Monday, April 29, 2013

Welcome "Ellsworth Place" (or Not)

There have been numerous claims over the years about how City/Shitty Place was on the cusp of a retail renaissance, but all of the grandiose talk has thus far proved hollow. Instead, we have continued to live with our zombie-like POS mall where only a free Rihanna concert can attract more than a couple dozen people through the doors.

Now the current management claims that they have all sorts of new super-double-secret tenants lined up to occupy the much-maligned mall. Could the hundredth time be the charm? The building will be re-christened "Ellsworth Place", though come on, good or bad it will always be City Place. Note that last time we heard this spiel, it was to be the "Galleria".

Of course, the planned changes to the structure now need to be submitted to the county, and we know at what speed that process can progress. Throw The Community in the mix, and we could be looking at another 20 years of Shitty Place.

What the county needs to do is fast-track this process - perhaps a City Place actually worth shopping at might help to distract somewhat from the never-ending Transit Center fiasco unfolding a couple blocks away.



36 comments:

Ubermunch said...

Yeah... good luck with that. This falls squarely into See-It-To-Believe-It territory. On the plus side... I'm sure the MoCo Govt can hook Petrie Ross up with some real good contractors for their renovations.

Clancy said...

I won't get my hopes up as I'm still convinced City Place is little more than some sort of tax dodge for whichever company owns it at the time. However, I am interested in learning that they've secured a significant line of credit. I guess that could say something. . .

Lee said...

I love how the Washington Business Journal article refers to the similar renovations at other malls, and then refers to White Flint as one of those. Last I heard, weren't they tearing White Flint down and redeveloping the whole thing? In that case, the only way it would be similar is if they were taking the City Place building down and restarting from scratch.

Anonymous said...

They will resuscitae Shitty Place right after the Transit Center is completed and intact.

Mr.Wang said...

So they are changing the name from Shitty Place to Smellsworse Place. Nice try.

Anonymous said...

I'm optimistic. Lining funding, some new tenants, and a site plan up is not something that happens quickly or cheaply. It requires a real investment so I think almost certainly something will come of this. Will it all come to fruition overnight? Nope, not even close. But at least it's much closer to reality than previous pie-in-the-sky plans that contained no real concrete steps forward like we're seeing now.

Anonymous said...

Any guesses who's moving in? If only they had more dollar stores, that's really what's missing from Shitty Place. Would that be the hole in the doughnut or the munchkin?

Terry in Silver Spring said...

Peterson has done a good job in Silver Spring, Hyattsville, and Oxon Hill (National Harbor). I wish the county would just give his team a free hand with City Place and let them do what they think would compliment the rest of DTSS.

Anonymous said...

I will miss the fact that the mall is essentially a super mario maze with Bowser at the top level waiting to fireball anyone who tries to make it to the Burlington Coat Koopa Castle.

And I'll also miss the Emptly theater / Warp Whistle floor that has nothing on it.

Anonymous said...

Ok folks, here's your quiz for the day. Which of the following projects will be completed first?
A. The Silver Spring Transit Center
B. The makeover of Shitty Place Mall
C. The Purple Line
D. None of the Above Will Ever be Completed

Rebecca said...

File me under cautiously optimistic. If they've actually closed on a loan to begin the renovations, then maybe we finally, finally have reason to hope?

Michael Cunningham said...

Tear it down and build a condo tower. That'll make everyone happy and MoCo could actually get some tax revenue.

Anonymous said...

The last thing we need are more condos or apartments that no one can afford.

Anonymous said...

Obviously increasing condo/apt supply lowers prices, over time. Not that that's an option in this case - one side of the facade is deemed historic and demoing the building would directly disrupt half of Ellsworth and effectively clusterfuck the whole area. There's exactly zero chance of that happening. Building on top of it would be the only option for expansion. I think a hotel would make the most sense, a la Chevy Chase Pavilion.

Gull said...

RE: future uses for the City Place site...

The site already has approval for 8 floors of office to be built on top of the existing structure, if the space is ever marketed and a tenant found.

Perry said...

Unrelated news...

A sign just went up, and a UPS store will be occupying part of the space located next to American Apparel.

Anonymous said...

Maybe they finally succeeded in attracting tenants with the concept of an outlet mall?

Anonymous said...

Haven't been in DTSS for a while so I did a quick search for the latest news on the Silver Spring Lib. What a surprise, nothing turned up, only links to the old place. When I left, the construction site had those concrete cylinders, infamously stamped with "Silver Springs". So, dare I ask if there's been anything going on with that project?

Anonymous said...

Yep, the county accepted a bid during the holidays and site work began in January. Currently there are a pair of big holes w/concrete being poured for the past couple weeks.

I found the permit for a new coffee house that was referenced in another comment section - it's in the building along Silver Spring Ave. that's next to FS1. Nice building; used to be a dry cleaners I think. It'll be interesting to see how they do w/imminent Studio Plaza construction over the next few years.

Anonymous said...

Add the library to the following:

A. The Silver Spring Transit Center
B. The makeover of Shitty Place Mall
C. The Purple Line
D. None of the Above Will Ever be Completed

Anonymous said...

"Concrete being poured" - New punchline going around DTSS.

Evan Glass said...

The owners of City Place - Petrie Ross Ventures LLC - will make their first public presentation on their renovation plans at the next meeting of the Silver Spring Citizens Advisory Board. The meeting will be held on Monday May 13 at 7pm in the civic building. I encourage you all to attend.

Justafed said...

So this is interesting. The last paragraph is the most informative. Petrie sold the property to Hutensky Capital Partners for $22.8M in 2010 and bought it back for...$28M just over 2 years later. Now: what did HCP do that was worth $5.2M? I think they got the debt squared away, and they had cash available at just the right time.

My confidence that *something* is going to happen is bolstered by the fact that Petrie Ross is now pretty deep into this. Deals of the transaction are sparse, to say the least, but the rent they are collecting presently cannot possibly be covering what the mall costs to operate let alone debt service on at least $17.6M in dept. (My guess is that the dept is higher, but less than $45M.) A plan to spend $75M total on this including acquisition suggests about $47M to renovate, which is over $120 per square foot of the current mall. That is obviously not nearly enough to gut the whole thing and start over, but it is enough to make some visible difference and reconfigure the space somewhat. Now the big question is who they can get as tenants. A lot of the obvious candidates from yesteryear might not be building as many physical stores as in the past.

Michael Cunningham said...

Re: The last thing we need are more condos or apartments that no one can afford.

If no one could afford them they would be empty. If they would be empty they would lower the price until someone bought them. That's how it works.

But having a condo that close to shopping and metro would would command a high price, and people would pay it.

Isayaah Parker said...

GET 'ER DONE!!!!

Anonymous said...

It would be nice to see an island between the Colesville's traffic like they have on Georgia Avenue. It might make the re-done entrance to City Place feel more inviting and improve the chances of it's success.

Craig said...

MC said: "If no one could afford them they would be empty. If they would be empty they would lower the price until someone bought them. That's how it works.

But having a condo that close to shopping and metro would would command a high price, and people would pay it."

Ah but many of these brand spanking new condos and apartments have empty units. Supply and demand has a way of correcting things. You only have so many high-income professionals (i.e. yuppies) to fill condos in downtown Silver Spring. The problem is that Silver Spring is competing with Bethesda, trendy DC neighborhoods, and Arlington VA for the single or childless professional couples. Places like Rockville, Wheaton, College Park and Hyattsville want to zone more properties for "upscale, luxurious apartment/condo living".

The job market in the DC region has been slowing down due to federal budget cuts, sequestration and the winding down of foreign military wars.

Fewer professionals are getting job transfers to the DC region.

Fewer professionals are finding federal funding for research-oriented projects due to deep cuts with federal grant programs.

Fewer recent college grads are finding full-time jobs in DC and the surrounding suburbs.

The great jobs boom of Washington, DC that started during the Dot.Com boom of the late 1990s and accelerated through the 2000s thanks to massive defense, homeland security, intelligence spending and outsourcing government projects to contractors has come to an end.

Thankfully.

Condo developers are elastic with their pricing models. Apartment property owners and landlords never reduce rent to attract tenants. Property owners would rather have multiple units sit vacant for six months to a year than offer a discounted rent lease agreement to a tenant. Only if this region was mired in an economic depression would the landlords bring down rents.

Anonymous said...

Craig, your claims have no basis in reality. Reality is that rent prices go up and down on a macro level all the time. In this area they've recently been going up - as you note - but last year and this year we've seen prices go down due to a glut of supply. That's the point of our economic system.

Not to mention you're completely ignoring the larger picture - new luxury units charging 2K a month means units built in 2005 are forced to charge less, meaning units built in the 80s are forced to charge even less than that. Increased new supply tampers down pricing for non "luxury" units.

You're also ignoring the longer term. In years and decades to come the current new housing stock will grow older and command lower and lower pricing as time goes on. GGW (maybe by JUTP?) had a good write-up on this, capturing all the ripples of increased supply. It's common sense that supply increasing faster than demand lowers prices, but the number of different ways in which it lowers prices is interesting.

Gull said...

@ Anon 12:17

While I think there is valid reason to say Craig is too pessimistic in his arguments, I think your point that all the new units do much to reduce rent at existing units is a bit too rosy of a picture also. Craig may be underestimating the number of new households that find highrise urban living attractive. Even in a post dot-com/defense economy, baby-boomers still keep retiring, and new college grads keep entering the workforce (at a slower rate than before). What's not changed yet is a majority of these new college grads still want urban housing and an urban lifestyle. What we've also not seen is at what age/point in life do people move on and join their parents generation in the suburbs. It's most likely with having kids, but lets assume you move into your first yuppy apartment at 20 with a couple of roommates, you don't move out until your past 30. I don't think we've finished creating the number of urban quality dwelling units the market can support, but we may be building them a bit quicker than they are needed.

On the counter side, I live in an old, 1960's apartment building, with some amenities, but nothing fancy, and nothing new or recently renovated, and surrounded by new construction. My rent still keeps going up every year, and the management uses the argument that since everything else around here now costs more, so will our apartments, because you've no where else to go to find it cheaper and stay in the neighborhood. So, it seems the new units are actually dragging up the price of my old unit. Granted rent went up a very small amount this year, it went up a lot last year, and I see no reason it won't go up at least some next year. As I disagreed with JUTP's author, I still disagree that new units will bring down the cost of the old. I think all that happens is once your unit is built, the annual increase in rent is *probably* a bit slower than inflation, which, over the course of 20 years, may make the older apartments lower in cost than the new ones, but it also means the new ones will just be that much more expensive to occupy.

Of course, missing from this whole conversation is how the corner of Georgia and Fenton is probably not the best place for apartments anyway. It's a busy intersection with through and turning traffic, frequent honking of horns, and squealing of car tires and brakes. There is an approved plan from a couple years back to put 8 floors of office on top of the Mall, which of course has been foiled by the economy and recent trends in the region for what is a hot office market. Never the less, Office and retail are probably the best uses for this spot now and in the future.

Anonymous said...

The question isn't whether or not your rent has gone up; the question is whether it would be going up even more if there wasn't an increasing supply of new apartments to help satiate the growing demand downtown Silver Spring has come to command.

Anonymous said...

Does anyone know what was presented during the May 13 Silver Spring Citizens Advisory Board meeting?

Anything of value or optimism?

After all, the location can't be beat, so a solid renovation and addition of good concept/restaurant offerings could really bring in a new wave of energy and excitement to the existing mall.

Leo dragon said...

I'm currently a tenet at this mall and hate it. I had silver star security ( hired by mall management) kick customers out of my store and call Montgomery county police on us. After several emails to mall manager Gary b. all my attempts to get in touch with him were left on deaf ears, no response absolute nothing. I can see why other tenants left and will not be returning. If Petrie Ross ventures wants to flip this into a prosperous place like Tyson's they should start with the core ( management & security) as far as I'm concerned I'm glad to be leaving for a more profitable location and more professional mall.

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