Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Tuesday, January 03, 2012

Another installment of "it's about the rents" (retail closings)

Melody Record Shop
Flickr image by JSDesign.

The Washington City Paper reports in "Melody Records Will Close This Winter" that Melody Records on Dupont Circle is closing and that Barnes and Noble in Georgetown has closed, according to WTOP, "Georgetown Barnes & Noble quietly shuts its doors."

Note that technically the issues between the two companies are a little different. Retail stores have tight margins, record/cd and bookstores have tremendous competition from online sources as well. But rents in Dupont Circle are pretty high, making retailers with small average dollar transactions vulnerable.

Similarly, in Georgetown, Barnes & Noble was probably profitable--I still find it shocking that the recent Borders Bookstore bankruptcy and closure shuttered 200 stores that were in fact profitable--but likely has been outbid on rent by a concept that can pay higher prices, in that case, probably a food concept.

In high demand locations, where there is a limited inventory of quality spaces, being outbid for space is an issue.

In either case, likely the stores could be successful in different locations, still highly visible, but in places where the rents aren't as high.

The problem is that generally, commercial properties are overly valued in DC, because the downtown real estate market is a national/international market, leading to an overvaluation of all commercial properties across the city, whether or not they are located in submarkets with national/international actors.

Now both Georgetown and Dupont Circle do have national actors present in the market for commercial real estate, but even so, properties are valued (and taxed) higher than they are worth based strictly on the ability of the properties to generate income based on their use as commercial retail, restaurant, and office properties.

WTOP also reports that the pinball museum formerly located in the Georgetown Park Mall has relocated to Baltimore and makes me think of the point I made in the commercial district revitalization plan for Cambridge, Maryland, that the retail and attractions mix for a commercial district needs to be planned and managed independent of the property owners.

Georgetown's loss of Barnes & Noble definitely affects the retail mix, and further shifts the district to evening entertainment oriented establishments rather than retail.

The pinball museum likely wasn't a significant attractor of patrons, but other attractions could be, and for other commercial districts (e.g., think of the Museum of the Moving Image in Astoria, Queens in New York City) can be a more significant part of the retail/attractions mix offered by a commercial district.

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