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Retail Renaissance Reaches Nation’s Capital

WASHINGTON — The in-town Washington retail scene is in the midst of a rebirth, after being largely overlooked by the new-store boom engulfing its suburbs over the last two decades.<br><br>It’s a change in fortunes for the city and its once...

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WASHINGTON — The in-town Washington retail scene is in the midst of a rebirth, after being largely overlooked by the new-store boom engulfing its suburbs over the last two decades.

This story first appeared in the January 15, 2003 issue of WWD.  Subscribe Today.

It’s a change in fortunes for the city and its once beleaguered economy, where for decades the availability of fashion retail has failed to match the buying power of its 573,000 residents and 650,000 workday commuters. According to the 2000 Census, the city’s disposable income per household was $33,000. Minus the money spent on food, city residents spent $2.1 billion on retail purchases, including $248 million on women’s apparel and $138 million on men’s clothing.

Starting this spring and through 2005, a wave of new stores, ranging from H&M and Target to Zara and Kate Spade, is unfurling in the city. Along the border in Chevy Chase, Md., a high-end designer boutique complex is on the drawing board and developers are courting tenants.

“There are a lot of people sniffing around for space,” said Susan Linsky, special assistant in the city’s office of Planning & Economic Development.

“Washington is coming back pretty strong,” said Trent Merrill, executive vice president of Lucky Brand Dungarees, which got in on the ground floor of the emerging retail upswing by opening two city stores in 2001, one in Georgetown and the other in Dupont Circle.

Retailers are catering not only to retail-deprived city dwellers, but to the tourists visiting the nation’s capital, whose numbers are gradually increasing after the events of Sept. 11. Merrill said last year, Lucky’s Georgetown store posted a 55 percent sales gain against 2001.

The city’s fashion retail boom, which is being accompanied by new restaurants, theaters and movie houses, has many roots, including a saturated suburban market.

A wide-reaching city economic plan, ripe with generous tax breaks and more downtown apartment and condo buildings, has also cast a new light for investment on vast areas long dead to retailing, like the boarded-up retail stock along F Street, N.W. In addition, city residents pack purchasing power: Washington, as a federal district, beats all 50 states with its $53,018 average annual salary. (Connecticut is second with $42,682.)

Eric Rubin, a principal with the broker Madison Retail Group, calls Washington “the last major U.S. city to go through a retail renaissance.” Rubin said, “Billions of dollars are being injected into the Washington economy.”

The March opening of a state-of-the-art convention center on the edge of downtown is also fueling the retail boom, where rents are fetching from $45 a square foot for 8,000- to 10,000-square-foot spaces to $1,000 for smaller hops of 1,000 square feet or less — about on par with most East Coast cities.

Bud Konheim, president of Nicole Miller, said the convention center and the projected annual influx of millions of new out-of-town dollars has changed his thinking about opening a store in the city. He is shopping for space in Georgetown, where a substantial percentage of sales tax proceeds for the city are generated.

“Washington is getting to be a hot city,” Konheim said.

The old Woodward & Lothrop flagship at the corner of 12th and F Streets, N.W. — a site seriously considered, then rejected, by Macy’s several years ago, in part because of the then lack of nearby housing stock — has been rented by the trendy Swedish Hennnes & Mauritz specialty chain.

H&M will occupy 27,000 square feet of the building, which will house other stores yet to be named, and will open in 2004. The presence of H&M fills a spot near bustling Metro Center downtown, where Hecht’s flagship, Filene’s Basement, Ann Taylor and Banana Republic are the apparel shopping mainstays, along with a Chanel boutique nestled next to the Willard Intercontinental Hotel.

However, the first H&M in the city will open this spring in Georgetown, with a 13,500-square-foot store in Georgetown Park Mall, which houses 90 specialty stores, but in its 22 years hasn’t been able to attract a major anchor. In total, H&M has announced seven stores for the region.

In the hip Dupont Circle neighborhood filled with restaurants and art galleries, a lease for a 5,056-square-foot, two-story Benetton was signed last month. The company already has a postage-stamp-size store in the bustling quarter, part of the meager fashion retail offerings that include Ann Taylor Loft, Betsy Fisher and Lucky Brand.

About a mile away in Georgetown, wide gaps in its retail offerings are being filled among existing stores like Gap, J. Crew, Urban Outfitters and Eddie Bauer. Zara, the Spanish specialty chain, recently signed a lease to open a Georgetown store on Wisconsin Avenue near the busy M Street intersection. Coach has relocated from its tiny Wisconsin Avenue store to a flagship space on M Street, where Kate Spade is said to have signed a lease. Bebe, a longtime tenant of Georgetown Park Mall, in April opened a second store in the neighborhood, a three-story space on Wisconsin Avenue.

The courting of new fashion retail in Georgetown coincides with a $9 million streetscape facelift designed to put the business district on par with the neighborhood’s tony surroundings, where homes regularly sell in the seven figures. It’s part of a larger repackaging of the business district that residents complained turned into a drunken party center in the 1980s and 1990s .

Attracting more fashion apparel stores is the focus of Georgetown developers, who, in the last two years, have created an enclave of high-end home furnishing stores at one end of M Street and swank antique dealers up Wisconsin Avenue.

Else, a designer boutique on M Street, is the type of store Georgetown planners hope to see, said Ken Gray, executive director of the Georgetown Partnership, which is overseeing the neighborhood’s gentrification.

“There’s a real danger you can become simply an urban version of a suburban mall,” Gray said. “While we value a national presence and they certainly provide a cachet, you need to maintain the unique.”

Else, opened in September by owners Pierre and Brigitte Lupesco, who in the Eighties and early Nineties, ran a designer men’s wear boutique in Washington before moving to Italy, where they started a sportswear line called Pierre Lupesco. After 7 1/2 years, they chose retailing over manufacturing and moved back to Washington.

“I think there should be another 20 to 30 more boutiques such as this,” said Pierre Lupesco, standing in his sun-drenched, two-level store strategically located diagonally from the Four Seasons Hotel.

Else carries such labels as Etro, Voyage and Lamatta and sells made-to-measure tailored clothing by Napoli designer Caesare Attolini, as well as Else’s own tailored line made in Italy. Lupesco also sells his Italian-made cashmere and merino wool sweater designs.

“I think Washington shouldn’t be any less than Paris, London or Rome,” Lupesco said.

As the seat of the federal government, Washington through the years has maintained a cadre of designer boutiques, like Saks Jandel at the Watergate Hotel and in Chevy Chase, catering to the upper echelons of local society and the international crowd. Neiman Marcus and Saks Fifth Avenue in Chevy Chase have also been outlets for designer shoppers, as have other nearby boutiques like Relish, Harriet Kassman and Micmac Bis.

Designer retailing in the neighborhood will be given a huge boost by 2005 when The Collections at Chevy Chase Center is slated to open. It’s being developed by the Chevy Chase Land Co., operating since 1890 and responsible for much of the neighborhood’s retail development.

The company owns a $20 million parcel of land and will invest $140 million in constructing 200,000 square feet of retail space at The Collections at Chevy Chase Center.

“We think this is going to be the new Rodeo Drive, which is an over-used term, but I think it will complete Chevy Chase’s high-end cachet that has always been promised,” said Ed Asher, president of the land firm, who declined to name potential tenants.

Meanwhile, room is being made to fill the city’s other weak retail link: the lack of in-town mass stores. Target will tap the market in 2004 when it opens in the inner-city residential neighborhood of Columbia Heights on upper 14th Street, N.W., where gentrification is jacking up town house prices, but where a solid core of blue-collar workers still live. Kmart also has a site ready for development in the city’s under-retailed northeast section, but plans are on hold because the chain is in bankruptcy.

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