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The Bethesda Central Business District Retail Market (1994)

Observations, Conclusions and Recommendations

The major conclusion of the Retail Analysis report is that retail in Bethesda is a success, despite strong competition from other suburban shopping locations. This success has resulted from private sector initiatives, good demographic characteristics, and supportive public policies and actions. The report recommends continuing to rely on these factors.

The juxtaposition, within easy walking distance of a wide range of residences, offices, restaurants, hotels, cultural resources and shops, has helped to create the CBD's retail vitality. Bethesda retail has evolved its own niche where it coexists with other more prevalent retail forms. The CBD offers a different shopping experience than the multitude of suburban shopping centers where there is often no sense of place. Part of the appeal of Bethesda is the eclectic mix of shops that offer hard to find items for their customers and add interesting flavor to the CBD shopping experience.

The neighborhood retail facilities serve the weekly shopping needs of households and businesses with groceries and sundry other goods and services.

The CBD also serves a wide market area. It has developed a reputation as a major dining destination. The abundance and variety of high quality restaurants draw customers from well beyond Bethesda. The same critical mass phenomenon is emerging for home furnishings stores and the many establishments selling books, art and related items.

Observations and Conclusions

1. Retail in the Bethesda CBD is a success. Bethesda retail has survived and grown because it provides shopping which is complementary to malls. In an era when many business district retail areas have withered in the face of competition from outlying malls, the retail sector in Bethesda has survived and grown to over two million square feet. Even with the advent of the nearby Montgomery Mall in 1968 and White Flint in 1977, the Bethesda CBD area still gained about 700,000 square feet of new retail space since 1979. In total, there was about 2.4 million square feet of occupied and vacant retail space in the Bethesda CBD Sector Plan area in spring, 1991.
2. The Bethesda CBD Sector Plan area realized an increase in the number of retail establishments between 1987 and 1991. The number of retail establishments has grown by 76 or 13 percent since 1987. Much of this increase was in restaurants and eateries. The Core area saw the largest gain in retail establishments over the last four years.
3. The retail vacancy rate of 12.6 percent in the Sector Plan area is good considering the amount of recently added space and the stress from the current recession.
4. Retail in the Bethesda CBD is in a transitional state. The area is still adjusting to the construction and absorption of many new office projects; the opening of the centrally located Metrorail station in 1984; the Montgomery Avenue - East West Highway one-way street pattern; the addition of 1,000 housing units; and the extension of Woodmont Avenue.
5. Bethesda CBD retail area provides basic and specialized goods and services to local and regional market areas. The CBD is a long established retail center serving both community and regional market areas. So often a retail area thrives on local households and employment and because it relies on such a small market area is vulnerable to changes in the economy. Bethesda CBD retailers serve neighborhood, community and regional market areas. Their base of support is large and diverse. Bethesda has attracted a number of shops that because of their specialized offerings attract customers from regional market areas. A few examples are a travel book store, a fly-fishing shop, several oriental rug shops, and a quality lamp store.
6. Concentrations of specialty retail attract consumers from well beyond Bethesda. Restaurants form the most obvious grouping, with far more eating places than would be expected to serve the immediate market area. Another rapidly expanding focus is home furnishings, with a strong sub-specialty in oriental rugs. A third emerging specialty concentration is arts-oriented, including galleries and book stores. Choices within these specialty concentrations are so great that customers can go to Bethesda with the expectation of satisfying their wants without having to choose a particular establishment beforehand much like going to a mall to shop for clothes or shoes.
7. In addition to the specialty retail which serves an extensive market area beyond Bethesda, there are also substantial retail elements which primarily serve the surrounding residential and employment communities. These include three supermarkets; many personal, professional, and business services; and other shopping that is typically done on a daily or weekly basis.
8. The CBD area has carved its own market niche and offers a unique mix of goods and services. The character of the Bethesda CBD has evolved over many years. The CBD shopping environment is much different than that found in regional shopping malls. Although the CBD has never had a major department store presence to draw customers, Bethesda residents have long shopped in department stores, first in the District; later in Friendship Heights, Silver Spring, and on Rockville Pike; and still later in several shopping malls. The CBD developed its own specialities and an eclectic mix of shops that do not rely on the draw of, nor are directly competitive with, department store anchored shopping areas.
9. There is some need for additional retail space to serve projected growth in the Bethesda area. The existing inventory of about 300,000 square feet of vacant retail space can accommodate some, but not all of this need.
10. The Planning Department's retail model estimates area demand for supermarkets, comparison goods and restaurants in the CBD Sector Plan area. The retail model indicates that at buildout of the high density residential alternative, there may be sufficient demand to support an additional supermarket. Currently, there is no existing vacant space which would accommodate a supermarket, but the Bethesda Place Safeway demonstrates that there are forms of supermarkets which could be accommodated on small sites.
11. Retail space in Bethesda is dispersed over a large geographic area. Rather than being compact like a mall, retail space is spread along many street fronts and uses a likewise dispersed pattern of on-street and off-street parking. Although it is much more spread out than a mall it is still compact enough so that most stores are within an acceptable walking distance of the center.

Recommendations

1. Overall, retail in the Bethesda CBD Sector Plan area is a success. The area's retail market niches have evolved in response to market forces, including stiff regional competition. It should continue to evolve largely on its own.
2. The Plan should accommodate additional retail development; including redevelopment of some of the existing space and some retail in new construction.
3. Retail in new office buildings should be street and pedestrian path fronting. First floor office building retail that is not visible and accessible from the street or sidewalk has not been very successful in the CBD. Retail space in office buildings requires naturally occurring street and pedestrian traffic to support the business over the long-term. In optional method projects, retail space should not be required in parts of buildings with low visibility or poor pedestrian accessibility.
4. Readily available parking also aids accessibility to retail. On-street parking provides the quickest and easiest accessibility to street fronting retail while off-street parking can sometimes be a less inviting alternative. The retention and development of on-street parking is encouraged where feasible. The reservation of short-term parking spaces near entrances of county parking garages to serve the needs of customers will also aid retail.
5. More pedestrian street crossings would make the area more pedestrian friendly as would expanded tree plantings and streetscaping in other parts of the CBD.
6. Retail directory maps would help customers searching for either a specific store or a store type. Kiosks at the metro station and retail maps at public parking garages could convey this information.
7. Special events programming should be advertised by area retailers and by the Urban District.
8. Some merchants could probably benefit from coordination of store hours and advertising. The initiative for such coordination hould come primarily from the business community. The merchants from selected districts or specialties could plan coordinated efforts.
9. A circulating shuttle bus connecting areas of the CBD may be of benefit to retailers. But since most of the CBD retail space is within an acceptable nine-minute walk from the center, and parking is for the most part well distributed, it should be carefully studied before implementation. The study should also address whether it would be best implemented by the County, the private sector, or a joint-venture.

Synopsis of Retail Report Sections

The full report describes retail in Bethesda, evaluates future directions, and answers the following questions:

• What types of retail establishments have become more numerous since 1987?
• Where are different types of retail businesses located?
• How much retail space is available for rent and at what rates?
• How does shopping in Bethesda compare to retail in a regional shopping mall?
• What are the characteristics of Bethesda employees and area residents that support retail activity Bethesda?
• What is the estimated area demand for supermarkets, comparison shopping and restaurant space in theyear 2010?

Section One
Compares the retail in the Bethesda CBD Sector Plan area between 1987 and 1991. The change in the number of establishments by retail category and by district between 1987 and 1991 is described. In addition, each 1991 retail business is shown by category on Geographic Information System (GIS) maps which detail street blocks, building ootprints and store configurations.

Section Two
Describes the retail inventory in the Bethesda CBD Sector Plan area as it existed in the spring of 1991. Estimated retail square footage of eight retail categories is detailed for five districts in the CBD area. In addition, CBD optional method projects containing retail space are analyzed separately.

Section Three
Discusses retail completions, vacancies, and asking rents for vacant space.

Section Four
Describes some of the forces shaping retail in the CBD. One of these forces is competition from regional malls. A comparison of the retail tenant mix of Montgomery Mall and the CBD yields interesting differences. This section presents resident and employee demographics which also help shape Bethesda CBD retail. Finally, Section Four highlights retail industry trends and discusses implications on retail in the Bethesda CBD Sector Plan area.

Section Five
Section Five is a quantitative retail space demand analysis. Supportable square feet of retail space in the Bethesda CBD Sector Plan area is presented for supermarkets, comparison retail, and restaurants in 1990 and for four buildout alternatives.

Appendices
Appendix A: Definitions of eight retail categories
Appendix B: Retail model overview
Appendix C: Detailed tables on retail categories by district
Appendix D: Bethesda CBD Sector Plan area resident profile
Appendix E: Bethesda CBD Sector Plan area employee profile
Appendix F: Reflections on the 1986 report: "Bethesda Central Business District, Issues and Opportunities," prepared by Praful Shah & Associates Inc.