Petworth and Georgia Ave are ascendant, and unconventional uses for retail spaces are becoming more common, according to the panelists at a Thursday morning event hosted by Bisnow to examine the state of the D.C. retail market.
But mostly, the message was that retailers of all kinds have developers in the palm of their (metaphorical) hand.
Essentially, to create the vibrant, mixed-use projects that will commandeer the highest returns on investment for developers, those projects need retailers more than retailers need the developers, the panel agreed. "It's more and more important that you create an area that feels good and gives a sense of excitement to be there," said D. Wright Sigmund, director of retail leasing for Vornado.
That means developers are willing to structure leases favorable to the retailers or even directly pay them to move in.
That said, retailers have to bring their A games. Developers are looking toward "curated retail," Sigmund said, where the overall mix of stores is just as important--if not more important--than any one anchor.
"All those retailers and that mixed-use environment is attractive, and acts as its own anchor," said David Dochter, executive director of retail services for Cushman & Wakefield.
Prime retail corridors
According to panel moderator Tara Scanlon, there are fifty "prime retail corridors" in the area. Keith Sellars, president and CEO of the Washington, D.C. Economic Partnership, pointed out that the most promising corridors are not necessarily 14th Street NW or H street NE; instead, they're the ones on the edges. "We're seeing this trend that the national [chains] are going into the neighborhoods where they can pay the rent, but the local folks are taking the gamble and winning because they're going into smaller markets." That said, panelists agreed that Georgia Avenue may be the next hot market.
"I think Georgia Avenue is going to be a great thoroughfare," said Norman Jemal, principal and SVP of Douglas Development. "Not just for cars but for pedestrians. It's got great bones and there's no doubts about where it's going--it's going up."
"You're going to see growth from Howard University up to Petworth" and beyond, Sellars agreed.
Creative uses
Big-box stores don't need such big boxes anymore, and retailers need less space because they can keep the bulk of their product in a warehouse, accessible with a click. So what's a landlord to do with her storefronts?
Sigmund cited
TechShop Arlington as the tip of a new trend of putting "technology-based companies" that aren't quite retail, but aren't quite office or industrial either, in traditional retail spaces. TechShop, which opens next month, is moving into what had been a Safeway but was vacant for the past decade. "It's taking challenged spaces and putting something new into the community," he said. "We believe these companies...are going to be something that changes retail space use."