Restaurant Dreams and Real Estate
By March 30, 2016 0 1075•
We’re dreaming of new restaurants in Georgetown, perhaps created by chef stars like José Andrés, Carla Hall, Eric Ripert, Bryan Voltaggio or Alice Waters — and all those others shown on this issue’s cover. And more. It just might be the right time, as Georgetown is getting another look.
That may be, in part, due to the imminent end of Georgetown’s long-standing liquor license moratorium, but it’s also because of developers, investors and promoters. While it may seem that there are few spots left in the old town, there are intriguing vacant spaces to consider — and some that will be created as part of new projects, such as Prospect Place and the EastBanc condos across from the Four Seasons. Indeed, the cover depicts the vacant 1200 Wisconsin Ave. NW building, which housed a Benetton store for decades (and before that the National Bank of Washington).
It will take creativity and determination; the rent is too darn high. Retail is cheaper to operate — but Georgetown needs restaurants to generate foot traffic and stimulate the local economy.
According to the National Restaurant Association, 10 percent of the U.S. workforce is part of the restaurant industry and almost half the American food dollar is spent on dining out (annual sales: $709.2 billion).
It’s time to get moving.
Wanted: Landlords With Vision
What will bring our dream restaurants into the heart of Georgetown? A young Sen. John F. Kennedy may have proposed to Jacqueline Bouvier at Martin’s Tavern, which is thankfully still here. But where will Comedy Central’s Larry Wilmore dine when he’s in town to host the White House Correspondents’ Dinner?
When visitors arrive in Washington, D.C., the one place they all want to visit is our charming, storied village. Not only to bump into a cabinet secretary or a senator, but to dine in elegance at classics like 1789 or the newest addition to the waterfront, Fiola Mare.
With the April 9 end of the Georgetown moratorium on liquor licenses, that bar (no pun intended) must continue to rise.
What will it take to bring hot new restaurateurs to Georgetown? It’s not just about the end of the moratorium, says legendary restaurant broker Tom Papadopoulos, who knows the D.C. restaurant scene like few others. High rents and low office density are also part of what makes Georgetown challenging.
Papadopoulos has been strategically placing restaurants in the D.C. market for years. “Georgetown needs more hip places like El Centro, the Richard Sandoval joint venture restaurant,” he says.
But how to attract the notable chefs who are opening elsewhere in D.C.?
“It would take a lucrative deal to attract a big name restaurateur,” advises Papadopoulos, who believes a landlord with vision who makes a significant monetary contribution — as MRP Realty did for Fiola Mare — is what helped chef Fabio Trabocchi open here. A landlord less concerned with getting top dollar for a retail deal is what will ultimately attract millennial-focused restaurants to Georgetown, he believes.
Landlords can charge higher rent for retail than they can for restaurants. Ideally, restaurants should pay $40 to $60 per square foot,” says Philippe Lanier of EastBanc. Rents in Georgetown can be double that. Even on restaurant-saturated 14th Street NW, the rents have been in the $70 to $90 range.
Lanier noted that chefs outside the D.C. region who had been looking at 14th Street and other upcoming districts are now checking out Georgetown.
It’s all about making accommodations. Restaurants attract the foot traffic that retail needs to be successful. Lanier noted that Philadelphia restaurateurs are checking out Georgetown again. Stephen Starr has already landed in D.C. with the very successful Le Diplomate on 14th Street. If he has his sights on Georgetown, the deal has to be that good.
EastBanc owns the former gas station space across from the Four Seasons Hotel. Lanier says that plans may call for a restaurant there in addition to the office space (think lunch business) and retail. Lunch business is possible, based on price point and tailoring a menu to complement the clientele that works and visits Georgetown during the day.
“The only restaurant that could afford the rent at $150 per square foot at the corner of Wisconsin and M Streets is the Cheesecake Factory,” says Papadopoulos.
There is another option, according to Papadopoulos. “The ultimate way to control costs now is to own the building, as rent prices are out of range for most restaurateurs,” he points out. Unless, that is, they find a visionary landlord.
NREB recently sent out an email offering rent of $185 per square foot at 1249 Wisconsin Ave. NW. That is the asking price, not the getting price. But that is where the rent ask has escalated.
The Latham Hotel at 3000 M St. NW has been closed for years with a change of ownership. Will New York-based Thor Equities get a high-profile New York chef to open where Michel Richard’s Citronelle was? Rumor has it that Thor is looking for fashion retail, but what about a restaurant that fits its targeted demographics? That too would rely on landlord accommodations, as rent there could start at $120 per square foot.
On Wisconsin Avenue at P Street, Marvelous Market has been closed since May 2014. What if Carla Hall — “Top Chef” contender and now a host of ABC’s “The Chew” — opened a Southern-style kitchen serving highlights from her cookbooks, “Cooking With Love,” “Carla’s Comfort Foods” and “Comfort Foods From Around the World”? Hall could invite guest chefs to cook some of those dishes with her for special dinners. But only if she has a landlord with vision.
The rumor is that &pizza is taking over the Five Guys spot at the corner of Wisconsin and Dumbarton, which could have rent close to $100 per square foot. That is significant for a fast-casual pizza chain, but only a chain could support that rent.
High rents and lack of office density to support lunch business are not the only issues for restaurants in Georgetown. The space that used to be Houston’s and Rugby is owned by a number of trusts. That makes it complicated to negotiate a restaurant deal.
Then there is 3220 Prospect St. NW, Doggett’s Parking. It’s a McCaffery space with EastBanc. Rory Cameron of McCaffery says they still need to identify the big tenant. Although they envision it as retail project, there may be room for a casual restaurant concept. No one has been approached yet. A parking lot will be incorporated into the project (so don’t worry that Georgetown is losing any more paid, covered parking spaces).
Papadopoulos sees how food halls have done well in New York City, and plans to make more visits to see how that can translate to D.C. Food halls put chefs and operators together, he believes, and it won’t be long before we see that in the District. Georgetown does have potential spaces that are big — see the aforementioned 3220 Prospect Street, as well as Restoration Hardware, also now in McCaffery’s portfolio.
But with high rents, that may not happen. Enter the visionary landlord — and an open-arms approach by the neighborhood to welcome the restaurants of our dreams.