7/31/2019 Washington AMERICAS Market Beat Retail Q12012

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ECONOMIC OVERVIEWConsumer confidence is slowly on the rise andChainLinks Retail Advisors reports in its Spring2012 Retailer and Restaurant Expansion Guidethat demand is up by approximately 5.0% fromlast year’s levels. As a result, many retailers are

moving forward, moderately, with expansion plans. Notable areas of growth this year will include discounters, grocery stores, off-priceretailers, and fast casual dining concepts. Still, weakness will be seenin mid-priced markets with planned closures by the Gap, Sears, and

other national chains.CHEVY CHASEChevy Chase Pavilion (5335 Wisconsin Avenue NW) is seeing aninflux of new high-profile tenants as a $32 million renovation isunderway. Expected to complete in September, the atrium canopywill be removed and the center will get new finishes and a mediavenue. Swedish clothing giant, H&M, has signed for 21,704 square feet(sf) and will join Top Chef Brian Voltaggio’s 14,000-sf Rangerestaurant and The Civil Lounge eatery and cigar bar. Average askingrental rates in Chevy Chase are up 13% year-over-year, but areexpected to remain relatively flat for the remainder of 2012.

14TH STREET CORRIDOR

The 14 th Street NW Corridor remains one of the hottest areas fornew restaurants and a top choice for outposts of area favorites. Morethan a dozen restaurants have plans underway for near-futureopenings on 14 th Street, including new concepts from restaurateurslike Mike Isabella, Stephen Starr, Eatwell DC, and the team behindEstadio and Proof, as well as new locations for Ted’s Bulletin,Matchbox, and M Café and Bar.

With so many eateries flocking to this corridor, future growth will bethreatened by zoning regulations, as current restrictions call for amaximum of 50% of ground floor retail space on a given city block tobe filled by restaurants or bars. Restaurants have to act fast to scoopup vacant space and this problem will be compounded as new mixed-

use projects break ground this year, bringing additional retail space tothe market.

PENN QUARTER

The Atlantic Building at 950 F Street NW is bringing a new host of soft goods and other amenities to the Penn Quarter neighborhood,creating the latest downtown destination for shoppers. J. Crew plansto occupy a total of 8,625 sf and the Art of SpYn, indoor cycling andyoga studio has signed for 5,272 sf. They will both be joining theAnthropologie which opened in the building at the end of last year.

OUTLOOK While the office market is facing a bumpy 2012 in Washington, retailhas been off to a strong start. Despite current election yearuncertainties, D.C. remains one of the healthiest markets nationallyand retailers look to the area as the place to be for expansion. Themetro area’s prime retail areas have performed exceptionally well in2011 and retailers who are looking for safety and growth want tohave a presence in Washington.

Source: Moody’s Analytics

ECONOMIC INDICATORSNATIONAL 2011 2012F

GDP Growth 1.7% 2.4% 2.8%

CPI Growth 3.1% 2.2% 1.9%

Consumer SpendingGrowth

2.2% 2.3% 2.9%

Retail Sales Growth 7.7% 6.0% 4.0%

REGIONAL (WASHINGTON METRO AREA) 2011 201

Household Income $90,934 $92,966 $95,789

Population Growth 1.8% 1.6% 1.2%

Unemployment5.8% 5.3% 5.3%

PRIME RETAIL RENTSLOCATION RENT (PSF/YR) % GROWTH (ANNUA

Georgetown $135.00 8.0%

Penn Quarter $125.00 25.0%

Dupont Circle $110.00 0.0%

Chevy Chase $90.00 13.0%

KEY Q1 2012 LEASING TRANSACTIONSPROPERTY TENANT

3100 14 th Street NW DSW 22,360

5535 Wisconsin Avenue NW H&M 21,704

950 F Street NW J. Crew 8,625

Q1 2012WASHINGTON, D.C.

RETAIL SNAPSHOT MARKETBEAT

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