Sage Policy Group Report

t
Revitalizing and Diversifying Melford in
Bowie Maryland
Submitted by
Sage Policy Group Inc
Submitted to
St John Properties
December 2012
Table of Contents
Listof Exhibits
2
ExecutiveSummary
3
A
Economic History and Current Performance of Melford
5
B
Regional Demographics Pertaining to Demand and Supply of Senior Housing Units
7
C
The Logic of Market Rate Housing as Part of Melford
s Optimal Mix
10
D
Significant Regional Office and R DFlex Space Pipeline Exists
14
E
The Need for Complementary Convenience Retail
16
F
Summary of Key Analytical Findings
17
G
Conclusion
19
Appendix
20
List of Exhibits
Exhibit 1 Occupancy at Melford
6
Exhibit 2 Aging of Prince George
s County and Maryland
s Populations 000 20102040
7
Exhibit 3 Howard County Projections of Total Housing Stock by Housing Type 2005 2015 10
Exhibit 4 Comparison of Melford with Other Mixeduse Developments
13
Exhibit 5 Market for Suburban Maryland Office Space Q22012
Exhibit 6 Market for Suburban Maryland Flex Space Q2 2012
16
Exhibit A 1 Selected Listing of Active Adult Communities in Maryland
20
2
Revitalizing and Diversifying Melford in Bowie Maryland
Executive Summary
Valuable Mixed Use Onoortunity at Melford
Melford is already home to a diverse business community The 466acre community in Bowie
currently encompasses an array of existing and planned amenities including roughly 1
5 million
square feet of built space divided between office and R Dflex space
Although much has gone right at Melford current performance is sub optimal due to a lack of a
residential component that could finance retail and architectural amenities and attract residents
retirees business tenants and merchants A retail component of the project needs to be placed
adjacent to the residential areas to create a 24hour environment within the community Roughly a
third of currently planned buildout at Melford has been completed and the pace of construction is
positioned to be slow going forward absent some newfound impetus given available space at other
developments Occupancy in suburban Maryland has deteriorated recently with both office and
R Dflex space experiencing rising vacancies this year
At the time of this writing Fall 2012 office occupancy at Melford stood at less than 62 percent
Just a year earlier occupancy had been approximately 66 percent Melford occupancy is below the
and the overall suburban market rate 85
RDflex space occupancy has
countywide rate 79
been stable at 63 percent well below the regional average of 88 percent City leaders and other
stakeholders are concerned with Melford
s underperformance given the critical position it plays in
s commercial property tax base
Bowie
Importantly Melford lacks a residential component one that could neatly complement existing
commercial space by situating a more proximate labor force supporting retail demand and allowing
for the inclusion of appealing lifestyle amenities Accordingly the development team seeks to
further diversify the enterprise by integrating a residential component Plans for Melford now
encompass more than 3 million square feet of office and RDinstitutional space including three
full service hotels retail approximately 2
100 marketrate and fee simple residential units and 400
senior living units
Addressing Two Social Issues withOne Publ P
The Washington area already has several noteworthy examples of this type of synergistic mixeduse
development Among the most celebrated are King Farm in Rockville Maple Lawn in Fulton
Kentlands in Gaithersburg its sister community Lakelands and Washingtonian Center in
Gaithersburg By incorporating a mix of marketrate housing of various types office and other work
sites and a rich array of commercial uses with a neotraditional design perspective King Farm
1 CBRE MarketView Suburban Maryland Office Second Quarter 2012 and MarketView Suburban Maryland
Industrial Second Quarter 2012 both available at www
research
com
cbre
Maple Lawn and Kentlands
Lakelands have been able to successfully create small townlike settings
that have enhanced their appeal and produced significant real estate successes
Melford developers are currently in an ideal position to model their community after the most
successful components of these other communities Implementation ofthe proposed mixeduse
approach would create a 247 living environment that will help the property sustain its appeal in the
longterm Such an environment would boost neighboring property values increase tax collections
accelerate business formation and generate jobs In addition inclusion of both market rate and senior
housi
ng and much needed amenities would stabilize the current drop in occupancy making the local
business market more attractive to prospective tenants
The proposed approach would also address a growing shortage of senior housing in and around
Bowie This report provides significant statistical detail pertaining to the growing and unmet demand
for senior living units The demographics of aging and life expectancy are overwhelming and
opportunities to situate senior housing in amenity
rich contexts should not be overlooked
In this regard the colocation of market rate housing plays a critical role in producing a context in
which senior housing can flourish in part because residents of market rate housing collectively
support the provision ofamenities that are attractive to the senior market In other words Melford
could not sustain an elite senior living community without market rate units
hT
ese same amenities are also often useful to workers at adjacent businesses which helps to bolster
proceeds at Melford it will be prudent for the development team to attract complementary retail and
service oriented amenities
occupancy and to accelerate commercial buildout Correspondingly as residential buildout
Summary of Positive Impacts
Positive impacts associated with appropriate development related to Melford include
Increasing the local tax base
Increasing Melford
s appeal to employers by creating immediately proximate residential
opportunities for members of the labor force
Expanding Smart Growthmixeduse oriented behavior including walking and biking to
work
Stabilize and enhance Melford by creating a better mix of land uses
Addressing the County
s emerging shortage of senior housing and
Expanding Melford
s retail offerings supporting both residents and employers alike and
expanding opportunities for small business owners
In conducting its analysis the study team failed to identify negative economic implications
associated with pursuing a diversification strategy at Melford The policy recommendation might
have been different if there was significant commercial development pressure at Melford creating a
scarcity of developable land there Scarcity is not the issue and will not be one anytime soon
4
Revitalizing and Diversifving Melford in Bowie Maryland
A Economic History and Current Performance of Melford
The Melford mixeduse business community is named after a historic plantation house located
within the community Dating back to the mid to late 1840s it is considered an outstanding
example of a mid19th century brick Greek Revivalstyle plantation house Originally built for
Dr Richard Duckett the house was home to two prominent families for a total of 140 years
In its transformation to a commercial and business center the property originally called the
University of Maryland Science
Technology Center was envisioned as a highdensity office
and research and development park with the potential to develop 6
4 million square feet of space
The project also anticipated a hotel and related uses including conference facilities retail space
and
restaurants to serve the Center
s
employment base At maximum buildout this original plan
foresaw employment of up to 13
000 people
These plans turned out to be overly ambitious One of the reasons the plans were not realized
was the lack of University participation An economic development report prepared for the City
of Bowie in 2000 stated that the University of Maryland has never taken an active interest in the
property and as a result the Center did not create a technology magnet that would help to
anchor the project
Subsequent development plans embodied more modest goals but maintained the mix of office
and research and development
flex space All of this development was created with the goal of
establishing a campuslike business environment with unified architecture an inter connected
trail system and a variety of space offerings
Now named Melford the proposed mixeduse business community is a 466acre complex that
anticipates the potential for over 3 million square feet ofoffice RDinstitutional space three
fullservice hotels retail between 2
100 and 2
200 marketrate and fee simple residential units
and 400 senior living units
Melford already contains or has received approval for roughly 1
5 million square feet of
developed space including
000 square feet of RDflex space
492
000 square feet of office space
567
National Register of Historic Places Properties in Prince Georges County available at
httpst
mhtmarylandgovnr
www
NRDetail
aspxtiDID 1 009COLINTYPrince2OGeorgesFROMNRCounty
Li
aspxCOUNTY
Prince20Georges
The Jacob France Center The Maryland Business Research Partnership The City of Bowie Economic
Development Strategy Report September 2000
5
000
440
square feet dedicated to the U
S Census Bureau the International Masonry
Institute and the Institute for Defense Analyses and
000 square feet of approved retail space
25
In total the Melford site will contain approximately 4
8 million square feet of RDflex office
institutional retail hotel and residential uses once fully developed
In 2012 occupancy for both the flex and office space has been flat even though the economy has
improved Between June 2010 and December 2011 office space occupancy averaged 71 percent
and has fallen into the low 60 percent range for the first six months of 2012 There has been a
drop offin flex space occupancy due largely to the addition of two newly constructed flex
building However in the absence of these new buildings occupancy would have remained in
the 80 percent range between June 2010 and June 2012 When one takes into account the
construction of the new flex buildings occupancy falls to 63 percent See Exhibit 1 for a visual
representation ofoccupancy in Melford that accounts for the newly constructed flex buildings
Exhibit I Occupancy at Melford
Flex
Office
90
85
80
75
65
60
55
50
l
C
ell
ell
1
Zo
R
C
eo
A
C4
a
e0 C
Z
Source St John Properties
With only onethird of its development potential realized and occupancy not grow for existing
office and flex space the Melford project would significantly benefit from repositioning of the
mix ofspaces it incorporates The current combination is clearly sub optimal
Residential development including some housing targeted to seniors has been identified as a
means by which to reinvigorate the complex Specifically the plan calls for approximately
12
00 marketrate and fee simple residential units and 400 senior housing units Not only would
this bolster demand for existing andor approved retail it would also produce demand for other
commercial space The addition of market rate housing would also create walking and biking
3
commute opportunities for employees already at the development and for future members of the
local workforce Seniors residing at Melford would also benefit from proximate retail and
business service opportunities thereby reducing demand for local roads and creating positive
environmental impacts There is already approximately 55
000 square feet of various medical
offices at Melford located in direct proximity to the senior living development
B Regional Demographics Pertaining to Demand and Supply of Senior Housing Units
rhe graying of the U
S population is arguably the most significant current and prospective
demographic trend As the baby boomer generation enters its retirement years in larger numbers
housing and many other industries will experience fundamental changes
Prince George
s County is hardly immune to these trends Compared to Maryland the County is
currently somewhat younger as measured by the share of the population 65 years of age or older
Over the next few decades however the growth of this age cohort in the county will outpace the
statewide average By 2040 county population 65 years and older is expected to increase 151
percent from its 2010 level from 81
500 in 2010 to 600
204 in 2040 while the statewide
population of this age segment will increase by 100 percent
This rate of growth for older residents is much faster than the growth in the overall population
As a result the share of the County
s population 65 years and older is projected to grow from less
than 10 percent in 2010 to more than 21 percent by 2040 a slightly larger share of the total
population than is projected statewide 4 Exhibit 2 provides detailed data for the County and for
Maryland
Exhibit 2 Acting of Prince George
s County and Maryland
s Populations 000 20102040
Age
Cohorty
Prince C
2010
2015
2020
2025
2030
2035
2040
40 10
x CoUNY
6
204
5
81
0
104
2
129
6
155
0
180
8
195
4
863
2
8x2
5
902
926 93
6
7
952
older
4
9
8
11
3
14
9
16
2
19
6
20
3
21
65 and older
6
707
5
840
000
1
8
175
1
7
328
1
4
404
1
4
418
1
6
428
ti
0110
0
613
8tSl
1
20
8
20
7
20
65 and older
Toth
Change
151
Share 65
Td
4
5773
962 ti 162
5
Q
100
rx j
gly
Share 65
older
3
12
1
14
1
16
3
18
Stale DmeCentrx
Ibid
7
The prospect of an increasingly older population in the County will create demands for an array
of housing options for older residents County planners and other officials have anticipated these
basic changes In 2006 the MarylandNational Capital Park and Planning Commission and the
Prince George
s County Planning Department published a Report ofthe Senior Living Market
Study Prince George
s County
i which analyzed the housing market in the County for seniors
This report provided 1 an overview of the senior housing market including development trends
demands for this form of housing in the county and in the Washington DC region and the
impact of national trends on local markets 2 a demographic profile of the active senior market
in the county and in the region and 3 a housing market analysis of active adult communities in
the county
As the report indicated when analyzing the senior housing market it is important to distinguish
between various market segments which range from housing that might be occupied by someone
55 years of age who is healthy and working to a nursing home that is exclusively devoted to the
infirm and is more likely to be occupied by those in their eighties or older One breakdown of
these market segments recognizes six relatively distinct segments although the lines between
these segments tend to become more blurred over time These include
I Active adult agetargeted community Housing marketed towards those at least 55 years of age
This housing typically offers few if any services e
g meals transportation medical support for
residents
2 Active adult age qualified community Housing restricted to those at least 55 years of age This
housing
typically has few if any services e
g meals transportation medical support for
residents
3 Continuing cure retirement communities CCRC Housing that incorporates independent living
assisted living and nursing home options at one location or campus A range of services
designed to support each of these levels of care is available The minimum age of CCRC
residents is typically 70 years
4
Independent living Facilities designed to provide meals housekeeping and other services as a
convenience to residents who are usually at least 70 years of age
5 Assisted living Facilities that provide a richer array of services than independent living including
personal care services e
g help with bathing and dressing to residents
6 Nursing homes Facilities that provide the most extensive level of service to residents who tend
to require ongoing health care services and support
This report is concerned with the active adult segments of the senior housing market These
segments often have a minimum age requirement of 55 years though the average age ofentry
tends to be during the early to mid sixties While active adult communities usually do not
s
MarylandNational Capital Park and Planning Commission and Prince George
s County Planning Department
Report of the Senior Living Market Study Prince George
s County September 2006 available at
httpwww pgplanningorgResources
of the Senior Living
Report
PubIications
Market Study
Prince George s
htm
Publication
County
8
provide meals transportation or other services commonly provided to residents of independent
living facilities community maintenance and landscaping services are typically provided
There are no sources of comprehensive data tracking active adult housing in the U
S Indeed
marketing of active adult housing often avoids direct references to age but rather concentrates
on the convenience and lifestyle characteristics of these communities
Nevertheless there are many indications of this rapidly expanding market The County
sponsored 2006 report identified 865 active adult communities in a national directory 6 In July
2012 this same directory listed 5
270 communities including more than 170 in Maryland and 19
in Prince George
s County
In reviewing active adult communities in Maryland the study team discerned the following
general characteristics
The vast majority offers forsale housing
Only a handful offer rental apartments
The scale of communities ranges widely from as few as 14 units to as many as 8
500 units The
average number of units for those communities providing these data is 381
When provided onsite amenities are typically oriented around recreational and social activities
and
Only a small number of communities are mixeduse projects that include retail and other
commercial uses although proximity and convenient access to these amenities are often a
prominent part of marketing these communities
In neighboring Howard County local planners have tracked the development of agerestricted
i active adult housing units The experience of the county demonstrates the vitality of this
e
real estate market segment The Sage study team reviewed housing projections in Howard
County which separate age restricted housing from other forms of housing As reflected in
Exhibit 3 while agerestricted housing stock represents a relatively small share of total housing
it is a rapidly growing segment The total number of all types of agerestricted units was
expected grow from fewer than 1
400 units in 2005 to almost 4
200 units in 2015 Although
non age restricted housing stock was expected to increase by 15 percent over that 10year
period the stock of agerestricted housing was expected to triple within that same timeframe In
absolute terms the largest increase in agerestricted housing is expected to be in the category of
apartments
accounting for more than half of all new agerestricted housing developed between
2005 and 2015
bid page 48
Active Adult Living Directory available at wwwactiveadultlivingdirectory
a
com
Sage Policy Group Inc HRAC Impacts on Fort Meade Area Housing October 2009
E
Exhibit 3 Howard County Proiections of Total Housing Ctnclr by 14micino T
una lnnc n i c
Type of
Housing
2005
Share of
2010
Tota
Share of
2015
Share of
Total
Total
y
SFA
319
20
w
21
MH
ARC
559
1
6
1
28
036
0
367
4
0
999
4
1
f
AR SFA
Note
AR
3
20
SFD
single family detached SFA
age restricted
113
22
3
20
1t
184
24
5
20
TS4
602
1
12Cf
411
1
single family attached APT
5
1
215
X2
605
1
1
4
1Q
0
3
1
907
1
6
1
21
956
2
5
2
apartment MH
mobile homes
Sources Howard County Department of Planning and Zoning Baltimore Metropolitan Council Sage
The proposed shift of uses for Melford is part of a broader trend involving a mix of other forms
of development with senior housing uses Within central Maryland there are several examples
of sophisticated adult housing development where active adult housing is part of development
along with commercial space including South River Colony Conservatory in Edgewater
One can also view the appropriateness of providing more senior housing opportunities in the
context of ongoing development from the following perspective Prince George
s County is
presently home to 15 percent of the state
s population With I 1 percent of the state
s active
adult communities 19 of 170 listed in a national database only one of which is in Bowie the
County and Bowie are likely underserving older County and Bowie residents 10 In doing so the
county and its municipalities may also be missing out on property tax base formation
opportunities It is worth noting that active adults are unlikely to have children of school age and
generally are not associated with substantial utilization of public safety and other forms of
County and municipal support
C The Logic of Market Rate Housing as Part of Melford
s Optimal Mix
The Housing Market is Showing Signs of Improvement
After several years of soft activity a number of current statistics indicate growing demand for
residential development in Bowie and Prince George
s County Between 2010 and 2030 the
number of households in Prince George
s County is projected to expand by approximately
47 representing an increase of 16 percent Bowie
500
s supply of retail and commercial
amenities along with available infrastructure render it a natural place in which to accommodate a
significant fraction of this growth
9 The County
s June 2011 population was 871
233 or 15 percent ofthe statewide population of 289
828 according
5
to the US Bureau of the Census
10
Op cit Active Adult Living Directory
n
As evidence ofan improving housing market home prices have been rising in Prince George
s
County and its neighboring jurisdictions an indication that supply demand equilibrium has been
attained According to the Maryland Association of Realtors between July 2011 and July 2012
median sales prices for existing homes in Prince George
s County expanded more than 8 percent
While home value appreciation indicates the expansion in demand for housing there are signs of
supply shortages as well The months of inventory measure stood atjust 31 months in July
2012 well below the 6month threshold often considered a representation ofequilibrium In
Montgomery and Frederick Counties inventory is down to 2
5 months and 3
8 months
respectively Another strong indication that Bowie
s housing market is improving is reflected in
units average days on the market In November 2011 units in the 20715 zip code stayed on the
market
for50anpercent
averagedecline
of69 days By November 2012 average number ofdays dropped to 35
an
almost
Not surprisingly the marketplace is responding by seeking out new opportunities to address
demand Between Q2
201 I and Q2
2012 new housing permits in Maryland were up 19 percent
including an increase ofroughly 5 percent in Prince George
s County As a result construction
activity has expanded this year More than 14
000 Class A apartment units in the Washington
C and Baltimore metropolitan region were constructed from June 2011 to June 2012 with
D
work on 11
000 more units expected to start in 2013 These data are provided by Delta
Associates which monitors the national rental industry
But the increase in demand does not represent the only reason to situate marketrate housing at
Melford The colocation of market rate housing also plays a critical role in producing a context
in which senior housing can flourish in part because residents of market rate housing
collectively support the provision ofamenities that are attractive to the senior market These
same amenities are also often useful to workers at adjacent businesses which helps to bolster
occupancy and to accelerate commercial buildout Correspondingly as residential buildout
proceeds at Melford it will be prudent for the development team to attract complementary retail
and serviceoriented amenities
Regional Examples of Mixed use Development
The Washington area has several noteworthy examples ofsuccessful mixeduse commercial real
estate development Among the most celebrated are King Farm in Rockville Maple Lawn in
Fulton Kentlands in Gaithersburg its sister community Lakelands and Washingtonian Center in
Gaithersburg King Farm is a 430acre site with an approved plan to develop 3
200 housing
units and as much as 2 million square feet ofcommercial space offices retail and other
RealEstate Business Intelligence LLC An MRIS company Statistics generated on 12
2012
04
Housing
Executive
Bozzuto
Leads
the
National
Rental
Industry
Maryland
Gazette
Available at
httpwwwgazette
articic20120914
net
NE
12
rental industry
template gazette
housingexecutivebazzuto
1029
709149702
WS
leadsthenational
Density is much higher than the surrounding areas in Rockville Creative use of open space
commons bike paths and other amenities enliven the community design and promote a
walkable engaging environment The development has been heralded by the Congress for the
New Urbanism the premier organization advocating design that contains a range of housing and
job types The U
S Environmental Protection Agency also cites King Farm as an example of
smart growth that incorporates virtually all of the key design and community qualities of that
type of development
13
Kentlands is a mixeduse development built on more than 300 acres that was originally designed
at a weeklong charrette in 1988 The resulting neotraditional design incorporates housing of
various types sufficient for a population of roughly 8
000 Office and commercial space totals
more than 1 million square feet and includes a range of stores restaurants offices and other
uses Among the features of Kentlands are livework buildings that have office and retail uses
on lower floors and residential units on upper floors Kentlands is considered one of the nation
s
largest and most successful new urbanist developments
14
s sister community Lakelands situated next to Kentlands and connected by internal
Kentland
streets is also considered an integrated community with a total
of 1
410 residential units t The
two communities combined comprise over 3
200 residential units and share various amenities
such as schools parks and retail space
Importantly King Farm and Kentlands both contain a senior living component The Ingleside at
King Farm is a continuing care retirement community which represents a type of highend
retirement community capable of meeting healthcare needs through the continuum of care
Kentland Manor which is situated in the heart of the Kentlands neighborhood supplies luxury
senior apartments
Maple Lawn located in Howard County is a mixed use community encompassing over 500
acres of land with a business district and six residential neighborhoods along with retail space
and other architectural amenities The development concept of Maple Lawn Farm is inspired by
the small towns of the late 19 and 20 centuries which provides distinctive ambience The
16
development plan consists of 1
340 approved residential units and 2
1 million square feet of
commercial spaces approved to be built 17 As with other mixeduse communities in the region
Maple Lawn Farm development is consistent with Maryland
s Smart Growth policy and has
Smart Growth Illustrated King Farm Rockville Maryland available at
htm
kingfarm
dcedlcase
gov
epa
www
http
History of Kentlands based on The emergence of modern Kentlands by Richard L Arkin available at
httpwww kcntlandsusacomsub
aspcategory l 9title History
list
category
15 Lakelands available at htto www lake lands uru home asn
16 A Community That Feels Like Home Project Overview available from http
greenebaum
www
htm
mapielawn
content
com
rose
The number of residential units and commercial spaces that have been built may differ
12
obtained
various national recognitions including the Rest In American Living Award by
Professional Builder Magazine
National Association of Home Builders 18
Washingtonian Center is a vibrant mixeduse development that surrounds Washingtonian Lake at
the heart of Montgomery County The development design is based upon the Main Street
concept containing over 3 million square feet of shopping retail and entertainment facilities
along with over 000
473 square feet of office spaces Washingtonian Center also offers 176
single family homes within its 24 acres of development
Melford developers are currently in an ideal position to model their community after the most
successful components of these other communities For example Melford is similar in scale to
several of these well established and successful developments both in terms of land area and
with respect to the mix of uses that can be developed Based on the site plans and development
concept Kentlands development is deemed to be the most akin to the development design
envisioned by Melford followed by Maple Lawn Farm King Farm and Washingtonian Center
Another major similarity among these exemplary mixeduse communities is the development
concept itself In the instances of King Farm Maple Lawn and Kentlands all three
communities have local historical roots being located at the sites of 18 and 19 century manor
houses that have been incorporated into the design and daily living of the communities
Furthermore by incorporating a mix of marketrate housing of various types office and other
work sites as well as a rich array of commercial uses offering a neotraditional design
perspective King Farm Maple Lawn and Kentlands
Lakelands have been able to successfully
create smalltownlike conditions These conditions have enhanced their appeal and produced
significant real estate successes This is precisely the type of formula needed to reinvigorate
Melford A statistical comparison of these mixeduse developments is provided in Exhibit 4
E 4 Comparison of Melford with Other Mixeduse Develonmente
Melford
Maple
King Farm
Lawn
Kentlands
Washingtonian
Lakeland
Center
of ToW Residential
Utiita
500 2
2
600
o Senior Units
om
in
oe
S
c
r
s
u
400
I3
5
1
1
ma
242
w
red
5 million
1
21miilton
2 milltotrrM
210
3
219
l million
ma
r
milt
3
ngcnFry amarr urowtn tttusiratea King Farm History of Kentlands based on The
emergence of modern Kentlands by Richard L Arkin Kentlands St John
s Properties Maple Lawn
The sizes ofdevelopment shown in the exhibit do not distinguish between approved and actual builtout
Number of senior units located in Kentlands Manor a senior apartment located in Kentlands Information is
obtained through email communication with Brett Havener Donaldson Group on November 27 2012
Material obtained from St s
John property
Material obtained from St John
s property
13
D Significant Regional Office and RDFlex Space Pipeline Exists
Under a relatively narrow market definition a broader definition would include Northern
Virginia and the District the Melford business community competes within a Maryland
suburban real estate market that surrounds Washington D
C and offers substantial choice for
both office and flex space users Montgomery County dominates this suburban market offering
approximately 70 percent ofthe market
s total space Montgomery County is also the only
jurisdiction with new office space under construction There are nearly 2 million square feet of
office space under construction in Montgomery County Opportunities for additional regional
build out abound particularly when one adds the District ofColumbia
s and Northern Virginia
s
development pipelines into the mix
According to CB Richard Ellis most recent quarterly report Quarter 2 2012 no office space is
under construction in either Frederick or Prince George
s counties From a Prince George
s
County perspective this highlights a need to improve the performance of existing properties
which would create better market conditions and thereby induce more investment going forward
Bowie represents a relatively small part of this suburban office market accounting for 5 percent
of the office space in the Prince George
s County market and only I percent ofthe total market
Several properties in the county have been shedding occupancy over the past year In Prince
s County only College Park has demonstrated a substantial ability to absorb space this
George
year
No new office space is in the Prince George
s County pipeline This is not surprising since
Prince George
s County occupancy is at 79 percent lagging both Montgomery and Frederick
counties Melford
s office occupancy in the second quarter of 2012 was lower than Prince
s County
George
Recent statistics on the office market in suburban Maryland are summarized in Exhibit 5 All
sub markets in Prince George
s County are listed while data for Montgomery and Frederick
counties are summarized at the county level By adding the subtotals for each of the three
counties total office space inventory for Suburban Maryland exceeds 80 million square feet with
an average occupancy of 85 percent For purposes of this analysis Suburban Maryland only
encompasses Frederick Montgomery and Prince George
s counties
O
CBRE MarketView Suburban Maryland Office Second Quarter 2012 available at www
comlresearch
cbre
2 Ibid
14
Exhibit 5 Market for Suburban Maryland Office Space Q2
2012
Submarket
Inventory
Overall
SF
Occupancy
2Q 2012 Net
Absorption
Absorption
Under
Construction
Average
SF
SF
SF
Direct
Lease
2012 Net
Rate
BeltshlW
Bowie
clkAv ue
Bra
College
910
108
24783
1
Park
952
094
4
sett
74
Lan harm
024
31225
s
1
75
598
10
8
79
7
111
r
6 00
85
861
266
r
82 00
7
L1 lol Hbi83ua 777
425
U74
9
72
0
Laurel
948
802
1
oon fIq
O
752
954
79
Penn Ave
987
688
9
63
4
85
3493
217
2
Landover
Px
847
8
0
J f O 766
n
269
542
r tS8
336
2078
0
93
20
0
42
SZQ
0
45
521
926Y
4
0
550
11
137
9
0
9
0
51
2
8
1 a
139
169
11
pi incB GiL gG
S
4
w
County Subtotal
Montgomery
711
18
339
Sg6
78
f33
18
County Subtotal
832
56
987
87
432
24
391
4
314
196
80
840
135
80
0
85
S
Suburban
land Total
so cs
01
28
0
20112Y
Upper Marlboro
Ma
Asking
Elris
638
130
0
46 946
797
935
1
49
S29
19
6
382
14
0
4Z
173
469
094
98
935
1
797
a
s
Bowie is a more significant player in the market for Maryland suburban flex space
encompassing more than 10 percent of the flex space available in Prince George
s County and
approximately 4 percent of the total suburban market Flex occupancy in Prince George
s
County have increased in 2012 thus far with more than 000
150 square feet of flex space
absorbed during the first half of this year The total market for flex space has experienced
absorption of more than 350
000 square feet of space this year
Broad occupancy trends for flex space are not dissimilar from those of office space Prince
s County occupancy was lower than in Montgomery and Frederick counties Melford
George
s
flex occupancy in the second quarter of 2012 was 64 percent which is below Prince George
s
s average of 81 percent Exhibit 6 summarizes occupancy and other data regarding the
County
flex space market in 2012
15
42
26
Exhibit 6 Market for Suburban Maryland Flex Space Q22012
Submarket
Inventory
Overall
SF
2Q 2012
2012 Net
Occupancy
Under
Net
Absorption
Construction
Absorption
z
B
Bowie
1
1
128
87
51
74
Avenue
980
6
b89
246
0
89
x42
4
Brandywine
000
24
0
036
326
LandoverLargo
670
1
306
A
t
HilUF
Oicoo
Pennsylvania Avenue
79
6
8
632
698
6SS
25
183
370
f
3
89
0
r 180
T
T32
Pr
Co
Montgomery
1
84
971
43
V
Ma
0
460
86
1943gS24
U
I
90
41993
0
71
0
4
3 679
Q
100
8
3
5
r
0
ti
190
2
0
728
7
p
s
80 636
a
M
190
2
5
99
0
37 635
0
500
800
v
686
51
lSd 809
a
645
96
0
f19
6I5
069
357
330 000
11 720 831
2
87
3
9
287
52
103 642
26
6
81
IIB
7
83
163
228
and Total
53 003
1
9fk6
Coun
itert
lc
Suburban
0
0
J
Rt 4
Uppg Marlboro
0
429
4
09Ir
78
21C701
Laurel
646
11
T
0
PG South
cip
Cheverly Hyattsville
SF
59 501
F
a
330 000
11 4lion i
fttlWidLllis
as a1
h
RV1
b NNt basis
E The Need for Complementary Convenience Retail
Retail is one of the most salient amenities for any household but its proximity may be of
relatively greater importance to seniors Seniors may have limitations on mobility or a
preference not to drive frequently in the madness and mayhem that is Washington metropolitan
area traffic As this report has noted convenient access to an array of choices for shopping
restaurants entertainment and other retail and services is a selling point for active adult
communities in Maryland It is preferable that those commercial choices be interwoven into the
development itself but nearby commercial choices are also beneficial and attractive
As residential buildout proceeds at Melford it is important for the development team to attract
complementary retail and services The approved mix of uses at Melford includes retail
designed to serve the needs ofcurrent occupants ofthe complex
s office and flex space
V
It may be that some ofthese services will also appeal to users ofcommercial space helping to
bolster occupancy numbers and eventually pave the way for build out and commercial tax base
formation to continue It is therefore important for polieymakers to allow the provision of a
critical mass of convenience retail at Melford
Another benefit of residential mixeduse development is the likely synergy between each
economic component According to the Urban Land Institute study Ten Principalsfor
Rebuilding Neighborhood Retail a mix ofhousing and office space supporting retailers could
boost rental rates by up to 20 percent by creating an optimal business environment for retailers
In particular the residential component would help the retailers capture nighttime customers
while office business component assists restaurants with respect to daytime revenue
generation
Other developments have embraced this mixeduse model which appears to be
preferred by many commercial tenants and consumers
22
According
a 2008perstudy
conductedS
on behalf
of the City ofAlexandria there were 20
2 square
feet of retailtospace
person in the U
23
Therefore if 2
000 to 3
000 new Melford residents
were to occupy the proposed new residential units then 40
000 to 60
000 square feet of retail
space would be needed to satisfy them Onsite commercial and office tenants would create
demand for additional retail space
F Summary of Key Analytical Findings
Melford has been through major strategic shifts since being proposed as a mixeduse
complex centered on office and RDflex space
Each shift has reduced the scale ofthe project e
g from 6
4 million square feet ofspace
for the University of Maryland Science
buildout of 4
8 million square feet
Technology Center to the current plan for total
Current development of approximately 1
5 million square feet represents roughly one
third of presently proposed buildout
Office and flex space in Melford is slow growing relative to other similar space in the
Maryland suburban market surrounding Washington DC
Melford office occupancy is now 62 percent below the Countywide 79
s
suburban market average 85
and the
Both office and flex space occupancy at Melford have declined this year
Based on declining occupancy Melford must be reimagined
Reenvisioned plans for Melford encompass more than 3 million square feet of office
RDinstitutional space three fullservice hotels retail between 2
100 and 2
200
marketrate residential units and 400 senior units
Urban Land Institute Ten Principles for Rebuilding Neighborhood Retail
Gibbs Planning Group Inc Retail Market Study Van Dorn Landmark Mall Corridor p
Available from
2 July 17 2008
pdf
andmarkVanDomRetailMarketStudy
fileO
org
alexecon
www
IF
Implementation of these plans will position Melford to produce the types of success
observed at several of the Washington metropolitan area
s most vibrant mixeduse
communities
Higherend senior living development at Melford will be possible in part because of the
amenityrich environment supported by the provision of marketrate housing
Senior housing is booming in Maryland and across the United States driven by the
approaching retirement of the baby boomer generation
Prince George
s County
s population ofseniors is expected to expand much more rapidly
than in the average Maryland jurisdiction with seniors making up a disproportionately
high fraction of total county population over the next 2030 years
The 65 population segment is expected to expand 150 percent in the county over the
next three decades
At least 170 active adult communities exist in Maryland and include a widely variable
number of housing units
For communities that provide data on total project scale the average number of housing
In Howard County which tracks development of housing for those over 55 years of age
units is 381
the number of age restricted housing units is expected to grow by 270 percent between
2005 and 2015 with the largest absolute increase being the number of agerestricted
apartments
The local housing market has begun to meaningfully recovery with available inventory
down to roughly less than two months ofsupply and existing home prices now rising at
high singledigit rates
The addition of market rate housing at Melford could unleash positive market dynamics
to help rejuvenate the development and accelerate construction creating King Farm and
Kentlandstype communities in the process
Rising demand for apartments has become apparent
According to Delta Associates more than 14
000 class A apartment units in the
Washington D
C and Baltimore metropolitan region were constructed from June 2011
to June 2012 with work on 11
000 more units expected to start in 2013 and
Easy access to retail and commercial amenities represents an important and obvious
selling point for active adult communities as well as for housing that is not agerestricted
18
G Conclusion
Melford is at a crossroads Occupancy in both the office and flex categories is in decline A
number ofcompeting projects are under development including in Montgomery Anne Arundel
and Howard counties as well as in the District of Columbia and Northern Virginia
At the same time local policymakers have noted a lack ofsufficient senior housing stock The
study team concludes that there is an opportunity for the City of Bowie to address two emerging
issues simultaneously by permitting the development of senior housing at Melford in conjunction
with market rate housing and convenience retail in order to rejuvenate and diversify Melford
Positive impacts associated with appropriate economic diversification at Melford include
Increasing the local tax base
Increasing Melford
s appeal to employers by creating immediately proximate residential
opportunities for members of the labor force
Expanding Smart Growth oriented behavior including walking and biking to work
Stemming the decline of Melford by creating a better mix of land uses
Addressing the County
s emerging shortage of senior housing and
Expanding Melford
s retail offerings supporting both residents and employers alike and
expanding opportunities for small business owners
In conducting its analysis the study team failed to identify negative economic implications
associated with pursuing a diversification strategy at Melford The policy recommendation
might have been different if there was significant commercial development pressure at Melford
creating a scarcity of developable land there Scarcity is not the issue and will not be one
anytime soon
19
Appendix
Ofthe more than 170 active adult communities in Maryland identified in a national directory 70
provided information regarding total unit counts This housing is typically marketed to those at
least 55 years ofage who are still in good health and are not interested in the types ofservices
usually associated with independent living communities
The following listing provides the number ofunits for each ofthese communities and reflects
variations in scale between these communities The smallest community includes 14 single
family homes while the largest is a mix of 8
500 single family and multifamily housing
All the listed communities are composed ofsale units of single family andor multifamily
housing The number of communities offering rental apartments in this listing source was very
limited
Exhibit A l Selected Listine of Active Adidt
r
20
a
v
Hearthstone
at
2
Severn Crest
Heritage Harbor
Legacy Eden Brook
At
Le ac at Greenview
Le
tevi
c
i
eat YYtls
Le ac At Greenview Villa Stonehurst
Eo
t
ati waw
Severn
45
Annapolis
1
Odenton
224
BeFAu4
74
New Market
233
Nevi tilark
233
New Market
233
Bel Air
114
1
Mac hail Woods
Fultol
E
Mares St Michaels
St Michaels
16
L x
Mount Hebron Overlook
Os re Landin
rt
o
Ovat
Park Ride
t
pSondominittn
Poplar Run
Residences
at
Park Place
Scots Glen
Stiff
Si
ature Club at Regent Park
South ate
Carttttlit
Stonecreek Condominiums
Sumni
CSrE
The Cloisters at Vill Crest
Hall
Y
Y
t
The Parke in Ocean Pines
fit Bpr xoc
The Warfields
25
Glen Burnie
131
Severna Park
33
Silver S nn
773
Anna
210
Its
Columbia
73
Mitchellsville
144
Prince Frederick
Via
Gatev
h
1
ra
e Cicand
The Overlook at Pe
r
51
Ellicott City
26
way
Laurel
R
ZOt
126
Salis
Ellicott City
7Whi
116
Ct
March
34
Ocean City
503
v
Glenelg
60
21
V lr
J
tf
mr
e
r
r
Villages of Wildewood
zv
California
r
i
V
314
Y
t
Waverly Overlook
j
W
Marriotsville
9
Wootton Crossing
ntimtiot of writs
Av
r
Rockville
t
a
Aduwvine 1utPiwwVr actiyeadY
39
38
Median number of units
Sa
26
146
vine conk
22