WASHINGTON, DC-The District of Columbia has struck a deal for the city’s first new major retail center in decades in a working-class neighborhood.

A Kmart and a Giant Food store would anchor the $60-million complex at what is now the city-owned Brentwood Impound Lot on Brentwood Road NE. Home Depot is also reportedly negotiating to be the third tenant in the center.

The District will sell the 23-acre property for $3 million to Graimark-Walker Urban Land Developments, which will spend another $7 million to prepare it for development. Construction on the 275,000-sf project would start in April 2001, with completion expected by 2002. The two signed anchors would occupy 150,000 sf.

City officials said the project, which would bring 450 jobs, would help economic development in the entire northeast quadrant of the city.

The Brentwood site, not far from the Rhode Island Avenue Metro stop, lies in the same part of the city that has seen a spate of new development activity after years of being economically dormant. The New York Avenue corridor blocks away has drawn new attention for attracting high-technology companies like Qwest, XM Satellite Radio and MCI. Black Entertainment Television Inc. has its headquarters and studios nearby and has plans for new offices.

The deal also underscores the direction of retailing, as retailers pursue urban locations as growth in the suburbs presents new difficulties.

“There are limited opportunities for large-format stores in suburban markets,” says Richard Lake, managing principal of Madison Retail Group.

Companies like Bed Bath and Beyond, Best Buys and Circuit City are good examples of retailers looking for urban opportunities, not just in Washington, but in urban America, Lake says.

The numbers of retailers don’t suggest that it’s easy, however. Cities aren’t used to dealing with retailers the way suburban governments are. “They have to find creative ways to do business in urban America,” he says.

Parking, green space and height limits are some of the issues that crop up in the way of retailers who want to set up shop in urban locations, he says. Some retailers need ceilings as high as 26 feet, when urban zoning rules sometimes limit heights to 10 or 12 feet, he notes.

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