Washington Dc: The Capitol Of Retail Trends - Cushman & Wakefield

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March 2016
WASHINGTON DC:
THE CAPITOL OF
RETAIL TRENDS
HOW MILLENNIAL CONSUMERS
ARE SHAPING THE DISTRICT’S
NEIGHBORHOODS
A Cushman & Wakefield Retail Research Publication
MILLENNIALS,
THE URBAN SURGE AND THE DISTRICT
In 2014, Nielsen published a report, Millennials — Breaking the Myths, that outlined a couple
of key trends that those of us in commercial real estate had seen building throughout the
post-Recession recovery period that began in 2010. The report surveyed thousands of
millennials (this demographic group currently ranges in age from 20 to 35 years of age)
and found that, in general, millennials prefer subways to driveways and that they would rather
live in cities than in the suburbs.
Certainly commercial real estate metrics all fall in line with this
basic hypothesis. Urban multifamily markets have been
white-hot going on five years for a number of America’s
gateway marketplace cities and this trend has long since
spread to the nation’s secondary and even some tertiary
markets. Urban office occupancy growth has far surpassed
suburban over the past five years. And urban retail, despite the
challenges of e-commerce and a frugal consumer, has
generally outperformed as well.
The Nielsen report found that the markets where millennials
are most highly concentrated tend to combine the urban
experience with a rich cultural, arts and music scene. In fact,
the report found that Austin, Texas had the highest
concentration of urban millennials (almost 1.2 times the
national average) and that with the exception of Washington,
D.C. most of the top markets for millennials were in western
cities. But Washington, D.C. featured prominently in the report,
ranking sixth nationally in terms of major U.S. cities when it
comes to the concentration of millennials. That being said,
millennials are currently living in cities at a higher rate than any
other generation and Nielsen’s polling indicated that 40% of
them said that they would like to live in an urban area in the
future. The report concluded that, for the first time since the
1920’s, growth in U.S. cities outpaced growth outside of them.
This embrace of urban living has had a demonstrably clear
impact on the District in the post-Recession era. It’s
transformed neighborhoods and it has revitalized the urban
landscape of Washington, D.C. This rebirth has arguably had no
stronger impact than on the District’s retail scene. In this
report, we will explore how all of these trends have played out
and continue to reshape the District, but let’s start with a quick
look at a critical component of this evolution: local job growth.
WASHINGTON, DC
OVERVIEW
THE LOCAL PERSPECTIVE
71
69
WALK SCORE
TRANSIT SCORE
BICYCLE SCORE
74
Ratings provided by walkscore.com
HIGHEST LEVEL OF EDU ATTAINMENT 2015 POP
High School 90,076
Some College, No Degree 63,368
Associates Degree 14,360
Bachelor's Degree 106,895
Graduate Degree 130,071
HOUSEHOLD INCOME LEVELS
Average Household Income: $106,812
2015 POP
$0 - $24,999 65,301
$25,000 - $34,999 20,776
$35,000 - $49,999 30,188
$50,000 - $74,999 43,451
$75,000 - $99,999 32,566
$100,000 - $149,999 44,447
$150,000+ 55,371
NEIGHBORHOOD POP BY AGE
Median Age: 34 years
2015 POP
0 to 14 96,318
15 to 19 38,624
20 to 24 60,441
25 to 34 147,398
35 to 44 90,485
45 to 54 77,665
55 to 64 69,700
65 to 74 41,366
75+ 32,853
WASHINGTON, DC DEMOGRAPHICS
D.C. URBAN (AND SUBURBAN) JOB
GROWTH DRIVEN BY PRIVATE SECTOR
For obvious reasons, the D.C. metro has long been considered the
ultimate “government town.” Yet something interesting has
happened in the Washington, D.C. metropolitan area in recent years
in terms of government employment. According to the Bureau of
Labor Statistics (BLS), total nonfarm employment for the D.C.
region as a whole (the greater metropolitan area includes the entire
District of Columbia, as well as portions of Virginia, West Virginia
and Maryland), unemployment as of the close of 2015 stood at just
3.9%. This is the lowest level of unemployment the region has
recorded since July 2008. These numbers reflect a total nonfarm
employment base in excess of 2.6 million people. Revised numbers
from the BLS indicate that just over 100,000 new jobs were created
in the region over the course of 2015, making last year the
strongest employment growth year in more than a decade (99,000
jobs were created in 2005).
Government employment accounts for just over 598,000 jobs
throughout the greater D.C. region, or 22.8% of total employment.
Government employment grew by just under 21,000 new positions
in 2015, compared to roughly 80,000 private sector jobs. What’s
more telling is that since 2011 (when the federal government began
implementing austerity measures), public sector employment has
increased by less than 67,000 jobs or just 15.9% of the more than
420,000 new jobs that have been created in the region over the
past five years. It has been the private sector, not the public sector
that has been driving employment growth in the region over the
past few years and those numbers are even more pronounced at
the city level.
Looking at employment trends within the District itself, the
unemployment rate stood at 6.6% as of the close of 2015 though
higher than regional totals, this metric has been on the same basic
trajectory--- this level of joblessness marks the lowest level of
unemployment in years. According to the BLS, there were roughly
772,000 actual nonfarm jobs in the District as of December 2015, of
which more than 237,000 of those positions (30.7%) were
government jobs. Since 2011, total employment in the District has
increased by more than 52,000 positions. But, the number of actual
government jobs within Washington, D.C. actually fell by more than
8,000 during this same time frame. And so, at least within the
boundaries of the district, the private sector has accounted for 133%
of all job growth over the past five years.
While the private sector (particularly professional and business
services) has driven job growth in both the District and its suburban
markets over the past few years, the impact of this trend on the
local office market has been anything but even.
The 123.1 million square foot (MSF) District office marketplace
closed 2015 with an overall vacancy rate of 10.8%. This number is
down from the 11.20% reading of one year earlier. Overall vacancy
had peaked at 11.5% in Q3 2014 but has been gradually falling ever
since. At 10.4%, the urban office vacancy rate in 2011 (when
government austerity measures began) isn’t far from where it
stands today. The same cannot be said of Washington, D.C.’s
suburban markets.
Suburban Maryland office vacancy currently stands at 18.6%. While
this is down marginally from the 18.8% rate that was in place exactly
one year earlier, vacancy levels here have been elevated above the
18.0% mark for the past two years. It had stood at 15.3% at the close
of 2011. The same trend has played out in the Northern Virginia office
marketplace. Vacancy now stands at 18.3%. This metric has fallen
from 18.8% over the past year, but it had soared over the previous
three years as a result of the Defense Base Closure and Realignment
Commission (BRAC). It stood at 14.2% at the close of 2011.
Jobs vs. Absorption
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bs or pt io n Absorption Jobs
WASHINGTON, D.C. METROPOLITAN JOB GROWTH VS OFFICE ABSORPTION
A Cushman & Wakefield Retail Research Publication
What is most interesting about these numbers is the fact that job
growth picked up by a rate of 3.8% throughout the D.C. Metropolitan
Area in 2015. The rate of employment growth in just the District
alone was 1.6%. Yet, the office market within Washington, D.C.’s urban
core boasts leasing fundamentals that are much more favorable to
landlords than their suburban counterparts, comparatively speaking.
Certainly vacancy is falling and occupancy growth is on the rise in
D.C.’s suburban markets, but District markets racked up more than
887,000 square feet of occupancy growth in 2015. This compares to
240,000 square feet of positive net absorption in the Northern
Virginia suburban markets and 123,000 square feet of occupancy
growth in the suburban Maryland markets. The region’s suburban
office markets are improving and will most likely continue to do so
in 2016, but the District’s urban office market will continue to
dominate. Office users are following their workforce, especially
their millennial workforce. And those young professionals continue
to drive the growth of nearly every major American city, with
Washington, D.C. having emerged as one of the greatest
beneficiaries of this trend.
MILLENNIAL POPULATION SURGE SETS
STAGE FOR RETAIL REINVENTION
People are flocking back to the city, since 2000 the District has
added over 88,000 new residents. With the metro area
unemployment rate still significantly below national averages, the
District’s strong job market has continued to attract new residents
(51.3% of which have at least a bachelors-level degree). The fastest
growing group has been millennials. The District has added over
47,000 new residents between the ages of 24 and 35 (a 47.0%
increase) since 2000. The average household income in the District
has also grown. It is important to note that while the improving job
market has helped to fuel this trend, the real driver here has been
the influx of young professionals and the District’s urban revival
over the past 15 years. Since 2000 the average household income
in the District increased by a whopping 65.0% to close 2015 at
$106,286 per year.
The impact on the District’s multifamily housing market has been
obvious. According to the Costar Group, as of the close of Q4 2015,
multifamily vacancy in D.C. was just 4.4%. This is down from the 5.2%
reading of a year ago despite the fact that the market added more
than 1,825 new apartment units during that period. What is most
striking is that the District’s current overall average asking rent of
$1,718 per unit has increased by 48.7% over the past five years.
Those numbers have been even more robust in D.C.’S hottest
neighborhoods. The East End (or Downtown/Penn Quarter/
Chinatown) multifamily market currently boasts an average asking
rent of $2,402 per month. This number has climbed by 60.6% over
the past five years as this neighborhood has transformed. That
transformation has been all about the influx of millennials, the
metamorphosis of housing markets and the rebirth of retail districts.
That being said, we are now tracking more than 10,000 multifamily
units under development throughout Washington, D.C. with delivery
dates through 2018. We anticipate these new projects to slow or
flatten rental rate growth as they come online in waves. That being
said, negative growth is unlikely barring larger-scale economic
upheaval (recession, etc.). Vacancy levels will be impacted, but keep
in mind that the District’s sub-5.0% vacancy levels over the past few
years have been a major factor in driving double-digit (and
unsustainable) rental rate growth. This new wave of multifamily
development actually will mean more rooftops for retailers and
should translate into better affordability to continue to drive the new
urban lifestyle trend.
Multifamily Stats | 12-Month Forecast
Current Vacancy: 5.1%
Average Asking Rent: $1,613 Per Month
Units Under Construction: 9,976
According to CoStar Group
A Cushman & Wakefield Retail Research Publication
“HOLLYWOOD FOR UGLY PEOPLE”
NO MORE
We track shopping center vacancy trends across more than 60 major
U.S. markets. As of the close of 2015, shopping center vacancy (this
number includes community/neighborhood, power, lifestyle and
unanchored strip centers) throughout the greater Washington, D.C.
metropolitan area stood at 4.8%, making it one of the tightest
markets in the United States (it ranked fifth behind Hawaii, Boston,
Pittsburgh and San Francisco). This number reflects a slight decrease
from the 4.9% rate that was in place one year earlier. It also reflects
just under 1.1 million square feet of occupancy growth (neighborhood/
community centers accounted for the lion’s share of this growth with
over 653,000 square feet of positive net absorption). But growth in
the D.C. suburbs has been almost exclusively driven by discounters,
dollar stores, off-price apparel, grocery and food concepts. Midpriced hard goods and apparel concepts are largely in flat or
negative growth mode. Basic needs retail has ruled suburban growth
nationally over the past couple of years and this trend is firmly in
place in D.C.’s suburban markets. But we are seeing a different
variation of this trend play out in the District’s urban marketplaces
where retail growth isn’t just being driven by the barbell of prosperity
(luxury on one side and discounters on the other), or by just food and
service concepts that don’t compete with e-commerce. In D.C.’s hot
urban markets we may be seeing those trends, but we are also seeing
a lot of innovation from concepts that don’t fit so easily into those
boxes and that are bucking national trends.
Fueled by strong in-migration trends, the District’s retail corridors
have been undergoing resurgence over the past few years with whole
new corridors appearing as neighborhoods undergo revitalization
efforts. With favorable demographics, strong job numbers and high
household incomes contributing to more disposable income, retailers
have been taken notice. For a city that was once referred to as “the
Hollywood for ugly people,” millennial-driven population growth has
been a factor in luring emerging brands and cutting-edge retailers
and restaurateurs. On the retail front, Washington, D.C. has seen the
emergence of an entirely new high street luxury retail district in the
East End. Simultaneously, it has seen the rise of multiple new “cool
streets;” emerging new retail districts that are leading the way in
terms of innovation and creativity. In addition to being favorite
locations of clicks-to-bricks online concepts looking to open physical
locations (Warby parker, Bonobos, Marine Layer and others), these
new cool streets are also emerging as the industry’s new fashion
incubators and the birthplace of the retail trends of the future.
The impact of these trends on the local restaurant scene has been
even more pronounced; the expansion of dining options has come
from all corners of the marketplace. Until the last few years, the
District’s restaurant scene was largely two-tiered; fast food or
cheaper fare for office workers or upscale white tablecloth
steakhouses for the lobbyist set, politicos and the Beltway crowd.
Over the past five years in particular, the District has seen a surge in
healthy concepts, in up-and-coming fast-casual options and in new
food halls and artisanal markets.
SUBMARKET LOW ASKING RENT
HIGH ASKING
RENT
Georgetown $150.00 $275.00
East End $60.00 $250.00
14th + U Streets Corridor $75.00 $200.00
CBD $50.00 $120.00
Dupont $80.00 $100.00
Spring Valley/Palisades $75.00 $100.00
Capitol Hill (includes Hill
East) $45.00 $100.00
Mount Vernon Triangle $45.00 $100.00
Friendship Heights $70.00 $95.00
Tenleytown $35.00 $95.00
Shaw/Howard University $50.00 $70.00
Woodley Park-Van Ness
Corridor
$50.00 $70.00
Columbia Heights $45.00 $70.00
Glover Park/Cathedral
Heights $40.00 $70.00
West End/Foggy
Bottom $45.00 $60.00
Adams Morgan $40.00 $60.00
Southwest $40.00 $60.00
Capitol Riverfront $30.00 $60.00
H Street Corridor $30.00 $60.00
Union Market $35.00 $55.00
NoMa $35.00 $50.00
Pentworth $25.00 $50.00
Brookland/Rhode Island
Avenue $35.00 $45.00
Bloomingdale/
Eckington $25.00 $40.00
ALL ASKING RENTS ARE QUOTED AS NNN FOR STANDARD 2,000 TO 3,000 SF
SPACE. ASKING RENTS RANGE BASED ON QUALITY, LOCATION, AND USE OF SPACE.
RETAIL ASKING RENT RANGES
For residents, experience has taken precedence; demand for the
live-work-play environment has never been stronger, as has the
demand for walkable and bicycle-friendly neighborhoods. The
revitalization of the District’s urban landscape has meant the
emergence of new neighborhoods noted for unique architecture,
historic buildings and walkable lifestyles. According to Walkscore.
com, Washington, D.C. has an overall walkability score of 74.1. This
ranks ninth out of the 141 major U.S. cities they track. The District
also scores an impressive 70.6 transit score, ranking it fourth in the
nation (behind only New York, San Francisco and Boston). Walks
core.com ranks D.C. tenth nationally in terms of its Bike Score (69.5).
We don’t see any of these trends abating any time soon. New
developments in the city, whether office or residential, are now
almost always including a street-level retail component. Office
tenants are demanding building amenities that go beyond the fancy
lobby; they want healthy, customizable quick-service lunch options
and restaurants that offer happy hours where they can catch up with
co-workers and celebrate company wins. Residents of new
multifamily developments are no different. Along the 14th and U
Streets Corridor – where much of the new residential development
has taken place – recently delivered apartment and condo buildings
all offer street-level retail that feels as unique to the individual stores
and restaurants that occupy the space, allowing the residential
component for the most part too unnoticed by pedestrians.
For the retail submarkets outlined in this report, all four have walk
scores above the District’s average, the majority of them in the high
90’s. Each are of the city has its own unique flavor catering to a
variety of consumers and residents. Georgetown’s long history and
reputation of luxury retail has established it as the District’s
long-time high street retail submarket. The East End has
experienced a transformation in recent years, becoming the main
street shopping destination for national mall brands and discount
retailers alike, even while luxury brands have found a new District
high street with the introduction of CityCenterDC. In the 14th and
U neighborhood a slew of hot, new chef-driven restaurants has
allowed the area to claim its status as the place to eat. The newest
emerging retail submarket in the District, Union Market, quickly
garnered attention following the delivery of the food hall in 2012.
Now this once gritty industrial neighborhood is a favorite of diners,
shoppers and developers alike.
The urban marketplaces we have highlighted in this report are not
the only District neighborhoods feeling the impact of the new
urban lifestyle trend that has largely been driven by millennial
consumers, but they are also all arguably the hottest urban
markets in D.C. today. But urban retail is often a moving target and
we anticipate more up-and-coming districts ahead. There are a few
very salient and logical arguments in terms of questioning how
long this trend will continue. The oldest millennials, after all, are 35
and increasingly marrying and starting families (albeit on a much
delayed timeline compared to previous generations). But most of
this demographic group still continues to demonstrate a
preference for urban living where they can and they are also being
supplemented in their numbers by affluent empty-nesters moving
back into the city. How Generation Z shapes the market remains to
be seen, but it is hard to assume that there will be any seismic
shifts away from the preference towards urban living. In fact, we
believe that the greatest challenge ahead comes not from the
aging of millennials, but the rising cost of living in America’s urban
marketplaces. With multifamily development in the District
ramping up, the arrival of more housing options should play a
critical role in widening and strengthening this trend.
Today, Union Market is rapidly gentrifying, and includes the food
hall, event space, Angelika Theater, and full service restaurants.
LCOR is under construction on what will be the first multifamily
building; a 187-unit apartment building known as The Edison –
which will include 28,000 square feet of retail – is expected to
deliver in the first quarter 2017. Next to The Edison, Level 2 is
currently in the planning stages for a 315-unit apartment building,
with 10,000 square feet of ground-floor retail, that it’s calling The
Highline. The development will also include a multi-tiered park –
something that is currently absent from Union Market – that will
also include a walkway to The Market and other retailers. In all,
there are 1,160-residential units in the propsed pipeline over the
next 18 to 24 months. Additionally, JBG’s partnership with Gallaudet
University, which was formalized in summer 2014, will further the
mixed use environment of Union Market by delivering additional
residential units, academic buildings for the neighboring university,
and retail opportunity in what is slated to be a 10-year, $85.2 million
mixed-use development to connect Gallaudet University with the
adjacent Union Market.
Union Market is the District’s newest up and coming retail district. A few years ago, this was just a collection of
wholesale bays and a hodge-podge of vendors that catered to souvenir shops and family-operated ethnic
restaurants. Opened in 1931 as Union Terminal Market, over 700 vendors sold meat, fish, dairy, and produce to the
District’s residents. When the city banned the outdoor sale of meats and eggs in 1962, the indoor market was built
in 1967 to meet demand and to remain compliant to city standards. The delivery of The Market (the former indoor
market portion) in 2012 kicked off the most recent round of new development as developers scoured the area
looking for redevelopment opportunities.
A Cushman & Wakefield Retail Research Publication
UNION MARKET
NEW KID ON THE BLOCK
Retail Asking Rate Range
$35.00 - $55.00 PSF, NNN Annual
Multifamily Stats | 12-Month Forecast*
Current Vacancy: 7.5%
Average Asking Rent: $1,879 Per Month
Units Under Construction: 2,364
According to CoStar Group
The Market portion of Union Market is currently home to
approximately 40 vendors, including a full-service restaurant, a
local home goods store known as Salt & Sundry, and a year-round
farmers market. In the summer,
The Market expands out to the parking lot
with lawn games, an outdoor farmers market, and additional
vendors, including a converted airstream trailer turn bar
that serves up frozen cocktails to plenty of thirsty
millennials.
Above The Market sits Dock5, a 13,000-square-foot warehouse
event space that hosts everything from group exercise events to
weddings and industry events featuring the country’s top chefs.
With exposed concert floors, glass garage doors, and 22’ ceiling
heights, the architecture of Dock5 – like much of Union Market –
offers authentic industrial grit that is so rarely found in a town
historically known for its office worker and policy makers. North of
The Market is warehouse manufacturing space that currently
houses Angelika Theater’s temporary space, Cotton & Reed
Distillery, Dolcezza Gelato & Coffee’s factory and store, and Red
Apron Butchery’s kitchen (they also have a shop and restaurant
within The Market). LAB 1270 is the most recent addition – opening
its doors in time for the 2015 holiday season with a rotating
collection of local artists, and designers.
Edens, the primary developer of Union Market and biggest driver of
the retail, is rumored to be discussions with several high-end
national retailers, locally-focused, organic full-service grocery
stores, restaurateurs, and service providers that would replace the
existing vendors along 4th and 5th Streets. In 2014, it was
announced that Philadelphia-based chef Jose Garces was planning
to open a 20,000-square-foot Latin market offering a range of
groceries and prepared foods. It’s also been reported that an
existing artist collective on New York Avenue is slated to become a
high-end 178-key boutique hotel that is backed by two D.C.
developers – D.B. Lee Development and Brook Rose Development.
The hotel is expected to have both a ground-floor restaurant and
an 11-th floor restaurant with While Union Market still has a lot of
development ahead, the area is poised for its delivery. With The
Market packed on weekends – students from Gallaudet University,
millennials, young families with strollers, and empty nesters alike
– consumer demand for more is strong. In 2015, The Market is said
to have collectively done approximately $20.0 million in sales. With
a variety of developers looking to capitalize on the area’s authentic
industrial grit that is so rare in the District, and with city officials on
board – there are plans to widen the pedestrian walkways under
the overpasses to allow for more accessibility from the nearest
Metro stop just a few blocks away – Union Market is set to become
a live-work-play location in just a few short years.
82
91
WALK SCORE
TRANSIT SCORE
BICYCLE SCORE
97
HIGHEST LEVEL OF EDU ATTAINMENT 2015 POP
High School 6,745
Some College, No Degree 4,691
Associates Degree 1,035
Bachelor's Degree 7,197
Graduate Degree 6,803
HOUSEHOLD INCOME LEVELS
Average Household Income: $92,896
2015 POP
$0 - $24,999 4,371
$25,000 - $34,999 1,351
$35,000 - $49,999 1,707
$50,000 - $74,999 2,545
$75,000 - $99,999 2,170
$100,000 - $149,999 2,987
$150,000+ 2,709
NEIGHBORHOOD POP BY AGE
Median Age: 34 years
2015 POP
0 to 14 5,648
15 to 19 3,062
20 to 24 1,936
25 to 34 3,945
35 to 44 10,658
45 to 54 6,211
55 to 64 5,519
65 to 74 4,464
75+ 1,703
UNION MARKET DEMOGRAPHICS*
Ratings provided by walkscore.com
*Based On a 1-Mile Radius
The East End’s transformation has been fueled by the coveted
millennial demographic and the ongoing trend of urbanism.
Millennials (and empty nest Baby Boomers) have consistently
demonstrated a preference for urban living over the past decade
and 24/7 cities that offer live/work/play environments. This trend is
clearly evident in the East End, where growth has been
overwhelmingly driven by age demographics. The East End has
experienced staggering population growth of 122% over the past 15
years. What is most telling, however, is that most of this growth has
been driven by young professionals between the ages of 24 and 34
years old. It should come as no surprise that with a median age of
33.4 years and average household income of $121,156 per year, the
East End has become an attractive area for developers and retailers
to invest.
In the last 15 years, the number of multifamily (apartment and
condominium) residential units has more than doubled in the East
End. The area added 3,482 units between 2000 and 2015.
Development of new multifamily projects in the East End has
recently slowed as available parcels of land for development or
redevelopment have become both scarcer and pricier. However,
there remain a number of proposed multifamily residential projects
in the pipeline in the Mount Vernon Triangle and Capital Crossing
Consisting of the neighborhoods of Chinatown, Judiciary Square, Mount Vernon Square and Penn Quarter, the
East End is Washington, D.C.’s old downtown quarter. The East End has reinvented itself in recent years; its retail
shift has included not just the addition of dozens of national mall brands along the F Street Corridor near the
Verizon Center, but the addition of an entirely new luxury retail destination, with the delivery of CityCenterDC.
Developments that could see the addition of as many as another
1,154 units over the next few years. We anticipate that these, and
other projects, will continue to add a steady stream of new housing
inventory, and new consumers, to this submarket over the next
five years.
A Cushman & Wakefield Retail Research Publication
EAST END
THE CENTER OF DOWNTOWN’S
RETAIL RENAISSANCE
Retail Asking Rate Range
$60.00 - $250.00 PSF, NNN Annual
Multifamily Stats | 12-Month Forecast
Current Vacancy: 3.4%
Average Asking Rent: $2,287 Per Month
Units Under Construction: 385
According to CoStar Group
WHERE A BLEND OF ASPIRATIONAL AND
VALUE BRANDS MEET
The 2014 delivery of CityCenterDC introduced many exclusive and
internationally coveted retail brands to the District for the first
time; Hermes, Louis Vuitton, David Yurman, Dior, Paul Stuart,
Carolina Herrera, Salvatore Ferragamo and others. Additionally,
other luxury labels expanded their presence in the District – Hugo
Boss and Kate Space both opened additional stores.
The CityCenterDC project consists of 295,000
square feet of retail space in addition to roughly 520,000
square feet of office space and nearly 675 housing units
(458 apartments and 216 condominium units).
Its opening capped a more than decade long effort by the District
to boldly redevelop the once blighted East End area. In addition
to marking the launch of an entirely new upscale shopping area,
the delivery of CityCenterDC also introduced several new
restaurants to the District; David Chang’s Momofuku, Laurent
Halasz’ Fig & Olive, Del Frisco’s Double Eagle Steak House and the
Bangkok-based Mango Tree have all opened their doors to much
fanfare in 2015.
100
88
WALK SCORE
TRANSIT SCORE
BICYCLE SCORE
97
HIGHEST LEVEL OF EDU ATTAINMENT 2015 POP
High School 464
Some College, No Degree 568
Associates Degree 85
Bachelor's Degree 2,121
Graduate Degree 3,082
HOUSEHOLD INCOME LEVELS
Average Household Income: $121,156
2015 POP
$0 - $24,999 866
$25,000 - $34,999 268
$35,000 - $49,999 552
$50,000 - $74,999 673
$75,000 - $99,999 557
$100,000 - $149,999 822
$150,000+ 1,384
NEIGHBORHOOD POP BY AGE
Median Age: 33 years
2015 POP
0 to 14 308
15 to 19 53
20 to 24 876
25 to 34 3,202
35 to 44 1,388
45 to 54 838
55 to 64 684
65 to 74 339
75+ 366
EAST END DEMOGRAPHICS
Ratings provided by walkscore.com
While CityCenterDC has introduced a high street retail element to
the East End, several mid-priced and discount national chains still
remain staples of the neighborhood. Bed, Bath & Beyond, Urban
Outfitters, JCrew, Banana Republic, TJ Maxx, Marshalls, Forever21,
H&M, Zara, Ann Taylor, and Anthropologie have all established
locations along East End’s two main retail corridors – 7th Street and
F Street. Other retailers with planned new locations in the East End
include Sak’s Off 5th and Nordstrom Rack.
The East End remains a top shopping, dining and entertainment
destination for District residents, employees, and visitors. Its
combination of both aspirational brands and discount retailers, as
well as both white tablecloth restaurants and fast casual dining
options cater simultaneously to a wide range of shoppers. The East
End’s growing number of residents and expanding daytime office
workforce have resulted in the neighborhood’s emergence as a
shopping and dining destination both during the week and on
weekends, with heavy foot traffic to support both. Meanwhile,
sporting events, concerts and shows at the Verizon Center, along
with the East End’s many theatres, ensure that this submarket
remains one of the District’s premier entertainment destinations,
creating the complete live/work/play environment that appeals to
this neighborhood’s strongest demographic group, the millennials.
*Based On a 1-Mile Radius
Since 2000, the population of the 14th and U neighborhood has
grown by 31.3%, and has become increasingly more educated –
70.8% of the population currently holds at least Bachelor’s Degree,
compared to just 41.9% in 2000. Most notably the average
household income has more than doubled in the last 15 years –
going from $50,892 in 2000 to $116,800 in 2015. By 2020, the
average household income is expected to increase by another
16.7%, closing at $136,276. As gentrification has taken hold in recent
years, new multifamily developments have been delivered (and
quickly leased up). Historic row homes have been renovated and
restored – converted most often into upscale condominiums. The
number of housing units has grown by 35.4% over the past 15 years.
As of the end of 2015, 98.1% of this neighborhood’s single-family
dwellings were occupied. For investors, the 14th and U
neighborhood is one of the hottest rental housing markets in the
District. Currently 70.0% of residents rent their homes, paying an
average $3.92 per square foot, or $2,842 per unit per month.
Developers are beefing up building amenities in order to compete
for the best tenants, adding full-service concierge service, resortlike roof decks and swimming pools, spa-quality gyms, dog parks
and grooming stations, secure bike rooms, and trendy retailers –
just to name some of the most common additions. In turn, residents
The 14th and U Street neighborhood, which we define as the U Street corridor between Florida Avenue to the
west and 10th Street to the East; Logan Circle; and the 14th Street corridor between Massachusetts Avenue to the
south and Euclid Street to the north – has undergone an immense transformation in the last five years. Gone are
the auto shops, vacant lots, and abandoned row homes. Instead, 14th and U has become synonymous with some
of the city’s best restaurants, chic boutiques, and luxury condos.
are willing pay premium prices for smaller units in order to take
advantage of the amenity-rich location, both in the building and the
surrounding neighborhood.
A Cushman & Wakefield Retail Research Publication
14TH & U STREET
THE FOODIE’S HAVEN
Retail Asking Rate Range
$75.00 - $200.00 PSF, NNN Annual
Multifamily Stats | 12-Month Forecast
Current Vacancy: 4.4%
Average Asking Rent: $2,237 Per Month
Units Under Construction: 226
According to CoStar Group
As the neighborhood’s housing has changed, so too has the local
retail landscape. Whole Foods opened their first District of
Columbia store at P and 14th Streets in 2000, after much lobbying
from nearby residents, and quickly became the catalyst for future
retailers. Room & Board opened their store in a former automobile
showroom on 14th Street shortly thereafter.
Today, 14th and U is filled with young
millennials – the average age of residents in the area is 33
with almost 39.6% of residents between the age of 24 and
35 years – shopping and dining.
Depending on the time of day, you may find people waiting for a
table for brunch or dinner at one of the many new chef-driven
restaurants. Philadelphia-based restaurateur, Stephen Starr, opened
Le Diplomate in 2013, and still remains one of the most popular
eateries in the city. Across the street, Ghibellina, an upscale
Tuscan-themed bistro, attracts the same crowd; young, welleducated millennials looking to enjoy good food and drink with
friends. The majority of restaurants on the 14th and U Street
corridors have patios and/or expansive window lines that they can
open when the weather permits. This has translated into a vibrant
sense of street life in this neighborhood.
85
93
WALK SCORE
TRANSIT SCORE
BICYCLE SCORE
97
HIGHEST LEVEL OF EDU ATTAINMENT 2015 POP
High School 1,545
Some College, No Degree 2,194
Associates Degree 464
Bachelor's Degree 7,141
Graduate Degree 9,111
HOUSEHOLD INCOME LEVELS
Average Household Income: $92,896
2015 POP
$0 - $24,999 3,045
$25,000 - $34,999 1,094
$35,000 - $49,999 1,660
$50,000 - $74,999 2,261
$75,000 - $99,999 1,770
$100,000 - $149,999 2,824
$150,000+ 3,447
NEIGHBORHOOD POP BY AGE
Median Age: 33 years
2015 POP
0 to 14 2,201
15 to 19 412
20 to 24 2,020
25 to 34 10,914
35 to 44 5,585
45 to 54 2,955
55 to 64 1,933
65 to 74 1,004
75+ 539
14TH & U STREET DEMOGRAPHICS
Ratings provided by walkscore.com
Though 14th and U has become synonymous with some of the
District’s top restaurants, the retail fabric includes a variety of home
stores and design showrooms that cater to the residents of the
neighboring luxury apartments and condos, and up-and-coming
brands, including the District’s only Filson and Shinola stores. The
boutique home goods store Salt & Sundry recently opened its
second store in 2014 at S and 14th Streets – its first store is located
at Union Market. San Francisco-based Marine Layer, known for its
extremely soft t-shirts, opened its first east coast store outside of
New York City in time for the 2015 holiday shopping season. The
neighborhood’s nightlife has picked up as well, thanks both to the
continued strength of the local dining scene as well as the addition
of a number of new bars and clubs that have popped up alongside
long-established jazz clubs in recent years. The 14th and U
neighborhood has undergone the most radical transformation over
the past fifteen years of perhaps any other up-and-coming
Washington, D.C. retail district. This metamorphosis has brought an
immense amount of development and vibrancy to an area that was
once run-down and a model of urban decay. Now, instead of being
an area avoided by most District residents, 14th and U has emerged
as one of the D.C.’s hottest neighborhoods.
*Based On a 1-Mile Radius
Georgetown offers only a handful of multifamily buildings sprinkled
among its residential areas and at the Georgetown Waterfront. The
neighborhood’s active historic preservation review boards have
kept new development to a minimum, though a small number of
boutique multifamily projects have delivered in recent years.
Currently, there are just a handful of proposed multifamily
developments in the pipeline – most of which are small boutique
condominiums aimed at the growing number of empty nesters
looking to downsize from nearby neighborhoods. The largest
proposed development is the adaptive reuse of the Georgetown
West Heating Plant, which the Levy Group aims to convert into 60
upscale condos once approval is received.
Despite being the home of Georgetown University, the majority of
local residents are owners. Renters comprise just 44.8% of
residents. Yet, Georgetown’s median age skews young at just 24.5
years of age thanks to the local student population. As such, there
is a dearth of rental housing in the area and a dire shortage in terms
of affordable and/or student housing, though Georgetown
University is looking to help alleviate that with the delivery of a
225-room residence hall that is set to deliver in summer 2016.
The Georgetown retail submarket has maintained its reputation for aspirational brands, high-end shopping, and
fine dining. Georgetown remains one of the District’s toniest neighborhoods. It is also the District’s oldest,
founded in 1751, predating the founding of the nation’s capital. The neighborhood has long been known for its
nightlife thanks to Georgetown University students, though the retail focus in recent years has gradually shifted
away from bars and night clubs and more towards specialty shops and national brands.
Georgetown’s retail is a blend of new and old. Established
restaurants from days gone by still continue to attract customers,
while new entries to the market have sought out Georgetown for
their first D.C. location. Martin’s Tavern, where JFK proposed to
Jackie Kennedy; Clyde’s, Café Milano, and Filomena Ristorante,
among many others have all welcomed politicians and celebrities
A Cushman & Wakefield Retail Research Publication
GEORGETOWN
A MIX OF THE OLD AND NEW
Retail Asking Rate Range
$75.00 - $200.00 PSF, NNN Annual
Multifamily Stats | 12-Month Forecast
Current Vacancy: 5.2%
Average Asking Rent: $1,933 Per Month
Units Under Construction: 225
According to CoStar Group
WASHINGTON, DC
OVERVIEW
THE LOCAL PERSPECTIVE
and common residents alike over the years. Many landlords,
however, have opted to shift their focus to retailers rather than new
restaurants, forcing new restaurants to open in secondary-locations
away from prime M Street and Wisconsin Avenue access. More
recent newcomers have included The Sovereign, a Belgian beer bar
and restaurant that opened in a walkway off Wisconsin Avenue, and
Chez Billy Sud, a French restaurant that opened on 31st Street, near
the historic Chesapeake and Ohio Canal Towpath.
The shift from nightlife, bar scene to retail and dining destination
continues to transform Georgetown. For example, long-time student
favorite Rhino Bar closed in 2015 and was replaced by a Club
Monaco Store. Meanwhile, Vornado’s redevelopment of the
Georgetown Park Mall (in partnership with Angelo, Gordon & Co.) in
2013 introduced an expanded JCrew, Pinstripes Restaurant &
Bowling Alley, DSW, and a TJ Maxx/HomeGoods store. Today,
Georgetown Park Mall is 91.5% leased, compared to less than 50.0%
occupied prior to the renovation. The introduction of discount
retailers signaled a shift away from Georgetown’s strict exclusivity of
high-end retailers and towards a greater embrace of discounters,
though Georgetown’s large consumer base of tourists has encourage
landlords to continue to seek out aspirational national brands.
67
76
WALK SCORE
TRANSIT SCORE
BICYCLE SCORE
84
HIGHEST LEVEL OF EDU ATTAINMENT 2015 POP
High School 158
Some College, No Degree 365
Associates Degree 154
Bachelor's Degree 2,783
Graduate Degree 3,960
HOUSEHOLD INCOME LEVELS
Average Household Income: $207,337
2015 POP
$0 - $24,999 387
$25,000 - $34,999 32
$35,000 - $49,999 231
$50,000 - $74,999 495
$75,000 - $99,999 421
$100,000 - $149,999 1,101
$150,000+ 2,186
NEIGHBORHOOD POP BY AGE
Median Age: 25 years
2015 POP
0 to 14 1,024
15 to 19 2,708
20 to 24 4,029
25 to 34 2,388
35 to 44 1,354
45 to 54 987
55 to 64 1,219
65 to 74 977
75+ 561
GEORGETOWN DEMOGRAPHICS
Ratings provided by walkscore.com
Though Georgetown continues to demand the highest retail asking
rents in the city, the rise of other high end retail districts in the city
are starting to have an impact.
Year-over-year openings remained stable
in 2015, with 43 new restaurants and retailers opening doors
– up from 42 new openings in 2014.
However, the number of closings has risen by 55.0% year-over-year,
with 51 stores and restaurants shuttering their doors in 2015. In an
effort to remain competitive with other submarkets – particularly
the 14th and U Street Corridors, which have gained a substantial
number of chef-driven restaurants in recent years – business
owners, along with neighborhood groups have petitioned the
District Alcoholic Beverage Control Board to lift Georgetown’s
27-year moratorium on new liquor licenses in order to encourage
the opening of new, full-service restaurants. Whether or not they
will remains to be seen, but maintaining Georgetown’s reputation as
a premier shopping and entertaining district is top of mind for
business leaders. Should the D.C. Government lift the moratorium, it
would almost certainly help Georgetown to compete against the
District’s other up and coming restaurant corridors.
*Based On a 1-Mile Radius
Summer Newman
Senior Analyst
Research
+1 202 739 0861
summer.newman@cushwake.com
Garrick Brown
Vice President
Retail Research for the Americas
+1 916 508 3410
garrick.brown@cushwake.com
Caitlin Slowinski
Senior Associate
Retail
+1 202 739 0396
caitlin.slowinski@cushwake.com
Hugo Gilbert
Senior Associate
Retail
+1 202 739 0382
hugo.gilbert@cushwake.com
Chris Hunt
Associate
Retail
+1 202 739 0388
chris.hunt@cushwake.com
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. The firm’s 43,000 employees in more than 60
countries provide deep local and global insights that create significant value for occupiers and investors around the world. Cushman & Wakefield is among the largest commercial
real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services,
investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com
or follow @CushWake on Twitter.
This report has been prepared solely for information purposes. It does not purport to be a complete description of the markets or developments contained in this material. The
information on which this report is based has been obtained from sources we believe to be reliable, but we have not independently verified such information and we do not
guarantee that the information is accurate or complete. Published by Corporate Communications.
©2015 Cushman & Wakefield, Inc. All rights reserved.
cushmanwakefield.com
For more information about
Cushman & Wakefield Research, contact:

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