Globalization of the DC real estate market catches neighborhood commercial districts up in the wake

The entry earlier about Bill 16-555 has a lot of words. It can be summed up something like this:

DC has become not a local real estate market but a globalized real estate market comprised of national and international firms, most not based in the region. While much of their property portfolio is located in the Central Business District this is not entirely the case, Dupont Circle and Friendship Heights being primary examples, as well as the eastward and southward expansion of the Central Business District to include the NoMa-Union Station area, as well as South Capitol Street and the Anacostia Riverfront.

While some national actors participate in the real estate market in neighborhood commercial districts, for the most part it is a local market, where the biggest players are Abdo Development and PN Hoffmann, both local firms. (Although Abdo has a national partner, Broadview Development, in some projects.)

So DC has two different real estate markets, one is global and the other is local. But the property tax assessment methodology is weighted towards the global, and doesn't assess the neighborhood commercial properties any differently. This creates a powerful force for displacement.

The pot of gold ideas generated by DC's global real estate market trickles down to the imaginations of local property owners, and why they set high prices for buildings in our local commercial districts--the church on 8th Street SE is for sale for $2.5 million, but it's not selling (or at least it hasn't for close to a year), because at that price, a business needs to generate huge revenue to pay off debt service. The Phish Tea building is for sale for $1.8 million, and it sold for under $700,000 in 2002 (I seem to recall). A business will have to generate a lot of money to pay down the debt, and convert it into equity... and restaurants generating that kind of revenue are in areas with much denser populations and easier access to other market segments.

All the more reason to study political economy.

For sale, $1.8 million. Flickr photo from inked78.

Index Keywords: urban-revitalization