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Commercial Site Characteristics Inventory

Land available for commercial development in Montgomery County, MD (February 1998)

NOTE: A copy of the full report is available from the Research & Technology Center.

Acknowledgments
Scope and purpose
Methodology
Executive Summary
Summary of findings
Commercial pipeline
Vacant and Redevelopable Parcels (not included in pipeline)
Recommendations

Acknowledgments

This report was prepared and authored by Andrew Perez, Research Planner, Research and Technology Center, Department of Park and Planning, M-NCPPC. Mr. Perez was assisted in this effort by Sally Roman, Research Coordinator, Fred Peacock, Research Coordinator, John Schlee, GIS Coordinator, Mary Dolan, Environmental Planning Coordinator and other members of the Research and Technology Center.

Other contributors include Montgomery County's Department of Economic Development who helped fund the costs of the consultant and assisted in identifying site characteristics identified in the report. Integrated Solutions Group of EDAW, Inc. and O.R. George and Associates, Inc. were instrumental in creating a Geographic Information System -- a link between data and maps -- using Arc View. With data supplied by M-NCPPC's Research and Technology Center, the Integrated Solutions Group at EDAW constructed a database of site development constraints and overlaid it on spatial parcel data; the main element being the environmental analysis of land for jobs.

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Scope and purpose

The report entitled "Economic Forces That Shape Montgomery County, Phase I," completed by the Research and Technology Center, Department of Park and Planning in Fall, 1996, included an analysis of vacant and redevelopable land for employment purposes in the County. The Phase I study identified vacant and redevelopable nonresidential parcels in the County and estimated potential yield of space, but without regard to environmental or other potential site constraints.

This report presents the result of a secondary, detailed evaluation of these sites in order to more definitively identify which of the sites identified in Phase I are "encumbered" by site characteristics that would make their availability for development/redevelopment for employment purposes less likely than was reflected in the initial analysis. The properties have been screened for environmentally nonbuildable areas (i.e., wetlands, steep slopes, or stream buffers); and the commercial pipeline projects include the status of required transportation improvements - providing insight to the County's short-term development potential. The intent is to provide a more definitive "snapshot" of the quantity of approved and developable properties that could facilitate economic development and master plan build-out.

Throughout this report, the terms "vacant" and "redevelopable" refer to property not in the pipeline, unless otherwise indicated. "Pipeline" always refers to the remaining capacity of approved nonresidential projects. The date of the "pipeline" assessment is September 1997, with completions removed up to January 1997.

In addition to providing a basis for assessment of the status of economic development potential in the County at this time, the data base of site characteristics generated as a result of this study will be provided to the Department of Economic Development as a resource to assist in their economic recruitment efforts.

Finally, this information will serve as the basis for an examination of the compatibility of site characteristics with the economic development prospects and objectives of the County. A joint effort between the Department of Park and Planning and the Department of Economic Development is anticipated to assess and answer the second question posed in the Economy Study Work Program for this issue, to wit: How does this inventory relate to the expected needs of new or expanding County employers?

The two Departments will complete an assessment of the compatibility of existing land use availability with economic development prospects and needs, and develop a set of strategic recommendations on any actions anticipated to better coordinate and conform site availability with economic development objectives.

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Methodology

This analysis is based on two primary sources of data. The first is an inventory of projects previously approved in the commercial pipeline by the Planning Board. Pipeline projects are considered to be more "readily available" for development in the short run, since they have already gained preliminary plan approval albeit with conditions. These projects may have transportation improvement requirements that must be satisfied before construction begins; however, the necessary development approval actions have otherwise been completed. The report evaluates transportation improvement requirements tied to approved commercial pipeline projects.

The second source of site information is a compilation of vacant land (countywide) and redevelopable land (in the CBD's) zoned for employment use, but not currently in the commercial pipeline.

For the purposes of this inventory, redevelopable sites have a land assessment greater than their improvement (building) assessment, as calculated by the Tax Assessor's office. A land assessment greater than a building assessment reflects a site that is not developed to its potential.

Research Staff developed two additional steps to determine if a property is redevelopable. Properties that could not redevelop to more than their existing floor area were excluded as were properties that would involve large demolition costs that would decrease the land value to the point that the building value was larger. Finally, a consultant reviewed the list of redevelopable sites to determine if any other properties should be omitted based upon a professional evaluation of the property's location and condition of surrounding buildings.

Vacant and redevelopable sites are considered part of the "mid- to long-term" development inventory because they have not gone through the approval process or entered the pipeline.

The inventory of vacant/redevelopable land and the commercial pipeline does not include the development potential of residentially-zoned, federally-owned campuses, such as the future FDA site in White Oak.

This Phase II analysis expands the list of site characteristics for each site, beyond that identified in Phase I. The Phase II analysis estimates the land area affected by wetlands, steep slopes, or stream buffers for all vacant and redevelopable sites. It also estimates the environmental effects for pipeline sites where construction has not yet begun. These environmental features are "overlaid" in the Geographic Information System to indicate the areas of the site that are considered nonbuildable.

Additionally, this Phase II analysis provides information on each site that relates to zoning, parking, traffic management districts and impact fee areas. Other information concerning proximity to Metro stations, road frontage, and water and sewer categories is available on a site-by-site basis through the Research and Technology Center.

The area of each site considered "nonbuildable" is an estimate and does not substitute for an engineering study and preliminary design. Additionally, density from a nonbuildable area can sometimes be transferred to the part of the site that is buildable and depends further on zoning, allowable building heights, setbacks, and other requirements.

The study does not attempt, furthermore, to provide a yield of space on a site-by-site basis but, instead, estimates potential yield of space for large geographic areas called community-based planning areas (CBA). All other data for every site in the vacant and redevelopable inventory is in the data base that forms the foundation for this report.

Four office building categories are used to evaluate potential development opportunities of sites having I-1, I-3, and I-4 zoning. The following four building categories are used:

BUILDING SIZE DESCRIPTION
Montgomery County Study Area

  20,000 - 50,000 sq. ft.

 Small single-tenant or local serving multi-tenant building

 50,001 - 125,000 sq. ft.

Medium-sized office building

 125,001 - 250,000 sq. ft

Large Class A office building

 Greater than 250,000 sq. ft.

Campus style multiple buildings and/or corporate headquarters

The report compiles and reports summary data for each CBA except the rural area (employment-ready zoned land is de minimis in the rural CBA). Vacant land and redevelopable parcels in the CBD's are mapped for each community-based area. Tables for each area summarize the site characteristics of the commercial pipeline and of vacant and redevelopable land. A countywide table summarizes the data for all parcels in the County (including the rural area).

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Executive Summary

Montgomery County has a wide range of types and locations of vacant land and pipeline projects to support both short- and long-term business growth.

In the long-term, there is enough remaining pipeline capacity (35.2 million square feet) and potential from vacant and redevelopable land (39.7 million square feet) to add another 75 million square feet of commercial space. That compares to the 152 million square feet of developed commercial space in the County today.

238 of the 250 projects in the commercial pipeline have no remaining Adequate Public Facilities (APF) transportation improvement requirements. Of particular interest, 24 of the 250 projects had transportation-related requirements which have been completed. This financial investment indicates that they should be ready to move ahead in the short-term. These 24 projects would add 9.5 million square feet of employment space.

The development capacities of the vast majority of the vacant parcels are not significantly affected by environmental constraints.

County-wide, 26 sites having I-1, I-3 or I-4 zoning are large enough and have zoning that would allow for development of campus/headquarter office buildings (potential for more than 250,000 square feet of space).

The I-270 Corridor is home to 23 of the industrially-zoned sites allowing for development of campus or headquarter buildings. The development of these sites could result in 24 million square feet of office space.

The CBA with the most commercial development potential is the I-270 Corridor, doubling the existing inventory of space.

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Summary of findings

General

  • 790 parcels comprise the inventory of potential employment sites in Montgomery County. Two hundred fifty (250) are in the pipeline, 299 are vacant, and 241 are CBD sites that are considered redevelopable.
  • Eight pipeline projects each have the capacity to add 1 million square feet or more of commercial space. In addition, 8 of the vacant and redevelopable parcels each have the potential of 1 million square feet or more of commercial space. Together, these 16 sites comprise 40 percent of the development potential in the County.
  • The pipeline inventory, in part, consists of 50 projects greater than one-acre in land area, each having the capacity to add at least 100,000 square feet. The vacant and redevelopable inventory, in part, consists of 174 parcels that are greater than one-acre with an average potential yield per parcel of 197,000. Half of the vacant and redevelopable inventory are less than 1/4 acre, having an average potential yield per parcel of 9,700 square feet.
  • The potential yield of all potential employment sites is 75 million square feet. The 75 million square feet represents the high-end of the range of development potential. This number assumes all vacant land and redevelopable parcels in the inventory develop at the average floor area ratios for their zoning categories, or the master plan cap, and all of the remaining capacity of the commercial pipeline is built. (The average floor area ratios reflect environmental and other constraints that affect existing development).
  • To put the 75 million square foot number in perspective, at the average rate of commercial construction of the 1980-1995 period (3.5 million square feet per year) this capacity would last 21 years. (We are not predicting that the construction rates of the eighties will be repeated.)
  • Seventy-three percent (54 million square feet) of the potential development yield from commercial parcels either have zoning that allows for or is proposed as office space.
  • 43 sites (vacant or in the pipeline) with I-1, I-3 or I-4 zoning could each add office buildings over 125,000 square feet.
  • 26 of the 43 sites with I-1, I-3 and I-4 zoning could support office buildings greater than 250,000 square feet (campus/headquarter buildings).
  • 13 sites (4 vacant and 9 in the pipeline) that have C-1, C-2, C-3 or C-4 zoning could support the prototype grocery store being constructed today (around 50,000 square feet).

Many of the vacant and redevelopable sites in the County's four CBD's are small and in some cases there will be insufficient land or floor area to develop a financially feasible project. Some of these sites could be assembled with adjacent parcels and would then support viable development, especially if the optional method of development is chosen by the developer.

Nonetheless, the CBD's have substantial development potential from 12 redevelopable sites and from 5 commercial pipeline projects. Twelve redevelopable parcels in the four CBD's each have the potential to build over 100,000 square feet of commercial space. Five pipeline projects in the four CBD's each have over 250,000 square feet of remaining capacity; one project is approved for 1.7 million square feet.

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Commercial pipeline

County-wide

  • 35 million square feet of space are in the pipeline accounting for 47 percent of the potential yield of all land in the inventory.
  • The I-270 Corridor has 27 million square feet of remaining capacity in the pipeline. Bethesda-Chevy Chase/North Bethesda, Georgia Avenue, Eastern County and Silver Spring/Takoma Park CBAs each have over 1 million square feet of commercial space in the pipeline.
  • Twenty projects each have remaining capacity of 500,000 square feet or more.
  • Office space is the predominant land use of the commercial pipeline having the potential to add another 29.5 million square feet.
  • 13 pipeline projects with I-1, I-3 and I-4 zoning each have the potential to add greater than 250,000 square feet of office space.

Research staff, in conjunction with Transportation Planning, identified 36 commercial pipeline projects which initially had transportation improvements as APF conditions of approval. These 36 projects have 14.7 million square feet of remaining capacity, accounting for 42 percent of the remaining capacity in the commercial pipeline. Twenty-four projects have completed, implemented, or are in process of constructing all of their improvements. These projects can go ahead (or could soon go ahead) with development and have the capacity to add 9.5 million square feet of commercial space. These 24 projects are comparatively more likely to try to begin construction in the short-term because they have already made the financial investment in completing all of the transportation improvements required as conditions to approval. The pace of construction will depend on the perceptions of the real estate and financial markets. 12 projects have not started their required transportation improvements. Five of these projects are in the Georgia Avenue CBA, 5 are in the I-270 Corridor, while the Silver Spring and Potomac CBA's have one each.

The I-270 Corridor

The I-270 Corridor is home to:

  • 135 commercial pipeline projects, or 27 million square feet of commercial space, of which a vast majority is approved for office development. Additionally, 60 percent of the County's pipeline approved for industrial space (including flex) is in the Corridor.
  • 16 of the 20 projects in the County each having over 500,000 square feet remaining capacity.
  • 10 pipeline projects, having I-1, I-3 and I-4 zoning, could each add buildings exceeding 250,000 square feet.
  • 114 projects that do not have transportation improvement requirements.
  • 16 projects that completed all of their transportation improvements. The Corridor could conceivably see near-term construction of these 16 projects that could add 8 million square feet to the market.

The Bethesda-Chevy Chase/North Bethesda CBA

The Bethesda-Chevy Chase/North Bethesda CBA has 36 commercial pipeline projects with a total remaining capacity of 2.9 million square feet.

Three commercial pipeline projects with APF transportation improvements required. All three of these projects have completed their transportation improvements. These three projects have a total of just over 1 million square feet of remaining capacity.

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Vacant and Redevelopable Parcels (not included in pipeline)

County-wide

  • 299 parcels in the County are vacant and another 241 CBD sites are redevelopable.
  • The potential development yield of vacant sites is 32 million square feet. Redevelopment of CBD parcels could add 7.7 million square feet.
  • A potential 10.6 million square feet are in areas where job capacity is unavailable.
  • The average yield per vacant parcel is about 30,000 square feet, except in the I-270 Corridor where the average yield per vacant parcel is 224,000 square feet.
  • All CBA's but Silver Spring and Potomac have substantial amounts of vacant land that allow for retail, office, industrial, or other non-residential development.
  • 80 percent of the total acreage of vacant land in the inventory is considered buildable (not affected by steep slopes, stream buffers, or wetlands). Two hundred and forty-eight of the 299 vacant parcels could build on at least 80 percent of their land area.
  • Only 7 percent of the vacant parcels (21 sites) have more than 50 percent of the site non-buildable. In most cases, the reason for the non-buildable designation is stream buffer.
  • Seventy-eight percent of the vacant parcels (234 of 299 sites) are in areas of the County that require Policy Area Review pursuant to the Annual Growth Policy. Fifty-six percent (168) of the vacant sites are in areas that have available capacity for 200 or more jobs (11.8 million square feet of potential development). Twenty-one percent (62) of the vacant sites are in areas of the County where job capacity is unavailable (10.6 million square feet potential development), while 4 sites are in areas where jobs capacity is limited.
  • Eighty-six percent of the redevelopable sites are located in a parking district; 82 percent are in a traffic management district. These districts normally require provision of parking spaces or payment of a tax in lieu of parking. Sites in these areas of the County would either be required to pay a tax, implement a traffic management plan, or provide enough parking in areas normally served by expensive underground structures.

The I-270 Corridor

  • The I-270 Corridor is home to 124 vacant parcels with potential development yield of 27 million square feet.
  • Vacant land that is, on average, 80 percent buildable.
  • 12 vacant sites that have more than 50 percent of the site non-buildable. Most are zoned industrial (I-1, I-2, I-3, and I-4); 8 of these sites are each less than 7 acres, and only one is greater than 15 acres.
  • 30 of the 38 large, vacant parcels (greater than 7 acres) in the County. The Corridor has twenty-two 15+ acre vacant sites, all but three have over 70 percent buildable land area.
  • All of the 13 vacant sites in the County having I-1, I-3 or I-4 zoning that could support campus/headquarter office buildings.
  • 70 parcels that require Policy Area Review pursuant to the Annual Growth Policy. Thirty-four parcels are in policy areas where job capacity is unavailable.
  • 21 parcels (in Germantown) that are in an Impact Tax District. Developers of these vacant parcels (totaling 208 acres) are required to pay a development impact tax. The impact tax is based upon the type of commercial development.
  • In Germantown, Impact Taxes per 1,000 square feet are: for office space: $1,000; for retail: $4,249; for industrial: $500; for other commercial space: $4,699.

The Bethesda CBD

The Bethesda CBD has the largest number of redevelopable sites of the four CBD's in the County. 119 sites are identified as being redevelopable, potentially bringing 2.9 million square feet to the market. The large number of redevelopable sites in Bethesda is a reflection of its strong office market.

Good potential for office development because of low vacancy rates and high rental rates both in its CBD and in other competing markets, such as Fairfax County, which also is experiencing a tightening of its office market.

Silver Spring

  • Silver Spring has most of its long-term development potential coming from redevelopable sites.
  • 61 vacant parcels, most are less than 1/4 acre in size and probably require assembly to achieve significant development.
  • Only 6 vacant parcels larger than 1/4 acre.

Eastern Montgomery CBA

Eastern Montgomery CBA has 13 vacant parcels, 10 are subject to the Impact Tax. For Eastern Montgomery County, Impact Taxes per 1,000 square feet are: for office space: $1,000; for retail space: $1,771; for industrial space: $500; and for other commercial space: $1,959.

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Recommendations

Despite this seemingly adequate supply of developable parcels for the short- to long-term period, public debate has continued concerning the relative lack of construction activity in the County vis-a-vis Fairfax County and other "competitive" sectors of the region. The recent update of the "Economic Forces That Shape Montgomery County, Phase I" indicates construction activities beginning to increase as the economic cycle enters the expansion phase; however, it still indicates construction starts and activity far below Fairfax County. Statistics continue to indicate modest activity -- despite site readiness, an expanding economy, and an active absorption of office space.

What factors explain this apparent inconsistency between "site availability" and activity? Are there additional actions necessary/warranted to stimulate "build-out" of the site ready inventory? Is this difference a "timing" issue or a "structural problem? Is such a "build-out" desirable and/or sustainable at this time?

More specific evaluation is required in order to determine whether the problem is a timing issue or structural problem. A more comprehensive, site-specific analysis may show there are other factors, beyond transportation improvements and environmental constraints, that affect the financial feasibility of individual sites. In addition, further analysis may show that some of the non-pipeline, vacant parcels are too small or poorly located to be considered as viable sites for development, thus reducing the size of a viable inventory. These sites are included in the inventory because of the possibility that they could assemble with adjacent sites; many of the small sites in the inventory have CBD zoning which have higher development yields, especially if assemblage is possible.

As indicated earlier in this Report, the Economic Forces study anticipated, as a subsequent work item, the comparative analysis of site characteristics to economic needs of current and existing employers. The Department of Park and Planning and the Department of Economic Development will engage in this analysis over the next 12 months and will examine whether site compatibility and strategic economic opportunity are sufficiently conformed.

An examination will be taken to determine whether or not economic expectations of past land use decisions continue to be realistic in a changing economy and economic development environment and, further, whether attraction of targeted employers is impeded by current land use distributions and/or zoning regulations.

However, this apparent inconsistency between the "site availability" and construction activity during an expansion period indicates that a broader analysis of the economic environment and objectives in the County may be indicated. Any definitive assessment of activity and/or resource sufficiency begs the question of "baseline" and strategic objectives. Whether or not the rate of absorption of office space and/or the rate of new construction at any point during the economic cycle is "sufficient" and/ or "desirable" can only be answered within a broader strategic framework.

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