Push is On to Fill ‘Marketplace’ Vacancies

With three tenants signed and another four or five to go, the much-anticipated Montgomery Village Marketplace is heading towards its ribbon-cutting this summer.

Community leaders see the 25,000-square-foot shopping center as a crucial step in bolstering Montgomery Village’s commercial scene—and hope it will help spark a revitalization of its larger neighbor, the Montgomery Village Center.

J Donegan Co. is building the shopping center on the grounds of the former YMCA, a 91,000-square-foot parcel facing Stedwick Road off the southern edge of the Montgomery Village Center. The Vienna, Va.-based developer bought the property in 2007 with the initial hope of opening the shopping center as early as autumn 2009.

Donegan Co. went through county’s lengthy approval process, demolished the YMCA and worked with the Montgomery Village Foundation to align the Marketplace’s design with the Village’s architectural guidelines.

The Marketplace's stand-alone CapitalOne bank opened two months ago, and three tenants have signed leases in the shopping center's main building: a Chinese restaurant, a dry cleaner and a nail salon. But more than three years after buying the property, Donegan Co. is still courting restaurants and retailers to fill the Marketplace’s unclaimed space.

“It’s a nice community and it’s been a pleasure to work with them, so we’d like to deliver a first-class product,” said CEO Jay Donegan. “…The reality is that we’ve had a downturn in the market the last couple years. Everyone is feeling that the overall market is getting better. Beyond that, Giant closed, so that didn’t help.”

When the Marketplace’s main building is filled, work will begin on a separate 8,000-square-foot building in the parking lot. The number of stores there hasn’t been decided.

“There’s really no development timeline at the moment,” Donegan said.

Vacancies in shopping centers across the country continue to linger as the economy continues to lag, but signs are cropping up that the economy is on its way to a comeback, according to the International Council of Shopping Centers, a trade organization.

ICSC data for national retail chains show that sales jumped 4.2 percent this February compared to February 2010. ICSC expects sales to be flat or slightly up in March, then climb as much as 5 percent in April.

As sales inch up, businesses will begin looking for space—and since there wasn't much commercial space built during the recession, vacancies should steadily fill up, said ICSC spokesman Jesse Tron.

“We’re sort of on the cusp of it really coming back,” he said. “There are retailers that are looking for space again. It’s not explosion by ay means. What’s encouraging is that there is a measured recovery occurring.”

A significant setback for the Marketplace came last summer, when the decades-old Giant supermarket left the Montgomery Village Center. The loss of that shopping center's anchor store compounded the Marketplace's uncertain picture, Donegan said.

After negotiations with Harris Teeter failed, the ethnic grocer Global Food replaced the Giant in November. Bob Hydorn, president of the Montgomery Village Foundation’s board of directors, remains convinced that Montgomery Village has the demographics to support national chains at the Marketplace.

“If a Chipotle went in there, I truly believe they’d be lined out the door every night with a complete spectrum of our residents,” he said.

Whenever the project comes to full fruition, community leaders hope that it will prod Washington Real Estate Investment Trust—which owns most of the Montgomery Village Center—to overhaul its aging shopping center.

“The Marketplace is such a great improvement in appearance. Everybody talks about how great it looks,” Hydorn said. “If only WRIT would do the same thing. The conversation always goes straight to them.”