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Columbia Heights Retail Center That Opened in 2008 Sustains Itself During 2016’s Challenging Retail Environment

Accompanying images can be viewed in the July 2016 issue pdf

By Larry Ray*

Have the dreams been fulfilled? The west side of the 3100 block of 14th Street, NW in the heart of Columbia Heights has anchored this community since the area transformed from rural to urban. (See “Columbia Heights Transitions from Rural to Urban Reflecting DC Growth,” InTowner, June 2016 issue pdf, page 1.)

During the building boom of the 1920’s, the Washington Post called this site Washington’s “Times Square.” Sadly, this block was burned and destroyed during the 1968 riots following the assassination of Dr. Martin Luther King, Jr., including the beloved Woolworth’s store. Besides a handful of stores such as People’s Drugs, Marianne, and Payless Shoes, this site lay fallow and empty for 40 years.

In a recent interview with architect and urban real estate developer Drew Greenwald, Principal of Grid Properties which built the DC-USA shopping center that now occupies the site, he recalls that in the 1997 neighbors conducted planning charrettes. A charrette is a meeting in which all stakeholders in a project identify issues and create a plan of action. Re-creating a neighborhood hub became their plan of action. They wanted a retail destination surrounded by residences. This led to zoning changes and an RFP in 1999.

Grid Properties of New York City applied for and was awarded the contract. (See, “Final Hurdle Cleared Now Ensures Columbia Heights Retail Project,” InTowner, December 2005 issue pdf, page 1.)  Greenwald stated that  DC-USA, anchored by the  two-level, 180,000 square-foot Target store, is generating $15 million annually.

They envisioned a pedestrian focused project which would  include a critical mass of stores that would be open to the streets. In 2000, Grid had developed Harlem USA on 125th Street in upper Manhattan as a retail and entertainment center which the developer considers to be a model for urban retail projects such as theirs.

Thus, the big box DC-USA retail complex rose and serves as the bedrock of the Columbia Heights neighborhood’s center. In March, 2008, with strong support of Mayor Anthony Williams, Mayor Adrian Fenty and then Ward 1 Councilmember Jim Graham, DC-USA was dedicated. In 2014, a plaque was installed inside the main entrance in honor of Robert Moore who served for 26 years as President and CEO of the Development Corporation of Columbia Heights (DCCH) until his death in 2014, and who had provided important guidance and support for this project.

Moore’s housing career was tumultuous. Marion Barry appointed him as director of the District’s housing department but troubles led him to short stint as Camden, New Jersey’s housing authority director where he encountered more troubles. In 1988, keeping a lower profile, Moore was appointed to lead the non-profit DCCH. City leaders viewed him as a dealmaker and one who always put the community first.

One of Moore’s visions for Columbia Heights was the Nehemiah Shopping Center on 14th Street a few blocks north of U Street. Though city-funded, the project was a failure and after 13 years was closed and the site cleared for new development. However, his reputation was redeemed by the central role he played not only with the DC-USA project but also the successful “re-birth” of the historic Tivoli Theatre and its adjoining site. As a result of this project’s success, in 2008 the Urban Land Institute bestowed its Community Builders award.

Former Ward 1 Councilmember Jim Graham

During a recent interview, Graham painted a big picture of the revitalization of the Columbia Heights vision that arose from a community meeting in 1987. First, Giant Foods and the Tivoli Theatre  needed to be redeveloped with the assistance of a large grant that could be made possible through the District’s Tax Increment Financing (TIF) program which allows for the sale of construction bonds backed by the project’s future taxes. Second, the large retail development needed to be surrounded by large apartment buildings such as those that opened during the past decade — Highland Park, Park Triangle, Kenyon Square, and the earlier Victory Square Senior Apartments. With that vision, neighbors declared “mission accomplished.”

Graham described the tough negotiations with Giant Food for them to envision second floor parking, rather than surface and for Target to envision indoor parking, not surface. Both establishments had to switch their suburban thinking to urban.

Design Considerations

City officials and developers envisioned a modern urban concentric design. If one is flying in a helicopter, one can see this design from the circular entrance of DC-USA to Tivoli Fountain and the Metrorail station. One can even see the series of colorful circles embedded in the sidewalks representing the diversity of the community.

But, that is from the sky. Most folks walk, bike or drive through this area and most likely do not see or appreciate this design. Many believe that DC-USA is ill-designed. They had envisioned a huge, open mall stretching from 14th to 16th streets, from Irving Street to Park Road. This vision included easy access, easy parking and easy walking. Shoppers are frustrated that they cannot walk easily from Petco to Target. They must exit to the sidewalk and then walk around to the main entrance.

Driver Greg Renfrow asserts parking is at least challenging, if not impossible. One must egress from a the little one-block street of Hiatt Place which leads to the frequently gridlocked one-way east Irving Street or one-way west Park Road.

The Financing That Made DC-USA Possible

The cost for the construction of the 1,000-space, two-level parking garage was facilitated through the issuance bonds worth 46.9 million by the then quasi-governmental National Capital Revitalization Corporation (and fully paid off in 2014). In addition, project financing was greatly assisted as a result of the Councilmember graham’s push for the City Council to authorize the tax increment (TIF) financing a year of negotiation. (Pending TIF projects include Gallery Place, the Mandarin Oriental Hotel and the International Spy Museum.)

Greenwald asserted that the garage was necessary to make the $150 million project work. Big retailers would not have signed without this parking, he said.

What About Local Businesses?

Another grand disappointment seen by many was the dream that DC-USA would be a balance between national and local businesses. Greenwald stated that they tried to fill 15,000 square feet with local businesses by offering leases at 30 percent below market rents. A walk through the complex reveals mostly national chains, even the newest tenants — Chick-fil-A, Five Below, Petco — are national brands. The opening of the local Peruvian restaurant chain’s newest Senor Chicken outlet was much heralded as a local business but closed soon thereafter, seemingly because of a business partnership failure.  This space is now being built out for locally-owned operated Ethiopian restaurant. Also, the IHOP on the Irving Street side of the complex is a local, minority-owned franchise, as is the minority-owned Magic Ground indoor park for children and families. In addition, there are a few local businesses along Park Road such as Mi Cuba that are not directly associated with DC-USA.

Negotiation Failures

One example is the failed negotiation between Grid and Richmond, Virginia-based Ellwood Thompson’s, a natural and organic foods market. In a recent interview, founder and owner Rick Hood, talked of how the business sources local foods and is guided by sharing community values. He told of what he called his five-year disappointing process, asserting that he was excited about and committed to the neighborhood. Upon signing the lease and spending large sums to architects and for overall preparation leading to opening, in 2008 they were hit with the effects of the severe economic downturn. Because of this reversal, he needed to renegotiate the lease terms; New York City-based Grid Properties, Inc., however, stayed firm and the negotiations failed.

Another failure involved Whole Foods. Residents from the neighborhood and all around were excited at the prospect of Whole Foods opening a major store there — it seemed like a done deal until negotiations fell through, seemingly mostly over the issue of designated parking.

The irony now is that DC-USA is desperately looking to rent unused parking spaces, even securing an agreement with the Washington Hospital Center, Childrens Hospital and the Veterans Hospital so that employees can park there inexpensively and then transfer to a shuttle van.

When Marc Katz of H&R Retail, Whole Foods’ exclusive real estate broker for DC. told this reporter, “We tried for several years to make the DC-USA project work but ultimately reached the conclusion that it just didn’t. It was not only parking issues, but size and location of the space in the building.”

Dee Hunter, founder of the DC Black Chamber of Commerce,  provides insight into the dilemma of attracting local and minority business to set up shop in these highly desirable locations like DC-USA where rents for them are too high to begin with and the estimated $125,000 cost just to build out often beyond reach. He is seeing this trend throughout the city, from upper northwest to U Street and now H Street, NE. DC’s largest developer, The JBG Companies for example, consider themselves experts in the type of mixed-use, “place-making” development like U Street. He is glad that retail dollars are being spent in DC at such places as DC-USA but wishes DC-USA had a more desirable blend of local and national businesses.

Editor’s Note: For a comprehensive report on the then brand new DC-USA complex and its welcomed arrival when it opened eight years ago, see “Major Retail Center Finally Opens inColumbia Heights; Great Excitement Generated in Neighborhood and Citywide,” InTowner, March 2008 issue pdf, page 1.

[This concludes Part 1 ; next month the final part will be published.]

*Larry Ray, a resident of Columbia Heights, is a Senior Lecturer at The George Washington University School of Law and Senior Trainer with the American Management Association. He is a former four-term Advisory Neighborhood Commissioner and has served as President of the North Columbia Heights Civic Association (NCHCA).

Copyright © 2016 InTowner Publishing Corp. & Larry Ray. All rights reserved.