Hines and Qatari Diar have partnered to bring high-end retailing to the heart of Washington, and brands including Burberry, Longchamp, Hugo Boss and Tumi have already opened stores in the new development.
This story first appeared in the December 8, 2014 issue of WWD. Subscribe Today.
The companies are creating CityCenterDC, a 10-acre, mixed-use center on a 4.5-block parcel bounded by New York Avenue and Ninth, H and 11th streets that, when completed, will boast more than 60 apparel stores, restaurants and cafés in approximately 300,000 square feet. All told, the project will include 520,000 square feet of office space, 458 rental apartments, 216 condominiums, a 1,550-space parking garage, a public park, a central plaza and pedestrian-oriented streets and alleyways. Construction of the Conrad Washington DC, a 370-room luxury property by Hilton Hotels, with 70,000 square feet of additional retail space, will begin in the third quarter of 2015.
Besides the stores that have already opened, luxury names including Hermès, Louis Vuitton, David Yurman, Salvatore Ferragamo, Loro Piana, Paul Stuart, CH Carolina Herrera, Zadig & Voltaire and Arc’teryx have also signed leases to open units in the center.
“The project has three distinct parts, and the first phase is essentially complete,” said Howard Riker, managing director of Hines, a privately held real estate firm that is the lead developer of CityCenterDC, along with the real estate investment arm of the Qatar Investment Authority, the state of Qatar’s sovereign wealth fund.
Riker said the retail component of the center is close to 90 percent leased, and the tenant mix is expected to appeal to the upscale consumers who are increasingly choosing the area for their residential and shopping needs.
“Over the last 15 years, this area has really come into its own as a residential neighborhood,” Riker said. “If you’re 22 to 40 [years old] and moving to D.C., chances are you will focus on that area.” In addition, a lot of empty nesters are headed back downtown to take advantage of the area’s theaters and other cultural offerings. Some 200,000 multifamily units have been added, Riker said, and there are about 15,000 hotel rooms within a mile of the development site, which formerly housed the city’s convention center.
At the same time, after New York and Chicago, downtown Washington is the third-largest office market in the country and among the “most stable,” Riker said, owing to its abundance of law firms, lobbyists and professional-services firms that work with the government.
But it’s not just locals that CityCenterDC is expecting to attract. Riker said the city lures 15 million visitors each year, “so that’s another demographic to take advantage of.” And it doesn’t hurt that all of the city’s Metro lines converge just south of the site.
CityCenterDC is not alone in its quest to attract the upscale shopper. The center’s biggest competitor is Tysons Galleria in suburban McLean, Va. Riker called the galleria — featuring Neiman Marcus, Saks Fifth Avenue, Gucci, Saint Laurent, Tory Burch and Thomas Pink, among others — “the center of high-end retail in the metro D.C. area.”
There’s also The Collection at Chevy Chase in nearby Chevy Chase, Md., where Louis Vuitton, Dior, Cartier, Ralph Lauren, Gucci and others have stores.
But in both cases, these centers are “some distance from the downtown area,” Riker observed. These high-end centers — along with Tysons Corner Center, a megamall with more than 300 specialty and department stores, including Bloomingdale’s — draw from a more dense residential population, but Riker thinks there’s more than enough to go around.
“Retail sales in the D.C. area are among the strongest in the country,” he said. “There’s a tremendous amount of affluence here. We’ve weathered the economic downturn well and maintained positive job growth.”
In addition to retail, CityCenterDC will also offer a number of high-end restaurants that are new to the market, including Daniel Boulud’s DBGB Kitchen and Bar, Del Frisco’s Double Eagle Steak House, Momofuku by David Chang and Mango Tree by Richard Sandoval.
“Downtown, food and beverage have proven themselves to be draws,” he said, “so we knew we could benefit from that. But what was missing from downtown is luxury and bridge retail.”
That’s one reason New York-based Paul Stuart is opening a nearly 10,000-square-foot, two-level store in CityCenterDC early next year. Tom Mastronardi, chief marketing officer, said he views the development as “the game changer for D.C. Hines is really doing it right.”
The store is expected to attract customers in the government, financial and tech industries — all of whom traditionally embrace the brand, he said. When the company revealed its plans for the store earlier this year, president and chief executive officer Michael Ostrove said, “D.C. makes perfect sense for us. It is a city that values style, refinement and sophistication over the constantly shifting vagaries of fashion. We believe that our unique and definitive approach to Anglo-American men’s wear will be particularly well received in the District.”
To create buzz and draw traffic to the project, CityCenterDC last month kicked off an advertising campaign, designed by Manhattan-based Laspata DeCaro to position the development as a top-notch shopping and dining destination. The campaign includes images shot on location around the city, and its tag line is “Monumental Style.” Model Coco Rocha appears prominently in the ads, along with models Patrick Kafka and Fatima Siad. The ads will appear first in regional Washington publications, including Modern Luxury DC, Capitol File, Washingtonian and The Washington Post, followed by national publications next year.