Housing Complex

Box Boom

Vince Gray beamed as he strode down the aisle, trailed by a cluster of aides and constituents hoping for a photo with the mayor, clutching a fork in one hand and a plate of appetizers in the other. “Imagine how many jobs this will create!” he said.

The scene last Wednesday was a preview reception at D.C.’s first Costco, the evening before the 154,000-square-foot store officially opened. Giddy Washingtonians, Marylanders, and local politicos availed themselves of the copious free food and gazed admiringly at the megajugs of liquor and electrical appliances stacked five feet high. Arriving almost exclusively by car, visitors put a solid dent in the Shops at Dakota Crossing’s 2,000-spot parking lot, near the heavily trafficked intersection of New York and South Dakota avenues NE.

Gray quickly quantified his imaginings: The store and its eventual neighbors at Dakota Crossing, his administration calculates, are expected to bring 1,200 permanent and construction jobs to the city and generate $634 million in tax revenue over the next 30 years.

The former figure includes the Costco’s nearly 260 employees, among them 220 new hires for the national big-box retail chain, according to Cathy Wanklin, the northeast regional marketing manager for Costco. The latter should go some way toward reducing the city’s estimated $1 billion in annual “retail leakage” by allowing D.C. residents with a proclivity for bulk shopping to spend their dollars in the District, a central goal of Gray’s five-year economic development plan—not to mention the revenue it’ll collect from Marylanders on their evening commutes home.

City officials can scarcely contain their excitement about Costco’s arrival.

“The folks in that neighborhood have been clamoring for some retail for quite some time,” says Ward 5 Councilmember Kenyan McDuffie of the Fort Lincoln area. “It’s going to be a catalyst for retail in the area.”

“Washington is still hugely under-retailed,” says Harriet Tregoning, the director of the Office of Planning, who says she just renewed her Costco membership for the first time in 20 years. “We have nine square feet of [shopping center] retail per capita. The national average is closer to 25.” The D.C. figure is even lower, she says, if you take commuters and visitors into account.

Even Vice President Joe Biden got in on the opening-day action, filling his cart with books, fire logs, a pie, and a 32-inch TV. He declared that the store augured “the renaissance of a whole neighborhood here.”

The Costco opening may have given Washingtonians much to celebrate, but it’s only the tip of the economy-size iceberg. With six Walmart stores coming to the District, we’ll soon feel the true impact of the big-box invasion.

Retail leakage may be on its way out. Will local businesses follow?


The first thing to understand about Costco is that it’s not Walmart. This may seem obvious, but to many fretful urbanists, they’re simply two heads of the same monster, which threatens to put every mom-and-pop shop out of business.

For one thing, the chief complaint against Walmart—its labor practices—doesn’t quite apply to its Washington State–based competitor. Cashier’s assistants at the D.C. Costco start at $11 an hour, while cashiers make $11.50 a first but eventually could earn significantly more. The average Walmart associate makes $8.81, according to a 2011 report by market research firm Ibis, though the company cites higher figures; Walmart hasn’t set starting wages for its D.C. employees yet.

“They’ve said they’ll pay more in D.C. but there have been no guarantees given,” says Mike Wilson, an organizer with Respect DC, an anti-Walmart advocacy group whose funders include the United Food and Commercial Workers union, which is threatened by competition from nonunionized Walmart stores. “They don’t provide health care benefits, at least not ones that are affordable to their workers.” Such concerns, Wilson says, don’t apply to Costco, the world’s seventh-largest retailer. (Walmart is the largest.) “Costco doesn’t have that same track record,” he says. “In addition to that, Costco allows their workers to unionize.”

The two stores also cater to different clientele. The average shopper at members-only Costco has a household income of $96,000; Walmart says its customers’ average household incomes range from $30,000 to $60,000.

But in D.C., the differences between the two stores will be even starker. For one thing, the Costco is hardly even in D.C.; it’s about half a mile from the Maryland border along an empty stretch of Route 50, and the majority of its shoppers are likely to be Maryland commuters, who comprise the bulk of traffic along the corridor. In fact, according to Jose Sousa, spokesman for the office of the Deputy Mayor for Planning and Economic Development, Gray and others have offhandedly referred to the Costco as “the tollbooth”—a border outpost where Marylanders stop to pay into D.C. coffers before heading home.

The threat of retail displacement is limited in the retail-starved area. Most of the dollars flowing to the Costco likely won’t be diverted from local businesses, but from Prince George’s County retailers and Costco stores in Pentagon City, Va., and Beltsville and Lanham, Md. One pair of Fort Lincoln residents I talked to expected the hardest-hit local shop to be Sammy’s Liquors at the corner of South Dakota Avenue and Bladensburg Road NE, given the Costco’s ample wine and liquor selection.

Walmart, by contrast, will set up shop in areas with considerably more existing retail. The store at New Jersey Avenue and H Street NW will sit a few blocks from the Mount Vernon Triangle Safeway and the Chinatown area’s shops. The store at 5929 Georgia Ave. NW will square off against a strip of retailers directly across the street.

And Walmart, with its low prices and vast selection, has a track record of disrupting local business. A 2009 Loyola University Chicago study found that the Walmart that opened on Chicago’s West Side in 2006 caused the loss of about 300 full-time equivalent jobs, canceling out the hires at the Walmart store. Within two years, 40 percent of the businesses within a one-mile radius of the store had closed. (Walmart takes issue with the study for failing to account for new businesses attracted to the area, of which Walmart says there are nearly two dozen.)

Yvette Bryant, a Landover, Md., resident and Respect DC organizer, says she’s already seen this phenomenon play out in her neighborhood, where she credits Walmart’s arrival with the closure of the Safeway supermarket next door, resulting in fewer food offerings. She hopes D.C. learns Landover’s lesson. “The writing’s already on the wall,” she says.

The Gray administration expects Walmart to employ 200 people in each D.C. store, plus 600 construction jobs, for a total of 1,800 jobs, but has not calculated how many nearby jobs are likely to be lost. Walmart predicts a slightly higher job total, at 1,800 retail jobs and 600 construction jobs.

Tregoning and McDuffie both say they expect the new big-box stores to help rather than squeeze local businesses. Tregoning points to the Target in Columbia Heights—larger than any of the coming Walmarts—as a model. “People do a lot of shopping there, and then they might get dinner or make plans to hit the farmer’s market,” she says.

Not all Walmarts are created equal. Some of them, like the New Jersey Avenue store, will be distinctly urban, with apartments above a store that fronts the sidewalk. These stores can generate the same kind of pedestrian-friendly shopping as the Target, with shoppers moving along to nearby businesses and giving the neighborhood a boost.

Others, however, like the planned store at New York Avenue and Bladensburg Road NE—just one long block from the Costco, if you can measure Route 50 in blocks—are oriented around their big parking lots. The Costco might happen to lie within city limits, but it’s far less accessible to most carless D.C. residents than the Costco next to the Pentagon City Metro station in Virginia.

The two models present different challenges: The urban stores have more nearby businesses to disrupt, while the suburban ones are emblematic of a mode of development that runs counter to the walkable model promulgated by smart-growth advocates.

Cheryl Cort, policy director of the Coalition for Smarter Growth, argues that while the area around the Costco might not be friendly to nondrivers, planners shouldn’t foreclose on a more accessible future. “These kinds of very suburban, auto-dependent formats are undermining the future of that community to become more walkable and transit-accessible,” she says.

The more urban stores, on the other hand, could be a model for big-box retailers who want to blend into a walkable environment. Cort praises the New Jersey Avenue and Fort Totten designs in particular. “Target learned that it needed to adapt to a more urban market, and now Walmart is learning that, too,” she says, “though we’re seeing a whole range of stores, and Costco doesn’t think it needs to adopt an urban model at all.”

Given the Costco’s nearly suburban location and very suburban design, that’s probably as it should be: It’s not taking up space that’s viable for mixed-use development in the near future, and it’s not threatening to drive away too many local businesses.

If, as Cort hopes, the neighborhood eventually does become more suitable for pedestrians and transit riders, Tregoning says the big parking lot could easily be transformed into street-facing retail. “We don’t take a long enough view,” she says. “A lot of these uses might very well be interim in that form and format. And parking in particular is something that couldn’t be more easily retrofitted.”

McDuffie hopes the Costco can help crack the chicken-or-egg problem haunting the New York Avenue corridor: It’s hard to attract retail without noncar transit options, but the city won’t be persuaded of the need to provide those options in the absence of retail.

“You’re seeing this suburban style of development because you don’t have the ability to get people in and out of that corridor without cars,” he says. “That being said, it’s going to be difficult to attract the sort of development along the New York Avenue-Bladensburg Road corridor if you’re really lacking the mass transit options. You have to make that corridor more pedestrian-friendly.”

For now, it’s pretty much just cars and buses arriving at the Costco. Coming west on New York Avenue, they’re greeted by a telling sight: a “Welcome to Washington, D.C.” sign that ushers them up the ramp into the Costco parking lot. “Take note,” the sign seems to say. “Big-box retail has arrived in the District, and it’s here to stay.”

Photo by Darrow Montgomery

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  • Douglas Stallworth

    The Costco store will be served by Metrobus Route H6 when some of the connecting access roads are completed on the site. In addition, when the Dakota Crossing grocery store and pharmacy are completed, another route, the B8, will be extended to this retail complex. This will provide transit options for nearby residents.

  • http://www.dclibertarian.blogspot.com Bruce Majors

    Costco is well known for using eminent domain to seize people's homes to clear space to build its stores, so I would say people in NE better be careful what they wish for. Costco is also a major Democratic Party donor. CEO James Singeal gave $400,000 to national Democratic candidates in 2008, 2010, and 2012 alone. So it is interesting that so many from that party attack competitor WalMart.

  • Aaron Lemon-Strauss

    Great article. LDP left big shoes, but you seem to be filling them nicely. I appreciate that your articles and posts contain your opinion (afterall, you know more about this stuff than I do - that's your job), without that opinion crossing over into polemics and dogmatism.

  • http://urbanplacesandspaces.blogspot.com Richard Layman

    The idea that Marylanders will shop at Costco on their way home from work is probably not based on typical shopping behavior. The majority of trips to Costco are for groceries. Most retail trips to supermarkets are Friday-Sunday (almost 70% of retail shopping happens on weekends).

    I think Marylanders in the store's RTA will shop there.

    3. Whether or not Costco engages in eminent domain action is immaterial to DC, since the site didn't involve any ED action. And as far as jobs in retail go, working at Costco is pretty good as the wages are reasonably high and people get health insurance and other benefits.

    Frankly, I think Costco is scary because of how after many attempts, they successfully forced (through a referendum) the State of Washington to sell off its liquor business.

    With regard to "demonization" of their donations to Democrats, how come you aren't talking about Walmart executives donations to anti-union candidates, or Target's CEO's support of Republican candidates in Minnesota (where they are based), etc. Typically retail owners vote and donate conservative, and Costco is an exception to this general trend.


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