bbp A S S O C I A T E S

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1 Economic Analysis and Initial Revitalization Concepts for Lake Anne Village Center Prepared for Prepared by bbp A S S O C I A T E S March 16 th, 2005

2 Meeting Purpose / Agenda Introductions Project Context Work Completed Key Findings Revitalization Concepts Summary Next Steps Discussion 1

3 Project Context Objective 3 rd party economic study Examine economic conditions & market issues Formulate revitalization concepts Input to subsequent public involvement (e.g. charette) Charette results in Master Plan Master Plan sets stage for potential developer selection 2

4 Study Area Comparison (Commercial Revitalization Area (CRA), Historic Overlay District) 3

5 Objectives Preserve and maintain historic Lake Anne/Washington Plaza Increase vitality and enhance attractiveness of the existing civic and retail environments Retain Village Center character, style, and ambiance (Lake Anne is not Reston Town Center which is another use and function) Mix uses and incomes Promote quality design, European character Wolf Von Eckhart - Piazza San Marco not a mere square but a grand hall 4

6 Work Completed Project Mobilization Plans/Policy Review Infrastructure Overview Examined Institutional Issues Field Surveys/Interviews Opportunities/Constraints Analysis 5

7 Work Completed Public Meetings Market Analysis Revitalization Concepts Implementation Strategies Impact Evaluation 6

8 Contacts RCRC Condo Association Merchants Association Two public meetings Institutions (RA, RCC, Reston Historic Trust) Individual merchants Residential cluster representatives Special contacts 7

9 Key Community Issues Maintaining Reston Spirit Balancing Growth & Preservation Establishing Certainty & Future of Plaza 8

10 Key Community Issues Densities Shared Parking Opportunities Governance & Management Security & Maintenance 9

11 Opportunities/Constraints Specialty themed eating and drinking setting Long established stores No traditional village center/community shopping center anchors (i.e. grocery store) Lack of visibility/access Incongruence with modern building practices (small floor plates) Relatively high operating costs Management constraints 10

12 Synthesis No desire/need for major change in retail No desire for design changes on plaza Build on historic village character Improve image and recognition 11

13 Synthesis (cont) Address seasonality Enhance area as a destination Improve residential/commercial relationships Provide adequate funding for management/maintenance Not against density per se 12

14 Physical/Infrastructure Evaluation High quality architectural design Unique built environment/ambiance Deferred maintenance Inequitable distribution of costs RELAC issues Poor signage, visibility, access, lighting Intermittent parking shortage 13

15 Market Observations Retail Strong county demand Emphasis on grocery anchored retail Low vacancy 3% Neighborhood center rents up 2% to $24.25/SF Significant local & regional competition Build on unique environment Address seasonality Address shortage of daytime activity, limited continuous use (Detailed Analysis) 14

16 Market Observations - Retail Primary retail market is 1/3-mile walkshed Needs special character of retailer Requires special character of resident Low net capture rate Highly seasonal Poor visibility No primary road access Potential to introduce more activities in walkshed Potential to enhance capture rates 14.1

17 Walkshed (1/3-mile) 14.2

18 Market Observations - Residential Top U.S. apartment market Condo conversions removed supply faster than transferred demand Low vacancy (3%), good growth in rents (4%), concessions down (8%) Shift from garden apartments to high-rise 14.3

19 Market Observations Residential (cont.) Pipeline down significantly for gardens (36%), up for high-rise (67%) Condo sales up (4,400 vs. 1,600) 45% conversions/pre-delivery switch Resale prices up 19% Prices high in $350 to $550/SF (e.g. Mercer, Midtown East) 14.4

20 Market Observations - Office Reston 2 nd largest office market in county (after Tysons Corner) Decreasing office vacancy Strong demand from government related (particularly DOD) demand Lease rates steady Lake Anne Small users Local support/associations Potential county/reston Association activity Opportunities for shared parking Limited daytime demand to support retail 14.5

21 Detailed Revitalization Market Findings Sales/sq. ft. ($252) approx. 46% of North Point ($540) and 82% of Tall Oaks ($308) Smaller stores would normally experience higher sales/sf Low net capture rate of applicable resident expenditures (21% vs. 61% for county) 15

22 Detailed Revitalization Market Findings (cont) Relatively low net capture rate 21% County: 61% net capture rate Nearby Reston Villages: 46%-85% net capture rate Case study Villages: 23 to 34% net capture rate Approximately 50% of sales from primary market area (varies greatly by store type) Strong opportunities for residential infill Modest opportunities for office infill (Detailed Analysis) 16

23 Comparison of Village Retail Areas Category Lake Anne Village Center North Point Village Center Tall Oaks Shopping Center Village of Liverpool (NY) Old Town Bowie (MD) Population 3,093 2,970 1,753 2, At-Place Employment Retail Trade Establishments Total Retail Sales** $7,037,155 $41,954,397 $10,523,299 $5,240,222 $1,994,377 Source: ESRI Business Solutions * 2004 data (nonoverlapping 1/3-mile radii from Reston Museum at Lake Anne and grocery store anchors at other two sites) ** Total retail sales and potential have been adjusted to exclude retail store types not applicable in Lake Anne 16.1

24 Retail Areas Sales Comparison $45,000,000 $41,954,397 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $7,037,155 $10,523,299 $5,240,222 $1,994,377 $0 Lake Anne Village Center North Point Village Center Tall Oaks Shopping Center Village of Liverpool (NY) Old Town Bowie (MD) 16.2

25 Comparison of Retail Performances Category Lake Anne Village Center North Point Village Center Tall Oaks Shopping Center Village of Liverpool, NY Old Town Bowie Fairfax County Sales per Establishment $351,858 $1,824,104 $1,315,412 $127,810 $221,597 $1,007,836 Sales per Capita $2,275 $14,126 $6,003 $2,988 $1,136 $6,833 Sales as % of Disposable Income 6.7% 38.7% 22.8% 11.4% 4.3% 28.2% Net Capture Rate (Sales/Expenditures) 21.1% 84.8% 46.4% 34.1% 23.0% 61.3% Source: BBP Associates, ESRI Business Solutions * Total retail sales have been adjusted to exclude retail store types not applicable in Lake Anne 16.3

26 Retail Sales per Establishment $2,000,000 $1,800,000 $1,824,104 $1,600,000 $1,400,000 $1,315,412 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $351,858 $201,547 $221,597 $0 Lake Anne Village Center North Point Village Center Tall Oaks Shopping Center Village of Liverpool, NY Old Town Bowie 16.4

27 Net Capture Rates 90.0% 84.8% 80.0% 70.0% 60.0% 50.0% 46.4% 40.0% 34.1% 30.0% 20.0% 21.1% 23.0% 10.0% 0.0% Lake Anne Village Center North Point Village Center Tall Oaks Shopping Center Village of Liverpool, NY Old Town Bowie 16.5

28 Revitalization Approach Strengthen ties/market capture of primary market Enhance specialty theme to attract more sales inflow Events programming/design enhancements to reduce seasonality 17

29 Revitalization Approach (cont) Enhance European feel Promote distinctiveness from competing retail (e.g. wine & cheese, baker, arts & culture, plaza vendors) Grow the day & night critical mass and realize Master Plan densities through office & residential infill 18

30 Revitalization Approach (cont) Continuum of actions Test over time Allow for phasing 19

31 Revitalization Approach (cont) Three key elements Marketing/merchandizing Organizational/funding Area infill/development 20

32 Strategic Marketing Could enhance retail sales potential from increasing Village capture rate (10% increase in capture rate approximates 5% increase in sales) Could enhance retail sales potential from increasing sales inflow (10% increase in inflow approximates 4% increase in sales) Marketing/merchandising and organizational changes could address above retail strategies 21

33 Strategic Marketing New signage Enhanced lighting Monitor/survey clientele Improve service levels In-store promotions (particularly off-season) Targeted advertising (direct mail to current customers/area residents) Image/merchandising enhancements Modify store mix (more eating/drinking less convenience food) 22

34 Organizational/Funding Continuum of actions Condominium restructuring CRA expanded to include opportunity areas County seeded Business Improvement District (BID) Dedicated revenue stream (land lease) to support management/ maintenance 23

35 Condominium Restructuring Improve efficiency & redistribute costs Separate residential & nonresidential County provides incentive by assuming Washington Plaza costs, debt, and liability County guarantees public access to plaza and waterfront 24

36 Revitalization Opportunity Areas 25

37 Infill Development Retain basic design/washington Plaza Gateway enhancement & access changes Shared parking Modest Infill Master Plan Realization 26

38 Modest Infill Moderate density (20 du/acre) development of Good Shepherd 44 units (7 low/moderate income) Modest office infill (25,000 SF) Retail sales generation = $320,000 Capital improvement costs = $1.8 million 27

39 Modest Infill Estimated Capital Improvement Costs $750,000 Streetscape enhancements $500,000 DHCD grants (e.g. signage, repairs, façade improvements) $65,000 Gateway features $50,000 Sidewalk replacement $32,500 Parking lot improvements 28

40 Modest Infill Program Good Shepherd Site (2.2 acres) 44 residential units (37 market rate, 7 low/moderate income) 88 parking spaces (structure/at-grade) 3 to 4 stories Infill Office (1.1 acres) 25,000 sq ft 2 stories 145 parking spaces o 56 below grade o 89 structured (2/3 stories) (Detailed Analysis) 29

41 $5,000 $4,500 Annual Retail Sales Impact per New Household / Employee $4,579 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $1,515 $1,120 $500 $0 Market Value Households Moderate Income Households Employee 29.1

42 Annual Sales Impact per 1,000 Square Feet of New Development $6,000 $5,600 $5,000 $4,000 $3,000 $2,289 $2,000 $1,000 $757 $0 Market Value Households Moderate Income Households Employee 29.2

43 Master Plan Realization Good Shepherd site (2.2 acres) 110 residential units (93 market rate, 17 low/moderate income) 220 parking spaces (under building) 3 mid-rise buildings, stories Infill Office (1.1 acres) 25,000 sq ft (2 stories) 145 parking spaces (56 below grade, 89 in 2/3 story structure) 30

44 Master Plan Realization (cont.) Crescent Apartments site (16.5 acres) 825 units (644 market rate, 181 low/moderate income replacement units) 1,650 parking spaces (under building, 2 to 3 levels & surface) 12-story landmark building Series of 6 to 10 story buildings, with 3 story at edge of site 31

45 Master Plan Realization (cont.) Remove ASBO / convenience store and enhance access/visibility to waterfront & parking Mixed use office : RA headquarters, replace ASBO, ground floor service retail (replacement), structured parking 35,000 sq ft office (2-3 3 stories) 5,000 10,000 sq ft service retail 300 structured parking spaces (210 new, 90 replacement) New entry way Landscaped enhanced surface parking Pedestrian linkage to Crescent Apartment site Capital improvement costs = $10.7 million 32

46 Master Plan Realization Estimated Capital Improvement Costs $4.5 million Structured parking $1.9 million Acquisition & relocation $750,000 Streetscape enhancements $500,000 Access improvements $500,000 DHCD grants (e.g. signage, repairs, façade improvements) $65,000 Gateway features $50,000 Sidewalk replacement $32,500 Parking lot improvements 33

47 Projected Revitalization Impacts 34

48 Summary - Revitalization Impacts Impact Do Nothing Strategic Marketing Modest Infill Master Plan Realization Change in Annual Retail Sales -$621,542 $621,542 $959,564 $4,865,950 Percent Change in Annual Retail Sales -8.8% 8.8% 13.6% 69.1% Change in Households Annual Cost to County $0 $115,000 $115,000 $115,000 County Capital Cost $0 $0 $1,816,750 $10,744,500 Annual Incremental County Tax Revenue* $0 $6,215 $304,752 $5,227,876 Annual Return on County Capital Investment NA NA 10.4% 47.6% Source: BBP Associates *Net new property tax revenue is for new development only (Detailed Analysis) 35

49 Retail Sales by Revitalization Concept $14,000,000 (2004 Constant Dollars) $12,000,000 $11,903,105 $10,000,000 $8,000,000 $7,037,155 $6,415,613 $7,658,697 $7,996,719 $6,000,000 $4,000,000 $2,000,000 $ Sales Do Nothing Strategic Marketing Modest Infill Master Plan Realization 35.1

50 600 New Permanent Employment by Revitalization Concept Strategic Marketing Modest Infill Master Plan Realization 35.2

51 New Retail Sales Tax Revenue by Revitalization Concept $60,000 $50,000 $48,659 $40,000 $30,000 $20,000 $10,000 $6,215 $9,596 $0 Strategic Marketing Modest Infill Master Plan Realization 35.3

52 Property Tax Revenue of New Development by Revitalization Concept $6,000,000 $5,179,217 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 $0 $295,156 Strategic Marketing Modest Infill Master Plan Realization 35.4

53 Estimated Capital Improvement Costs by Revitalization Concept $12,000,000 $10,744,500 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $1,816,750 $0 $0 Strategic Marketing Modest Infill Master Plan Realization 35.5

54 Annual Return on Capital Investment (Tax Revenue / Capital Improvement Costs) 50.0% 47.6% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 10.4% 5.0% 0.0% Modest Infill Master Plan Realization 35.6

55 Summary Do Nothing continues slow decline Increasing retail competition Lack of visibility & access Deferred maintenance Convoluted management structure Opportunity for infill especially residential 36

56 Summary (cont.) Revitalization concepts Marketing & merchandizing Organization & funding Area infill & development 37

57 Next Steps Review findings Conduct Public Meeting Initiate charette process Finalize Implementation Strategies/ Recommendations Developer Solicitation 38

58 Discussion / Q & A Basile Baumann Prost & Associates 177 Defense Highway, Suite 10 Annapolis, MD (800) jprost@bbpa.com 39