What are the commercial lease rates are at Friendship Heights?

[Anonymous]

This WaPo article never mentions the leases that these vendors are paying. Does anybody know how these lease rates compare to anywhere else in the area? I would assume that leases are one of the reasons that only big box stores seems to be moving in along the Wisconsin Ave Corridor from M Street to Western Ave.

The article mentions a few lightning rod DC tropes and mentions that the area is already zoned for increased density, but it never really talks about why the stores walked outside of leaving for City Center. One would thing though that the location and the built in shopping population could support that commercial district.

Friendship Heights, once known as a hub for high-end shopping, is struggling as the pandemic accelerates an exodus of retailers
https://www.washingtonpost.com/local/trafficandcommuting/friendship-heights-pandemic-losses/2020/09/26/ef985b86-f757-11ea-89e3-4b9efa36dc64_story.html
By
Luz Lazo
September 26, 2020 at 7:09 p.m. EDT

[Anonymous]

Wisconsin Ave is now Banks, Wawa's and Target.

On the good side it is GREAT to see Whole Foods re opening in Glover Park.

As for Friendship Heights, I cannot answer OP's questions as to commercial real estate rates but it must be expensive. Stores that were always packed were closed pre pandemic and stores that the area clamored for did not survive COVID.

And before the density crowd comes jumping in, this is not a purely density issue as the area was already in an area saturated with shoppers and on a very busy metro line.

[Anonymous]

Friendship heights used to have a nice mix of shops that did not survive the internet competition and the rents. Borders books used to be where dsw is now, Anna’s linen i think in the Nordstrom rack, and a few others.

Don’t know how much they pay but it’s too high for the shops to survive and for practical shops that families with kids in the surrounding neighborhoods would regularly shop in, particularly with the convenience and price competitiveness of online shopping.

[Anonymous]

The rates were high at Chevy Chase Pavilion but lower in the neighborhood than at City Center. It’s not so much the rents right now, these are corporate decisions and mostly driven by a national change in retailing. Department stores aren’t doing as well because of online shopping. Friendship Heights then lost a concentrated mix that draws the high end shoppers, who are choosing other neighborhoods like City Center. Georgetown isn’t doing well either. Then this was before covid devastated all of it. The only thing doing decent now are grocery anchored centers, drugstores and medical retail.

[Anonymous]

Friendship Heights needs to just revert back to single family or townhouse type. Like a new upscale McLean Gardens. Lord and Taylor and Mazza razed would provide lots of room for delightful family housing.

[Anonymous]

Then after Family housing is created they should lease to places like Jiffy Lube, dollar store, and gyms, karate studios, yoga studios. Starbucks with drive through coffee. Make it a place people can actually live.

People in this DC bubble love to hate their life.

[Anonymous]

Anonymous wrote:Then after Family housing is created they should lease to places like Jiffy Lube, dollar store, and gyms, karate studios, yoga studios. Starbucks with drive through coffee. Make it a place people can actually live.

People in this DC bubble love to hate their life.

I meant to add they hate their life which is why they don’t support normal useful businesses in their neighborhoods. Only ridiculously posh places that just keep closing.

[Anonymous]

Anonymous wrote:Friendship Heights needs to just revert back to single family or townhouse type. Like a new upscale McLean Gardens. Lord and Taylor and Mazza razed would provide lots of room for delightful family housing.

This is the easy densification throw away answer that never answers the real questions. Let's just say that you convert all that space into your silly one bedroom apartments. Then what? Where do they shop? How do we attract those shops now? Build away, but also figure out why retail does not work there except for there Wawa and mattress stores.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Friendship Heights needs to just revert back to single family or townhouse type. Like a new upscale McLean Gardens. Lord and Taylor and Mazza razed would provide lots of room for delightful family housing.

This is the easy densification throw away answer that never answers the real questions. Let's just say that you convert all that space into your silly one bedroom apartments. Then what? Where do they shop? How do we attract those shops now? Build away, but also figure out why retail does not work there except for there Wawa and mattress stores.

I don’t mean one bedroom apartments. I mean a community development with a mix of townhouses and SFHs with, as I mentioned immediately thereafter, non upscale stores such as a Jiffy Lube and some other middle brow useful places that people need to hike to Rockville to use now. Retail doesn’t work because there’s only so much demand for Jimmy Choo and stupid themed restaurants like the red beet. They need to raze those stupid existing department stores and Geico (wtf) what a waste of land, and build homes and normal retail. Not more Whole Foods or Harris Teeter junk. Normal stuff for normal people.

Again I never suggested one bedroom apartments. To the contrary. Normal 2500-3000 sf single family and garage townhomes. Some drive through restaurants and smart street parking.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Friendship Heights needs to just revert back to single family or townhouse type. Like a new upscale McLean Gardens. Lord and Taylor and Mazza razed would provide lots of room for delightful family housing.

This is the easy densification throw away answer that never answers the real questions. Let's just say that you convert all that space into your silly one bedroom apartments. Then what? Where do they shop? How do we attract those shops now? Build away, but also figure out why retail does not work there except for there Wawa and mattress stores.

I don’t mean one bedroom apartments. I mean a community development with a mix of townhouses and SFHs with, as I mentioned immediately thereafter, non upscale stores such as a Jiffy Lube and some other middle brow useful places that people need to hike to Rockville to use now. Retail doesn’t work because there’s only so much demand for Jimmy Choo and stupid themed restaurants like the red beet. They need to raze those stupid existing department stores and Geico (wtf) what a waste of land, and build homes and normal retail. Not more Whole Foods or Harris Teeter junk. Normal stuff for normal people.

Again I never suggested one bedroom apartments. To the contrary. Normal 2500-3000 sf single family and garage townhomes. Some drive through restaurants and smart street parking.

Raising office buildings that (in non-pandemic times) bring thousands of people into the area would be good for retail? That seems off.

[Anonymous]

Giggle: Nationwide out of Business
Pottery Barn: Not sure why they closed
Range: Byian Voltagio claimed no foot traffic after three years
Williams Sonoma: Claimed no foot traffic in Mazza location (They moved to a MUCH smaller location)
Le Pain Quotidien: Ni idea why they closed (COVID)
Sur La Table: No idea why they closed
Chatter: The remodeling that is just never ending
H&M: How on earth did it not make it there?
PF Changs: COVID
Peet's: COVID
Elizabeth Arden/Red Door: No idea
Lord and Taylor: National closing
Neimans: National Closing

[Anonymous]

Mixed use is not some magic bullet. Look at Rockville Town Center. They constantly struggle to bring in retailers, and they are moving out all the time. They have some decent anchor tenants -- a grocery store and the library. Yet they can never seem to keep the retail tenants. The tenants weren't high-end either -- mid-scale merchants and restaurants.

I suspect in FH, the issue is the landlords are part of a larger group who needs to make a certain return on their money, so they set minimum rents based on their costs, which is higher than what the FH market is worth.

This may all go out the window now, as retail and commercial real estate is hurting big-time. One of my friends in the biz on the commercial side (warehouses and industrial) said only 25% of tenants are paying on time currently, due to pandemic killing their business. He'll negotiate down to 50% of the current lease price and consider it paid in full currently.

[Anonymous]

Mixed use is a densification fallacy they use to sell projects people otherwise do not want.

The retail still has to attract customers. Mixed use with a bunch of mattress stores and banks does nobody any good. Do we really need another Wawa on Wisconsin?

[Anonymous]

Don’t forget to factor in that landlords can write off a vacancy as a loss. That’s usually more valuable than renting for a reduced rate. They also use the rental rates to calculate the value of their buildings for refinancing—which they then use to build a new building somewhere else. If they base their business model on $100 a sqft but rent for $50, they’ve just reduced the overall value of their building.

[Anonymous]

Anonymous wrote:Don’t forget to factor in that landlords can write off a vacancy as a loss. That’s usually more valuable than renting for a reduced rate. They also use the rental rates to calculate the value of their buildings for refinancing—which they then use to build a new building somewhere else. If they base their business model on $100 a sqft but rent for $50, they’ve just reduced the overall value of their building.

OK, this is interesting stuff. Did not know this.

I have always wondered why a building was left empty for years after a tenant could not come to a lease renewal Agreement. For example Cafe Delux on Wis? How can the owner not be losing money instead of renewing lease at old rate. But your explanation makes sense.