More profitable for DC landlords to "sit" on empty storefronts than rent at market rate??

[Anonymous]

Keep in mind that renting to banks and WaWas are not necessarily in the LL's best interest either with new projects where you are trying to choose retail tenants who will be an amenity to the tenants. That's why new multi-family developments (think Park Van Ness on Conn., or City Ridge and the Wegman's) generally have better retail---at least at the beginning when they are trying to attract residential tenants to the apartments. But the blocks of small 1920ish commercial? Those are usually family-owned, with no debt, and usually no one owner owns all the lots in the block so redevelopment is unlikely, even if such properties weren't already subject to historic designations, which many are. Those owners are going after the highest rent they can get.

[Anonymous]

Anonymous wrote:Keep in mind that renting to banks and WaWas are not necessarily in the LL's best interest either with new projects where you are trying to choose retail tenants who will be an amenity to the tenants. That's why new multi-family developments (think Park Van Ness on Conn., or City Ridge and the Wegman's) generally have better retail---at least at the beginning when they are trying to attract residential tenants to the apartments. But the blocks of small 1920ish commercial? Those are usually family-owned, with no debt, and usually no one owner owns all the lots in the block so redevelopment is unlikely, even if such properties weren't already subject to historic designations, which many are. Those owners are going after the highest rent they can get.

This makes sense, but I feel like there was this approach in Columbia Heights and now all the retail is gone. I am worried about pegging density to vibrant retail and dining. Without some planning and tax codes to guide it, I think you eventually end up with wawa, banks and empty storefronts. The city needs to look at this, city wide instead of thinking density will "solve" everything.

[Anonymous]

Anonymous wrote:
Keep in mind that renting to banks and WaWas are not necessarily in the LL's best interest either with new projects where you are trying to choose retail tenants who will be an amenity to the tenants. That's why new multi-family developments (think Park Van Ness on Conn., or City Ridge and the Wegman's) generally have better retail---at least at the beginning when they are trying to attract residential tenants to the apartments. But the blocks of small 1920ish commercial? Those are usually family-owned, with no debt, and usually no one owner owns all the lots in the block so redevelopment is unlikely, even if such properties weren't already subject to historic designations, which many are. Those owners are going after the highest rent they can get.


This makes sense, but I feel like there was this approach in Columbia Heights and now all the retail is gone. I am worried about pegging density to vibrant retail and dining. Without some planning and tax codes to guide it, I think you eventually end up with wawa, banks and empty storefronts. The city needs to look at this, city wide instead of thinking density will "solve" everything.

This phenomenon happened in Columbia Heights because there is not a critical mass of higher income residents to support the type of retail you seem to want. There are a lot of low income people in Columbia Heights living in public/Section 8 housing. There are a lot more of those buildings than there are market-rate/upper income apartments. And the owners of building at the metro who spiked Pete's to get WaWa were just greedy, but they were also trying to improve the income of their building at the time, since they had a lot of competition from new buildings on U Street. Where Columbia Heights DID get good neighborhood serving retail was the 11th Street corridor. Compare Columbia Heights to the U Street corridor where almost all of the multi-family is market rate. It is just super hard for retailers (whether higher end or lower end) to succeed if there is not enough of a single income demographic. So that's why Best Buy, ChicFila, Krispy Kreme and Target survive at Columbia Heights---they draw from a wide range of incomes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:See that another restaurant on Conn Ave is closing due to rent .. (UDC is landlord). Brings to mind so many empty storefronts in Wisconsin Ave and Conn, from Georgetown to Friendship Heights, from Dupont Circle to Chevy Chase. I've heard there's a tax loophole that allows large landlords to "wash" $ as write offs through empty holdings, when they could be earning astronomical rent from businesses they STILL come out ahead of the property sits empty. Why would the Mayor and Council not pass laws to discourage this? What gives?

Same thing happens with residential, where the problem is even worse, not just in DC but all over.

Yep. This has and continues to happen in my hometown of Detroit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
Keep in mind that renting to banks and WaWas are not necessarily in the LL's best interest either with new projects where you are trying to choose retail tenants who will be an amenity to the tenants. That's why new multi-family developments (think Park Van Ness on Conn., or City Ridge and the Wegman's) generally have better retail---at least at the beginning when they are trying to attract residential tenants to the apartments. But the blocks of small 1920ish commercial? Those are usually family-owned, with no debt, and usually no one owner owns all the lots in the block so redevelopment is unlikely, even if such properties weren't already subject to historic designations, which many are. Those owners are going after the highest rent they can get.


This makes sense, but I feel like there was this approach in Columbia Heights and now all the retail is gone. I am worried about pegging density to vibrant retail and dining. Without some planning and tax codes to guide it, I think you eventually end up with wawa, banks and empty storefronts. The city needs to look at this, city wide instead of thinking density will "solve" everything.

This phenomenon happened in Columbia Heights because there is not a critical mass of higher income residents to support the type of retail you seem to want. There are a lot of low income people in Columbia Heights living in public/Section 8 housing. There are a lot more of those buildings than there are market-rate/upper income apartments. And the owners of building at the metro who spiked Pete's to get WaWa were just greedy, but they were also trying to improve the income of their building at the time, since they had a lot of competition from new buildings on U Street. Where Columbia Heights DID get good neighborhood serving retail was the 11th Street corridor. Compare Columbia Heights to the U Street corridor where almost all of the multi-family is market rate. It is just super hard for retailers (whether higher end or lower end) to succeed if there is not enough of a single income demographic. So that's why Best Buy, ChicFila, Krispy Kreme and Target survive at Columbia Heights---they draw from a wide range of incomes.

I watched Columbia Heights get developed overnight when Metro came in. There was not a lot of thoughtfulness applied. That's why I am very suspicious of the density bros aiming for Ward 3. It's like a land grab, and they leave trash in their wake. Columbia Heights (IMO) was actually a more cohesive neighborhood before the developers swept through like locusts and disfigured so much of it. It could all have been so much more thoughtful.

[Anonymous]

Anonymous wrote:I’ve asked commercial real estate agents about this and they say it is more likely to to happen where a family has owned the property outright for years.

It is less likely to happen when a property is owned by a business with stockholders.

So we need more corporate landlords who care about the bottom line?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I’ve asked commercial real estate agents about this and they say it is more likely to to happen where a family has owned the property outright for years.

It is less likely to happen when a property is owned by a business with stockholders.

So we need more corporate landlords who care about the bottom line?

Be careful what you wish for.