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Transit-Oriented Development Not Immune to Downturn

Samuel Staley
June 6, 2009, 9:27am

I saw this interesting tidbit in the news yesterday: Rockville Town Center in Maryland, a marquee project for proponents of transit-oriented development, is not holding up so well in the economic recession. Retailers and restaurants are folding up despite the concentration of housing built into the mixed-use project according to a report at WTOP.com

"But some businesses have cleared out of the mix of retail, restaurant and residential buildings.

One merchant, who didn't want to be recorded, rattled off a number that have left or are leaving.

"Bedheaders, Love Your Eyes, Mo's Southwestern Grill, Stonefish Grill," and more. On Gibbs Street, the tanning salon was shuttered. A handwritten sign urged would-be customers to call a corporate number to find other locations.

One shop worker looked out his front window and declared, "In two years, this will be nail salons and dollar stores."

This may be a bit harsh, but it makes an important point. Investment in and of itself doesn't guarantee success. Also, projects need to be evaluated over the long run, not the short-term swings of the economy. Nevertheless, Rockville Town Center was touted as a project designed to meet untapped demand, and it has the advantage of a major Washington, D.C. metro stop.

Replacements [for departed restaurants] are on the way. A wing restaurant will replace the Greystone Grill.

Fenestra apartments - the apartment building on site - reports that it has a 92 percent occupancy rate, but a Web site dedicated to rating apartments includes comments - and complaints - about the number of students being directed there by area universities and the subsequent noise and parties that result. Shop owners say when the residential spaces didn't sell with professionals and families, the pitch went out to universities to fill the building.

Another complaint in the area is that there is no grocery store in the development. Super Fresh is paying rent on a space, but has yet to open its doors. The chain failed to obtain a license to sell liquor.


Samuel Staley is Research Fellow


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