A Georgetown renaissance is brewing, but is the neighborhood right for sit-down restaurants?
The Georgetown M Street corridor has seen significant changes over the last two decades. Once a party destination for college students, the neighborhood has matured into a real estate trophy district, attracting top retailers. It still draws tourists from around the world, but with its diversity of college students being lured from surrounding schools, including the Georgetown University main campus and George Washington University, the customer base can often skew young and diverse.
“Have you seen so many fit people eating salads?” asked Joe Sternlieb, Georgetown BID CEO in a May panel discussion held at Church Hall in Washington, D.C., and sponsored by the Restaurant Association of Metropolitan Washington (RAMW).
At the RAMW panel discussion, Sternlieb said that Georgetown is going through a renaissance. Talk of a Georgetown Metro Station and the redevelopment of the C&O Canal are signs that the area again is up and coming. In the roundtable discussion, several other factors came up in favor of the area as a good prospect for restaurants and retailers: The area is home to an outdoor shopping area that is the largest in adjoining shopping, the ubiquity of Uber and Lyft remove parking concerns for customers, and the diversity of the retailers and food outlets make the area a true social destination.
The Georgetown corridor has always been a top tourist destination due to the sheer equity in its name and notoriety. Dochter & Alexander reports in a BizNow piece that retail spaces average $300/square-foot, making the economics of running a restaurant business in Georgetown challenging. Also, as the story points out, it is harder for restaurants to compete in the bidding and acquisition of open spaces versus the muscle of top national retailers.
Celebrity Chef and Restaurateur José Andrés recently signed a lease for a new restaurant from his ThinkFoodGroup, America Eats Tavern. It occupies the space at 3139 M Street Northwest, the former home of Old Glory, a restaurant that operated there for 26 years and closed suddenly.
As another sign of the long-term value of the Georgetown corridor for business, The Shops at Georgetown Park was acquired in 2014 for $272.5M by Atlanta-based real estate firm Jamestown, which also owns several trophy office buildings and retail real estate. During a tour in May of Georgetown Park, as part of the RAMW roundtable, Jamestown representatives showed vacant restaurant space on the backside of the park’s development at street level and facing the C&O canal. There, representatives touted the space as a “partnership between the developer and a visionary restaurant group,” and suggested that it was a destination venue.
The continued ability of Jamestown to attract top restaurants to Georgetown Park, however, will go against recent history: Georgetown has 22 (full-service) restaurants still open in 2018, only about half of the number it had in 2008, according to The Georgetown Metropolitan. Many restaurateurs and news reports point to the moratorium on liquor licenses as part of the stalling of new restaurant openings. It expired in 2016. Others say the high rents and past closings are obstacles when restaurateurs envision setting up shop in Georgetown.
Restaurateurs will make their decision based on the value proposition there.
What economic factors would make them invest along the Georgetown retail corridor? Across D.C., restaurant owners are becoming accustomed to asking for a significant portion of the build-out from landlords; this would be an essential tactic in negotiating space in Georgetown. Margins are slim for D.C.’s top restaurateurs, who have built their restaurants into destinations in and of themselves. And there are plenty of competing neighborhoods that can be more appealing for a variety of factors, including the Shaw, NoMa and the District Wharf, as landlords there beckon new restaurant development.
Thyme Real Estate Holdings, which is developing along the side streets of the corridor, is also moving forward in Georgetown in a way that is not so typical. Its Grace Street Collective has relatively low rents at 3210 Grace Street, Northwest, according to BizNow. The Collective, which is a boutique food hall, is home to South Block, Sundevich and Grace Street Roasters. The building that houses The Collective is growing: Thyme is adding a fish shop and a restaurant by José Andrés-protegee Johnny Spiro in 2018.
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Another sign of the changing M Street Corridor in Georgetown is the opening of national food retailers and coffee shops. In December, Wawa opened its first D.C. location there and Blue Bottle Coffee arrived in July 2017. Georgetown should continue to see a gradual more–restaurant-friendly environment as it evolves into an all-day destination; additionally, there are other opportunities that can be realized: investment in further side-street development and the possibility that a savvy landlord makes a long-term investment in a large, ambient food hall. A recent report by Cushman & Wakefield, a real estate consultancy, and research firm, notes that there will be 300 food hall projects in operation by 2020 and that the food hall model creates a robust economic catalyst for new restaurant development.
The opening of Church Hall in March portends well for future full-service restaurant openings. The beer and game hall is a striking and comfy location to socialize and enjoy great beer. Geoff Dawson, a Church Hall partner and owner, was on hand at the roundtable to offer up his opinion of the changing Georgetown environment and proclaim his own positive outlook on the dining scene there. The Church Hall investment in a neighborhood that is 270 years old is also a long play, but the venue as a destination could drive a unique trajectory of success.
As evident during the panel discussion, and what many other writers have noticed, is that the space is designed in a way to help guests forget they are in a subterranean space. Game boards, multiple TVs and a setup that includes couches and communal tables are all part of the cozy, destination-worthy restaurant and beer hall. Church Hall’s arrival and the new full-service restaurants announced for Georgetown this year may be indicative of a tide turning in favor of restaurateurs.
This story was originally published in Eatery Pulse News, now, the leading foodservice industry publication for restaurant owners and management in the Washington, D.C. market. Catch its news on our digital platform.
Photo credit: Eatery Pulse Media