012 (At year-end)
DC Suburban Maryland Suburban Virginia DowntownDC BID Area Chevy Chase/Bethesda Rosslyn Central Business District Rock Spring Park/Pike Corridor (2) Ballston NoMa (1) Silver Spring Crystal City
$80 Capitol Riverfront Prince George’s County Tysons Corner/McLean Reston/Herndon $64 $64
$60 $47 $55 $45 $45
$48 $40 $31 $41
$37 $29
$20 $31 $23
0 94 96 98 00 02 04 06 08 10 12 94 96 98 00 02 04 06 08 10 12 93 95 97 99 01 03 05 07 09 11
(1) NoMa is the Capitol Hill/NoMa Market, (2) In 2012, Cushman and Wakefield revised the Suburban Maryland sub-market boundaries. The Rock Spring minus 3 dollars per SF. Park and the Pike Corridor sub-markets are the closest approximation to the North Bethesda and the Rockville sub-markets that were used from 2007-2011. Prior to 2007, the markets were tracked together. Source: Cushman and Wakefield
Overall vacancy rates in the DowntownDC BID area increased in 2012, but are lower than the rest of the region in absolute terms. The tenant moves resulting from BRAC in Northern Virginia are nearly complete, but increases in vacancies are likely to continue as the remaining BRAC-impacted Department of Defense agencies move and the contractors follow.
Regional Overall Vacancy Comparison, 1995–2012 (At year-end) Suburban Virginia DC Suburban Maryland Ballston DowntownDC BID Area Silver Spring Rosslyn Central Business District Chevy Chase/Bethesda Tysons Corner/McLean NoMa (1) Rock Spring Park/Pike Corridor (2) Reston/Herndon 30% Capitol Riverfront Prince George’s County Crystal City/Pentagon City
24% 25% 21%
17% 20% 15% 20%
15% 19% 15% 14% 16% 13% 13% 10% 12% 11% 5%
0 96 98 00 02 04 06 08 10 12 96 98 00 02 04 06 08 10 12 96 98 00 02 04 06 08 10 12
(1) NoMa vacancy is calculated from Cushman and Wakefield’s (2) In 2012, Cushman and Wakefield revised the Suburban Maryland sub-market boundaries. The Rock Spring Capitol Hill/NoMa submarket by the DowntownDC BID. Park and the Pike Corridor sub-markes are the closest approximation to the North Bethesda and the Rockville sub-markets that were used from 2007-2011. Prior to 2007, the markets were tracked together. Source: Cushman and Wakefield
31 (1) Regional Overall Office Market Comparison, 1998-2012 Vacancy Rates Suburban Suburban 20% DowntownDC DC 17.9% BID Area (2) Maryland Virginia 13.0% 16% 11.8% 18.9% 12% 17.3% 16.5% 8% 10.4% 11.9% 4%
0% 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
Asking Rental Rates (Per SF, weighted average of both full service and triple net asking rents)
$60 $55.20 $51.58 Suburban Suburban DowntownDC DC BID Area (2) Maryland Virginia $50 $32.14 $40 $26.89
$30 $55.03 $50.63
$20 $26.27 $30.92 $10
0 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
Private Office Space Inventory (Millions of SF) 130 Suburban Suburban 140 DowntownDC DC BID Area (2) 107 Maryland Virginia 120
100 80 55 60 36 40
20
0 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
Overall Absorption (Millions of SF) Suburban Suburban DowntownDC DC BID Area (2) Maryland Virginia
6 +1.86 +0.15 -0.94 4 -0.55 -0.57 -0.19 -0.25 -2.51
2
0 Not Not Not Not available available available available –2 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
(1) Data does not include owner-occupied buildings, one-story buildings, or bulidings less than 25,000 SF. (2) The DowntownDC BID uses Cushman & Wakefield’s East End office market as the DowntownDC BID office market. Source: Cushman and Wakefield
In 2012, office performance in the DowntownDC BID area was strong relative to performance in the region, with lower vacancy rates and higher asking rates. Suburban Maryland had less negative absorption than both the DowntownDC BID area and DC, but there have also been fewer deliveries in the past three years than in DC so there has been less growth to absorb. While the DowntownDC BID area accounted for little of the net-new deliveries in the past three years, new buildings within DC but outside of the DowntownDC BID area have been attractive options for DowntownDC BID area tenants. Flat or slightly negative absorption is expected to continue in the DowntownDC BID area as tenants shuffle between DC sub-markets.
32 DowntownDC Business Improvement District • 2012 State of Downtown Office Market
Regional Class A Office Market Comparison, 1998–2012 (1) Vacancy Rates Suburban Suburban 24% DowntownDC DC (2) Maryland Virginia BID Area 14.7% 18.5% 17.9%
18% 13.2%
12% 18.0% 15.6% 14.6% 11.7% 6%
0 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
Asking Rental Rates (Per SF, weighted average of both full service and triple net asking rents)
$75 Suburban Suburban DowntownDC $63.88 DC $61.55 BID Area (2) Maryland Virginia $60 $34.43 $45 $62.88 $59.28 $30.91
$30
$15 $30.72 $33.26
0 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
Private Office Space Inventory (Millions of SF) DowntownDC Suburban Suburban 100 DC BID Area (2) Maryland Virginia 75
80 51 60
40 20 27
20
0 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
Overall Absorption (Millions of SF)
DowntownDC DC Suburban Suburban BID Area (2) Maryland Virginia
6 +2.53 +0.33 +0.44 +0.06 4 -0.29 +0.45 +0.07 -0.79 2
0 Not Not Not Not available available available available –2 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
(1) Data does not include owner-occupied buildings, one-story buildings, or bulidings less than 25,000 SF. (2) The DowntownDC BID uses Cushman & Wakefield’s East End office market as the DowntownDC BID office market. Source: Cushman and Wakefield
The DowntownDC BID area and DC Class A space again outperformed the suburban markets but not as well as in past years for a variety of reasons (1) the dissolution of two law firms; (2) new development that was not fully leased; and (3) tenants moving to lower cost office sub-markets elsewhere in the Center City.
33 Performance in the DowntownDC BID area and DC showed mixed strengths relative to other downtowns. Class A asking rents and sales prices per SF were strong. But vacancies are increasing and sales volume was low relative to other downtowns.
Large City Downtown Office Market Comparison, 2012 (1) Class A Asking Rents
$75.07 $63.88 $61.55 $55.50 $49.35 $45.91 $38.40$38.22$34.90$32.70$31.21$26.52$24.40$19.94
NYC DowntownDC DC San BostonNYC HoustonChicago Los Seattle Denver Philadelphia Dallas Atlanta Midtown BID Area Francisco Downtown Angeles
Vacancy Rates
10.3% 11.8% 13.0% 8.7% 9.9% 8.8% 11.9% 14.1%20.4% 16.5%12.3% 11.4%27.5% 24.9%
NYC DowntownDC DC San BostonNYC Houston Chicago Los Seattle Denver Philadelphia Dallas Atlanta Midtown BID Area Francisco Downtown Angeles
Office Space Inventory (Millions of SF)
242 36 107 49 62 85 37 124 27 42 27 44 29 15
NYC DowntownDC DC San BostonNYC Houston Chicago Los Seattle Denver Philadelphia Dallas Atlanta Midtown BID Area Francisco Downtown Angeles
Office Sales, Price Per SF
$570 $653 $479 $515 $320 NA $278 $161 $247 $464 $270 $95$256$155
NYC DowntownDC DC San BostonNYC Houston Chicago Los Seattle Denver Philadelphia Dallas Atlanta Midtown BID Area Francisco Downtown Angeles
Office Sales Dollar Volume (Billions of $)
$10.20 $1.36 $3.42 $5.33 $1.67 NA $1.25 $2.56$0.97 $3.43$0.74 $0.15$0.14 $0.12
NYC DowntownDC DC San BostonNYC Houston Chicago Los Seattle Denver Philadelphia Dallas Atlanta Midtown BID Area Francisco Downtown Angeles
Sources: Cushman and Wakefield, Real Capital Analytics (1) DowntownDC BID uses Cushman & Wakefield’s East End office market as the DowntownDC BID office market.
34 DowntownDC Business Improvement District • 2012 State of Downtown Overall vacancy rates in the DowntownDC BID area and DC rose in 2012, but both areas still have some of the Office Market lowest vacancies compared to other downtowns. Because the DC market is more resilient during recessions than other downtowns, vacancy rates did not have the same increases from 2008 to 2010, and, therefore, the markets will not have parallel decreases as the rest of the nation returns to pre-recessionary levels.
Change 2002–2012 Large City Downtown Overall Vacancy Rates, 1995-2012 (1) Houston -4.5% Denver -5.2 Seattle 1.8 Los Angeles 0.8 Change Change 35% Atlanta 5.6 2002–2012 2002–2012 Dallas 0.1 DowntownDC BID Area 4.2% San Francisco -11.0% 30% Washington DC 5.1 NYC Downtown -4.4 Boston -4.9 27.5% NYC Midtown -0.8 25% Philadelphia -1.9 24.9% Chicago -1.3
20% 20.4% 14.1% 13.0% 11.4% 16.5% 15%
12.3% 10.3% 11.9% 10% 9.9% 11.8% 8.7% 8.8% 5%
0 96 98 00 02 04 06 08 10 12 96 98 00 02 04 06 08 10 12 96 98 00 02 04 06 08 10 12
(1) Markets other than Washington DC and the DowntownDC BID grouped by size of CBD office markets and listed by vacancy rate. Source: Cushman and Wakefield
Class A asking rents rose in the DowntownDC BID area and DC with only Midtown, New York City having higher rates.
Large City Downtown Class A (1)(2) % Change % Change Asking Rents, 1995-2012 2002–2012 2002–2012 (Dollars per SF) NYC Midtown 32% Houston 49% San Francisco 75 Los Angeles 37 % Change Boston 6 Seattle 12 2002–2012 NYC Downtown 2 Denver 43 $100 DowntownDC BID Area 44% Chicago 5 Dallas 6 Washington DC 39 Philadelphia 2 Atlanta -7
$80 $64 $75
$56 $60 $38 $49 $62 $35 $46 $40 $33 $38 $31 $27 $24 $20 $20
0 96 98 00 02 04 06 08 10 12 96 98 00 02 04 06 08 10 12 96 98 00 02 04 06 08 10 12
(1) Markets other than Washington DC and the DowntownDC BID area are grouped by size of CBD office markets and listed by asking rent per SF. (2) Rent concessions were offered widely in 2009.
Source: Cushman and Wakefield
35 The DC population increased by 13,300 in 2012, maintaining a 2% annual population growth rate since 2010. This growth has caused DC to increase its regional population market share to 10.9% from 10.8%. With 9,200 housing units and housing under construction in DC at the end of 2012, strong population growth should continue for at least the next two years. With 732,000 jobs in DC but only 303,000 housing units, there is a strong demand for new housing in DC driven by the desire to minimize commuting times to and from work. The housing preferences of young workers and retirees are also expected to increase the demand for centrally located, amenity rich neighborhoods, with access to public transportation. DC has many neighborhoods that already fill these needs and is also investing in other city neighborhoods to offer similar amenities in the near future.
DowntownDC BID area apartment rental rates ($3.03 per SF), vacancy rates (2.4%) and condominium prices ($500 to $800 per SF) are all improving and compare favorably to other DC and suburban markets. DowntownDC BID area rental rates have been trending upward for the past 10 years. The new condominiums at CityCenterDC have been selling above $800 per SF. The highest rents in DC are around $4.25 per SF, and the highest condominium prices are in the $1,000 to $1,200 per SF range.
While the DowntownDC BID had no new residential buildings deliver in 2012, 216 condominiums and 458 apartments are under construction at CityCenterDC, with another 350 to 400 residential units planned or under consideration by developers. The CityCenterDC condominiums have been reported as selling quickly. CityCenterDC’s new condominiums and apartment units will increase the residential population in the DowntownDC BID area by 10%.
As of March 2013, there were 7,800 market rate units under construction in Central DC, including nn1,100 units within three blocks of, but, outside of, the DowntownDC BID area boundary, and nn3,400 units within one mile of 9th and G streets, NW, but outside of the DowntownDC BID area, including the 1,100 units listed above.
Downtown Population, 1990-2016 DC Population, 1990-2015 (Thousands) 70 (Thousands) 64.6 654(1) DowntownDC BID Area 700 632 70 60 DowntownDC BID Area plus three blocks north 60 600 One mile radius from 607 50 9th and G Streets, NW 602 55.6 58.1 500 572 50 PROJECTION 40 37.2 38.1 PROJECTION 400 40 28.6 1990 2000 2010 July 2015 24.4 25.8 Census Census Census 2012 30 30 16.2 16.3 (1) Projection from the Metropolitan Washington Council of Government's 20 Population and Household Forecasts, Round 8.1, July 2012. 8.4 8.5 9.4 Sources: US Census and Metropolitan Washington Council of Governments 10 4.5 4.9
00 (1) 1990 2000 2010 2012 2016 Census Census Census
(1) 2016 estimates based on 1.3 residents per units to be completed by 2016.
Sources: 1990, 2000 and 2010 US Census and DowntownDC BID
36 DowntownDC Business Improvement District • 2012 State of Downtown Population & Housing
DC has had a higher population growth rate from 2010 to 2012 than the rest of the region, albeit only slightly. Absolute population growth is still higher in the suburbs.
Regional Population, Population (Thousands) Change, 2011–2012 Change, 2010–2012 Change, 2000–2012 2000-2012 (1) 2012 2011 2010 2000 Thousands % Thousands % Thousands %
DC 632 619 602 572 13 2.1% 31 5.1% 60 10.5%
Suburban Maryland 2,366 2,342 2,304 2,065 24 1.0 62 2.7 300 14.5
Northern Virginia 2,752 2,701 2,623 2,117 51 1.9 130 4.9 636 30.0 Total 5,750 5,662 5,529 4,754 88 1.6% 222 4.0% 996 21.0%
Sources: US Census and the Center for Regional Analysis at George Mason (1) Region as defined by the Office of Management and Budget in 2003, excluding West Virginia.
Young workers and retirees are creating a strong demand for centrally located, amenity rich neighborhoods, with access to public transportation.
DC Resident Income Analysis, 1995–2012
Tax Filers by Annual Income Total Tax Filers Filers by Income Level as % of Total Filers Below $25,000 Below $25,000 400,000 Between $25,000 and $100,000 80% Between $25,000 and $100,000 Greater than $100,000 340,765 Greater than $100,000
56% 300,000 60% 52% 46% 289,511 313,056 44% 251,595 200,000 161,364 161,559 151,530 40%
116,706 103,597 39% 40% 41% 40%
16% 100,000 125,114 134,924 20% 12% 111,818 8% 54,311 6% 26,383 31,292 16,329
0 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: DC Office of the Chief Financial Officer
37 The increase in lower income tax filers means they are in, or have found, affordable housing, which is due DowntownDC BID Area to a variety of factors: (1) the city’s preservation and Demographic Profile, 2012 production of affordable housing units, (2) the city’s rent (From 7th and H Streets, NW)
supplement program, and (3) the growth in market rate Population 0–0.5 mi 0-1 mi 0-3 mi housing that has taken pressure off the existing housing Total number 13,604 41,051 317,473 stock. All these factors have resulted in more affordable Male 6,845 21,195 157,393 housing in DC than would otherwise occur. Female 6,758 19,856 160,080
Households Total Number 8,163 22,640 148,950 Average Household Size 1.6 1.8 1.9 Owner Occupied 25% 25% 33% Median Home Value $336,665 $379,748 $416,051
Household Income Average Household Income $64,284 $66,752 $89,749 Median Household Income $36,451 $40,298 $59,786 Thirty percent of downtown households have incomes Share of households with 28.5% 29.5% 42.1% higher than $75,000, which have supported downtown $75,000 or more
residential values, and retail and restaurant growth. Sources: ESRI forecasts courtesy of the Washington DC Economic Partnership
Market rate multi-family housing starts were stalled from 2008 to New Construction Multi-family Housing Starts in DC, 2000-2012 (1) 2010 caused by the recession and the financial crisis, resulting in few GROUNDBREAKINGS (Number of Units) DowntownDC BID Area DowntownDC Near Near BID, Balance Near BID, NW (2) deliveries in 2010–2012. After BID Area of DC Total DC BID, NW NE/NoMa Near BID, NE/NoMa (3) the lending markets loosened in 2000 105 52 -- 85 242 Balance of DC 2010/2011, a large number of 2001 871 678 -- 356 1,905 multi-family projects broke ground, 2002 975 403 -- 304 1,682 approximately 4,500 in both 2011 2003 206 711 -- 1,056 1,973 and 2012. 2004 323 745 -- 1,129 2,197 2005 163 1,572 425 1,684 3,844 Much of this activity occurred within 2006 189 394 44 1,761 2,388 Central DC. The 7,800 market rate 2007 -- -- 212 931 1,143 units under construction in Central 2008 49 -- 440 735 1,224 2009 ------325 325 DC as of March 2013 will provide 2010 -- 606 726 721 2,053 ample supply for future population 2011 582 432 1,637 1,887 4,538 growth. The increased supply 2012 -- 1,008 857 2,460 4,325
of market rate units will alleviate 0 2,000 4,000 6,000 8,000 demand and rental pressure on UNDER CONSTRUCTION (Number of Units) existing supply to help maintain DowntownDC Near Near BID, Balance their relative affordability and allow BID Area BID, NW NE/NoMa of DC Total DC the District’s recent population 2000 105 52 -- 503 660 growth to continue. 2001 976 678 -- 441 2,095 2002 1,902 926 -- 304 3,132 2003 1,608 858 -- 1,151 3,617 Over the past two fiscal years the 2004 399 1,024 -- 1,487 2,910 number of tax filers in DC has 2005 486 2,298 425 2,421 5,630 increased in all income brackets. 2006 487 1,649 469 2,728 5,333 Specifically, the number of tax filers 2007 189 1,172 681 2,347 4,389 in DC making less than $25,000 2008 49 460 652 2,053 3,214 has grown by 10,254 over the past 2009 -- -- 652 882 1,534 two fiscal years and those tax filers 2010 -- 606 469 1,501 2,576 making more than $100,000 has 2011 582 1,038 2,106 2,675 6,401 grown by 12,362. Thus, residents 2012 582 1,440 2,528 4,636 9,186 at both ends of the income 0 2,000 4,000 6,000 8,000 Sources: Delta Associates (1) Market-rate units only. Includes conversions from non-residential units like hotels and office. spectrum are able to find housing and the DowntownDC BID (2) Includes the area five blocks north and west of the DowntownDC BID boundary. in DC. (3) Includes the NoMa BID area and H Street corridor west of 5th St NE.
38 DowntownDC Business Improvement District • 2012 State of Downtown Population & Housing
Central DC New Market Rate Multi-family Housing Completed Under Completed 1/1/2012- Construction Planned at Development, 2000–2020 2000-12/2011 3/1/2013 at 3/1/2013 3/1/2013 Total New Units Projected
Near Downtown to North (1) 4,886 555 1,519 3,164 4,683 DowntownDC BID 3,471 - 674 150 824 Mount Vernon Triangle 2,198 390 860 1,439 2,299 Capitol Riverfront 2,000 15 924 5,721 6,645 West End 1,741 - 15 428 443 Columbia Heights 1,376 57 144 265 409 Capitol Hill 656 9 202 2,765 2,967 NoMa 644 546 1,944 4,994 6,938 (1) Includes Shaw, Southwest 489 - 517 3,173 3,690 Logan Circle, Dupont Circle, 14th H Street 462 138 514 1,236 1,750 Street, U Street and LeDroit Park areas. Adams Morgan 453 26 12 284 296
Sources: Capitol Petworth 236 - 280 580 860 Riverfront BID, Mount Vernon Triangle CID, Woodley Park 39 - 211 9 220 NoMa BID, and DowntownDC BID TOTAL 18,651 1,736 7,815 24,208 32,023
Petworth
Y A KW Columbia AR P K Heights E COLUMBIA ROAD E R C K Howard C O University R
Adams 2 miles Morgan
U ST. LeDroit Park MASS. AVE.Kalorama FLORIDA AVE. 14th & U RHODE ISLAND AVE. CONN. AVE. Streets Eckington
NEW HAMPSHIRE AVE. 9TH ST. George- Dupont Logan 7TH ST. town Circle Circle 1 mile P ST. Shaw NoMa Walter E. M ST. Washington NEW YORK AVE.
West 22ND ST . Central Midtown Convention 16TH ST. Mount End Business Center District K ST. Vernon K ST. 0.5 mile Triangle 1ST ST. NE MASS. AVE. CityCenterDC George H ST. H Street Washington NORTH CAPITOL ST. University DowntownDC NEW JERSEY AVE. Union BID Station 14TH ST . 18TH ST . Verizon Kennedy White E ST. EXPWY. House E ST. Center Center 395 Foggy Bottom Federal Triangle PENNSYLVANIA AVE. CONSTITUTION AVE.
NATIONAL MALL Capitol US Hill Capitol INDEPENDENCE AVE.
OHIO DR. SW Tidal Federal Basin Triangle South 395 4TH ST. SW Po to m a Southwest 295 c
SOUTH CAPITOL ST. SE R W 3RD ST. SE i ve a r sh Arena in Capitol Distance g Stage to M ST. SW Riverfront from 7th and n C H Streets NW Haines h Navy a n Yard Point n Fort e Nationals l McNair 0 N 1/2 P ST. SW Ballpark MILE
39 Effective rental rates have had modest growth throughout the region for the past several years.
Effective Rental Rates in Class A High Rise Apartment Buildings, 2004-2012 (Per square foot per month)
$5.00 DC (1) Suburban Maryland Suburban Virginia DowntownDC BID Area Bethesda Rosslyn-Ballston Corridor Near the BID, NW (2) Silver Spring/ Wheaton Crystal City/Pentagon City DC North Bethesda/ Rockville Alexandria $4.00 Near the BID, NE/NoMa (3) $3.22
$3.04 $2.82 $2.71 $3.00 $3.03 $2.26 $2.56 $2.67 $2.00 $2.15 $2.16
$1.00
0 04 05 0706 1211100908 04 05 0706 1211100908 04 05 0706 1211100908
(1) 2004 - 2008 data not available for the Near BID, NE/NoMa. (3) Includes the NoMa BID area and the H Street corridor west of 5th St NE. (2) Includes the area five blocks north and west of the DowntownDC BID boundary.
Source: Delta Associates
Vacancy rates in core urban locations have been flat or decreasing due to changing preferences and relatively low levels of new product.
Stabilized Residential Vacancy Rates in Class A High-rise Apartment Buildings, 2004-2012
DC (1) Suburban Maryland Suburban Virginia DowntownDC BID Area Bethesda Rosslyn-Ballston Corridor 12% Near the BID, NW (2) Silver Spring/ Wheaton Alexandria DC North Bethesda/ Rockville Crystal City/Pentagon City Near the BID, NE/NoMa (3)
8% 8.0% 6.4% 6.1% 5.1% 4.3% 4% 3.4% 2.4% 2.4% 3.3% 2.2% 0 04 05 0706 1211100908 04 05 0706 1211100908 04 05 0706 1211100908
(1) 2004-2008 data not available for the Near BID, NE/NoMa. (3) Includes the NoMa BID area and the H Street corridor west of 5th St NE. (2) Includes the area five blocks north and west of the DowntownDC BID boundary.
Source: Delta Associates
40 DowntownDC Business Improvement District • 2012 State of Downtown Population & Housing
New Condominium Prices Per SF in the Washington Metro Area, Year-End 2012 (1)
Average Effective Contract Price Per SF (2) Central DC $705
Arlington and Alexandria $600
Upper Northwest DC $590
(3) Northeast DC $475
(4) East and South DC $380
Montgomery County $300
Prince George’s County $300
Fairfax County and Falls Church $275
Loudoun and Prince William Counties $170
(1) Reflects prices of condo projects currently selling, so averages should not be (3) East of Rock Creek and north CityCenterDC has compared from quarter to quarter since locations of projects change each quarter. of S/N/Florida Ave. 216 condominiums (2) Central DC is bound by Constitution Ave, Rock Creek Park, Connecticut Ave/ (4) NoMa, Ward Six east of New T St/16th St/S St/11th St/N St, and New Jersey Avenue in Northwest DC. Jersey Ave and east of the that have been Anacostia River. selling for more than Source: Delta Associates $800 per SF.
New condominium prices have been steady within the DowntownDC BID area, but will increase in 2013 as sales of CityCenterDC condominiums have been more than $800 per SF.
Average New Condominium Prices Per SF in the Region, 2003–2012 (1)
DC (2) Suburban Maryland (5) Suburban Virginia (5) DowntownDC BID Area (3) Inside the Beltway Inside the Beltway Near the BID, NW (4) Outside the Beltway Outside the Beltway $800 Near the BID, NE/NoMa (5) DC $640 $608 $540 $600 $523
$510 $358
$400
$200 $288
$195
0 03 04 05 0706 100908 11 12 03 04 05 0706 100908 11 12 03 04 05 0706 100908 11 12
(1) Averages are of fourth quarter sales. (2) 2002 and 2003 data was not available for DowntownDC BID area and the area near the BID, NW. 2002-2004 data was not available for the area near the BID, NE/NoMa. (3) 2008 data based on sales in only two buildings, including one with very small units, and is estimated to be above the Greater Downtown market by as much as 20%. (4) Includes the area five blocks north and west of the DowntownDC BID boundary. (5) Includes the NoMa BID area and H Street corridor west of 5th St NE. There were no new condo sales in the area in 4Q 2011 or 4Q 2012.
Source: Delta Associates
41 Attendance at the Convention Center, regional hotel nights and many hotels, tourism tourism indicators in DC increased in 2012, but hotel performance in the DowntownDC BID area declined slightly from 2011 as it did in the other & conventions hotels in DC. The decline in performance by DowntownDC BID area hotels was greater than in the rest of the city. DowntownDC BID area revenue per available room (RevPAR) and total revenues both declined 2.7% in 2012, and the other DC hotels experienced declines of 1.0% and 1.2%, respectively. Because of its proximity, the decrease in the number of city- wide conventions and in-room nights generated by the Convention Center negatively impacted the performance of DowntownDC BID area hotels more than other DC hotels.
While DowntownDC BID area hotel performance declined in 2012, the RevPAR and total hotel room revenues were the second highest ever. This RevPAR was also the third highest among comparable downtowns, behind only Midtown, New York City and Downtown Boston. The strong relative performance and high sales prices per hotel room reflect the long-term strength of the DowntownDC BID area’s hotel market.
The opening of the 1,175 room Marriott Marquis hotel in the spring of 2014 will have a major impact on the DowntownDC BID area and DC hotels. It will have enough supplementary banquet halls and meeting space to accommodate multiple conventions simultaneously within the Convention Center and the Marriott Marquis. The ability to host simultaneous conventions is expected to increase the number of annual conventions, and therefore should increase hotel performance and total revenue for all DowntownDC BID area hotels. The DC government approved $177 million in tax increment financing to support this project.
In addition to the $525 million Marriott Marquis, 560 additional rooms are under construction in four hotels within a few blocks of the DowntownDC BID area, and another 1,200 are planned, including 600 within the DowntownDC BID area: 350 rooms at CityCenterDC and 250 at the Old Post Office on Pennsylvania (where the GSA selected the Trump Hotel Collection as the hotel developer). Adjacent to the DowntownDC BID area, 400 rooms are planned in two hotels across L Street on the north side of the Marriott Marquis and another 180 rooms a few blocks east of the Convention Center. This new hotel development will provide new job opportunities for DC residents and new tax revenues. DC may see more hotel development over the next few years if land prices for office development drop because of lackluster office space demand.
The most recent data on international visitation for 2011 (released in June 2012) shows a moderate growth trend in international visitors to DC, which is good news for the DowntownDC BID area and DC hotels as international
DowntownDC BID Area Hotel Performance, 1997–2012
100% Occupancy (%) $250 Average Room Rate ($) $222 $250 RevPar ($) (1) 77.9% 80% 200 200 $173 $220 60% 76.3% 150 150 72.5% $142 $168 40% 100 100 $103 20% 50 50
98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12 98 00 02 04 06 08 10 12
Source: Smith Travel Research (1) RevPAR = Revenue per Available Room = Occupancy x Average room rate
42 DowntownDC Business Improvement District • 2012 State of Downtown Hotels, Tourism & Conventions
visitors spend more money than domestic tourists. This trend appears to reflect the city’s growing cultural, entertainment and culinary amenities. With the opening of CityCenterDC’s retail in the fall of 2014, international visitors will have another reason to visit DC.
Capital Bikeshare bicycles have been seen at Mount Vernon, Arlington Cemetery and all along the National Mall. This amenity is being used by tourists every day.
The National Cherry Blossom Festival attracts visitors from the region, nation and beyond.
The DowntownDC BID area Regional Hotel Market Size Comparison, 2012 accounts for 16% of regional hotel (Ranked by revenue) revenues, but only 9% of hotel Revenue Rooms Hotels rooms. Revenue per available Millions of $% of total #% of total #% of total room in both the DowntownDC Region (1) $3,692 100 % 103,271 100 % 651 100 % BID area and the rest of DC have DC Total 1,537 42 27,553 27 116 18 been consistently stronger than the DowntownDC BID 566 16 9,602 9 27 4 Other DC 971 26 17,951 18 89 14 rest of the region. The proximity to Arlington/Alexandria 666 18 17,465 17 90 14 cultural attractions, businesses, and Fairfax 512 14 17,050 16 97 15 the federal government has driven Bethesda/Rockville 159 4 4,932 5 23 3 the strong performance relative to Rest of Region 818 22 36,271 35 325 50 the region. Source: Smith Travel Research (1) The region as defined by the Office of Management and Budget in 2003.
Regional Hotel Revenue Per Available Room Comparison, 2000-2012
$200 DowntownDC BID Area Arlington/Alexandria DC Total $168 Region Rest of DC Bethesda/Rockville $152 Fairfax
$150 $120 $144 $105 $89 $98
$100 $81 $88 $109 $103 $81 $83 $80 $50
0 00 01 02 03 04 05 06 07 08 09 10 11 12 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: Smith Travel Research
43 There are more than 1,700 hotel rooms under construction in the area including and surrounding the DowntownDC BID area, and another 1,300 are being planned.
DowntownDC BID Area Hotels, March 2013
Scott Circle N ST. N ST. Existing 7TH ST. 6TH ST. 5TH ST.
Thomas 12TH ST. 11TH ST. 10TH ST. Westin City Circle Under Construction Center M ST. Planned M ST. Walter E. The Washington Metro Madison Donovan Convention House Source: DowntownDC BID 16TH ST. Center NEW YORK AVE. Residence L S T. L ST. Inn 395 Capital VERMONT AVE. Henley Hilton Crowne Park Plaza K S T. Mt. Vernon K S T. K S T. Four Embassy Square St. Regis McPherson Franklin Points Square Square Suites Sheraton NEW JERSEY AVE. EYE ST. Renaissance EYE ST. 395 Sofitel 13TH ST. Washington, DC
H ST. Hilton CityCenterDC Fairfield Inn & Suites MASSACHUSETTS AVE. H ST. Garden H ST. Lafayette NEW YORK AVE. Inn Gallery 1ST ST. NE Square Marriott at Grand General ST. CAPITOL N. Metro Center Hyatt Place Accounting G ST. 15TH ST. Office G ST. Verizon G ST. Center W Hotel Phoenix Union F ST. Washington Park Station White Court Hotel House 395 JW Marriott Hotel 4TH ST . 6TH ST. 5TH ST. Hotel Marriott 11TH ST. 10TH ST. Courtyard Monaco E ST. George Willard InterContinental Hotel FBI Liaison 1ST ST. 2ND ST. Harrington 8TH ST. Capitol Hill D ST. Hyatt PENNSYLVANIA AVE. Regency Ronald Dept. The Ellipse Reagan INDIANA AVE. of Labor Buiding C ST. LOUISIANA AVE.
DELAWARE AVE.
CONSTITUTION AVE. CONSTITUTION AVE. N NATIONAL MALL 0 1000 FEET
In 2012, three DowntownDC BID area hotels were sold for an average price The 888 room Grand of $449,000 per room: the Westin ($377,000 per room), the Grand Hyatt Hyatt sold for $498,000 ($498,000 per room) and the Madison Hotel ($411,000 per room). A total per room in July 2012. of seven hotels were sold in DC in 2012 for an average price of $422,000 per room.
On average, real estate tax revenue per SF for a hotel is less than for a downtown office building, but has a larger fiscal impact because of hotel sales taxes and the retail and restaurant sales tax revenues generated by hotel guests.
Hotel Sales in the DowntownDC BID Area and DC, 2006-2012
DowntownDC BID Area All of DC, Including DowntownDC BID Area BID Area Sales as a % (27 Hotels and 9,600 Rooms) (116 Hotels and 27,500 Rooms) of Total DC Sales by
Dollar Price per Dollar Price per Dollar Hotels Volume Rooms Room Hotels Volume Rooms Room Volume Rooms (#) (Millions of $) (#) (Millions of $) (#) (Millions of $) (#) (Millions of $) (Millions of $) (#) 2006 2 $270 688 $392 6 $607 1,490 $407 44% 46% 2007 1 $170 178 $955 6 $927 2,698 $344 18% 7% 2008 - - - - 2 $174 497 $350 0% 0% 2009 ------NA NA 2010 3 $209 615 $340 7 $392 1,327 $295 53% 46% 2011 1 $94 353 $266 6 $353 1,019 $346 27% 35% 2012 3 $740 1,647 $449 7 $992 2,352 $422 75% 70%
Sources : HVS International and the DowntownDC BID
44 DowntownDC Business Improvement District • 2012 State of Downtown Hotels, Tourism & Conventions
The Marriott Marquis Convention Center Headquarters Hotel is under construction and will open in the spring of 2014.
The Convention Center hosted the Science and Engineering Festival in April 2012, a national event for high school students, and will do so again In 2013.
Room Nights Generated from Walter E. Washington Convention Center Events by Destination DC, 2003–2014 (1)
2003 320,000 2004 481,000 2005 622,000 2006 492,000 2007 460,000 2008 545,000 2009 357,000 2010 367,000 2011 512,000 2012 392,000 2013 391,000 (Booked as of 2/1/2013) 2014 308,000 (Booked as of 2/1/2013)
Source: Destination DC (1) The Walter E. Washington Convention Center opened in March 2003.
The number of city-wide conventions decreased to 13 in 2012 from 22 in 2011, negatively impacting the number of room nights generated by the Convention Center. Overall, attendance at the Convention Center increased due to larger public events, like the Science and Engineering Festival. After the Marriott Marquis hotel is completed in the spring of 2014, the number of city-wide conventions is expected to increase, as there will be enough meeting space to hold multiple events simultaneously.
Walter E. Washington Convention Center (1) 1,400 Attendance, 1999-2017 (Thousands) 1,500 1,105
1,200
900 999 600 850 NUMBER PROJECTION OF EVENTS 300 116165 169185 181170 110171 178235 208215 206 0 99 01 02 03 04 05 06 07 08 09 10 11 12 17
(1) Walter E. Washington Convention Center opened in March 2003. Sources: Washington Convention Center Authority and DowntownDC BID
45 The number of visitors to DC, both national and international, has increased every year from 2006 to 2011.
Visitors to Washington, DC (1)
Visitors (Millions) The number of visitors to DC, both national and Occupied international, has increased every year from 2006 to Domestic International Total Hotel Nights 2011. While the number of international visitors to DC 2012 NA NA NA 7.6 has risen, they also have increased in other major U.S. 2011 16.1 1.8 17.9 7.6 cities. DC’s increases have been on par with or slightly 2010 15.5 1.7 17.3 7.4 larger than the increases in other top 10 cities in the 2009 14.8 1.5 16.3 7.2 2008 15.2 1.5 16.7 7.1 nation. DC had the 7th highest number of international 2007 14.8 1.2 16.0 7.1 visitors since 2009, and the 8th highest between 2005 2006 13.9 1.1 15.0 6.9 and 2008. 2005 14.1 1.2 15.3 7.1
(1) Visitor data is released in June of each year for the prior year. Sources: Destination DC and Smith Travel Research
Overseas Visitors to Top 10 Cities in the United States, 2005-2011 (1) (2)
(Ranked by market share) Visitors (Thousands) (3) 2011 (4) % Change in Market Visitors from 2011 2010 2009 2008 2007 2006 2005 Share 2005–2011
1. New York City 9,285 8,462 7,792 8,211 7,646 6,219 5,810 33.3% 59.8% 2. Los Angeles 3,653 3,348 2,518 2,788 2,652 2,514 2,580 13.1% 41.6% 3. Miami 2,956 3,111 2,661 2,585 2,341 1,972 2,081 10.6% 42.0% 4. San Francisco 2,872 2,636 2,233 2,610 2,270 1,993 2,124 10.3% 35.2% 5. Orlando 2,788 2,715 2,399 2,433 2,055 1,993 2,016 10.0% 38.3% 6. Las Vegas 2,788 2,425 1,853 2,027 1,720 1,647 1,778 10.0% 56.8% 7. Washington, DC 1,812 1,740 1,544 1,470 1,195 1,062 1,106 6.5% 63.8% 8. Honolulu 1,785 1,634 1,497 1,495 1,553 1,733 1,821 6.4% -2.0% 9. Boston 1,311 1,186 1,140 1,115 1,075 997 802 4.7% 63.5% 10. Chicago 1,199 1,134 1,117 1,368 1,147 1,062 1,084 4.3% 10.6%
Sources: U.S. Department of Commerce, (1) Report is issued in June of each year for the preceding year. (4) Market share is a percentage of the total ITA, Office of Travel and Tourism Industries number of visits, not total number of visitors, (2) Excludes Canada and Mexico. Only city destinations having so the total of each market’s share can be a sample size of 400 or more are shown. greater than 100%. (3) Each visitor may visit more than one city.
46 DowntownDC Business Improvement District • 2012 State of Downtown Hotels, Tourism & Conventions
Annual Visitors to the National Mall Museums, 2004–2012 (1) (Ranked by highest attendance in 2012)
Total Visitors (Millions) Visitors at Each Site (Millions) 2012 2011 2010 2009 2008 National Museum of Natural History 7.6 6.6 6.8 7.4 7.0 35 National Air and Space Museum 6.8 7.0 8.3 7.0 7.0 30 National Museum of American History (2) 4.8 4.6 4.2 4.4 0.5 25 National Gallery of Art 4.2 4.4 4.8 4.6 5.0
20 Holocaust Museum 1.6 1.6 1.7 1.7 1.7 National Museum of the American Indian 1.6 1.4 1.3 1.4 1.5 15 20.7 25.0 28.8 Smithsonian Castle 1.4 1.5 1.8 1.9 1.7 10 Hirshhorn Museum and Sculpture Garden 0.8 0.6 0.6 0.7 0.7
5 Arts and Industries Building (3) Closed Closed Closed Closed Closed
0 Total Visitors 28.8 27.7 29.5 29.1 25.0 04 05 06 07 08 09 121110 % Change in Attendance from Previous Year 4% -6% 1% 16% 7%
(1) Figures are not unique visitors to the National Mall as some visitors (2) Closed for renovations from (3) Closed in 2004 for extensive repairs go to multiple museums during one or more trips to the mall per year. September 2006 until November 2008. and decision on future use. Scheduled to reopen in 2014. Sources: Smithsonian Institution, Holocaust Museum, National Gallery of Art
Visitors to the National mall museums, memorials and monuments increased in 2012. Ongoing capital improvements of the National Mall are restoring the well-worn space into an impressive landscape that will better serve millions of annual visitors.
The Reflecting Pool’s $31 million reconstruction and Phase I of the lawn renovations between 3rd and 7th streets were completed in 2012. Final plans for Phase II and III of the lawn renovations were submitted in April 2013. The Reflecting Pool underwent a $31 million reconstruction in 2012.
Annual Visitors to the National Mall Memorials and Monuments, 2004–2012 (1) (Ranked by highest attendance in 2012)
Total Visitors (Millions) Visitors at Each Site (Millions) 2012 2011 2010 2009 2008 Lincoln Memorial 6.2 6.0 6.0 5.3 4.7 30 Vietnam Veterans Memorial 4.4 4.0 4.6 4.4 4.2 25 World War II Memorial 4.2 3.8 4.0 4.1 4.2 20 Martin Luther King, Jr. Memorial 3.7 1.5 Opened in late August 2011 15 21.4 22.5 27.2 Korean War Veterans Memorial 3.3 3.1 3.1 3.1 3.7
10 Franklin D. Roosevelt Memorial 2.8 2.3 2.2 2.6 2.6
5 Thomas Jefferson Memorial 2.6 1.9 2.3 2.3 2.4 Washington Monument (2) 0.0 (4) 0.4 (3) (4) 0.6 (3) 0.7 (3) 0.7 0 04 05 06 07 08 09 11 1210 Total Visitors 27.2 23.0 22.8 22.5 22.4 % Change in Attendance from Previous Year 18% 1% 1% 1% 6%
(1) Figures are not unique visitors to the National Mall as some visitors go to (2) The number of visitors inside the (3) Visitor hours extended (4) The Washington Monument multiple memorials/monuments during one or more trips to the mall per year. Washington Monument is limited to 10 p.m. during July was closed for repairs after to 80 people at one time. and August. the August 23, 2011 Source: National Park Service earthquake.
47 Large City Downtown Hotel Performance Comparison, 2012
Revenue Per Available Room ($)
$254
$180 $168 $155 $144 $144 $126 $125 $114 $108 $104 $91 $91
Midtown Boston DowntownDC San DC, Chicago Philadelphia SeattleDenverLos HoustonAtlanta Dallas New York BID Area Francisco Outside of Angeles BID Area
$296 Average Room Rate ($)
$230 $220 $191 $195 $191 $170 $160 $158 $146 $142 $139 $148
Midtown Boston DowntownDC San DC, Chicago Philadelphia SeattleDenverLos HoustonAtlanta Dallas New York BID Area Francisco Outside of Angeles BID Area
Occupancy Rate (%)
86% 78% 81% 78% 76% 74% 75% 74% 72% 74% 73% 66% 60%
Midtown BostonSDowntownDC an DC, Chicago Philadelphia SeattleDenverLos HoustonAtlanta Dallas New York BID Area Francisco Outside of Angeles BID Area
Rooms (#) 48,513 31,756 29,237
17,951 16,745 12,829 9,602 8,900 9,956 6,807 8,186 7,055 6,499
Midtown Boston DowntownDC San DC, Chicago Philadelphia SeattleDenverLos HoustonAtlanta Dallas New York BID Area Francisco Outside of Angeles BID Area
Revenue (Millions of $)
$4,494
$1,808 $1,535 $971 $566 $487 $551 $448 $408 $460 $341 $278 $212
Midtown Boston DowntownDC San DC, Chicago Philadelphia SeattleDenverLos Houston AtlantaDallas New York BID Area Francisco Outside of Angeles BID Area
Source: Smith Travel Research
DC hotels compete favorably with all other downtown U.S. hotel markets. In 2012, the DowntownDC BID area was the third best performing downtown hotel market in the U.S. with a RevPAR of $168. DC ranks fourth in number of downtown hotel rooms after Midtown, New York City, San Francisco and Chicago.
48 DowntownDC Business Improvement District • 2012 State of Downtown Hotels, Tourism & Conventions
Large City Downtown Hotel Performance Comparison, 2000-2012
DowntownDC BID Area Midtown New York Seattle DC, Outside of BID Area Boston Denver San Francisco Los Angeles Revenue Per Available Room ($) Chicago Houston Philadelphia Atlanta $300 Dallas $254
$250
$200 $168 $180 $155 $125 $150 $114 $144 $108 $100 $144 $104 $126 $91 $50 $90
0 00 02 04 06 08 10 12 00 02 04 06 08 10 12 00 02 04 06 08 10 12
Average Room Rate ($) $296 $300
$220 $250 $230 $160 $191 $158 $200 $191 $148 $150 $195 $146 $170 $142 $100 $139
$50
0 00 02 04 06 08 10 12 00 02 04 06 08 10 12 00 02 04 06 08 10 12
Occupancy Rate (%) 86% 100% 76% 78% 81% 74% 80% 78% 73%
75% 72% 74% 60% 66% 74% 60% 40%
20%
0 0 00 02 04 06 08 10 12 00 02 04 06 08 10 12 00 02 04 06 08 10 12
Source: Smith Travel Research
The national economy’s continued improvement has led to improved hotel performance in 2012 for all large city downtown hotel markets in the U.S., except for the DowntownDC BID area and DC hotels. Nevertheless, 2012 was the second best hotel industry performance ever for the DowntownDC BID area and other DC hotels.
49 culture & entertainment
Cultural and entertainment visitation to the DowntownDC BID area decreased in 2012 caused primarily by fewer hockey games and fewer performances in the larger theatres. Downtown’s free and ticketed museums continue to attract millions of visitors—topping five million for the second time in three years. The quality and appeal of Downtown’s cultural programming continues to attract audiences and attention from the region, nation and world. In 2012, the Shakespeare Theatre Company won the prestigious Tony award for best regional theatre in the U.S., only the third time for a DC area theater company to do so. In addition, DowntownDC BID area theaters won five of 26 annual Helen Hayes Awards for outstanding artistic work and were nominated for many more. The Verizon Center’s entertainment programming also continues to be impressive as well as attendance to other non-hockey, events; which increased by 20% in 2012. The opening of the Hamilton Live performance event space was a highlight of 2012 with an opening performance by Mavis Staples. The 300 seat venue brought 64,816 patrons into the DowntownDC BID area in 2012. Looking ahead, the number of events held in DowntownDC BID area theaters in 2013 is expected to increase, largely due to an anticipated increase in performances at the National Theatre, which is under new management.
Visitors in the DowntownDC BID Area, 1999-2017 (Thousands) 10,650 12,000 9,152
9,000
9,331 6,000
3,000
PROJECTION Verizon Center non- hockey attendance 0 99 0102 03 04 05 06 07 08 1009 11 12 17 increased by 20% in 2012. Source: DowntownDC BID
The Ringling Bros. and Barnum and Bailey Circus entertains visitors at the Verizon Center annually. 50 DowntownDC Business Improvement District • 2012 State of Downtown Culture & Entertainment
Economic Impact of Non-Profit Arts and (1) Culture Organizations in DC, FY 2010 Arts and Culture In 2010, non-profit arts and culture generated more Total Economic Activity Organizations (2) Audiences (3) Expenditures than $80 million in tax revenue and 14,600 jobs, Total Industry an increase of 21% over the 2005 estimate of taxes $688 million $395 million $1,083 million Expenditures generated and jobs supported in 2005. Economic Impact of Expenditures (4) Full-Time Equivalent The National Portrait Gallery and American 12,138 jobs 2,416 jobs 14,554 jobs Jobs Supported Art Museum are two Smithsonian Museums in Household Income Paid to Residents $409 million $48 million $458 million the DowntownDC BID area. Most of the other Revenue Generated Smithsonian museums and facilities are along $66 million $14 million $80 million to Local Government the National Mall. Together these museums and facilities represent a large portion of the (1) The Smithsonian Insititution has been excluded from this economic impact analysis. (2) Spending by non-profit arts and culture organizations includes labor, payments Smithsonian’s annual $800 million budget. to local and non-local artists, operations, materials, facilities and asset acquisition. (3) Event-related spending by non-profit arts and culture audiences, excluding the cost of admission. (4) Includes both direct and indirect impacts.
Source: Americans for the Arts
Visitors in the DowntownDC BID Area By Major Sector, 1999–2017 (Thousands)
6,000 4,000 Museums Verizon Center (Excludes Mall museums) 4,800 5,750 3,200 2,600
3,600 4,976 5,066 2,400
2,500 2,300 2,400 1,600
1,200 NUMBER OF MUSEUMS (1) 800 8 7 7 6 9 10 9 10 11 13 13 13 13 14 15 0 0 99 010002 03 04 05 06 07 08 10 121109 17 99 0102 03 04 05 06 07 08 10 121109 17
1,500 1,500 Cinemas Theaters
1,200 1,200 1,400 900
900 1,237 1,257 900 618 528
600 600
300 300 NUMBER OF THEATERS (2)
NUMBER OF CINEMAS 2 2 2 2 2 2 2 2 2 2 4 4 2 4 4 4 5 5 6 6 7 7 7 7 7 0 0 04 05 06 07 08 10 121109 17 99 010002 03 04 05 06 07 08 10 121109 17
Source: DowntownDC BID (1) Between 2001 and 2005, one or more venues were closed for renovation. In 2007 and 2008, one museum did not report attendance. In 2009-2011, two museums did not report attendance. In 2011, attendance for one museum is a DowntownDC BID estimate. In 2012, two museums did not report attendance, and attendance for two museums is a DowntownDC BID estimate. (2) In 2001 and between 2007-2008, one or more theaters were closed for renovation.
nnNon-hockey events at the Verizon Center increased by 300,000 to 1.5 million in 2012. The hockey strike caused the Verizon Center to lose approximately 500,000 in attendance numbers, and had a major impact on restaurant and bar sales around the Verizon Center. This led to both lower DC sales tax revenues and lower DC employment during the strike. nnDowntownDC BID area theatres received 33 Helen Hayes nominations out of 158 and won four awards out of 26. The Shakespeare Theater had 19 nominations from six different shows; Woolly Mammoth Theatre had nine from two shows; Ford’s Theatre had four nominations from one show and the National Theatre had one nomination from one show. The Shakespeare Theatre won three awards and Woolly Mammoth two. nnDowntownDC BID area cinemas have done so well that another cinema is planned within the Center City, at the Capitol Riverfront as part of The Yards development just east of Nationals Park.
51 DowntownDC BID area theater attendance declined in 2012. 2013 attendance is expected to increase because the National Theatre is under new management. SMG World is increasing the number of nights that the theatre will be open and the types of events that it will have, including Broadway shows and musical acts.
DowntownDC BID Area Theater Attendance, 1999–2012 (Ranked by highest attendance in 2012)
Total Visitors (Thousands) Visitors at Each Site (Thousands) 2012 2011 2010 2009 2004 1999
1,000 Warner Theatre 122 143 179 190 274 281 Ford’s Theatre (1) 103 87 92 85 98 98 800 Sidney Harman Hall (2) (3) 103 165 150 142 Opened in 2007 600 National Theatre 86 (4) 106 (5) 64 222 132 223 740 Lansburgh Theatre (2) 78 73 96 90 146 138 400 650 562 528 Woolly Mammoth Theatre 36 45 45 45 Opened in 2005 200 Total Theater Attendance 528 618 626 773 650 740
0 % Change in Attendance from -15% -1% -19% 37% -20% 1% 02 03 04 06 08 10 12 Previous Year
(1) Ford’s Theatre closed for an 18-month renovation on 6/1/2007 and reopened on 2/3/2009. (2) Shakespeare Theatre Company. (4) Only 3 shows ran during 2011.
Sources: Theaters (3) Only 3 shows ran during 2012. (5) Only 2 shows ran during 2010.
The Ford’s Theatre’s production of “1776” was one show that led to an increase in the theater’s 2012 attendance, the year it received four Helen Hayes Award nominations.
Brooks Ashmanskas as John Adams and the cast of the Ford’s Theatre production of “1776,” directed by Peter Flynn.
Regional theatre attendance also declined slightly, but there were more productions and performances in 2012 than ever before. This increase in the variety and number of performances will make shows more appealing to a wider audience and increase attendance over time.
Theater Attendance Data for Washington Region, 1990–2012 Attendance 2,137 2,500 (Thousands) 1,802 2,000
1,500 2,080 2,225
1,000
500 Number of Performances (Thousands) 5.3 5.5 5.5 6.4 6.1 6.0 6.4 6.9 5.8 6.5 7.6 8.19.3 8.17.6 7.27.6 8.18.7 8.39.4 9.910.4 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 30 33 37 44 46 48 52 52 52 61 78 78 83 85 80 56 64 67 69 73 79 84 86
Source: Helen Hayes Awards Number of Theatres
52 DowntownDC Business Improvement District • 2012 State of Downtown Culture & Entertainment
Largest Public Performing Arts Spaces in DC, February 2013
DowntownDC BID Area Theaters Highlighted Seats The Kennedy Center for the Performing Arts 6,6,67679 Concert Hall 2,4422,442 Opera House 2,302,3000 Eisenhower Theater 11,100,100 Terrace Theater 551313 Family Theater 323244
DAR Constitution Hall 33,702,702
Warner Theatre 1,841,847
National Theatre 1,671,676
Cramton Auditorium, Howard University 1,500
The Lisner Auditorium, The George Washington University 1,490 Visitors look at an exhibition Arena Stage 1,411 at the National Museum of The Fichandler Stage 683 Kreeger Theater 515144 Women in the Arts. Kogod Cradle 214214
Lincoln Theater 1,251,250 Harman Center for the Arts, Shakespeare Theatre Company 1,221,226 The award for Sidney Harman Hall 775775 Outstanding Lansburgh Theatre 454511 Choreography, Resident Studio Theatre 700 Production, goes to Joe Mead Theatre 220000 Milton Theatre 200200 Isenberg for his work in Metheny Theatre 202000 the production of "The Stage Four 101000 Elaborate Entrance of Ford’s Theatre 658 Chad Deity" presented by the Woolly Mammoth Howard Theatre 600 Theatre Company. Atlas Performing Arts Center 526 Atlas Fixed Seat Theatre 272766 Atlas Flexible Seat Theatre 252500
Hartke Theatre, Catholic University 516 Town Hall Education Arts & Recreation (THEARC) 365
Tivoli Theatre, GALA Hispanic Theatre 270 Woolly Mammoth Theatre 265 Folger Theatre 250250 Jewish Community Center (Theatre J) 238 Warehouse Theater 165 H Street Playhouse 150
Source Theatre 150 Washington Stage Guild at Undercroft Theatre 148
Church Street Theater 115
Flashpoint Theatre 6060
Total Current Seats 25,95725,957 % of Seats in DowntownDC BID Area 23%
Source: DowntownDC BID
Jesse J. Perez as Florindo, Allen Gilmore as Pantalone, Paul Reisman as a Waiter, Steven Epp as Truffaldino and Rachel Spencer Hewitt as Beatrice in the Shakespeare Theatre Company’s production of The Servant of Two Masters, directed by Christopher Bayes.
53 Museum attendance in the DowntownDC BID area was strong at 5 million visitors in 2012. The opening of Ford’s Center for Education and Leadership (a 2012 DowntownDC BID Momentum Award winner) was a highlight of the year, with 317,500 visitors in 2012. In addition, increases in attendance at the Naval Heritage Center and the National Museum of Women in the Arts brought more museum-goers to the DowntownDC BID area in 2012.
Museum Attendance in the DowntownDC BID Area, 2007-2012 (Ranked from highest to lowest attendance in 2012)
2012 2011 2010 2009 2008 2007 National Portrait Gallery 1,000,000 948,300 1,100,000 1,000,000 1,000,000 786,000 and American Art Museum (1)
National Archives 909,200 1,045,600 1,058,700 1,003,500 1,015,400 1,075,100 The Newseum (2) 700,000 806,000 712,000 714,000 714,000 Opened April 2008 Ford’s Theatre Museum (3) 538,100 563,400 599,800 557,700 335,900 732,500 National Building Museum 521,200 554,300 515,500 436,300 406,800 414,500 International Spy Museum (4) 500,000 600,000 650,000 650,000 700,000 719,800
Ford’s Education Center 317,500 Opened late Feb. 2012 NA NA NA NA Old Post Office Tower 283,200 236,100 262,000 256,900 239,800 226,900
The Naval Heritage Center 140,000 100,000 75,000 60,000 60,000 60,000 National Museum of Women in the Arts 105,100 68,300 68,000 85,000 96,700 116,000 Marian Koshland Science Museum 19,700 21,700 26,200 27,700 28,300 24,100 National Law Enforcement Memorial — 32,200 32,300 30,500 31,600 27,600 29,600 Visitors Center
Crime and Punishment Museum Data Unavailable Opened May 2008 NA Madame Tussauds Data Unavailable Opened Oct. 2007
Total Museum Attendance 5,066,200 4,976,000 5,097,700 4,822,700 4,624,500 4,184,500 % Change in Attendance from Previous Year 2% -2% 6% 4% 11% 8%
(1) The National Portrait Gallery and American Art Museum closed for (3) Ford’s Theatre and Ford’s Theatre Museum closed for renovations in renovations in 2000 and re-opened in July 2006. September 2007. The Theatre reopened in February 2009, and the Museum (2) The Newseum opened in April 2008. 2008 attendance is for reopened in July 2009. The Petersen House was open throughout. 4/08-4/09. 2012 attendance is a DowntownDC BID estimate. (4) The 2011 and 2012 attendance for the International Spy Museum is a DowntownDC BID estimate.
Sources: Museums and DowntownDC BID
Ford’s Center for Education and Leadership was completed in February 2012 and contributed to the DowntownDC BID area’s increased museum attendance.
54 DowntownDC Business Improvement District • 2012 State of Downtown Culture & Entertainment
DC’s National Gallery of Art was the 8th most visited art museum in the world in 2012. The National Gallery and four other DC art museums were ranked in the top 15 most visited art museums in the United States, more than any other city. Also included in the top 15 are the National Portrait Gallery and the Smithsonian American Art Museum, which share the same DowntownDC BID area building.
The East Building of the National Gallery of Art is currently undergoing an $85 million federally-funded replacement of the panels that clad the I. M. Pei designed building. An additional $30 million in private donations will fund a renovation to add 12,300 SF of exhibition space to the East Building and a roof top sculpture garden. The renovation will also update the Top 25 Art Museums in the World, 2012 East Building’s infrastructure. Together, the two Attendance Rank projects will require closing the East Building Museum City (Thousands) 2012 2011 for three years. Construction on the renovation Louvre Paris 9,720 1 1 and expansion is scheduled to begin in 2014 Metropolitan Museum of Art New York 6,116 2 2 and be completed in 2017. British Museum London 5,576 3 3 Tate Modern London 5,305 4 5 National Gallery London 5,164 5 4 Vatican Museums Vatican City 5,065 6 NA National Palace Museum Taipei 4,361 7 7 National Gallery of Art Washington 4,200 8 6 Centre Pompidou Paris 3,800 9 8 Musée D'Orsay Paris 3,600 10 10 Victoria & Albert Museum London 3,232 11 14 The East Building of the National National Museum of Korea Seoul 3,129 12 9 Gallery of Art panel replacement State Hermitage Museum St Petersburg 2,882 13 12 began in early 2011 and will be Museum of Modern Art New York 2,806 14 13 completed in early 2014. National Folk Museum of Korea Seoul 2,640 15 16 Reina Sofía Madrid 2,565 16 15 Centro Cultural Banco do Brasil Rio 2,235 17 17 National Portrait Gallery London 2,097 18 18 Shanghai Museum Shanghai 1,945 19 20 Museum of Scotland Edinburgh 1,894 20 NA Galleria degli Uffizi Florence 1,769 21 19 Moscow Kremlin Museums Moscow 1,736 22 21 Tate Britain London 1,537 23 28 Grand Palais Paris 1,519 24 25 Tokyo National Museum Tokyo 1,504 25 22
Top 15 Art Museums in the Nation, 2012 Attendance Rank Museum City (Thousands) 2012 2011 Metropolitan Museum of Art New York 6,116 1 1 National Gallery of Art Washington 4,200 2 2 Museum of Modern Art New York 2,806 3 3 Art Institute of Chicago Chicago 1,438 4 4 Smithsonian American Washington 1,232 5 10 Art Museum/Renwick (1) (2) Getty Center (3) Los Angeles 1,207 6 8 Guggenheim Museum New York 1,189 7 9 Los Angeles Museum of Los Angeles 1,172 8 7 Modern Art (LACMA) De Young San Francisco 1,109 9 6 National Portrait Gallery (2) Washington 1,079 10 11 Museum of Fine Arts Boston 998 11 5 Freer and Sackler Galleries (1) Washington 870 12 12 Philadelphia Museum of Art Philadelphia 835 13 14 Hirshhorn (1) Washington 753 14 15 Museum of Fine Arts Houston 737 15 NA
(1) A Smithsonian Museum. (3) Excludes the Getty (2) The National Portrait Gallery and the Smithsonian Villa's attendance of 383,405. American Art Museum are housed in the same building.
Source: The Art Newspaper, No. 245, April 2013
55 retail & DowntownDC BID area retail is nearing the requisite critical mass to be restaurants a successful shopping district. The planned opening of 185,000 SF of new retail in Phase One of CityCenterDC has the potential to change the way the DC region thinks about DowntownDC BID area shopping. CenterCityDC retail will connect the current gap between retail on 7th Street, F Street and 13th Street, and shoppers will soon be able to go downtown “to shop” instead of making
CityCenterDC Retail Overview Retail/Public trips to individual retailers. The 2012 opening of two Parking national retailers, J. Crew and TJ Maxx, showcase the Projected Retail SF Opening Dedicated Off-Peak attractive opportunities for retailers in the DowntownDC Phase One 185,000 4Q 2013 525 400-500 BID area. The demand for shoppers goods is estimated Phase Two 110,000 4Q 2015 225 50 to exceed the current supply by $931 million. The new retailers and parking spaces at CityCenterDC will help Phase Three 40,000 2015/17 NA 100-300 attract more shoppers, increasing both the sales of the Source: DowntownDC BID existing retailers and the demand for shoppers goods.
Retail Space Overview for DowntownDC BID Area, March 2013 (As percentage of existing and possible space. Percentages and square footage numbers are rounded.)
Total Possible Retail Space 3,626,000 SF Non-Retail First Vacant Under (1) Occupied or Announced Floor Space Construction
70% 14% 9.7% 6%
2,549,000 SF 511,000 SF 351,000 SF 215,000 SF
% of Occupied or Announced Space Food and Beverages: 51% Shoppers Goods: 31% Services: 18%
Total Space 1,305,000 SF Total Space 792,000 SF Total Space 452,000 SF
Casual Restaurants 409,000 SF Clothing and Shoes 269,000 SF Banks and Financial Institutions 189,000 SF High-End Restaurants 400,000 SF Department Stores 227,000 SF Fitness Centers 91,000 SF Deli, Fast Food and Coffee 390,000 SF Gift Shops, Florists and Newsstands 77,000 SF Hair and Nail Salons 42,000 SF Nightclubs, Bars, Liquor Stores 106,000 SF Home and Office Supplies 59,000 SF Printing and Mailing Services 32,000 SF and Food Retail Drug Stores 58,000 SF Shoe Repair, Drycleaners and Optics 22,000 SF Cellular Stores, Electronics 42,000 SF Doctors/Medical 19,000 SF and Camera Shops Travel Agencies, Car Rental 56,000 SF Jewelry, Art Galleries and 31,000 SF and Other (1) Includes CityCenterDC with 185,000 SF of retail. Specialty Stores Source: DowntownDC BID Book and Music Stores 30,000 SF
Occupied retail space in the DowntownDC BID area totaled 2.5 million SF in March 2013, spread across 125 blocks, excluding parks, or 20,000 SF per city block or 5,000 per block face. When Phase One of CityCenterDC’s retail opens, the percentage of occupied retail space will rise to 75% of available ground floor and the percentage of shoppers goods space will rise to 34% from 31% (assuming 110,000 SF of 185,000 SF will be shoppers goods).
56 DowntownDC Business Improvement District • 2012 State of Downtown Retail & Restaurants
DowntownDC Retail Opportunity For Shoppers Goods, March 2013 (From 9th and G Streets, NW) Change
2012 2016 2012–2016 INPUTS FOR RETAIL DEMAND PROJECTIONS (Projected) (Projected) Office Office Space Within 5 Blocks 41 million SF 46 million SF 5 million SF Worker Market Office Space Within 15 Blocks 124 million SF 133 million SF 9 million SF Office Workers Within 5 Blocks 117,100 132,800 15,700 Office Workers Within 15 Blocks 347,300 384,400 37,100
Non-Office Non-Office Workers Within 5 Blocks 11,000 15,000 4,000 Worker Market Non-Office Workers Within 15 Blocks 30,000 36,000 6,000
Residential Population Within 5 Blocks 6,300 7,100 800 Market Population Within 15 Blocks 67,000 76,000 9,000
Visitor Hotel Rooms Within 5 Blocks 3,300 4,900 1,600 Market Hotel Rooms Within 15 Blocks 16,900 19,600 2,700 Hotel Rooms Citywide 27,500 30,600 3,100
Hotel Room Nights Within 5 Blocks 0.93 million 1.37 million 0.44 million Hotel Room Nights Within 15 Blocks 5.5 million 6.8 million 1.2 million Hotel Room Nights Citywide 7.6 million 8.9 million 1.4 million
INPUTS FOR RETAIL SUPPLY PROJECTIONS SF of Shoppers Goods Retail 0.8 million 1.2 million 0.4 million Within 15 Blocks
RETAIL SALES OPPORTUNITY ANALYSIS — 15 BLOCKS
Dollars Office Worker Market (1) $734 million $879 million $145 million of Retail Demand Residential Market 354 million 434 million 80 million Overnight Hotel Visitor Market 162 million 214 million 53 million Total $1,250 million $1,528 million $278 million
Dollars of Retail Supply (15 blocks) $319 million $506 million $187 million
Retail Opportunity $931 million $1,021 million $91 million (Current DowntownDC BID Area Retail Demand in annual in annual Less DowntownDC BID Area Retail Supply) sales sales
(1) Office worker demand for shoppers goods is based on the June 2012 Workers Retail Spending Report by the International Council of Shopping Centers.
Sources: CoStar Group and Cushman and Wakefield (office space data); 2010 Census (residential market data); Smith Travel Research (visitor market data); International Council for Shopping Centers, Destination DC and the DowntownDC BID (residential and retail market data)
The demand for shoppers goods from downtown workers, residents and visitors exceeded the supply by $931 million in 2012. This gap is expected to grow to more than $1 billion by 2016, even accounting for the new retail space at CenterCityDC and Walmart, just outside the DowntownDC BID area at 1st and H streets, NW. The population growth to the north of the DowntownDC BID area and the increase in downtown office workers and their spending preferences are the demand drivers for this Available DowntownDC BID Area retail opportunity. Destination Retail Space, March 2013
Building Address Square Feet The retail vacancy rate in the DowntownDC BID area is 9.7%. 529 14th St. NW 56,000 The closures of Filene’s Basement in 2012 and the ESPN Zone 555 12th St. NW 42,000 in 2010 have left large blocks of retail space open. The next 1500 H St. NW 11,700 largest vacant space will be leased up in 2013. In early April 1250 H St. NW 11,300 2013, a pending lease was announced for 1500 H Street, NW, 915 F St. NW 10,800 for Joe’s Seafood Prime Steak and Stone Crab. The multi-floor 1001 Pennsylvania Ave. NW 7,300 restaurant will occupy 18,000 SF, seat more than 500 diners 801 Pennsylvania Ave. NW 7,400 and strengthen the cluster of restaurants just west of the 1010 Massachusetts Ave. NW 7,000 White House. 401 9th St. NW 6,800 444 7th St. NW 5,800 In March 2013, a flagship Walgreen’s opened at the northeast 1299 Pennsylvania Ave. NW 5,500 corner of 7th and H streets, NW. Market sources say the rent Total Large Vacancies 171,600 on this space is more than $200 per SF (compared to a more
Sources: CoStar, Brokers and DowntownDC BID typical DowntownDC BID area retail lease of $60 to $80 per SF).
57 While destination restaurants decreased slightly in the DowntownDC BID area in 2012, nine announcements were made for new restaurants, one of which opened in February 2013 and another that is expected to open in April 2013. A total of 141 destination restaurants are projected to be open at the end of 2013.
From 1999 to 2012, 148 restaurants opened and 90 closed for a net gain of 58. The spaces that housed the seven restaurant closures in 2012 were quickly leased to new restaurateurs, many of whom have existing restaurants in DC, including Ashok Bajaj, Fabio Trabocchi, Richard Sandoval, Frederik de Pue and Aziz Safi. On average, each new restaurant generates $3 million to $5 million in sales, creates 50 to 80 jobs and $300,000 to $500,000 in sales tax revenue.
Destination Restaurants in the DowntownDC BID Area DowntownDC BID Area, 1999–2013 Destination Retailers, 2012 141 Square Feet 150 Ten Macy’s 227,000 Largest Forever 21 65,000 Retailers Bed Bath and Beyond 47,800 120 110 136 Dress Barn 31,000 TJ Maxx 29,000
78 H&M 26,500 90 Barnes & Noble 22,600 Zara 13,900 Urban Outfitters 12,400 Anthropologie 10,700 60 Large Retailers Subtotal 485,900
Other J.Crew 9,600 30 Retailers City Sports 8,700 Jos A Bank (2 stores) 9,200 Ann Taylor 6,700 0 Utrecht Art Supply 5,900 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 (1) Ann Taylor Loft 5,700
# Opened NA 16813910 12 8161717513 59 Guess 5,100
# Closed NA 67675514 4796874 Banana Republic 4,200 Net Change NA 10 17257-612108-1 5-25 Peruvian Connection 3,600 La Mode 3,400 (1) Projection. Source: DowntownDC BID Payless Shoe Source 3,200 Penn Camera 2,700 Nine West 2,400 Fahrney's Fountain Pens 2,300 American Apparel 2,100 W. Curtis Draper 2,000 Leica Camera 1,800 Wm. Fox & Co. 1,700 lou lou Boutique 1,600 Comfort One 1,500 Alden Shoes 1,400 Johnston & Murphy 1,300 Shoes By Lara 1,300 Geoffrey Lewis 1,300 Pua Naturally 1,100 Coup de Foudre 800 Mephisto 700 Ida's Idea 600 Department of Skate J.Crew opened in 2012 600 L’Occitane 500 and was one of two Andrew’s Ties 400 national shoppers goods Memorial/Museum/Theatre Gift Shops (13 shops) 21,500 retailers to do so. Electronics (7 stores) 10,100 Jewelry Stores (8 stores) 7,200 Specialty Book Stores (7 stores) 7,100 Art Gallery (3 stores) 2,800 Other Retailers Subtotal 142,100
Total Destination Retail Space 628,000
Sources: CoStar, Brokers and DowntownDC BID
58 DowntownDC Business Improvement District • 2012 State of Downtown Retail & Restaurants
DowntownDC BID Area Destination Restaurants, March 2013
N ST. N ST. Existing restaurant Scott Thomas Circle Circle Planned restaurant 7TH ST. 6TH ST. 5TH ST. 13TH ST. 12TH ST. 11TH ST. 10TH ST. M ST. Metro M ST. Walter E. MASSACHUSETTS AVE. Washington Source: DowntownDC BID Convention
16TH ST. Center L ST. NEW YORK AVE. L ST. L ST. 395
VERMONT AVE. K S T. Mt. Vernon K ST. Mount Vernon Triangle, K S T. Square Franklin Northwest One and NoMa McPherson Square Square EYE ST. EYE ST. NEW JERSEY AVE. Gallery Place 395
CityCenterDC Retail MASSACHUSETTS AVE. ST. CAPITOL N. H ST. H ST. NEW YORK AVE. Lafayette H ST. Square General 1ST ST. NE Accounting G ST.
13TH ST. Office G ST. Verizon G ST. Georgetown Center Union Law School Station White F ST. House 395 NEW JERSEY AVE. 3RD ST. 4TH ST . 9TH ST. 6TH ST. 5TH ST. E ST. 11TH ST. E ST. FBI 14TH ST. 15TH ST. 2ND ST. 1ST ST.
D ST. PENNSYLVANIA AVE. Ronald Dept. The Ellipse Reagan INDIANA AVE. of Labor Buiding C ST.
DELAWARE AVE. LOUISIANA AVE. 7TH ST. CONSTITUTION AVE. CONSTITUTION AVE.
NATIONAL MALL 0 N 1000 FEET
DowntownDC Destination Retail Map, March 2013
G Scott N ST. Circle Existing Destination Retail MAJOR CONNECTICUT
AVENUE RETAIL 7TH ST. 6TH ST. 5TH ST. Future Destination • Benetton 13TH ST. 12TH ST. 11TH ST. 10TH ST. Retail Space G Thomas M ST. • Betsy Fisher Circle G • Brooks Brothers Walter E. Grocery Stores MASSACHUSETTS AVE. • Burberry Washington PIERCE ST. Convention Metro • Charles Tyrwhitt L ST. Center • Gap NEW YORK AVE. Source: DowntownDC BID • Men’s Warehouse L S T. VERMONT AVE. G 395 • Nine West • Nordstrom Rack (announced) Jos A. Bank • Proper Topper K S T. Mt. Vernon K S T. • Square Rizik’s McPherson Franklin • Thomas Pink Square Square Utrecht Art NEW JERSEY AVE. • Tiny Jewel Box Supplies Ida’s Idea EYE ST. EYE ST. 395 • Victoria’s Secret CityCenterDC Department Walmart Geoffrey NEW YORK AVE. (under Lewis of Skate H ST. Mephisto and construction) H ST. G Johnston & Comfort Murphy and One GALLERY PLACE RETAIL Lafayette 1ST ST. NE Ann Taylor Macy’s Shoes MASSACHUSETTS AVE. Square Shoes • Ann Taylor Loft • Aveda G ST. by Lara Union • Wm. Fox & Co. G ST. Verizon Bed Bath and Beyond Station Dress • and W. Curtis City Sports Georgetown ST. CAPITOL N. 5 8 910 Center 3RD ST . Draper Barn 3 • Urban Outfitters 1 2 4 Law School F ST. 8. Leica White 395 NEW JERSEY AVE. MAJOR UNION Nine West 12 116 House 7 9. Mia Gemma STATION RETAIL Fahrney’s Pens 10. Alden Shoes, Cowgirl E ST. • Appalachian Spring Creamery and L’Occitane • Ann Taylor Coup 11. Anthropologie and J. Crew • Chico’s 2ND ST .
1. Banana Republic 1ST ST . de Foudre 12. Peruvian Connection • Express 2. T.J. Maxx and lou lou D ST. • Heydari 3. Guess and Andrews Ties • Jos. A. Bank 4. H&M Pua Naturally Dept. The Ellipse INDIANA AVE. of Labor • L’Occitane 5. Forever 21 • New York New York 15TH ST. and Zara C ST. LOUISIANA AVE. • Nine West 6. Jos A. Bank and PENNSYLVANIA AVE. • The Body Shop American Apparel • Victoria’s Secret 7. Barnes and Noble CONSTITUTION AVE. 12TH ST . 10TH ST . 9TH ST . CONSTITUTION AVE. 0 N 1000 NATIONAL MALL FEET
59 Transportation and access to the DowntownDC BID area from all parts of the DC region is a key competitive advantage for attracting workers, visitors and residents to the DowntownDC BID area. Continued investment in both current and future transportation modes will maintain and strengthen that advantage, and allow for the further densification of the DowntownDC BID area.
In 2011, 55% of DC residents took public transportation, biked or walked to work, an increase over 2010’s 53%. Mayor Gray’s Sustainable DC plan has set a goal of 75% by 2032. A larger percent of DC residents used non- transportation auto transportation to get to work than those who work in DC. Metrorail’s planned improvements and expansion, and the projected growth of public transportation options throughout the region, will improve access to public transportation for non-resident workers to DC.
Percentage of Residents and Workers Taking Non-Auto Transportation Modes to Work, 2011
City Residents Getting to Work Workers Getting to Work in the City from Anywhere in the Region by Non-auto Mode Anywhere in the Region by Non-auto Mode
Total Public Transit Bike Walk Total Public Transit Bike Walk New York City 68% 56% 0.8% 10.4% 67% 57% 0.7% 8.9% Washington, DC 55% 40% 3.2% 11.8% 44% 38% 1.4% 4.6% Boston 49% 33% 1.7% 14.5% 46% 37% 1.4% 7.9% San Francisco 45% 32% 3.4% 9.9% 45% 36% 2.5% 7.0% Philadelphia 37% 26% 1.8% 9.2% 37% 28% 1.5% 7.7% Chicago 35% 28% 1.4% 6.3% 38% 31% 1.2% 5.4%
Source: American Community Survey 2011, One Year Estimates
metrorail
During each non-holiday weekday in 2012, Metrorail has approximately 724,100 passengers, with 14% of that total exiting daily in the DowntownDC BID area. The number of DowntownDC BID area 2012 exits has declined by 2.0% from 2011, a larger decrease than the system-wide decline of 0.3%. Metro ridership in the Daily Metrorail Ridership Exits in DowntownDC BID area peaked DowntownDC BID Area, 1997-2012 (1) (2) in 2009, but flattened and then (Thousands) declined after the June 2009 Average Non-Holiday Weekday crash. In addition, the increase 120 Average Weekend Day or Weekday Holiday in system maintenance as part of 100 Washington Metropolitan Area 68 78 109 105 Transit Authority’s (WMATA) longer 80 term deferred maintenance and 43 38 investment project shuts down 60
parts of the system at night and on 40 19 24 the weekends. Thus, the decline in weekend and holiday ridership 20 at DowntownDC BID area exits 0 has declined by 11% whereas 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 non-holiday weekday exits have (1) Exit numbers for Metro stations in DowntownDC BID Area (McPherson Square, Metro Center, Gallery Place- declined only 4% since 2009. Chinatown, Archives-Navy Memorial-Penn Quarter, Federal Triangle, Mt. Vernon Square and Judiciary Square. (2) The MCI (now Verizon) Center opened in December 1997 at Gallery Place.
Source: WMATA
60 DowntownDC Business Improvement District • 2012 State of Downtown Transportation
Due to increased maintenance decline WMATA awarded $151 million to in weekend and holiday ridership replace and modernize 128 escalators, at DowntownDC BID area exits has including two at the Metro Center declined by 6.5% from 2011. station.
Before ridership growth can return to 2009 levels, let alone reach the system’s full potential, capital investments must be continued and increased. In February 2013, WMATA released its strategic plan, titled “Momentum – The Next Generation of Metro,” which includes goals for 2025 and 2040, and outlines the necessary investments and changes to the Metrorail and other transportation systems. It includes running eight-car trains during rush hour — instead of the current mix of eight- and six-car trains — installing new infrastructure and providing continual status updates for all modes of transportation by installing of on-site digital communication systems. At a minimum, the required investment is estimated at $3 billion by 2025. A new tunnel under the Potomac for additional Blue and Orange line trains plus the new Silver Line trains is estimated to cost another $1 billion — compared to the $2.5 billion cost of a new Woodrow Wilson bridge (built over 9 years, 1999-2008).
The Momentum strategic plan supplements the ongoing Metro Forward initiative: a $5 billion plan over six-years (2011–2016) to improve the safety, reliability and experience of Metrorail. This includes escalator, platform and track improvements. These repairs have caused significant short-term disruptions to ridership but are necessary for the long-term performance of the system. Metro Forward was substantially funded through a 10-year, $3 billion financing plan that calls each year for $300 million in regional and federal funding: $150 million from the federal government, and $50 million each from DC, Suburban Maryland and Northern Virginia.
Average Non-Holiday Weekday Metrorail Ridership Exits in DowntownDC BID Area, 2012 (1) (2) (Figures represent exit numbers only) Archives- Metro Gallery McPherson Judiciary Federal Navy Memorial- Mt. Vernon TOTAL Center Place Square Square Triangle Penn Quarter Square
2012 28,181 26,731 17,569 9,766 9,428 9,182 4,112 104,969
2011 28,940 27,188 17,682 10,098 10,050 9,218 3,948 107,123 Change -759 -458 -112 -332 -622 -36 164 -2,155 % Change -3% -2% -0.6% -3% -6% -0.4%4% -2%
1997 23,638 7,286 14,443 6,396 9,422 5,543 1,689 68,417 Change 4,543 19,445 3,126 3,370 63,639 2,423 36,552 % Change 19% 267% 22% 53% 0.1% 66%143% 53%
Metrorail Lines
(1) Exit numbers for Metro stations in DowntownDC BID Area (McPherson Square, Metro Center, Gallery Place- (2) The MCI (now Verizon) Center opened in Chinatown, Archives-Navy Memorial-Penn Quarter, Federal Triangle, Mt. Vernon Square and Judiciary Square. December 1997 at Gallery Place.
Source: WMATA
61 dc circulator
The Convention Center-Southwest Waterfront route was replaced in 2011 with the Potomac DC Circulator Annual Ridership, 2006–2012 Avenue-Skyland route, and this change (Millions) accounted for the decrease in ridership in 2012, 5.8 5.7 6.0 but is part of the 10-year Circulator plan for 4.9
future development growth. Ridership increases 5.0 4.0 are expected as development continues east of the river in Anacostia and when the new retail 4.0 space and residential units are completed at 2.7 2.4 Skyland over the next few years. 3.0 2.1
2.0 Ridership for the previously existing lines, including the two routes that pass through 1.0 the DowntownDC BID area, was flat despite a slight decline in vehicle revenue hours. The 0.0 Annual Percent 2006 2007 2008 2009 2010 2011 2012 maintained ridership reflects more efficient Increase in: scheduling and vehicle deployment. Ridership – 16% 14% 46% 21% 19% -1%
Vehicle Revenue Hours – -1% 14% 43% 9% 12% -4%
Number of Routes 3 3 3 5 7 5 5
Source: WMATA
streetcar
The H Street NE-Benning Road section of the Proposed DC Streetcar System Lines One City streetcar line is under construction
and scheduled for completion in late 2013/early ST 16TH 2014. Concerns over the location of the state- of the-art maintenance facility unexpectedly AVE GEORGIA
MILITARY RD
CONNECTICUT AVE
delayed the start of final construction as the ST 14TH track was laid down several years ago during MASSACHUSETTS AVE a standard neighborhood commercial center WISCONSIN AVE streetscape upgrade. Mayor Gray’s FY 2014 MICHIGAN AVE
Proposed Budget has allocated $400 million RHODE ISLAND AVE through 2019 for a total commitment to-date of $540 million of the $1 billion 22-mile Priority K ST H ST Street Car lines that represent Phase One of BENNING RD 8TH ST
the originally planned 37-mile system. The 7TH ST INDEPENDENCE AVE One City Line that runs from Benning Road to M ST Georgetown will be operational in 2017 at the PENNSYLVANIA AVE
GOOD HOPE RD
earliest. The remainder of funding will come POTOMAC RIVER
from federal highway funds for streetscape MLK JR AV
improvements and Pay-Go capital projected to E be available in the years 2015 through 2021. Phase 1 (22 miles): 2013-2019 The North-South streetcar line of the Priority Under Construction System is anticipated to be completed from Remainder of Priority System
2016 through 2019. Phase 2 (15 miles)
Existing Metrorail N DC will soon join the 18 U.S. cities that have added streetcar or light rail in the past 15 years to their downtown transit options including Cincinnati, Dallas, Denver, Houston, Phoenix, Portland, Salt Lake City and Seattle.
62 DowntownDC Business Improvement District • 2012 State of Downtown Transportation
Capital Bikeshare Data: 2011-2012 (1)
Jan. 2011 Jan. 2013 % Change Number of Bicycles 1,170 1,700 45% Number of Members 19,000 22,000 16%
Member Trips 2011 trips 2012 trips % Change Total System 985,700 1,664,700 69% Ending in the 144,000 253,200 76% DowntownDC BID Area (14.6% of DC) (15.2% of DC)
Pass Trips Total System 247,000 372,700 51% Ending in the 51,600 74,200 44% DowntownDC BID Area (20.9% of DC) (19.9% of DC)
(1) System opened in September 2010. Sources: Capital Bikeshare and DowntownDC BID
In December 2012, the L street protected bike lane was officially opened by Mayor Vincent C. Gray (center), the DowntownDC BID’s Ellen Jones and Megan Kanagy, DDOT’s Sam Zimbabwe and Washington Area Bike Association’s Shane Farthing (from left).
walking & biking
DC has made investments to improve the safety and experience of biking and walking by installing dedicated and protected bike lanes, adding bike parking and making sidewalk and streetscape improvements. The DowntownDC BID area is increasingly becoming a bike and pedestrian-friendly environment. Within its square mile/138-block area, there are 17 Capital Bikeshare stations, with seven more planned, 1,200 bike parking spaces and 6.5 miles of bike lanes. The transit alternatives will improve the ease of travelling within downtown, and potentially increase unplanned retail purchases.
Capital Bikeshare is the largest bike sharing system in the U.S. as of April 2013, but several U.S. cities have aggressive plans for implementing their own bike sharing systems. 63 The DC government recorded its 16th consecutive budget surplus in FY 2012, ending September 30, 2012. The $417 million surplus was due to additional revenues of $266 million (64% of the surplus), under spending of $117 million (28%) and other adjustments of $34 million (8%). The city placed 100% of this surplus into the “rainy day” fund section of its reserves. The city’s reserves now total $1.507 billion, just shy of their September 30, 2005 level of $1.585 billion. The city’s “rainy day” fund is now $781 million dc financial as the remainder of the $1.5 billion reserve is reserved for specific needs.
overview As the impact of sequestration became better understood, and the city enjoyed unexpected increases in individual and business income taxes and non-hotel sales taxes, a surplus of approximately $190 million for FY 2013 is projected.
The city’s strong revenue outlook resulted in Mayor Gray’s recently released proposed budget for FY 2014 with no new taxes.
DC’s General Fund Budgetary Surplus/Deficit and Cumulative Fund Balance History, 1992–2012 (Millions of $) $1,507
$1,500 Cumulative Fund Balance Budgetary Basis Surplus / Deficit
Revitalization Act $1,585 $931
$1,000 $1,245 $465
$515 $500 $444 $446 $417 $325 $224 $292 $256 $281 $240 $191 $140 $109 $58 –$9 –$110 –$147 –$61 $48$54 0
– $518
-$500 949392 95 96 97 98 99 00 01 02 03 0504 06 07 08 09 121110
Source: DC Comprehensive CONTROL PERIOD Annual Financial Reports
DC has legislated a goal of $1 billion in Locally Mandated Reserve, equivalent to two months of local general fund expenditures, which will be funded by having at least 50% of any year’s surplus placed in the Locally Mandated Reserves. As of September 30, 2012, the Locally Mandated Reserves totaled $781 million. The September 30, 2013 projection is $878 million.
Composition of DC General $81 $188 Fund Balance, 2007-2012 (In Millions of $) $149 $87
$592 $409 $136 Unassigned/ Assigned $91 $442 Policy Decisions Reserved $246 $91 Restricted by External Factors $194 Locally Mandated Reserves $185 $173 Emergency/Contingency Cash Reserve $209 $158 Restricted for Debt Service $338 $339 $339 $309 $330 $284
$327 $210 $232 $288 $345 $388
TOTAL FUND BALANCE: $1,494 $1,245 $920 $890 $1,105 $1,507 9/30/07 9/30/08 9/30/09 9/30/10 9/30/11 9/30/12 Source: DC Comprehensive Annual Financial Reports
64 DowntownDC Business Improvement District • 2012 State of Downtown DC Financial Overview
The city currently enjoys very low borrowing costs due to (1) the low general level of interest rates, (2) the use of its AA/AAA rated Income Tax Secured Revenue Bonds, and (3) the AA ratings on its general obligation bonds.
DC’s Municipal Bond Ratings, 1992–April 2013 INCOME TAX SECURED REVENUE BONDS
CURRENT RATINGS OUTLOOK AA/AAA AAA Standard and Poor’s Stable AA Aa1 Moody’s Stable A/AA AA+ Fitch’s Stable
A
BBB/A GENERAL OBLIGATION BONDS BBB CURRENT RATINGS OUTLOOK BB/BBB INVESTMENT GRADE AA – Standard and Poor’s Stable BB Aa2 Moody’s Negative (1) B/BB AA – Fitch’s Stable
1/921/93 1/94 1/95 1/96 1/97 1/981/99 1/00 1/01 1/02 1/03 1/041/05 1/06 1/07 1/08 1/09 1/10 1/111/12 1/13
Source: DC Office of the Chief Financial Officer (1) Moody’s Sept. 20, 2011 Press Release: “ . . . reflects the District’s unique exposure, as the nation’s capital, to federal government downsizing and the risk that such a downsizing could have on the finances of the District.”
The two rating agencies Moody’s and Fitch have rated DC’s general obligation bonds at AA levels since April 2010, though Moody’s gave DC a negative outlook qualification in September 2011 because of the potential impact of any federal government downsizing on the city. In March 2013, the Standard and Poor’s (S&P) rating agency upgraded its rating of DC general obligation bonds to AA- from A+. S&P said the upgrade reflected the city’s “improved financial position that has been strengthened by recent strong revenue performance as well as the rebuilding of reserves in accordance with…recently new reserve policies.” While giving DC a stable outlook, the rating agency cautioned about the possibility of tougher times ahead by saying “In light of the uncertainty about how some of the sequester cuts could be implemented and the exact impacts on the District’s future budget and economic activity, we believe a further upgrade is limited at this time.”
The FY 2013 projected surplus and an increase in revenues of approximately $180 million for FYs 2014 – 2017, allowed Mayor Gray to issue a robust proposed FY 2014 Budget with an increase in spending over FY 2013 of $293 million in the Local General Fund, or an increase of 5%. More importantly, the Mayor has proposed an increase in the city’s capital budget of $370 million in FY 2014 and another $910 million for FYs 2015 – 2018 as part of a total capital budget of $6.2 billion over the next six years. This investment increase remains within the city’s self-imposed limit on debt service as a percent of local general fund expenditures of 12%.
Debt Service as % of Expenditures, 1992–2018 (As of September 30 of each fiscal year)
15% 11.9% Cap on Debt Service as % of Expenditures = 12% 10.9% 12% Revitalization Act 9% 10.6% 11.6% 10.2% 10.0%
11.5% PROJECTIONS 6% Based on Dec. 31, 2012 8.3% Proceeds of 2001 tobacco bonds Assumes all new revenue from used to redeem $482 million of Feb. 2013 Revenue Estimates 3% outstanding GO bonds is spent and $200 million in new revenue in 2017 and 2018
0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 CONTROL PERIOD
Sources: DC Office of the Chief Financial Officer and the DowntownDC BID
65 Commercial property tax revenues have grown from 12% of total local tax revenues in 2000 to a peak of 23% in 2010. Because other revenues, particularly individual and corporate income taxes, have grown faster than assessment values, commercial property taxes accounted for 19% of total local revenues in 2012 and are expected to be between 19% and 20% for the next 5 years.
Commercial Property Tax Revenue History, Fiscal Years 1995-2017 (1)
$1,500 Total Annual Commercial Property $1,220 $1,221 $1,233 Tax Revenues (Millions of $)
$1200 $1,385 $709 $900 $438 $409 $600 ESTIMATE (2) $300
0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 NA -20 -4 -1 -13 9156265847464198 150100 -1 -71721247283343 Yearly Dollar Change in Commercial Property Tax Revenues 23% 19% 19% 25% Commercial Property Tax Revenues as a Share of Total Local Revenues (%) 20% 15%
15% 20%
10% 16% 12% 5%
0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Sources: DC Office of the Chief Financial Officer (OCFO) and the DowntownDC BID (1) Assumes commercial property tax revenues to be 67% of real property tax revenues. (2) From OCFO February 2013 revenue estimate.
Commercial property taxes continue to increase on a per SF basis, as annual increases in assessments are not offset by reductions in the commercial property tax rate. Thus, future commercial tax bills remain unpredictable for both property owners and the city, resulting in expensive and time-consuming assessment appeals by property owners and unnecessary revenue uncertainty for the city. Implementation of a limit on increases or decreases in property tax revenues of 3% to 5% could be very productive in creating a more predictable future for both property owners and the city, and enhance the city’s competitive position within the region.
DC Historical Commercial Property Assessment, Annual Percent Change, Fiscal Years 1995-2014
30%
28% 25 2000-2012 26% Annual Growth 20 Rate of 10.7% 19% 14% 15 13%
10 11%11% 9% 9% 7% 7% 8% 5 3% 2% 0 -3% -0.4% -5%-5% -5 -6%
-10 -13% 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Sources: Comprehensive Annual Financial Reports (FY95-FY12) and DowntownDC BID (FY13 - FY14)
66 DowntownDC Business Improvement District • 2012 State of Downtown DC Financial Overview
DC Gross Local Tax and Other Revenues, Fiscal Years 1995-2017
7.0 $8 DC Gross Revenues 6.5 6.6 (Billions of Dollars) 6.4 5.4 4.7 $6 3.4
$4 2.7
ESTIMATE (1)
$2
0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
16% Growth of DC Gross Revenues (Percent change from prior year) 9-Year Average Annual 9-Year Average Annual Growth Rate for DC Gross Growth Rate for Consumer 12% Local Revenue of: 5.6% (2) Price Index of: 2.5% (3) (4)
8%
4%
0
-4%
-8% 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
(1) From OCFO February 2013 revenue estimate. (2) The 17-year annual DC Gross Local (3) Not Seasonally Adjusted, as measured (4) The 17-year Consumer Price Revenue Growth average is 5.1%. in January. The 9 year average is Index average is 2.4%. Source: DC Office of the Chief Financial Officer (OCFO) January 2003 to January 2012.
Selected DC Tax Rate History, Fiscal Years 1996–2014 Increase from prior year Decrease from prior year Commercial Office Real Residential Real Deed Recordation Individual Income Tax Income Tax Property Tax Property Tax (1) and Transfer Tax Sales Tax Lowest Highest Multi-family Single General Restaurant Hotel 1996 6% 9.5% 9.975% 2.15% 1.54% 0.96% 2.20% 5.75% 10% 13.0% 1997 6 9.5 9.975 2.15 1.54 0.96 2.20 5.75 10 13.0 1998 6 9.5 9.975 2.15 1.54 0.96 2.20 5.75 10 13.0 1999 6 9.5 9.975 2.15 1.54 0.96 2.20 5.75 10 14.5 2000 5 (2) 9.5 9.975 2.05 (2) 1.34 0.96 2.20 5.75 10 14.5 2001 5 9.3 (2) 9.975 1.95 (2) 1.15 0.96 2.20 5.75 10 14.5 2002 5 9.3 9.975 1.85 (2) 0.96 0.96 2.60 5.75 10 14.5 2003 5 9.3 9.975 1.85 0.96 0.96 3.00 (4) 5.75 10 14.5 2004 5 9.3 9.975 1.85 0.96 0.96 3.00 (4) 5.75 10 14.5 2005 5 9.0 (2) 9.975 1.85 0.96 0.96 2.20 5.75 10 14.5 2006 5 (2) 8.7 (2) 9.975 1.85 0.92 0.92 2.20 5.75 10 14.5 2007 4 (2) 8.5 (2) 9.975 1.85 0.88 0.88 2.90 (5) 5.75 10 14.5 2008 4 8.5 9.975 1.85 0.85 0.85 2.90 (5) 5.75 10 14.5 2009 4 8.5 9.975 1.85 (3) 0.85 0.85 2.90 (5) 5.75 10 14.5 2010 4 8.5 9.975 1.85 (3) 0.85 0.85 2.90 (5) 6.00 10 14.5 2011 4 8.5 9.975 1.85 (3) 0.85 0.85 2.90 (5) 6.00 10 14.5 2012 4 8.95 9.975 1.85 (3) 0.85 0.85 2.90 (5) 6.00 10 14.5 2013 4 8.95 9.975 1.85 (3) 0.85 0.85 2.90 (5) 6.00 10 14.5 2014 4 8.95 9.975 1.85 (3) 0.85 0.85 2.90 (5) 6.00 10 14.5
(1) Residential property taxes are currently impacted by the following: a) The property’s taxable assessment increase is limited by a cap of 10%. b) Residential revenue increases are limited to 8%. Any projected increase due to this amount is used to reduce the residential tax rate (as happened in 2006–2009). c) All property is subject to a minimum taxable assessment equal to 40% of market assessments by the DC government. (2) These rates were reduced by the Tax Parity Act passed in 1998, which allowed for reduced rates if the national and DC economies were growing and DC tax revenues were growing. (3) The tax rate on the first $3 million of assessed value is 1.65%. (4) Deed and recordation tax for non-owner occupied property is 3.0%; for owner occupied property sold under $250,000 is 2.6%. (5) Deed and recordation tax for property sold for $400,000 and above is 2.9%; for properties sold under $400,000 is 2.2%.
Source: DC Office of the Chief Financial Officer 67 The DowntownDC BID area will generate a net fiscal impact of $690 million in FY 2013. When combined with the Golden Triangle BID area, the Downtown will generate $1 billion in new tax revenue. This fiscal impact is similar to that in other downtowns, which have high density and fewer needs for city services than other areas. But healthy neighborhoods are required to support a healthy downtown, and healthy downtowns are required to help fund improvements in the neighborhoods.
The DC government invested in the DowntownDC BID area and the rest of the Center City, which has resulted in a return five times that of the downtown investment through cumulative tax revenues through 2012. This revenue has supported citywide initiatives and investments. To maintain the growth fiscal impact in tax revenues, DC continues to strategically invest in the Center City.
Mayor Gray’s proposed FY 2014 budget funds the following important economic development and infrastructure investments that will then create thousands of jobs and hundreds of millions of dollars in new annual tax revenues: In the DowntownDC BID area nn23 new positions in the Office of the Deputy Mayor for Planning and Economic Development Downtown’s Net Fiscal Impact, FY 2013 nn$500,000 for park planning (in addition to the $300,000 for FY 2013) DowntownDC BID Area In Millions nnSeveral million dollars for enhanced nighttime DC Local Tax and Other Revenues $1,085 services in the Downtown Entertainment Zone Estimated Fiscal Costs –394 nn$103 million for planning, redeveloping, and Net Fiscal Impact $690 possible expansion of the Martin Luther King Jr. central library Golden Triangle BID Area nn$400 million for the DC Streetcar System nn$700 million for WMATA DC Local Tax and Other Revenues $527 Estimated Fiscal Costs –190 In other Center City sub-markets Net Fiscal Impact $337 nn$13 million for Poplar Point nn$18 million for the DC Water site in Total Downtown Area Capitol Riverfront DC Local Tax and Other Revenues nn$50 million for parks in NoMa $1,612 nn$56 million for St. Elizabeths East Campus Estimated Fiscal Costs –585 nn$475 million for a new Frederick Douglass Bridge Net Fiscal Impact $1,027
In the neighborhoods outside of Center City Downtown Revenue Share of nn$2.3 million for Walter Reed Total DC Gross Local Revenue of 25% $6.48 billion in FY 2013 nn$40 million for Skyland n n$48 million for McMillan Reservoir Source: DowntownDC BID nn$50 million for affordable housing nn$1.8 billion for new public schools and school renovations
DC Government Economic Development and Infrastructure Investments and Returns Summary
INVESTMENT Private and DC Gov’t as Annual Cumulative Jobs DC Gov’t Federal Sectors % of Private Taxes Taxes + Created (Millions) (Millions) and Federal (Millions) (Millions) 1995-2012 DowntownDC BID $505 $10,472 4.8% $420 $3,526 63,500 Rest of Center City 733 14,303 5.1 454 2,665 65,700
2013-2020 DowntownDC BID $217 $4,817 4.5% $222 $7,481 17,400 Rest of Center City 260 13,915 1.9 557 8,391 47,300
1995-2020 DowntownDC BID $722 $15,289 4.7% $725 $11,007 80,900 Rest of Center City 993 28,218 3.5 1,021 11,056 113,000
Sources: Washington DC Economic Partnership and DowntownDC BID
68 DowntownDC Business Improvement District • 2012 State of Downtown Downtown Fiscal Impact
The DowntownDC BID area has five million SF of development capacity remaining. Each SF of downtown development DC’s Development Capacity (As of April 2012) results in between $14 and $71 in annual tax revenue to the SF % city. Combined with the areas outside of the DowntownDC DowntownDC BID Area 5 4% BID area, DC has 122 million SF in total development capacity CBD, West End and Georgetown 5 4% that is expected to yield between $800 million and $1 billion REST OF CENTER CITY in tax revenues upon full build out. Developments have been Mount Vernon Triangle 5 4% planned for much of the vacant land and underutilized space in NoMa 18 15 the Center City area, but market factors will determine the rate Capitol Riverfront 18 15 at which it develops. Southwest 5 4
The large project areas ADJACENT TO CENTER CITY need infrastructure 14th and U Streets 4 3% investments before Fiscal Impact of Downtown H Street, NE 2 2 development DC Development by Type LARGE PROJECT AREAS can occur. The Taxes Generated St Elizabeths 6 5% developments 100,000 Poplar Point 6 5 adjacent to the Center Per SF SF Project Hill East 2 2 City and elsewhere in Restaurant $71 $7,100,000 McMillan Reservoir 1 1 DC neighborhoods are Hotel $60 $6,000,000 Walter Reed 3 2 primarily smaller infill Retail $38 $3,800,000 OTHER BY WARD projects that respond Condo $15 $1,500,000 Ward 1 2 2% to localized market Ward 2 1 1 Office $14 $1,400,000 demand. Ward 3 2 2 Apartment $14 $1,400,000 Ward 4 4 3 Source: DowntownDC BID Ward 5 10 8 Ward 6 1 1 Ward 7 15 12 Ward 8 7 6 TOTAL 122 100% Upon completion, the Walmart mixed-use project, located just Source: DowntownDC BID outside the DowntownDC BID area, will generate $14 million in annual tax revenue.
101 Constitution Avenue, NW, has the second highest DC real property taxes in the DowntownDC BID area.
Five significant downtown projects are expected to yield $124 million in new annual tax revenues.
Fiscal Impact of Future Downtown Projects (All figures in millions of $) DC Tax Revenues Generated Project Project Size Total Property Sales Income CityCenterDC Phase 1 700 30 12 13 5 Phase 2 150 11 4 7 - Phase 3 200 12 7 3 2 Marriott Marquis Hotel 550 21 9 12 - Old Post Office Hotel Project 200 12 3 9 - Capitol Crossing 1,250 24 15 3 6 (I-395 Air Rights Project)
Walmart Mixed Use Project at H Street 215 14 7 3 4
TOTAL 3,265 124 57 50 17 Source: DowntownDC BID
69 The DowntownDC BID area and DC are holding their own in all major economic sectors, but they both face significant competition from Suburban Maryland and Northern Virginia on cost and, increasingly, on amenities. regional Below is a sector-by-sector overview of regional competition: Office Market: Vacancies left by BRAC, concerns over federal government competition leases, employment and expenditures, and densification have increased regional competition for office tenants in the Washington region. Given that the office market employs an estimated 63% of DC’s 732,000 jobs, and the office market generates an estimated $900 million a year in property taxes, the city must pay close attention to office market dynamics.
Hotel Market: The city is developing more than 3,000 new hotel rooms and enjoying premium room and occupancy rates. However, many tourists stay at hotels in Suburban Maryland and Northern Virginia as the room rates can be substantially lower in those markets.
Housing Market: The city has a 24% market share of the current regional Class A multi-family construction, but only 11% of the region’s population. A DC renter with a taxable income of $60,000 will pay approximately $700 less in taxes than if they rented in Suburban Maryland but $800 more than if they rented in Northern Virginia.
Retail Market: With the upcoming opening of CityCenterDC shoppers goods retail, the opening of six Walmarts, and the new openings or redevelopment of several full service grocery stores, DC is moving to substantially reduce its retail leakage. It is possible the DowntownDC BID area will soon join Georgetown as a regional shopping district in DC and compete with large suburban malls.
Restaurant Market: DC has the highest number of destination restaurants in the region, and imports millions of dollars of restaurant sales taxes.
In 2012 and the first quarter
(1) of 2103, two major DC office Regional Tenant Movement Data for DC Office Market, 2001-2014 (Thousands of SF) tenants, totaling 206,000 SF, Private and announced they were leaving DC: Tenants Moving Out of DC Government Tenants Tenants Tenants DC Net By New Location Moving to/from Moving Moving Tenant Private Space Into DC Out of DC Movement Maryland Virginia Intelsat is moving from its current
2014 --- -188 -188 --- 100% headquarters near the Van Ness 2013 141 -34 107 --- 100 Metro station—which it sold in 2012 33 -248 -215 10% 90 2012—to Tysons, where it is leasing 2011 84 -163 -79 2 98 188,000 SF. 2010 302 -74 228 47 53 2009 43 +=-192 -149 82 18 Patton Boggs is moving its back 2008 88 -813 -725 11 89 office operations from the city’s 2007 52 -425 -373 11 89 West End to Tysons, where it is 2006 82 -890 -808 15 85 leasing 18,000 SF. 2005 101 -614 -513 21 79 2004 17 -478 -461 52 48 2003 155 -306 -151 22 78 2002 15 -106 -91 1 99 2001 134 -60 75 17 83 Subtotal 1,247 -4,591 -3,344 21% 79%
Federal Agency Moves NavSea (2001-2003) 1,050 --- 1,050
TOTAL MOVEMENT 2,297 -4,591 -2,294 21%79%
Sources: DowntownDC BID, CoStar, Washington DC Economic Partnership, Cassidy and Pinkard and Jones Lang LaSalle (1) Data as of March 1, 2013.
70 DowntownDC Business Improvement District • 2012 State of Downtown Regional Competition
On the tax front, FY 2014 has had the following proposed and enacted suburban tax rates and other tax increases:
nnVirginia has increased its general sales tax rate to 5.3% from 5.0% (1% of which is designated for its counties), and with an additional increase in Northern Virginia of 0.7% for a total of 6.0%. The new Northern Virginia general sales tax rate is effective July 1, 2013. This increase will fund transportation infrastructure. nnNorthern Virginia has increased its base commercial and residential property tax rates slightly. These increases will fund traditional government services. nnFairfax has approved a special assessment tax, recommended to be between 0.07% and 0.09%, for the Tysons Service District. This increase will fund an urban street grid and streetscape. nnMaryland increased it gas tax rate per gallon. The increase will fund transportation infrastructure.
Suburban building owners and local governments recognize that tenants and residents want traditional urban amenities and are investing to become more competitive. Buildings and sub-markets are being repositioned with large capital and infrastructure investments. These include transportation investments that will allow for new central activity centers outside of DC’s Center City core. While DC has the central location, amenities and placemaking advantage, these advantages are offset by the city’s significant cost disadvantage relative to the suburbs, which is a combination of market rents and higher DC property tax rates. Some of this cost disadvantage is declining as suburban taxes increase to pay for infrastructure and urban amenity investments.
DC’s commercial real property and corporate tax rates are significantly higher than those in the region’s other jurisdictions. While some premium is warranted because of the amenity base and location, bringing the rates into alignment with the rest of the region would better position DC and the DowntownDC BID area to capture their share of growth in office space and corporate tenants. The increase in office space and corporate tenants would further protect DC tax revenues from potential federal decreases.
To maintain DC’s competitive edge and protect Top Ten Largest DC Tenant Moves Into/Out of and grow its tax revenue base, the city should Maryland and Virginia, 2001-2014 continue with its own economic development and infrastructure investments, and implement Largest Moves In Size Year a phased, contingent and modest program of 1. NavSea 1,050,0001,050,000 SFSF 2001-2004 tax rate reduction for commercial property and 2. CoStar 151,000151,000 2010 business income. 3. Anteon/Alion Corporation 123,000123,000 2003 4. Northrop Grumman 92,000 2001 5. Georgetown Continuing Studies 90,00090,000 2013 6. American Chemistry Council 87,00087,000 2010 7. American College of Cardiology 85,00085,000 2005 DowntownDC BID Area Average Real Property (1) 8. Independent Community Bankers of America 51,00051,000 2006 Taxes Per SF, Tax Years 2000–2014 9. United Negro College Fund 50,00050,000 2013 $10.32 $1212 10. U.S. Parole Commission (DOJ) 36,00036,000 2011 $1010
Largest Moves Out 8$8 $5.91
1. FDIC 474474,000,000 SSFF 2006 6$6 $9.72 $9.78 $3.03 $7.84 2. Corporate Executive Board 465,465,000000 2008 4$4 3. The Bureau of National Affairs, Inc. 2250,00050,000 2007 2$2 4. Intelsat 1188,00088,000 2014 5. PriceWaterHouse Coopers 1182,00082,000 2007 0 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 6. Union Labor Life Insurance Corporation 154,154,000000 2004 $148 $150 $213 $231 $276 $298 $319 $410 $489 $526 $518 $425 $508 $530 $559 7. Microsoft 134,00134,0000 2009 (2)(3) DowntownDC BID Area Sample Value Per SF 8. Carlyle Group 1131,00031,000 2012 (1) Based on assessments of a sample of office properties in the Downtown BID; 9. Towers Watson & Co. 1122,00022,000 2005 sample size increased from 31 to 41 for years 2007-2014. 10. KPMG 117,117,000000 2011 (2) Reduced by 2.2% from the initial March 2012 assessment of $542 per SF through appeals. (3) Based on assessments as of March 2013, before any appeals.
Sources: Washington DC Economic Partnership, CoStar, and the DowntownDC BID Source: DowntownDC BID
71 cost competition
Real Estate Costs
DC’s relative costs for real estate (1) taxes, total real estate costs, Regional Commercial Real Property Tax Rates and corporate income taxes are As a % of DC Tax Rate, Fiscal Year 2014 (Proposed as of March 2013) higher than those in the suburbs. 100% DC commercial real property tax At this level jurisdictions’s tax rate is equal to DC. rates are 20% to 80% higher than its closest suburban competitors. 80% 82% 79% 78% Additionally, market demand has 67% resulted in higher assessment 60% 63% 65% values and in higher commercial 56%
property taxes per SF. DC’s 40% FY 2014 commercial property
tax competitive disadvantage 20% is between $5 and $12 per SF, depending on what DC office 0 sub-market is being compared to Alexandria Crystal City Rosslyn Tysons Reston Bethesda Silver Spring what suburban office sub-market. ARLINGTON FAIRFAX MONTGOMERY
The suburban commercial Virginia Maryland property tax rates, proposed as (1) Includes base tax rate plus BID taxes, stormwater fees/taxes, the Silver Line special assement and tax district, and Arlington and Fairfax transportation taxes. of March 2013, have increased Sources : DC Mayor's Budget, Virginia Department of Planning and Budget and Maryland Department of Budget and Management and therefore decreased the tax differential from DC by $0.07 to $0.50 per SF. Much of these tax increases are dedicated toward transportation investments, like the Silver Metrorail Line on the Arlington and Alexandria Streetcar lines. Even with the proposed suburban tax increases, a Class A office tenant would save $5 to $12 million on a 100,000 SF 10-year lease by moving from DC to the suburbs. Typically, 50% or more of the higher property tax cost in DC is due to higher property values in the District and not the city’s higher tax rates.
Corporate Income Taxes Regional Commercial Income Tax Rates Virginia’s 6.0% business tax rate is As a % of DC Tax Rate, Fiscal Year 2014 (Proposed as of March 2013) 60% of DC’s 9.975% rate, which creates attractive cost savings for 100% for-profit companies. Maryland’s At this level jurisdictions’s tax rate is equal to DC.
rate of 8.25% is 83% of DC’s. 80% 83% 83% Combined with the real estate
costs, the cost premium for doing 60% business in DC is substantial. 60% 60% 60%
40%
20%
0 Alexandria Arlington Fairfax Montgomery Prince George’s
Virginia Maryland
Sources : DC Mayor's Budget, Virginia Department of Planning and Budget and Maryland Department of Budget and Management
72 DowntownDC Business Improvement District • 2012 State of Downtown Regional Competition
Competitive Disadvantage of DC’s Office Property Tax Rate, FY 2014 (Proposed as of March 2013)
DowntownDC Virginia Maryland (a) BID Arlington Fairfax Silver Alexandria Crystal City Rosslyn Tysons Reston Bethesda Spring
FY 2014 Total Office 1.762% or (b) 1.053% 1.191% 1.224% 1.550% 1.487% 1.269% 1.474% Property Tax Rate 1.879%
Tax Rate on First $3 million 1.650% 1.026% 1.008% 1.008% 1.095% 1.095% 1.224% 1.429% of Assessed Value
Tax Rate on Assessed Value 1.850% 1.026% 1.008% 1.008% 1.095% 1.095% 1.224% 1.429% Over $3 Million
Business Improvement Tax 0.030% (c) - 0.045% 0.078% - 0.047% (g) - (h) - (h) Stormwater Tax 0.002% (d) 0.005% 0.013% 0.013% 0.020% 0.020% 0.003% 0.003% Transportation Tax - 0.022% (e) 0.125% 0.125% 0.125% 0.125% 0.042% 0.042% Silver Line Special - - - - 0.220% 0.200% - - Assessment
Tysons Service District - - - - 0.090% (f) - - -
150,000 Class A Building Example
■ Value in Submarket $600 $400 $400 $450 $300 $350 $400 $275 ■ Tax Rate 1.875% 1.053% 1.191% 1.224% 1.550% 1.487% 1.269% 1.474% ■ Taxes Per SF $11.252 $4.212 $4.764 $5.508 $4.650 $5.205 $5.076 $4.054
DC Taxes Per SF Competitive Disadvantages NA $7.04 $6.49 $5.74 $6.60 $6.05 $6.18 $7.20
■ Due to Tax Rate NA $3.29 $2.74 $2.93 $0.98 $1.36 $2.43 $1.10 — % of Difference NA 47% 42% 51% 15% 22% 39% 15% ■ Due to Higher Value NA $3.75 $3.75 $2.81 $5.62 $4.69 $3.75 $6.10 — % of Difference NA 53% 58% 49% 85% 78% 61% 85%
(a) Includes state, countywide, regional, and special service area taxes. (e) Alexandria may tax an additional 0.125% on commercial properties for (b) Reflects the range for buildings assessed at $5 million to $200 million. transportation. The tax is being considered as an additional alternative for FY2014. (c) The DowntownDC BID's FY14 rate is $0.16 per SF. (f) The Tysons Service District was approved January 8, 2013 and will be applied to properties in Tysons and along the Dulles Toll road. (d) Estimate based on 10 FAR and building value of $650 per SF. (g) Reston has an additional 0.047% tax for the Reston Community Center District. (h) The Bethesda Urban Partnership and the Silver Spring Urban District are funded Source: DowntownDC BID through the parking district and urban district components of the tax rate.
Regional Development Capacity (As of April 2012) SF SF (MM’s) (MM’s) Downtown 10 Maryland 240 I-270 Corridor 100 Rest of DC 112 Other Montgomery County 40 Center City 46 PG County 100 Large Projects 18 Virginia 250 Neighborhoods 48 Tysons Corner 100 Other NoVa 150
Total for DC 122 Total for MD and VA 490
Source: DowntownDC BID
The region has 612 million SF of development capacity 1812 N Moore, a spec 580,000 remaining, including 122 million SF located in DC. SF office building in Rosslyn, Development is not guaranteed to occur in DC before the rest Virginia, will be the tallest building of the region, particularly if demand is stronger outside of DC. in Arlington upon delivery later This would delay the $800 million to $1 billion of annual DC tax in 2013. It has yet to sign any tenants, but has been advertising revenues generated by this future development. its lower taxes. 73 Over the past 13 years, 2.3 million SF of space has left DC on a net basis. This translates into between $37 million and $44 million of lost potential tax revenues.
Cost to DC of Tenants That Have Moved Out of DC, 2001-2014 Share of Employees Moving Homes to Follow Job
A) 3.3 million SF of private office space has left (on a net basis) 50% 100% “Lost” Tax Revenue Estimates (1) Property Taxes $27.8 million $27.8 million Sales Taxes From Employees (2) 2.3 2.3 Individual Income Taxes (3) 10.0 20.1 $40.1 million $50.2 million
B) 1.0 million SF of federal agencies have moved into federal space (on a net basis) “Gained” Tax Revenue Estimates Property Taxes (4) NA NA Sales Taxes From Employees (5) –$0.9 million –$0.9 million Individual Income Taxes (6) –$2.6 –$5.3 –$3.5 million –$6.1 million
C) Total (A + B): 2.3 million SF of space has left (on a net basis) Net “Lost” Tax Revenue Estimates Property Taxes $27.8 million $27.8 million Sales Taxes From Employees 1.4 1.4 Individual Income Taxes 7.4 14.8 $36.6 million $44.0 million NA = Not Applicable (1) 2.2 million SF * $450 per SF * 1.85%. (2) 3.2 million SF / 250 SF per employee (= 10,900 employees) * a. (210 work days less 20 days off) * 80% employees eat out in DC* $8 per person * 10% tax rate b. Each employee spends $300 per year on shoppers goods in DC * 6% tax rate c. Each employee goes out to dinner in DC ten times a year * $30 per dinner * 10% tax rate (3) 3.2 million SF / 250 SF per employee * 30% of employees live in DC (= 3,280 DC Residents) a. 50% of employees move: 3,280 * 50% * $ 5,000 in income taxes per year b. 100% of employees move: 3,280 * 100% * $5,000 in income taxes per year (4) Because there was a net gain of federal office space, the amount “gained” is negative. (5) 1.1 million SF / 200 SF per employee (= 3,000 employees) * a. (210 work days less 20 days off) * 80% employees eat out in DC* $8 per person * 10% tax rate b. Each employee spends $300 per year on shoppers goods in DC * 6% tax rate c. Each employee goes out to dinner in DC ten times a year * $30 per dinner * 10% tax rate. (6) 1.1 million SF / 200 SF per employee * 20% of employees live in DC (= 600 DC Residents) a. 50% of employees move: 600 * 50% * $ 5,000 in income taxes per year b. 100% of employees move: 600 * 100% * $5,000 in income taxes per year
Sources: Washington DC Economic Partnership, CoStar, and the DowntownDC BID
DC’s higher corporate income tax Regional Commercial Income Tax Rates, Fiscal Year 2014 (Proposed as of March 2013) rates are a reason why relatively few large taxable businesses have 10% 9.975% operations in the city.
8% 8.25%8.25%
6% 6.0% 6.0% 6.0%
4%
2%
0 DC Alexandria Arlington Fairfax Montgomery Prince George’s Virginia Maryland
Sources : DC Mayor's Budget, Virginia Department of Planning and Budget and Maryland Department of Budget and Management
74 DowntownDC Business Improvement District • 2012 State of Downtown Regional Competition
Regionally Significant Transportation Projects, 2000-2020 Development Potential Unlocked Cost Estimate Completion SF Time Horizon Comment Regional Sub-Market Project Description (Millions of $) Date (Millions)
Complete 1. District of Columbia Metrorail Infill Station $105 4Q 2004 25 2007- 2020 in NoMa 2. DC, MD and VA Wilson Bridge 2,500 2008 -- NA 3. Fairfax County I-495 Express Lanes 1,900 2012 -- NA Substantially 4. Montgomery and Prince New Highway – 18 Miles 2,600 2014 NA 2012-2034 Completed George’s Counties Intercounty Connector Under 5. District of Columbia 11th Street Bridge, Phase 1 300 2013 -- NA Construction 6. Tysons Corner Metrorail Expansion – 2,900 4Q 2013– 110000 2013-2043 Silver Line Phase I 2Q 2014 Funding for new roads, street • 11.6 miles grid and parks required • 5 new stations before full development (4 in Tyson’s Corner) potential is unlocked 7. District of Columbia DC Streetcar, 1,500 Fall 2013– 30 H Street, NE, Revitalization 22 mile Phase I Fall 2018 already underway
8. Fairfax County I-95 HOT Lanes 940 2015 -- NA 2012 Planning 9. Potomac Yards Metrorail Infill Station 195–462 2016/2017 12 NA • Similar to the new NoMa Station • Significant private 2013/14 sector contribution 10. Loudon and Fairfax Metrorail Expansion – 2,700 2016 50 Projects will begin 24 to 18 2014 Counties Silver Line Phase II months before completion • 11.4 miles Projected • 6 new stations, ground- including Dulles Airport breaking date 11. District of Columbia Frederick Douglass Bridge 475 2018 -- NA 12. Crystal City Streetcar through 150 2019 3 TIF District was established Crystal City in 2010 • 5 miles 2015 13. Arlington County Streetcar from Pentagon 250 2019 3 Seeking Federal funds City out Columbia Pike • 5 miles 14. Montgomery and Prince Purple Line Light Rail 2,150 2020 30 Funding is not set, and some George's Counties • 16 miles route issues unresolved • 21 new stations
15. Montgomery County Corridor Cities Transitway 545 2020 100 NA Phase I (Bus Rapid Transit to Science City)
16. North Bethesda Bus Rapid Transit along TBD TBD 15 Phasing and funding have Rockville Pike not yet been determined
Far in the 17. Montgomery and New Potomac River NA NA NA Being talked about, but no Future Fairfax Counties Bridge gov’t planning has started
Source: DowntownDC BID
Since 2012, Virginia and Maryland have made or are planning to make more than $14 billion in transportation investments to attract both residents and businesses. While DC’s investment needs differ from those in the suburbs, the nearly $2.3 billion DC is making in transportation investments will improve the experience and ease of getting to and around the DowntownDC BID area. These investments are necessary to both maintain and grow the current levels Northern Virginia's of employment, visitation and investments include the Silver population. Line Metrorail extension. 75 DC has invested, and is continuing to invest, in urban placemaking projects which are necessary to maintain a competitive advantage over the suburbs. The suburbs are now strategically investing in what have been traditionally urban amenities. The investments are partially being paid for by tax increases and special assessment districts.
Seventeen Regionally Significant Urban Public-Private Total New Development Placemaking Projects, 2000-2020 Capacity of (Ranked By Start Date) Project Area Urban Placemaking Project at Start of Project Regional ProjectState DescriptionStart Completion (MM’s of SF) 1. NoMa DC Streetscape, Parks and Amenities 2001 2004-2018 27 2. National Harbor MD Greenfield Project 2004 2008-2018 15 3. Capitol Riverfront DC Street Grid, Parks and Amenities 2005 2006-2018 30 4. Arts District Hyattsville MD Artist Housing 2005 2014-2016 2 5. Mosaic District VA Amenities 2011 2014-2016 2 6. White Flint MD Street Grid and Parks 2013 2015-2018 5 7. Crystal City VA Street Grid and Parks 2014-2015 2016-2025 10 8. Tysons Corner VA Street Grid, Parks, Bike Lanes 2014-2015 2020-2025 100 9. St Elizabeths DC Street Grid and Infrastructure 2013-2014 2018-2020 5 10. Walter Reed DC Street Grid, Parks and Infrastructure 2014 2018-2020 3 11. Parkside DC Street Grid, Parks and Infrastructure 2012 2016-2018 3 12. New Carrollton MD Street Grid and Infrastructure 2013-2014 NA 3 13. Potomac Yards VA Street Grid and Infrastructure 2013-14 2015-2020 12 14. McMillan Reservior DC Street Grid, Parks and Infrastructure 2015-2016 2017-2019 2 15. Wheaton MD Deck Over Metro Station 2015-2018 TBD 3 16. Konterra MD Street Grid and Infrastructure 2015-2030 TBD 5 17. Wheaton MD Deck Over Metro Station 2015-2018 TBD 3
Source: DowntownDC BID
While DC's top marginal income tax rate is equal to that of the State of Maryland plus either Montgomery County or Prince George's County, the suburban Maryland tax rates escalate more quickly for the taxes paid on income earned below $10,000. This escalation results in higher income taxes in suburban Maryland than in DC for all pre-tax, gross incomes.
Regional Individual Income Taxes, Difference From DC by Taxable Income
$3,000 +$930 or 2.3% +$600 or 0.6% +$1,160 or 0.2% of annual income of annual income of annual income
0 0 $20,000 $40,000 $60,000 $80,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000
-$3,000 –$160 or 0.4% of annual income
–$1,800 or 1.8% -$6,000 of annual income
-$9,000 Top Marginal Tax Rates Next Highest –$13.500 or 2.7% of annual income DC 8.95% above $350,000 8.5% above $40,000 Suburban Maryland (1) 8.95% above $250,000 8.7% above $150,000 -$12,000 Virginia 5.75% above $17,000 5.0% above $10,000
-$15,000
Sources: DC Mayor’s Budget, Virginia Department of Planning and Budget and Maryland Department of Budget and Management (1) Includes State and County taxes.
76 DowntownDC Business Improvement District • 2012 State of Downtown Credits
credits
AECOM InfoUSA Shakespeare Theatre* Research Americans for the Arts International Spy Smith Travel Research Jeannette Chapman Museum The Art Newspaper Smithsonian Institution Data and Graphics Landmark Theatres Association of Foreign US Census Bureau Farhana Hossain Investors in Real Estate Lodging Econometrics US Department of BASIS Charter School Marian Koshland Commerce, Office of Photography Stan Barouh Bureau of Labor Statistics Science Museum Travel and Tourism Ron Engle Massachusetts Industries Center for Regional Bruce Guthrie Technology Collaborative US Green Buildings Analysis, George Mason Kevin Koski for the State of California Council University S. Christian Low Sustainable Building Task Warner Theatre Carol Rosegg CoStar Group, Inc. Force Washington Metropolitan Cushman & Wakefield McDermott, Will and Area Transit Authority Graphic Design DC BID Council Emery* Adrian Saunders Washington DC Metropolitan Washington DC Greenworks Economic Partnership Council of Governments Production DC Office of Planning Woolly Mammoth National Archives Jeannette Chapman DC Office of the Chief Theatre* Desiree French Financial Officer National Building Museum Delta Associates * Special thanks to Printing National Gallery of Art organizations that DigiLink, Inc. Destination DC provided photos National Law District Department of Enforcement Memorial Printed April 2013 the Environment National Museum of District Department of Women in the Arts* Transportation National Park Service ESRI National Theatre Events DC* Naval Heritage Center Ford’s Theatre* Newseum General Services Administration Real Capital Analytics Helen Hayes Awards Regal Entertainment Group Holocaust Museum REIS HVS International
77 1250 H Street, NW 202-638-3232 phone DowntownDC Suite 1000 202-661-7599 fax Business Improvement District Washington, DC 20005 www.downtowndc.org
N St. Scott Circle Thomas 6th St. 5th St.
Circle 13th St. 12th St. 11th St. 10th St. M St.
Midtown Massachusetts Ave. Walter E. Shaw Northwest Washington One Pierce St. Convention Center L St. New York Ave. New Jersey Ave.
L St. 16th St. L St. 395 1st St. NW Vermont Ave. NoMa K St. K St. Mt. Vernon K St. Square Mount Vernon McPherson Franklin Square Square Triangle Eye St. Eye St.
CityCenter DC Chinatown
Massachusetts Ave. H St. N. Capitol St. H St. H St.
Lafayette 1st St. NE Square New York Ave. Gallery Place G St. G St. White House Verizon Georgetown Center Law School Union F St. Station 395 Old Executive U.S. Treasury New Jersey Ave. 5th St. 12th St. 4th St. 14th St. 13th St. 6th St. 3rd St. 9th St. Office Building Department 11th St. 10th St. E St. Penn 2nd St. Quarter 1st St. Pennsylvania Ave. D St. Ronald The Ellipse Reagan Indiana Ave. Buiding C St. Federal Louisiana Ave. Capitol Triangle Delaware Ave. Hill Constitution Ave.
National Mall US Capitol
about the downtowndc bid
The DowntownDC Business Improvement District (BID) is a private non-profit organization that provides capital improvements, resources and research to help diversify the economy and enhance the Downtown experience for all. This special district, where property owners have agreed to tax themselves to fund services, encompasses a 138-block area of approximately 825 properties from Massachusetts Avenue on the north to Constitution Avenue on the south, and from Louisiana Avenue on the east to 16th Street on the west. As a catalyst, facilitator and thought leader, the DowntownDC BID promotes public/private partnerships to create a remarkable urban environment. For more information, visit www.DowntownDC.org.