Study: Gaithersburg should prioritize reinvestment and flexibility as growth slows

A market study presented to Gaithersburg City leaders on Jan. 12 concluded the city is shifting from an expansion phase to one centered on reinvestment and flexibility, and urged policies that favor modernizing existing centers over broad outward growth.

Tom Duretsky, vice president and director of research at Camoin Associates, told the mayor, council and planning commission the city will need roughly 565,000 square feet of retail space through 2040 driven largely by replacement and modernization, not household growth, while about 745,000 square feet is currently in the approved pipeline.

"The greatest long term value really comes from updating, repositioning, repurposing existing centers rather than adding retail in large quantities in entirely new locations," Duretsky said.

The study found current retail vacancy in the city is below 3 percent, a sign of strength but also a constraint because very low vacancy can limit tenant movement and slow reinvestment. Camoin recommended right‑sizing the pipeline by category because some segments—general merchandise and large‑format retail—face greater oversupply risk if all planned projects were built.

On employment, the report identified five clusters—life sciences, information technology, professional and technical services, government/nonprofit, and health care—that together account for about 40 percent of jobs in the Gaithersburg submarket. Duretsky described life sciences as a local strength but warned of a near‑term national oversupply of lab space and a shift toward smaller, flexible lab/office combinations.

"Flexible environments where lab and office and R&D functions can be combined, start with a smaller space and expand as demand evolves—that will be an important implication for land use flexibility going forward," he said.

The study flagged employment land as finite: once office or industrial land is converted to housing or retail, it can be hard to restore. Camoin recommended policies to preserve and modernize core employment areas while enabling hybrid zoning and small, move‑in‑ready footprints to retain growing firms.

On housing, the study projects about 1,600 net rental unit demand from 2025 to 2040, while roughly 3,200 rental units are currently in the development pipeline. That imbalance, Duretsky cautioned, does not mean all entitled projects will be built, but it suggests the city should track actual production and encourage a broader unit mix—particularly more 3‑ and 4‑bedroom units—because the pipeline skews toward studios and one‑ and two‑bedroom units.

The report also noted affordability pressures: about 38 percent of households in Gaithersburg and a majority of renter households are cost‑burdened (paying more than 30 percent of income for housing), and only an estimated 15 percent of rental units are affordable to households earning $60,000 or less.

Council members pressed the consultant on several practical points. Planning Commission Chair John Bauer asked what other industry types the city could pursue beyond the five clusters; Duretsky said small‑scale manufacturing may be possible on constrained land and that a 50,000–100,000 square foot facility would be a realistic industrial scale for the city.

Councilmember Lisa asked why Old Town—despite walkability and mixed‑use attributes—lacks vibrancy; Duretsky recommended more housing in the area to create the critical mass of residents that attract retail and dining. Councilmember Jim raised transit constraints for some infill locations and the need to cultivate a distinct employment node identity where transit is limited.

On policy tools to address affordability in a land‑constrained market, the consultant advised a tailored toolkit rather than a single fix: low‑income housing tax credits, inclusionary zoning, density bonuses, reduced parking requirements and use of publicly owned land are among the options he cited.

The study highlighted several risks to Gaithersburg’s outlook, including federal employment contraction, slower population growth with more older and smaller households, federal immigration policy impacts, life sciences sector volatility, retail transitions to experiential uses, and constraints on modern industrial land and utilities.

The full market study is posted on the master plan project page for Gaithersburg 2040 on the city website. No formal actions or votes were taken at the Jan. 12 work session; the city’s next regular meeting is Jan. 20.