F.C. Expert Presents Strong Case for Robust Residential Downtown

By Nicholas F. Benton

Most of the larger and most successful mixed use development projects in the Washington, D.C., metropolitan region are far more than 60% residential, the Falls Church City Council learned last week in a special briefing from Rick Goff, the City’s economic development chief. A similar proportion in Falls Church’s downtown redevelopment is not only what the market will bear, but will spur optimal economic growth here, he added.

Goff’s comprehensive report, presented as the Council moves toward a vote on changes in the Comprehensive Plan to permit a major redevelopment of the City’s downtown area adjacent the intersection of Routes 7 and 29, made a strong case for supporting a major residential component to the area.

The Market Common on the Clarendon district of Arlington is now 64% residential, and will be 79% by the time its third phase is completed, he said. Pentagon Row, with 2.3 million square feet, is 69% residential. The 2.37 million square foot Metro West project in Vienna is 85.5% residential, the Merrifield Town Center, at 1.95 square feet, is 68% residential, the Silver Spring project is 55% residential and the Midtown Springfield project is 79% residential, Goff reported.

So far in Falls Church, a debate has erupted over the percentage of the downtown redevelopment that should be residential. While the City staff recommended to the Council a mix that would be “up to” 40% commercial, the Planning Commission adopted a position that the mix be “a minimum of” 40% commercial, a rigid limit that has been seized upon by some civic groups even while the Planning Commission softened its “intent” at its meeting last week.

But Goff’s report strengthened the City staff’s recommendation, indicating that while there is little chance Falls Church can compete aggressively to fill a lot of commercial space in a region where there remains a glut of it, a strong residential component can be essential to fuel a significant retail growth in the same area. “Residents of a City Center spend three times as much as people who work in a City Center,” he noted, adding that “new resident incomes will be spent locally and will provide the necessary ‘night time population’ for business.”

In terms of office space, he quoted a commercial broker for the Staubach and Company, who said, “Developers will not pay more than $50 per square foot for land on which to build offices in Northern Virginia.” He compared that to the average 2005 assessed value of property in the 22-acre area targeted for the Falls Church City Center, which is $74 per square foot.

Also, neighboring Fairfax County’s annual office absorption rate of 8.8% per year since 1980, compared to a 0.8% absorption rate in Falls Church since 1988, and Fairfax’s superior market position “raises serious questions whether Falls Church can successfully compete,” Goff said.

These numbers are especially critical since of the 4.5 million square feet of new office space introduced to the Northern Virginia market since 2004, only 919,000 has been in Fairfax County. While only 46,000 square feet of new office space was built in Falls Church since 1988, 133,000 more has already been approved and consultants tell City officials there is a potential for as much as 400,000 new office space here.

Goff questioned whether 533,000 square feet of new office space in Falls Church can compete against regional realities that have dictated only 919,000 square feet of new space in all of Fairfax County with its historically much higher absorption rate.

On the other hand, Goff said, there remains a serious shortage of housing stock in the region, as increased commuting and congestion costs “have placed higher premiums and value on close-in locations.”

“The region’s strong housing market is fueled by the economy and job growth, which has consistently outperformed all other metropolitan areas of the U.S. over the past five years,” he said.

Right now, he said, the 22-acre City Center redevelopment area includes 99,000 square feet of retail space (including Bowl America with 32,000) and 200,000 of office space (including 91,000 at George Mason Square). That adds up to a density for the area of a 0.3 FAR (floor to area ratio), which is “about that of a single family home.”

He added that “creation of a ‘great place’ with a ‘main street’-style shopping center experience, more residents, new office and retail workers and a hotel would, collectively, generate an additional 157,000 square feet of retail demand.” He then added that “preliminary developer interest far exceeds this amount,” noting also that “parking is essential.”

He quoted Dr. Stephen Fuller, director of the Center for Regional Analysis of the School of Public Policy at George Mason University. “Tomorrow’s viable Falls Church City Center must have a strong housing element among the mix of uses in the City Center. Without that element, it is not realistic to expect the private sector to build office and retail space, with adequate parking, that commands Class A rents in our submarket,” Fuller said. “Creating a variety of housing options in the City Center will not only reduce the risk for the developers we choose to partner with, it will reduce the city’s risk of creating too narrow a development program to sustain over time.”