August 14, 2006

Life Around Dupont Circle Takes a New Turn

By Chris Kirkham
Washington Post Staff Writer

For more than a generation, the Third Day has been a Dupont Circle landmark, a garden shop in the middle of a city. People walking by would be stopped by the vibrant pink of a bromeliad or pulled through the door by a pungent whiff of basil.

By the end of November, the shop will be history.

One door away, Neil Conway of District Hardware expects to be forced out of Dupont this year by rising rents. He'll probably move, depriving people in the neighborhood of the best place to buy a screwdriver or a paintbrush.

Sweeping change is underway in one of the most distinctive neighborhoods in Washington , driven by trends in the market for commercial real estate.

Polished national chains such as Cosi, Ann Taylor Loft and Chipotle are snapping up historic storefronts and supplanting quirky local merchants. The chains are helping to drive up commercial rents, which have doubled -- even tripled, in some places -- in a decade. They see profit and a chance to associate their stores with the cachet of a funky neighborhood.

But some people who live in the neighborhood see a unique cityscape slipping away.

Along Connecticut Avenue , independent art galleries, curiosity shops and restaurants with names like the Golden Booeymonger are gone. Many independent merchants say they can't pay the rents the chains pay, so they are closing or moving. As they do, many residents contend, the utility of the neighborhood for people who live there is disappearing with them.

"I used to feel a lot more at home on Connecticut ," said Rob Halligan, president of the Dupont Circle Citizens Association. "But now it feels a lot more like somebody else's neighborhood I'm walking through than my own."

A similar story has played out across the country in recent years.

From New York 's SoHo to Chicago 's Lincoln Park to San Francisco 's Hayes Valley , chain stores are remaking urban neighborhoods, sparking protest. In some places, people have managed to slow the trend and retain a mix of local and national retailers, while other neighborhoods, Georgetown among them, have essentially become shopping malls.

Dupont has not reached that point; the neighborhood still has far more local merchants than national chains. But the balance is shifting. Private and public decisions over the next couple of years could determine how much of the neighborhood's old character survives.

Chains Move In

Phil Herbert has seen the end coming for a long time.

His store, the Third Day, has always been an unlikely venture -- an "anachronism," by Herbert's own description. It was founded 35 years ago by a seven-person collective, named for the day in Genesis on which God made plants. The Third Day continued selling potting soil and seeds and ornamental peppers long after $5 cafe lattes appeared in Dupont Circle .

As rents jumped in recent years and stores such as Rock Creek, a clothing boutique, and Naturally Yours, a health food store, started folding around him, Herbert knew his time was near.

The Third Day and neighboring District Hardware, which includes a bicycle-repair shop, occupy space along P Street carved from the basement of the historic James G. Blaine mansion. The leases end in November. A lawyer, John Phillips, bought the property in April. He plans renovations and said he had no choice but to bring rents up to the market price of more than $60 per square foot, more than double current rates.

Phillips said he tried to keep the hardware store -- but Conway said Phillips offered a smaller, underground space. Conway balked, noting that "location is critical." So he's planning to move.

"I went the extra mile," Phillips said, but couldn't come to terms with the shops. "I felt sorry for them because they'd been there for so long."

Herbert said he didn't put up a fight, knowing that his modest plant store couldn't cover the rents now common in the neighborhood.

"We tried to run a good show, and it was a good run, but times change," said Herbert, 59, who plans to move with his partner to Vermont , where the number of Starbucks shops in the entire state -- four -- equals the number in Dupont Circle .

Where local shops like Herbert's once ruled, chain stores and restaurants are now the busy spots in the neighborhood.

Since 1991, the number of national chain stores along Connecticut Avenue , Dupont's main commercial strip, has surged. A count by The Washington Post, using old directories and other references, showed 61 independent stores and three national chains in 1991 along the three blocks of Connecticut north of Dupont Circle . Today there are 39 independents and 18 national chains.

The shift has been gradual, but chains now span the entire length of the corridor, from the Krispy Kreme doughnut shop at the south end of the circle to the Buca di Beppo restaurant at the top of the hill near Florida Avenue . The four Starbucks stores are clustered within three blocks of the circle, and Comfort One Shoes, a local chain, has three stores in the 1600 block of Connecticut .

Sue Landini, owner of the Axis hair salon on Connecticut Avenue , traces what she called "the beginning of the end of an era" to the early 1990s, when the first Starbucks came to the circle.

"We didn't know that once Starbucks came, that was it," she said. "We were naive. We were like the dumb natives."

Rents Doubled

The factors in play in Dupont are the same ones bringing national retailers and restaurants to urban neighborhoods across the country. In the common pattern, a funky, offbeat neighborhood becomes trendy. Wealthier people move in. Chain retail follows.

"You've got neighborhoods that have been brought back to life because of the investment and hard work of independent businesses, and once those neighborhoods attract a certain popularity the chains come in," said Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance, an advocacy group. "If it's a hip neighborhood, the ability to associate your brand with the vibe and authenticity of the area can be very appealing."

That's what brought Johnny Rockets -- a hamburger chain usually found in suburban malls and tourist destinations -- to Dupont last month. "We can't beat Dupont for brand recognition," said district manager Micheal Williams. For many chains, urban neighborhoods are the last frontier. The suburbs where they started are saturated with stores. As the chains ran out of suburban sites, they realized that the demographics of many urban neighborhoods had shifted drastically.

Household income in Dupont Circle was once below the District average. But from 1990 to 2006, typical household income in Dupont, adjusted for inflation, rose from $46,000 to nearly $60,000, according to figures from Environmental Systems Research Institute. The average home value, adjusted for inflation, rose from $493,000 to about $582,000.

Dupont has remained an evening and weekend destination for dining, drinking and shopping for many who live and work elsewhere, especially young adults and gay people.

Meanwhile, office space in the neighborhood has expanded as older buildings were converted. With more office workers during the day, and more disposable income and wealth in Dupont at all hours, the chains' customer base has expanded. Dupont used to get most of its foot traffic on nights and weekends, real-estate agents said, but now it is an all-hours retail district.

Several of the big Dupont Circle landlords did not return phone calls regarding their activities in the neighborhood. Those who did said they had made efforts to accommodate local merchants.

"I prefer the local tenants because they keep the flair and the charm of Dupont Circle ," said Michael Kain, who has owned property in the area since 1976. Most of his tenants are locals, but he also has Ann Taylor Loft, one of the biggest and most visible chain stores along Connecticut Avenue .

Halligan, of the Dupont Circle Citizens Association, said much of the decision-making is driven not by sentiment but by dollar signs.

"Chains think, 'What can this do for me?'" he said. "And the person renting is thinking, 'How much money can I make?'"

Defending the Chains

In some of the leases on mid-size shops that are expiring, brokers said, rents are less than $3,000 a month. Rents on newly signed leases for the same amount of space run from $6,000 to $12,000 a month, depending on the location. With their heavy foot traffic, chain stores can usually pay those rents.

"If you want to get frustrated at the local guy not wanting to pay the rent, get frustrated at him not being able to get his act together and compete," said Bill Miller, a senior vice president at Transwestern Commercial Services, a realty firm.

Some area business leaders see substantial benefits in having chains in Dupont. Ed Grandis of the Dupont Circle Merchants and Professionals Association conceded that chain stores don't contribute as much to the community as independents. But he said having several chain anchors draws traffic and provides a stable retail base.

"We want to have services that can meet the residents of today, not 15 years ago," Grandis said.

Some people who live in Dupont feel the same way. While they may be sad to see old places close, the changes strike them as inevitable.

"I think D.C. overall has become a more cosmopolitan city, and retail has to follow that," said Kirsten Brinker, who lived in the neighborhood in 1998 and moved back two years ago. "We couldn't be where we are today without it."

Looking for Help

As Dupont Circle changes, many of its old-line retailers are groping for ways to adapt.

Chris Stone, owner of the Cyberstop cafe near 17th and Q, feels the pressure. He plans to remodel and rename his place this fall. The new 17th Street Cafe will sell alcoholic beverages and food for the first time to compete with chains.

Grandis and others want the District to consider tax credits or other measures that would benefit locally owned stores, easing the pressure of escalating rents. Some cities, including San Francisco , require new businesses to fit the character of a neighborhood.

Under a bill proposed last year by D.C. Council Chairman Linda W. Cropp (D), who is running for mayor, and council member Jim Graham (D-Ward 1), small retail stores in historic districts would get a 50 percent property-tax credit. The bill, which has not come up for a vote, is limited to certain older businesses and wouldn't benefit all independents.

But such ordinances typically slow change without stopping it. For young people moving into the neighborhood, the newer Dupont is the only one they know. Unlike many older residents, they can walk the busiest three-block stretch of Connecticut Avenue , from the circle to S Street, without being haunted by the ghosts of stores that are no longer there -- or bothered by the shiny chain stores now visible on every block.

Landini, the Axis salon owner, watches them stroll past her door. For her, the "sterilized" Dupont is not the real thing. But she knows it's a matter of time before the people who remember the old Dupont are gone.

"It's not our turn any more," Landini said. "It's the turn of the new people."

http://www.washingtonpost.com/wp-dyn/content/article/2006/08/13/AR2006081300499.html

©2006 Washington Post

 

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