Patrick L. Phillips“Woodrow Wilson Plaza in the [Ronald] Reagan Building used to be a parking lot of unsurpassed ugliness. It was a place where people could come in, do what they had to do in Washington, and get out. Now, it’s a plaza with bands, entertainment, people, and restaurants. We have discovered in the redevelopment of downtown Washington that, in fact, people want to walk. They like to gaze, and to have lunch outside under an umbrella. It [the revitalization] is succeeding.”

-Late U.S. Senator Daniel Patrick Moynihan in a July 2001 interview with Urban Land

Each fall, when ULI and Pricewaterhouse Coopers release the North America edition of Emerging Trends in Real Estate,Washington, D.C., the site of this year’s ULI Fall Meeting, is rated among the top five investment markets in the United States. It is a sure bet that this year will be no different. Even the 2010 report – prepared in 2009 during the gloomiest days of the recession – was upbeat in its assessment of the nation’s capital, describing it as “bulletproof.”

With very few exceptions, said last year’s Emerging Trends, Washington “features all the attributes investors want – plenty of government jobs that don’t get cut in slowdowns, high-tech and biotech industries that feed off government programs, a slew of area universities, and, most importantly, a diversified 24-hour center linked to other global capitals and national gateway cities by three major airports. No wonder it’s one of the few markets to register a slight ratings gain over last year’s survey.”

No wonder, indeed. Since the 1980s, Washington has evolved from a buttoned-down office monoculture dominated by K Street’s lobbying and law firms into a vibrant, energetic city with a range of entertainment and recreational offerings. The run-down, vacant storefronts (and empty streets after 6 p.m.) that for decades characterized the city’s core have been replaced by ample shopping and dining establishments, creating a buzz of activity fueled by downtown residents and workers, as well as patrons from surrounding neighborhoods and tourists.

Few would question that much of the downtown’s comeback was initially sparked by development of the Verizon Center arena by late pro sports team owner Abe Pollin. However, while the games and concerts certainly brought people to the centrally located facility, the development spawned a dramatic expansion of the downtown’s competitive trade area to include the considerable population and buying power of the city’s suburbs. The resulting base of restaurants and other amenities laid the foundation for a housing boom, shaping downtown into not just a mixed-use hub for the surrounding neighborhoods, but also the region’s most prominent activity center. Effective public/private management has kept the momentum going. Even though Washington was a latecomer to the business improvement district (BID) trend, its Downtown DC BID is now one of the nation’s most effective.

Credible political leadership was essential to this success. The administration of former mayor Anthony Williams put the District back on sound financial footing, and the city’s current mayor, Adrian Fenty, is tackling much more directly the challenge of public education, the District’s longtime Achilles’ heel. (As is the case in many cities, the rising downtown population has been fueled by childless professionals and empty nesters; most families still prefer public school systems in the suburbs.) There are many positives, not the least of which is a falling crime rate that has helped strengthen neighborhoods and property values.

Of course, what has happened in downtown is only part of the success story. The well-planned growth that has taken place in several of the suburbs, including Arlington, Virginia, and Bethesda and Silver Spring, Maryland, is indicative of strong public/private efforts to make the metropolitan area an appealing place to live and play, as well as work. The suburban counties are now turning their attention to aging inner-ring suburbs and their challenging older commercial strips.

All this growth has not come without growing pains, however. The region’s investment in its Metro subway system in the 1970s and 1980s was crucial to driving a generation of development. Now, with ridership at an all-time high, the system is showing its age while regional leaders search for a long-term funding strategy for the region’s transit backbone. Within the District, city officials are investing in a streetcar system to link Metro’s regional transit to local destinations in underserved neighborhoods.

Still, far beyond the District and outside the Capital Beltway, transit connections can be difficult. As documented in the ULI Terwilliger Center’s 2009 Beltway Burden report, those who moved far outside Metro’s reach in search of affordable housing are finding themselves saddled with high transportation costs and grueling automobile commutes. In fact, despite warnings of the imminent decline in the distant suburbs, a recovery from the real estate market crash is well underway, driven by the dramatic repricing of the recently built housing stock, plus ongoing population and job growth. While it does not appear that the outlying parts of the region will spiral down, major employment nodes in these areas are still separate from major residential neighborhoods, which means the region’s roadways will remain clogged.

The forces of decentralization remain far stronger than those of reconcentration, but this is common in politically fragmented regions like Greater Washington. As a result, financing to address the region’s infrastructure needs in order to better serve residents and workers – on the outer edges as well as close in – remains the metro area’s most formidable challenge.

A case in point: seven miles (11.2 km) west of Washington’s core, the redevelopment of Tysons Corner in Fairfax County, Virginia, will include extending Metrorail to the business center and eventually to Dulles International Airport, located 17 miles (27 km) farther west. The ambitious overhaul of this nearly five-square-mile (13-sq-km) business district is factoring in transit as a core catalyst for investment and development, and it deserves to be closely watched around the nation. A seven-year planning effort (nobody can accuse Fairfax County of rushing things) has led to a recently approved vision for a much denser, pedestrian-oriented, transit-linked, mixed-use district. There is no reason to believe this will not happen, but residents and political leaders should temper their expectations. The Tysons redo could be a model for other urban regions, but it will be a multi-generational effort.

One of the most important factors that sustains long-term projects such as this is the certainty that Washington, D.C., will remain a “brain gain” region. Not only is Washington able to retain its graduates, but it also is among the top markets worldwide for attracting talented workers. Incomes correlate with educational attainment, and the spending power numbers in the area show it. The federal government attracts many high achievers, and it supports a broad middle class as well, driving the area’s economy not just with direct spending and government employment, but also through myriad government suppliers and contractors, particularly in the fields of medical research, defense and security, and information systems. The technology cluster in northern Virginia, one of the nation’s largest, traces its roots to defense spending.

As a longtime Washington resident and land use professional, it has been a pleasure for me to witness the transformation of Washington from a pleasant but rather stodgy place to work into an energetic place to enjoy. Going forward, Washington’s ability to maximize its potential depends on collaboration rather than competition: as in many urban areas, land use planning is fragmented among the various jurisdictions that comprise the whole. As Emerging Trends shows year after year, everyone expects Washington to succeed. How far it exceeds expectations hinges on how well it grows as an urban region.