Three decades may seem like a long time to wait for mixed-use, transit-oriented development, but 30 years after the Washington Metropolitan Area Transit Authority (WMATA) completed its White Flint Metro station in 1984, the first phase of Pike & Rose has opened. This retail, entertainment, office, and residential development is a transformation of the former Mid-Pike Plaza, a 24-acre (9.7 ha) retail strip center in North Bethesda, Maryland.
In recent decades, urban planners and developers have concentrated on revitalizing inner cities to the substantial exclusion of the vast middle city that includes not only suburbs, but also most of the land within cities but outside their urban cores. In fact, most of the land in and around U.S. cities is still zoned for single uses, and many of the buildings in these areas do not maximize the potential of their sites.
Demographics and economics have changed. Millennial buyers, strapped by student debt, stagnant wages, and tighter credit, are having a more difficult time renting or buying housing, especially in the close-in, walkable urban neighborhoods that many seem to prefer. As this largest generation in history matures and forms families, economics suggest that developers will pursue cost-effective opportunities to house them in transformed suburbs. Middle-city areas, such as that along Rockville Pike in the Montgomery County suburbs just north of Washington, D.C., may well be the next frontier for those who wish to build for millennials.
It is in this context that Federal Realty, a Rockville, Maryland–based national real estate investment trust (REIT) developer, has been redeveloping older and underperforming retail centers as walkable, mixed-use, places. On the East Coast, Federal Realty is best known for its Bethesda Row development—a mixed-use reinvigoration of the heart of the suburban town of Bethesda, only seven miles (11.2 km) and 20 minutes from Pike & Rose, named for its location at the intersection of Rockville Pike and Montrose Parkway.
The Pike District
Federal’s redevelopment of its Mid-Pike Plaza into Pike & Rose, the first phase of which opened in 2014, is one of a half dozen large developments in an area of about 430 acres (174 ha) around the White Flint Metro station. About a half mile (0.8 km) south of Pike & Rose, Lerner Enterprises is replacing the 850,000-square-foot (79,000 sq m) White Flint Mall on a 45-acre (18 ha) site with four office buildings, a 300-room hotel, 1 million square feet (93,000 sq m) of retail and restaurant space, and 12 apartment buildings with up to 2,500 units. Numerous other redevelopments of 1970s strip centers are also underway in the Rockville Pike corridor.
With the support of some of the Washington area’s largest developers—Federal Realty, Lerner Enterprises, JBG Companies, B.F. Saul Company, Holladay Corporation, and Gables Residential—Montgomery County approved the White Flint Sector Plan Area, now called the Pike District. The plan calls for:
- 9,800 new housing units, including affordable and workforce units;
- 5.7 million square feet (529,000 sq m) of commercial and office development;
- transformation of Rockville Pike into an urban boulevard with a tree-lined median, on-street parking, bike lanes, crosswalks, and space for future bus rapid transit; and
- an elementary school, a library and recreation center, and parks.
These developers agreed to pay a 10 percent special assessment to fund infrastructure required to achieve this increase in density. Pike & Rose is currently the largest agglomeration of urban uses between Bethesda, five miles (8 km) to the south, and Rockville, 3.5 miles (5.6 km) to the north.
Mix of Uses
Determining the mix of uses for larger-scale suburban mixed-use development by a single developer can be much more complex than developing within either urban cores, where different developers build single uses on smaller blocks, or in traditional suburbs, where single-use zoning segregates larger land areas for the same use.
At Pike & Rose, the combined projects include 470,000 square feet (44,000 sq m) of retail space; more than 1.1 million square feet (102,000 sq m) of offices; 1,600 residential units; a 177-room Hilton Canopy hotel; an eight-screen, 782-seat iPic Theaters cineplex; and a 250-seat AMP performing arts venue and jazz club, all on nine new blocks within the site.
Federal needed to balance a weak office market against a retail recovery and accelerating apartment demand. It also needed to lead with enough restaurant and entertainment development to create a place that would attract people to live, work, shop, play, visit, and linger as it built enough expensive structured parking to serve users and tenants drawn by lower rents and prices. While the developer was entitled to build up to 80 percent of its allowed floor/area ratio (FAR) as residential units, it needed to balance that against its entitlement to develop up to 50 percent of its FAR as commercial uses, including all its retail, office, entertainment, and hotel space, which would make it a more active place and could produce more profit.
Pike & Rose Site
Bethesda and Rockville are older towns with a block pattern, with block lengths that vary from about 400 by 600 feet (122 by 183 m) to 300 by 500 feet (91 by 152 m). Pike & Rose is a much larger, trapezoidal site of about 1,400 by 1,200 feet (427 by 366 m) on the longer sides. The 174-unit, five-story PerSei Apartments, built above 44,000 square feet (4,100 sq m) of retail space, is the first residential component of Pike & Rose. Two blocks to the west, Pallas, named for the Greek god, is a 19-story, 319-unit luxury high-rise apartment building with 12,000 square feet (1,115 sq m) of retail space and above-grade structured parking.
In order to break down the large site into more-walkable, urban-scaled blocks, Federal Realty hired Street-Works Studios, a New York–based urban design and redevelopment firm with expertise in retail development and master planning. The result is a neighborhood composed of nine major rectilinear areas about 300 feet (91 m) square, divided into 13 separate projects. (Street Works Studio also master planned Federal Realty’s Santana Row in San Jose, California.)
For the first phase’s residential component within Pike & Rose, Federal Realty hired Baltimore-based architecture firm Design Collective to design the PerSei Apartments and Pallas Apartments and penthouse blocks. Michael Goodwin, the principal-in-charge architect at Design Collective, said that when his firm was hired to design the PerSei and Pallas projects in 2010, “a charrette with Street-Works and Federal Realty ‘downloaded’ all the urban design goals, thought, and community engagement that went into the approved concept development plan.”
It is a complex and time-consuming task to transform a single-use retail strip center, conceived during an automobile-focused decade, into an urban-scaled mixture of retail, office, residential, and entertainment uses that becomes a place where people want to live, work, and play. It also requires a variety of design and development talents. Federal Realty’s project developer, Don Briggs, was trained in urban design, architecture, and development and chose to hire not only Street-Works and Design Collective, but also Seattle-based ForeSeer, a place-making design consulting firm that had also worked on Santana Row.
The decision to use different architects, coupled with the phasing of multiple projects at different densities over a 15- to 20-year buildout, creates places that are markedly different from those single-use retail centers like the original Mid-Pike Plaza, which typically were designed by a single architect and built in a single phase, resulting in monolithic building masses in the center of the site surrounded by extensive surface parking lots. Those were projects, not places.
For Pike & Rose, Federal chose different architects from the start—in addition to Street-Works for master planning, Design Collective for blocks 10, 12, and 2 (at the terminus of the Grand Park Avenue axis fronting Pike & Rose’s largest public park); Washington, D.C.–based WDG Architects for blocks 3, 4, 7, 8, 9, and 11; and ForeSeer for retail place making. Because Pike & Rose includes design elements conceived by almost 100 professionals and artisans, the development achieves visual diversity and from its inception displays a kind of patina that typically only develops over time.
“The challenge is that you are designing not just for Rockville Pike today, but also for what it will be ten to 20 years in the future,” Goodwin says.
Development of 13 discrete projects phased separately and designed by different architects at different times emulates traditional downtown evolution. The multiblock street grid sets a framework for evolution.
Redevelopment of Pike & Rose started with the site’s highest-trafficked edge along Old Georgetown Road on its south side and will expand progressively to the north, and generally from west to east. That approach meshed with the need to keep older shops in business farther into the site.
But rather than focus on the major intersection of Old Georgetown Road and Rockville Pike, where Federal controls only one quadrant of land, the master plan focuses on a new entry called Grand Park Avenue, which leads to the master plan’s large public park, located in the center of the Pike & Rose redevelopment. Outdoor movies, musical performances, and farmers markets are planned for the park.
The master plan placed the tallest buildings at the edges of the redevelopment to allow light and air into the public park. That also creates two prominent corners for retail space in the first phase flanking the entry to Grand Park Avenue, both controlled by Federal, and it creates ten prominent retail corners along the new street as future phases progress along the new Grand Park Avenue spine.
Along the northern facade of PerSei, an east–west pedestrian pathway, Muse Alley, threads through the entire redevelopment, creating a second major retail corner at the northwest building edge facing the iPic theaters. This corner’s prominence will grow as future phases are built out and as Metro transit ridership increases. The transit station is about 1,600 feet (488 m) away from Pike & Rose, but the route between them is not yet pedestrian friendly. Retail corners will evolve. Federal Realty placed ground-floor retail space at PerSei’s northeast corner and along Muse Alley, which is currently the rear of the building and faces an active construction site. Despite its location, the northeast corner is making the transition into a beer garden on the programmed pedestrian route.
Retail Space Leads Mixed-Use Design
Federal Realty was primarily a retail developer before it began developing mixed-use centers like Santana Row and Pike & Rose about 20 years ago, and its development focus remains retail-driven to activate the street experience even in its vertical mixed-use buildings. Location, circulation, accessibility, visibility, synergy, adjacency, and massing are more critical for retailing than for other destination-oriented uses. The gradual phasing in of portions of its 470,000 square feet (44,000 sq m) of planned retail space made Federal’s retail decisions more critical.
The wide range of uses is served by 4,145 parking spaces, resulting in a more cost-effective overall gross parking supply of about 1.2 parking spaces per 1,000 square feet (12.9 per 1,000 sq m) of leasable space, before shared parking is considered. Because office space is about one-third of the mix and constitutes a use very compatible for shared parking with the hotel, cineplex, restaurant, and specialty retail space, at least a one-quarter to one-third increase in functional parking capacity can be expected. Paid parking in a suburban context needs to be priced to invite short-term visitors and deter Metro users, so the first two hours are free, the third hour costs $1, the fourth $2, fifth $3, and hours thereafter $10. The theaters validate three and a half hours of free parking.
Early in the entitlements process, Montgomery County and Federal agreed to accommodate all phase I nonresidential parking through a shared parking strategy under which the parking load was satisfied at an aggregate level across the whole plan rather than on a block-by-block basis. As a result, all parking for the first phase of 117,000 square feet (10,870 sq m) of retail space and 80,000 square feet (7,400 sq m) of office space was provided in a single shared parking structure with 597 spaces in the eight-story block 11, located between the Pallas and PerSei projects. However, in order to market PerSei’s apartments in phase I, all of PerSei’s 163 underground parking spaces are allocated for its residents. Keeping the parking underground also allowed all four of PerSei’s facades to be activated with ground-floor retailers.
Federal’s strategy for urban place making is to create an active retail environment within the first 20 feet (6 m) of elevation of each building. That strategy requires changes in the way architects have designed conventional office/residential mixed-use buildings in recent decades.
Goodwin notes that, typically, an apartment developer wants the entrance to the residential lobby and leasing area to be placed in the most visible and important corner of the building. By contrast for PerSei, Federal wanted a strong retailer at PerSei’s strategic southwest corner and entry point of the complex, whereas the residential entry was relegated to the least-visible facade, on the north side.
Conventional practice for residential developers is to use the ground floor for residential amenity spaces, fitness centers, and community areas, because they help activate the entrances and ground-floor residential units are often more difficult to lease. At PerSei, because Federal wanted all the ground floor for retail space, Design Collective relocated the residential amenity spaces, along with the leasing office and fitness center, up to the courtyard level on the second floor.
Similarly, the retail first and second floors of the office mixed-use building across the street just west of PerSei occupy the high-visibility corner with a covered outdoor café, while the office footprint is recessed to the rear with an understated midblock office lobby entry. The southwest corner of PerSei was conceived in the master plan as an opportunity for an urban entry threshold into the whole redevelopment.
The first retail phases are heavily weighted to restaurants, cafés, brew pubs, and similar businesses to create active amenities for apartment residents and to help make Pike & Rose a place where people choose to congregate and live. To create the maximum retail leasing flexibility during design, the number of kitchen exhaust chases that extend up through the residential levels and roof was doubled from four to eight so that any retail space can accommodate a restaurant tenant.
Retail Space Influences Apartment Design
The PerSei Apartments, named after a constellation, has a square footprint of 230 feet (70 m) per side around an open courtyard of 90 feet (27 m) per side above 163 residential parking spaces. PerSei’s five-story wood-framed structure is articulated to appear as several different buildings with historic allusions to what had existed on the site decades earlier. Mural signs on the brick and stucco facades with the names “Corby Co. Inc.” and “Peerless Purveyors” suggest older lofts and add a historic texture to the western facade.
The design of the first-floor retail space involved a sensitive architecture and development issue. Conventional practice for architects is to design the entire building’s facades from sidewalk to roofline, Goodwin says. But retail tenants and their architects also want complete control to maximize the visual impact and functionality of their shops and restaurants. As a retail-driven mixed-use developer, Federal gives its retail tenants full freedom in the first 16 feet (5 m) of facade design.
Goodwin notes what a challenge it was for Design Collective to relinquish facade design control. “We were concerned that the visual weight of the masonry facade needed to meet the ground with piers within the retail storefront,” he says. However, recognizing Federal’s experience, along with that of Street-Works, Design Collective followed Federal’s lead. “We literally left the retail frontage completely empty in our construction documents,” Goodwin says. “The retail tenants designed the rest, and the result, he says, is fortuitous, “with a richness as if it evolved organically over time.”
The primary material of PerSei’s northern and eastern facades is stucco; the south and west facades and all street-level materials are masonry. Corner elements are articulated vertically as towers, and the most visible Old Georgetown Road brick facade is further articulated with three vertical pavilions. Recessed seams between the building sections help differentiate corner tower elements from the primary field of the facades. These recessed seams efficiently form studio units that have the benefit of a functional balcony. In fact, over 40 percent of PerSei’s units have usable balconies to provide better connections to the energy of the sidewalks below and help support rent premiums.
The mix of apartments—74 percent one-bedroom units averaging about 750 square feet (70 sq m) and some two-bedroom units renting for more than $3,000 per month—indicates that the target market is relatively affluent professional singles and couples in the millennial and X generations, as well as lifestyle renters.
James Chung of New York–based Reach Advisors undertook a market study for Federal that pinpointed not only those target markets, but also assessed the kinds of amenities that might yield 10 percent rent premiums. The study found that “across all three demographic groups, access to outdoor living spaces that were part of the units, part of the building, and part of the entire Pike & Rose development ranked number one,” Goodwin says. These amenities included balconies, roof decks, private garden plots, outdoor cafés, parks, and piazzas, as well as access to fitness and cultural opportunities.
The retail tenant mix reinforces those target markets and is more heavily weighted to restaurants, cafés, and entertainment, along with such specialty retailers as a 36,200-square-foot (3,360 sq m) REI recreational equipment store (set for phase II, scheduled to open in the first half of 2017); a 31,791-square-foot (3,000 sq m) Bethesda Sport & Health Club; a 5,218-square-foot (485 sq m) NAVA Health & Vitality Center staffed with physicians, acupuncturists, chiropractors, nutrition experts, and massage therapists; a 47,000-square-foot (4,400 sq m) iPic cineplex; and a 240-seat live AMP performance venue run by the Strathmore Music Center, a performing arts center located in nearby North Bethesda.
More than 14 restaurants and cafés are already operating at Pike & Rose, including a 7,700-square-foot (715 sq m) Del Frisco’s Grille steakhouse; Summer House Santa Monica; Stella Barra Pizzeria and wine bar; La Madeleine Country French Café; City Perch Kitchen + Bar; &Pizza; Roti Mediterranean Grill; and a 30,485-square-foot (2,800 sq m) Pinstripes bistro, opening in phase II, which will have bowling, bocce, and a year-round outdoor patio and fire pit.
Place-Making Costs and Benefits
Place making in a suburban setting can be much more complex than in urban cores with their smaller-scaled urban grids. However, a single developer can control large blocks of land and raise significant sums of capital that can be diversified among several different uses, reducing the risk exposure for any single one. And if developers have experience developing mixed-use centers and can deploy lower-cost equity generated by sales of REIT shares, as Federal does, then reduced debt can lower risk for the developer, which can maintain ownership and management of large projects, which in turn may generate operating economies among different uses.
These new mixed-use developments now command the highest rents in the middle city, and they weather market cycles better than the single-use retail and office centers they replace. Because the centers are longer lived and diversify market risks, they can appreciate more than their single-use predecessors.
William P. Macht is a professor of urban planning and development at the Center for Real Estate at Portland State University in Oregon and a development consultant.