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With empty stores in Dupont Circle and Cleveland Park, Starwood Urban Investments is redefining window shopping.
Back in October, Starwood Urban Investments realized it had a problem: The properties it had purchased on a block of Connecticut Avenue north of Dupont Circle had been lying idle for more than two years, and neighborhood residents were complaining about the resulting eyesore.
The company’s solution? Really nice graffiti.
As part of its Project for the Arts, which Starwood began “to showcase and promote artists in retail windows and buildings…that are temporarily vacant,” the company commissioned an impressive mural that made the space less visually assaulting. The graffiti, spread along the 1700 block of Connecticut Avenue NW, did not change the fact that the thriving, locally owned small businesses that Starwood had kicked out—which included a dance studio, a newsstand, and an antiques/ collectibles store—still had not been replaced.
“It’s terrible that they haven’t done anything,” says Elia Fuentes-Dumas, whose business, Glorious Revivals, was one of those forced to close after Starwood bought the property. “We live in a neighborhood with half a block boarded up,” she says, adding that the company has ignored her complaints. “They aren’t concerned with development in the city—they just want to make money for their investors.”
That, of course, is what companies do. A financial giant that owns properties up and down the East Coast, Starwood proclaims its mission as “to create value in overlooked properties and untapped or emerging urban markets.” The company purchases properties in areas it deems up-and-coming and then tries to attract prestigious national chains and restaurants that will pay significantly higher rents than the previous tenants, usually local small businesses.
“Theoretically, someone like Starwood coming in could be a terrific thing,” says Doug Loescher, assistant director of the National Main Street Center, a commercial-revitalization group. “We know the vitality of a commercial district relies on a mix of local and national businesses. If you fight to keep national retailers out of your neighborhoods, they’ll pop up somewhere else, and people will go to them.” He cautions, however, that “groups like Starwood require the assemblage of a large number of properties and their development all at the same time—neighborhoods obviously lose some element of control.”
As Starwood has learned, local residents don’t usually take this loss of control lightly. When the company purchased a row of commercial buildings on Connecticut Avenue in Cleveland Park two years ago, residents feared that local businesses were going to be replaced by national chain stores and restaurants. The situation grew so tense that Starwood CEO John Richmond was forced to attend a special meeting to answer the questions and deflect the criticism of more than 150 locals.
“This is a neighborhood shopping area,” says Ann Loikow, vice president of the Cleveland Park Citizens Association. “People don’t want to see companies like Starwood price all of the neighborhood retail out of the area.”
Worried about that possibility, local residents enacted a commercial overlay that outlawed the opening of new restaurants in the area. The overlay left Starwood, which had recently completed renovations to the properties, with limited prospects in attracting tenants. Restaurants are critical to companies like Starwood, because they pay high rents and anchor large retail areas.
Starwood would not return repeated calls for comment. But commercial real estate professional Larry Demaree, who has consulted for the company, says he finds the Cleveland Park restrictions oppressive.
“If there’s a market for more restaurants, why not have more? We should let the market figure out what’s right,” he says. “How is a resident to say what neighborhood demand will be?” Demaree scoffs at what he sees as an “‘I’ve got mine’ attitude” among some District residents: “It makes me sad when people say, ‘Stop the growth.’ You want to put the tenants in that serve the needs of the community. Life is all about change and growth, but some people say, ‘Not in my neighborhood.’ It becomes this fear that people have.”
It’s a fear that is not completely unfounded. Without neatly tailored restrictions, activists worry that brokers like Starwood will simply conclude deals with brand names that have already claimed their share of commercial frontage. The Dupont Circle neighborhood, for example, is watching its fourth Starbucks outlet open for business. There, local concern has grown to the point that the Washington Blade recently ran a cover story suggesting that chain stores had stripped the neighborhood of its identity. And Starwood has found itself the target of residents who blame the company for unwanted neighborhood gentrification.
“What Starwood has basically done is buy up a bunch of buildings, throw out the tenants, and lay out the plans for creating another Georgetown,” says Andy Pino, who lives and works near Dupont Circle. “The last thing Washington needs is another outdoor mall full of generic chain stores.”
The issue is particularly relevant right now, because Mayor Anthony A. Williams, in conjunction with the National Main Street Center, just announced the $7.5 million “ReStore DC” initiative, a commercial-revitalization program aimed at attracting retail stores to D.C. neighborhoods. According to John McGaw, a coordinator for neighborhood commercial revitalization in the deputy mayor’s office, the initiative leaves it up to locals to decide what sort of businesses they want to attract.
“Generally, the biggest local gain does come from building local businesses,” says McGaw, who worked with the mayor on the initiative. “A smaller retailer is more likely to use local services and keep money in the neighborhood.” He stresses that the important thing is simply to get redevelopment going: “The time for this has come. People shouldn’t have to go to the suburbs to buy a new washer/dryer. We are severely under-retailed in this city.”
Sam Smith, editor of the Progressive Review, a journal forced to relocate when Starwood bought its building and tripled the rent, says he would prefer an in-town merchant class. “The question is whether we are going to have real economic development,” he says. “When Starwood brings someone in, the money doesn’t stay in the community. You don’t help a neighborhood when every dollar that comes into the business goes out of town. You’re just turning your neighborhood into a funnel.”
Perhaps. But D.C. residents every day fire up their cars and empty their wallets at chain outlets in Maryland and Virginia. And while activists attempt to zone out chain stores, Williams each year attempts to lure more of them to D.C. neighborhoods. In the meantime, the future of D.C. retail will remain in the hands of Starwood and its ilk.
“There will always be tension between independent small businesses and national retailers,” says Loescher. “The question will remain whether or not the big companies are really listening to the community and bringing in things that will be beneficial, or just trying to earn a profit.” CP