Investment In Prince George’s Stifled By Purple Line Delays, Rent Control
Prince George's County, a jurisdiction with nearly 1 million people that borders D.C., has lagged behind other parts of the region in drawing investment, and its leaders see transit-oriented development as a key way to reverse that trend.
But real estate executives and economic development leaders speaking at Bisnow's Future of Prince George’s County event last week said two factors have held back the surge in investment they are seeking: major delays on the planned Purple Line transit project and new rent control policies.
“What we need are more large activation projects,” Yoke Management Partners partner Chris Grant said at the event, held at St. John Properties' Melford Town Center in Bowie.
“We need the Purple Line to happen. We need some transit-oriented development things to really just happen. And once those things happen, there's investors all across the country who would support and invest.”
He added that projects have been stalled by challenging market conditions as well as local regulations, and the county needs more tailwinds to get construction moving and draw investment.
Prince George's has been an outlier among D.C.-area jurisdictions in receiving investment, according to a 2023 Urban Institute report on the region's capital flows. The report found that all D.C.-area jurisdictions are in the top third of the 100 largest U.S. counties in overall investment, except for Prince George's, which is in the bottom half.
Prince George's County Economic Development Corp. CEO David Iannucci said the county has received far less investment from the federal government than other D.C.-area jurisdictions.
“It is that inequity that has held Prince George's County back,” Iannucci said.
It has the chance to change that with a major federal project planned in the county that is expected to spur additional investment, the FBI headquarters near the Greenbelt Metro station.
“There is nothing you can imagine that will have a greater positive effect on what Prince George’s County is, how we perceive ourselves and how we’re perceived in the region and nation, than the FBI,” Iannucci said.
While the planned 2.1M SF headquarters is still a ways from opening, the county has other transit sites where development is more imminent.
Urban Atlantic and Brookfield are building a nearly 3M SF mixed-use development on 40 acres next to the New Carrollton Metro station. Last week, WMATA put out a solicitation for a development partner to build up to 600K SF on 6 acres next to the Capitol Heights Metro station zoned for multifamily, retail and office.
“Almost every policy in Prince George’s County is focused around building around our Metro stations — mixed-use, by the way,” Iannucci said.
However, a large chunk of development potential is dependent on a transit project that has been delayed for years.
The Purple Line, slated to connect Prince George’s to Montgomery County across 16 miles and 21 stations, was originally scheduled to open in 2022. But the project was only around 65% done as of this spring. It is now projected to be completed in late 2027, with the latest delay putting the state another $425M over budget.
“I think it's a tragedy that it has taken this long. Just get the thing finished,” Iannucci said, adding that “it's going to bring all sorts of redevelopment opportunity.”
Langdon Park Capital Head of Acquisitions Julia Stevenson said her firm, which invests in workforce and affordable housing, is looking at deals along the Purple Line.
“Part of our underwriting thesis hinges on what we expect to happen in terms of rent growth, with people feeling more comfortable about being able to get to work from those locations,” she said. “And then the expansion of the footprint for tenants looking at areas that we're trying to invest in that are on the Purple Line.”
But while it has that potential, the legislative approach to housing affordability is making the county less attractive to investors, panelists said.
The county’s permanent rent stabilization law, which takes effect next month, will cap rent growth at older buildings at 3% plus inflation, with a 6% ceiling.
With the capital markets slowdown, panelists said the reduced ability to raise rents only further dissuades investors from investing money in the county.
“With rent control in place, you create a different hurdle that now investors have to think about, learn about as they make those initial decisions on if they want to invest into the neighborhood, into this community,” Yoke Management Partners’ Grant said.
Stevenson said she has seen this issue arise in the housing projects Langdon Park Capital is working on.
“Capital is interested in TOD areas,” Stevenson said. “However, the perceived limitations around rent growth burdens the underwriting. And so even when you're looking at impact investors, you're still challenged in getting those to pencil.”
Urban Atlantic Development Manager Teddy Swift said his firm secured traditional LP equity for two New Carrollton multifamily projects.
But amid the already skittish investor environment, he said the housing legislation “just scares them off.”
Hogan Cos. President Timothy Hogan said he has been laughed at when talking to his peers about projects in the county because of rent control and other “moronic” local proposals.
“They're like, ‘Yeah, right. No chance are we going to do anything in Prince George's County right now,’ because of the headlines,” he said.
