The R Word: Recession or Revival?

March 4, 2010

One day it was there, the next—gone. An empty storefront on Wisconsin Avenue is all that remains of Sugar, a Georgetown boutique that once sold women’s clothes and jewelry.

James Packard-Gomez, a Georgetown business owner, ran into the proprietor of Sugar not long after it closed.

“She told me, ‘I just closed in the middle of the night. The landlord was doubling my rent, I couldn’t afford it,’” Gomez said.

Sugar’s fate is not an uncommon one. According to the Georgetown Metropolitan blog, 47 stores closed or moved out of Georgetown in 2009. (The Georgetown Business Improvement District puts the number at a more conservative 35.) The Georgetown Metropolitan counts roughly 450 stores around the Wisconsin Avenue and M Street corridors, meaning that one in ten businesses left Georgetown last year. Only about half that number went against the tide and opened for business in Georgetown last year.

Down to Business

What is happening to Georgetown? Are these the normal hiccups and fluctuations of a vibrant city, or is this a more fundamental change in the very character of this old district?

The reasons for the closings are “fairly obvious,” according to Ed Solomon, a member of Georgetown’s Advisory Neighborhood Commission and the owner of Wedding Creations and Anthony’s Tuxedos.

“[These businesses] are just not getting the traffic, people walking the streets to spend money,” he said. “The numbers are down, across the board.”

While guarding against generalizations, Solomon noted that the recession has made credit tighter all over, and Georgetown is no exception.

For many businesses in Georgetown, the high rents that come with the fancy neighborhood prove to be too much when times get tougher.

“I look at a lot of these other small businesses and the problem they’re facing is they’re just not making the money to match the huge rent that comes with having a Georgetown location,” local resident Carol Joynt said

Joynt owned the iconic Nathan’s Restaurant before being forced to close it in the summer of 2009. She has lived in Georgetown for 30 years, and now blogs about the neighborhood at Swimming in Quicksand. According to Joynt, Nathan’s was bankrupt the whole time she owned it. It only made money at the bar, while Joynt was forced to pay property taxes and keep up an expensive building in an expensive part of town. This past year, having sunk as much of her own money into the place as she could, Nathan’s landlord sued her for eviction and Joynt got out.

Nathan’s, whose closure was covered by The Washington Post and other local media, may have been the most visible Georgetown business that closed in 2009. Many of the other stores are less familiar—Mass’s Closet, Georgetown Pet Boutique, Ann Hand. But some other, bigger names have been rumored to be in trouble, and may close in the next year. According to the Georgetown Metropolitan, Puma may be on its way out. Pottery Barn is to be replaced by Brooks Brothers within the year. Joynt has heard rumors about other brands like H&M and Benetton shutting their doors for good—although Benetton has said it is just remodeling. And the Georgetown Mall continues to hemorhage stores.

At Pottery Barn, a saleswoman said everything was fine, and that she did not know anything about the store closing. But according to Topher Mathews, who writes the Georgetown Metropolitan blog, Georgetown’s Pottery Barn has long been the worst-performing one in the country, something he said is true of many of the chain stores in the neighborhood. Many businesses, already on the edge, have been pushed over by the recession.

Not Without A Fight

“We don’t like the ‘r’ word,” Packard-Gomez, CEO of Erwin-Gomez Salon and Spa, said. “We tend not to use that word, because, knock on wood, we are able to consistently maintain our numbers through various different tools, incentives, and programs that we’ve put in place.”

According to James Bracco, executive director of the Georgetown BID, the failure rate of Georgetown businesses is actually significantly below average, which in the past year was 27.77 percent for the United States and 21.62 percent in Washington, D.C. Georgetown’s losses may just seem overwhelming because of the nature of the neighborhood.

“The Georgetown business community is tight-knit so we experience business failures here as heartbreak,” Bracco wrote in an e-mail. “When a business closes, we feel it. When a business is struggling, we empathize.”

Mathews, who has lived in Georgetown for about seven years and written the Georgetown Metropolitan blog since 2008, sees a slightly different explanation.

“I do think that with Georgetowners, there is a bit of a cottage industry of being angst-ridden about the state of Georgetown and the future state of Georgetown,” he said. “You can go back in the Post archives, for example, and find articles talking about the decline of Georgetown that were written 10 or 15 years ago.”

In 1990, the Post ran an article headlined “Georgetown Copes With Changing Image,” forecasting retail doom as Georgetown transitioned from “elegance to free-wheeling carnival.” Two decades ago, the state of Georgetown business was a similar concern, with some upscale retailers such as Chanel turning down the neighborhood and some chains like the Gap thriving.

“Some people would maybe want Georgetown to be all fancy furniture stores and high-end boutiques, but there is a history going back to the ‘70s and ‘80s of Georgetown being sort of rough and tumble like that,” Mathews said. “Quirky is probably the better term. Commander Salamander is the last vestiges of that, of a more punk, alternative kind of place.”

The fortunes of “quirky” Commander Salamander show the transition Georgetown is going through right now. In January, the store posted signs reading “CLOSING THIS LOCATION…Everything must go!” and advertised newly slashed prices. After a few weeks of “total liquidation,” the store made enough money from its sales to keep going for another month, and perhaps another month after that.

None of the Commander Salamander salespeople the Voice interviewed for this story knew how long the store would be open. They said they are currently planning to stay open on a month-to-month basis, but the going-out-of-business signs have not gone away.

“A lot of small businesses that have been here a long time, sometimes they are able to adapt, or you have a clientele that comes here regardless,” Solomon said. “But in terms of the ones that depend on tourist traffic, we have seen a drop off.”

Yet it is hard to see where businesses like Commander Salamander, which has been in the neighborhood for many years, fit into this dichotomy. The storefronts of Wisconsin Avenue and M Street are in flux, and it’s unclear what Georgetown will look like when the dust settles. Change is coming, and naturally the neighborhood’s residents are feeling the impending losses.

New Look Georgetown

“Christ, I shopped at Commander Salamander,” Packard-Gomez said. “I got my first Madonna-rama belt there when I was 14. To see things like that close, it’s really been a mind-altering, earth-shattering experience … I guess it’s just part of the evolution of change, but with change comes a little pain.”

Nevertheless, Packard-Gomez is optimistic about some of the more upscale stores moving in. Most other people with strong ties to the Georgetown community seem to agree that the neighborhood is changing, though not all are as optimistic about where it is headed.

“It used to be that Georgetown merchants catered to Georgetown residents,” Joynt said. “Well, Georgetown residents aren’t necessarily the prime markets for the M Street corridor … I don’t know who the people who shop on M Street are, I don’t know, tourists.”

Tellingly, some of the more tourist-focused businesses, such as Georgetown Cupcake, have found a way to thrive, despite the economic climate.

“Georgetown Cupcake is a phenomenon, but you can’t look at that as an example,” Joynt said. “You look at upper Georgetown—small proprietors, small businesses, selling something that’s not trendy. There will be more closings over the next year.”

Long term success for other small businesses, such as those on Wisconsin Avenue who cannot rely on tourists, is dependent instead on appealing to long-term residents. Or perhaps the students who live nearby for four years.

“I don’t think residents think much of the role that students play,” Mathews said, “which is probably significant, but narrow. There are a small handful of places that [students] go a lot.”

If that is the case, there may soon be more student-oriented outlets replacing outgoing businesses. Bracco mentioned students as an impetus for the Apple Store that will soon take the space previously occupied by French Connection on Wisconsin Avenue.

Emily Osterkamp (SFS ‘10), waiting in line at Georgetown Cupcake, said that she could not think of any businesses that had closed during her four years as a Georgetown student that she was particularly sad about, but was excited about some of the new businesses that had opened, such as Lululemon Athletica and Georgetown Cupcake. She characterized the newer stores as “upscale chains” as opposed to “singular stuff.”

Georgetown Cupcake is the company most often mentioned as a model of how to succeed in business in Georgetown. Founded by sisters Katherine Kallinis and Sophie LaMontagne in February 2008, it soon had lines around the block, hour-long waits for cupcakes, and a growing reputation. In the past year, Georgetown Cupcake moved to a larger space, opened a location in Bethesda, and started a catering business. This summer the store will be the focus of a reality series on TLC.

Georgetown Cupcake may owe its success to being able to appeal to students, tourists, and residents.

“There are a lot of visitors—both foreign and national—who find themselves in Georgetown and see the perky festivities on the corner and stop by,” Olivia Bennett (COL ’10), who works at the store, wrote in an e-mail. “A lot of locals come by to place orders for a party or to get a dozen for an upcoming event. Of course, with the new Facebook/Twitter “free cupcake,” [the store posts a flavor for the day online, and the first 100 who ask for it get a free cupcake] TONS of students come by for that! And surprisingly, more and more adults know about it as well.”

“While it’s very popular with tourists, it gets an awful lot of residents too,” Joynt said of Georgetown Cupcake. “It was the residents that kept them afloat through the blizzard. They stayed open, and that was cool.”

Bennett reported that the store sold a lot of hot chocolate during the snow, and that customers trekked from George Washington University and even Rosslyn to the shop, one of the only Georgetown stores that stayed open during the storms.

Road To Recovery

The success of Georgetown Cupcake and other new stores proves that despite the recession, all is not hopeless in Georgetown. Stores may be closing, but others are opening up, and many are doing well. Although Georgetown will undoubtedly remain a popular neighborhood when the money starts flowing again, it will also be a different one.

Some of the old-guard Georgetown boutiques, like Commander Salamander, may be gone, and perhaps some of the name brands like Puma and Benetton. But in all likelihood, once the economy has completely recovered, the chains will be replaced by more of the same. In the meantime, the few businesses that keep their finger on the pulse of Georgetown will continue to thrive.

For Joynt, the places that she thinks are doing well, including Georgetown Cupcake, Marvelous Market, A Mano, and Thomas Sweet, “are places that stayed open during the blizzard, that were committed to serving the community.

“That’s really going to be the secret to survival—serve the community and the community will be there for you.”

Additional reporting by Brendan Baumgardner.

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David Roffman

Georgetown has always had its ups and downs. In the 1960s, saloons and nightclubs were a major concern to residents. In the 1970s, crime was running rampant and vendors were setting up all along Wisconsin Ave. in front of stores. But the Georgetown merchants organized, built a strong merchant association that got city hall to pay attention to what was happening to this historic neighborhood. The Citizens Association got involved in fighting crime with increased neighborhood watch programs and increased policing of the neighborhood. The realtors of Georgetown were willing to work with the small merchants. Johnny Snyder, Sam Levy, Emil Audette and other commercial realtors did not gauge the merchants, but set reasonable rents. Rick Hinden of Britches, John Laytham and Stuart Davidson of Clydes, The Georgetowner newspaper, Richard McCooey, all worked together to form a strong mercantile base for the community, bring in a good merchant mix. By the 1980s, Georgetown was in its heyday. Business was pretty strong. Then in the 90s, things began to change. Rents went sky high, mom and pop stores moved out, foreign money took over the commercial sector, banks (the mainstays of the co mmunity) like Riggs, Washington National, American Security all closed or were taken over by outside interests. The merchant association lost its importance when the BID came about. The citizens association became more of a social outlet. All nightlife disappeared as saloons and nightclubs were forced out. And parking enforcement turned so many shoppers off. Malls in the suburbs stole business from Georgetown offering free parking and big movie screens. All of Georgetown’s movie theatres shut down. The Food Mart, Neam’s Market, the French Market all left. Residents had to drive outside of the communty to go grocery shopping. Chain stores moved in. Shoppers did not come back. The same chain stores could be found in the suburbs, where parking was easy and free. And so, here we are today, almost at a stage where Georgetown has to start over. The merchant mix is all wrong. The Georgetown Business Association has to take the lead. City Hall has to wake up and see what is happening to this historic neighborhood and work with the merchant association to improve the situation.

The community newspapers have to start rebuilding the image of the community. We had parades down Wisconsin Avenue in the 1980s for Francis Scott Key Weekend. We celebrated July 4th on the waterfront with major festivals.

Let’s be a little more creative.