Housing Complex

Is Capitol Riverfront Retail Overheating?

The Capitol Riverfront neighborhood has been revitalized with new housing, parks, and restaurants.

The Capitol Riverfront neighborhood has been revitalized with new housing, parks, and restaurants.

The sixth-anniversary annual luncheon of the Capitol Riverfront Business Improvement District, held this morning, was a festive occasion. The event took place in the PNC Diamond Club of Nationals Park, overlooking the empty baseball diamond, and BID president Michael Stevens trumpeted the revitalized neighborhood's many recent accomplishments. Guests received a copy of the 2013 Capitol Riverfront BID annual report, which highlighted the area's retail growth in particular.

"Retail in the Capitol Riverfront popped in 2013, with the opening of eight new restaurants, two more service retailers, construction of 88,000 square feet of new retail space, and the announcements of ICON Theater and Whole Foods opening in the neighborhood in 2016 and 2017, respectively," the report stated. 2013 brought such buzzy new venues as Bluejacket Brewery and Osteria Morini, the report boasted; 2014 will see the opening of a Harris Teeter, Vida Fitness, Sweetgreen, TaKorean, and more.

And then Heather Arnold threw cold water on all that.

Arnold, the director of research and analysis for the retail and design firm Streetsense, delivered the keynote address at the event, and it was mostly a downer. The BID hired Streetsense to conduct a study of the neighborhood's retail development, which has been led by a boom in restaurants that, according to Arnold, has been "overcompensating" for what was a retail shortage just a few years ago.

"Everybody always overestimates how much retail demand is going to come out of a new catalyst," Arnold said.

Supply, Streetsense forecasts, will outpace demand by 2018. The neighborhood currently has just under 200,000 square feet of retail. By 2018, Streetsense predicts, that'll rise to near 400,000, and when the neighborhood is fully built out, it'll be 800,000. Demand, by contrast, which is currently under 300,000 square feet, will only to rise to 400,000 at full buildout.

As a result, Arnold warned, developers in the neighborhood shouldn't just stick to the mixed-use model that's generally popular (and desirable from the perspective of the pedestrian experience). "We're not going to put retail on the ground floor of every building," she said. "My greatest fear is that we'd build all these retail spaces and have a high vacancy rate."

Instead, she said, the neighborhood would benefit from some ground-floor educational uses, offices, and perhaps a museum or two. Retail should focus on three main corridors: New Jersey Avenue (anchored by Whole Foods, the Metro station, and the U.S. Department of Transportation), Tingey Street (with the Harris Teeter and Vida nearby, and a focus on destination dining), and Half Street SE (centered on the baseball stadium, with "entertainment dining" to cater to fans).

Capitol Riverfront is certainly a neighborhood on the rise. But if these trends continue and Streetsense's projections are right, vacancies could soon be on the rise as well.

Photo by Darrow Montgomery

  • Jim Ed

    I would counter that some of the spaces included in this study are disproportionately represented because they are built to handle the influx from the baseball crows, like Gordon Biersch. Not to mention most of the existing multi-family down there does not have ground floor retail. Between the 3 JPI buildings is what, 800-1000 units with minimal retail? Add the Onyx, and the Velocity which has all of maybe 1,200 sf of retail in Justin's Cafe, and the area North of M feels rather under served by retail as-is.

    I'd also be curious of whether the Fairgrounds factors into the current 200k sf. If so, then of course the area is going to look over-saturated with retail.

  • jason carey

    The problem is that the retail spaces are so over priced that the only business that move in are a bunch of chains. If they were priced fairly, then unique businesses not franchises would come and there would be plenty of business.

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  • JES

    A bunch of chains? Justin's, Park Tavern, Bluejacket, Agua 301, Lot 38 Coffee, and TaKorean are chains? Even some of the chains we do have are smallish chains, like Nando's, Morini, and Sweetgreen. Sure we also have Potbelly, Starbucks, Subway, etc, but who doesn't? That comment makes zero sense to me.

  • tim

    Yeah, I think you still run into the problem that at the end of the day, the neighborhood is just not that densely populated. I mean DC is not NYC or Paris where you have dozens of vibrant activity nodes.

    And even in NYC, you have avenues lined with retail, but the narrow side streets are packed with dense residential/office buildings.

    This development is just one of many in the city (NoMa, City Center, 14th street, Shaw, H Street, Mt. Vernon Triangle, SW Waterfront) this is trying to compete for new retail to say nothing of the established nodes (Gtown, Dupont, Golden Triangle, AdMo, Barracks Row).

    Most urban American cities have a dense lively downtown, that attracts people from the neighborooods/region, with more modest scale retail strips in the residental nodes.

    DC's population is growing and becoming wealthier, but it's not growing exponentially.

  • EP

    Untapped demand is there for retail especially being so close to Capitol Hill, SW and Anacostia communities with few options for retail compared with most every other city nationwide. High rents kill the entrepreneurial spirit so alive elsewhere despite a tough economy. Weird to live in a place where everybody drives to the suburbs to go to a mall for basics. I guess the chains have metrics they use but even Chinatown has hardly anything beyond Urban Outfitters and Bed Bath and Beyond. This is why Wal-Mart knew it would be so easy to bully its way in.

    I consider retail to be small everyday needs like hardware stores, markets, boutiques, antiques, book stores, and chains with home wares, clothing, toys, crafts, sporting goods ect. These are in much greater numbers in most every suburb and neighborhoods in places like Philly, Pittsburgh and even Baltimore. Cheap BYOB restaurants and dry 24-hour diners thrive in places like Philly but that is unheard of here. Every place has to have a liquor license to survive and most everything that is new is an expensive (for those outside the DC bubble) destination restaurant.

    You see the ghosts of a past when this was possible in places like Brookland and H Street and Rhode Island Ave. Most of us our priced out of places where sparks from a more humble past are still alive like Chevy Chase and Cleveland Park.

  • tim

    I'm not sure that high rents are the issue..per say. NYC and SF have higher rents and have more retail. It think the issue is more that DC has one of the largest imbalances between office uses vs. residential. As a result, retail serving office workers crowds out residential retail in the core of the city.

    I'm not so sure that Bmore and Pittsburgh have a lot more retail in there residential areas? There are probably a couple neighborhoods in both cities, but so does DC: Georgetown, Dupont, etc. But, like DC the vast majority of those cities are residential with little retail. Same for the suburbs. Vast swaths or residential cul de sacs and then strip malls. I mean going to Columbia Heights or Gtown to shop is a pain from Cap Riverfront, but in the auto-centric suburbs it's just a quick couple mile drive.

  • Alan

    I think it may become a regional draw. It's not like the main users of U st are all from within a mile of the area. It often feels like half the people there are from outside of DC. Navy Yard could recreate that with a different mix and feel.

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