J. Paul’s will close its doors before the year’s end. Marking the most recent sign that Georgetown’s restaurant scene is entering a new stage.
The saloon debuted at 3218 M Street NW in 1983, kicking off a mini restaurant empire in Georgetown for Capital Restaurant Concepts. The group owned Paolo’s, which just flipped into High Street Cafe, and Old Glory, which reinvented itself as America Eats Tavern this summer.
“There is a lifespan to independent restaurant groups — they are graciously retiring after a long successful career. It’s a changing-of-the-guard moment,” Georgetown restaurant broker Bill Miller, principal at Miller Walker, tells Eater.
He adds that, with J. Paul’s, Capital Restaurant Concepts can be credited with changing the “strictly bar culture” of Georgetown into more of a “cafe culture” and “a more polished bar and grill” scene.
The wood-lined restaurant features 5,000 square feet across two levels, and Miller says the space is currently entertaining potential restaurants to take its place. Eater reached out to the building’s owner Richard Levy, a prolific Georgetown landlord, but did not immediately hear back.
“While I’m sad to see eras end, Georgetown is due for another chapter,” Miller says.
A manager at J. Paul’s declined to discuss the closure but says it’ll stay open until at least past the end of the month.
Big-Name Restaurant Chains May Bring Problems to the D.C. Restaurant Market
D.C.’s burgeoning scene is attracting big-name out-of-town restauranteurs. This market explosion may seem beneficial on the surface but two local restaurant founders believe otherwise.
Andy Shallel, founder and CEO of Busboys and Poets, while speaking at Bisnow’s D.C. Metro Retail event, said “We have to be mindful of what’s happening now, the market has been so hot and a lot of people have suddenly discovered D.C. and so they’re paying extraordinary rents and they’re jacking up prices for everybody else who’s been there for a long time.” He continues on to say “I think a day of reckoning is about to come.”
Amazon HQ2 is on it’s way to the District. This could mean higher rents for local tenants. Busboys and Poets experienced this in September. Its landlord attempted to raise rent by 30%. With news of Apple’s new store opening up in the Carnegie Library building there are high expectations. This is two blocks away from Busboys and Poets’ Mount Vernon location. “I’m told the reason why rents are going up so high is because Apple is opening up around the corner, and now God forbid Amazon is across the river and suddenly all of these things start to become a tsunami on really good retailers,” Shallal said.
Ultimately, Shallal chose to move the Busboys and Poets City Vista space across K Street to a different location.
Rising Rent With Slowing Growth
Shallal said he has heard a lot of negativity in the market about sales growth flattening while rents continue to rise. Another well-known D.C. restaurateur said he is hearing similar sentiments.
“It is the most negativity I have heard from restaurateurs ever in my career,” Founding Farmers founder Dan Simons said. “While I’m bullish on the big picture, I think D.C. has a lot of greatness ahead of it, I’m cautious with the individual growth and the business models that can make it work.”
Simons also has a recent experience in Mount Vernon Triangle that makes him concerned about the D.C. market. When he signed a deal to open Farmers & Distillers at 600 Massachusetts Ave. NW, he said everybody he spoke to was bullish on the location, in contrast with previous openings in Foggy Bottom and Tysons when people weren’t as optimistic. The restaurant opened in December 2016 and has underperformed expectations, Simons said.
“It has been slower than we thought,” he said. “Allegedly, the Apple store is going to solve all of our woes and I hope it does. Real estate is really hard … Somehow there’s that magic that if it looks like it’s going to be perfect, the economics don’t work and it won’t be as great as you think because everybody thought the site was great.”
Miller Walker Retail Real Estate principal Bill Miller, a broker who represents both retail tenants and landlords, said he sees an oversupply of retail space in new developments that has shifted the market in the tenant’s favor. “What we’re seeing is more supply of retail by far on new developments and we’re seeing less retailers wanting to lease space, and that works against one another,” Miller said. “There is a bubble. We’ve got a restaurant opening every day in Washington. We’ve got fast fitness on every street corner. We are seeing landlords competing for these deals more and more. They are being taken to task financially more often than they had in the past because there’s so much available.”
Menomale and sweet science are coming to the Belgard DC
The Belgard in DC will open it’s doors to some new and interesting tenants.
Menomale, a Neapolitan pizzeria, and it’s sister deli, Salumeria 2703, are on their way. The two brands will be housed in a 3,000 SF retail space at The Belgard: 33 N Street NE – Washington, D.C. The Belgard is one of the newer additions to the NoMa neighborhood. It is a 13-story, 346-unit residential building, chock full of amenities.
It’s location is conveniently located less than a quarter mile away from Rockville Metro station. It has ample parking and a robust mix of local retailers and restaurants. Even more, Montgomery County, the home of Rockville Town Square, is an affluent area with an encouraging 3.6 unemployment rate.
Yet 11 years after first opening, the $370 million project, comprised of a private-public partnership backed by the city of Rockville, Federal Realty Investment Trust and Montgomery County, is struggling.
Dawson’s Market is one of the many small business retailers that have recently closed it’s doors at Rockville Town Square. Over the past couple years about a dozen other business have also closed their doors.
‘Tenants may be more interested in opening at developments along Rockville Pike that provide more visibility than the town square’s tucked away location.’
“The competition is getting fiercer. The landlords are becoming more aggressive in winning the deal over the other guy,” Miller said. “Who’s not going on Rockville Pike in terms of retailers and restaurants?”
Tropical Smoothie Cafe leases restaurant space at The Boro in Tysons Corner, Virginia:
“Bethesda, Md.-based developer The Meridian Group has announced seven food and drink retailers and two service businesses that will open in 2019 at The Boro in Tysons Corner, Va., about 15 miles outside of Washington, D.C.
The restaurants and cafés include Fish Taco, Bluestone Lane, North Italia, Flower Child, Tasty Kabob, Tropical Smoothie Café and Taylor Gourmet. The service businesses are MyEyeDr. and Boro Cleaners…
…Alex Walker and Connor McCarthy of Miller Walker Retail Real Estate negotiated Tropical Smoothie Café’s 1,200-square-foot outpost. Asadoorian Retail Solutions’ John Asadoorian represented hoagie shop Taylor Gourmet for its 2,300-square-foot eatery.”
Miller Walker Retail principal Bill Miller also sees concessions rising from the $100/SF range to as much as $200/SF, but he said this is still a fraction of the cost of some build-outs. Typical restaurants spend $400/SF to $600/SF on creating their interiors, while larger companies like Joe’s Stone Crab and Clyde’s can spend as much as $1K/SF.
Smart restaurateurs understand that saving a fraction of their build-out costs is not going to help a restaurant succeed long term if it does not have an appealing concept and location, Miller said.
“Tenant improvements sound sexy, but if you don’t do sales it doesn’t matter at all,” Miller said. “If you’re a really sharp operator, you know $100/SF in TI doesn’t matter as much as a great location … No amount of TI is going to cover a site that doesn’t do the sales, you’re still going to be going out of business.”
Kazaba said she has worked with restaurateurs who have turned down deals with $200/SF of tenant improvements because they didn’t like their chances of succeeding in the space.
“Just because they’re getting that offer, it doesn’t mean we’re saying yes to the deal,” Kazaba said. “When it’s not a good restaurant space to begin with and you have a landlord giving significant TI, the answer isn’t always ‘yes, let’s move forward,’ because it is about location and concept.”
But not all restaurateurs are smart, Miller said, and some restaurant groups can be enticed by the cost savings into opening more locations than they can handle. “A number of restaurant groups have gotten overly ambitious,” Miller said. “Guys who are less experienced might be like a moth to a flame and say, ‘I’m getting such a good deal, I might as well do three,’ but they don’t realize the manpower and complexity is going to put them in a tight position … If you open too many, you shoot yourself in the foot.”
Miller also said he is seeing mistakes on the part of developers who are building too much retail into projects in areas without enough demand…
Streets Market plans to open the NoMa store in early 2019 and the West End store next summer. Burns said the decision to sign on at Legacy West End came down to the project’s location.
“We thought this area in West End was fantastic because it borders on the daytime crowd coupled with a permanent, residential, nighttime crowd as well,” Burns said. “It’s a mix between both worlds.”
Tasea Investment Co. and the Auger Family earlier this year completed the Legacy West End project, a conversion of an office building to 192 apartments with retail. Miller Walker Retail principal Bill Miller, who represented the landlord, said the landlord could have gotten a higher rent by signing a national fast-casual chain, but decided to come down on price to have the local grocer.
“This is a better amenity for the project,” Miller said. “They stretched a little bit and said, ‘This is the right thing to do, and it’s going to get you more rent upstairs’ … Long term what’s sexy is a grocery store, and this is a cool market that’s halfway between a bodega in New York and a Whole Foods.”
The Morton’s in Georgetown, in the same block as Cafe Milano and Peacock Cafe, was the second-ever location of the now ubiquitous chain, which opened in Chicago in 1978. Old Glory, the Daily Grill and Sea Catch have also closed in Georgetown.
Morton’s lease expires in November, ending a long run for the stalwart steak spot and ushering in a new French restaurant concept by Ilhan, who said he recently signed a lease to open there. Miller Walker Retail Real Estate represented both Ilhan and the landlord in the deal.
Although he hasn’t finalized a name, Ilhan said his concept would be a more lively, modern and casual version of his other French effort, Mirabelle, in downtown D.C.
After breaking into the D.C. market in October with a $140M Bethesda acquisition, French insurance giant AXA has come back for more.
The investor acquired 1401 New York Ave. NW from a JV of Minshall Stewart Properties and Heitman for $165M, CoStar reports.
The 12-story, 210K SF office building, constructed in 1983, sits just two blocks from the White House. Minshall Stewart and Heitman acquired it in 2014 for $95M. Law firm Boies, Schiller & Flexner LLP signed on for 37K SF in the building in 2015. The building features a Starbucks in the ground-floor retail space and has a 5K SF available retail space that Miller Walker Retail Real Estate is marketing.
Most Georgetowners and DC diners are familiar with Morton’s The Steakhouse. Although there are other locations, the upscale steak restaurant is closing it’s Georgetown location.
Formerly located at Georgetown Court at 3251 Prospect Street NW. The property owner of the complex says it will depart its Georgetown location during the first half of next year.
Although Morton’s has been on Prospect Street for almost three decades it’s time at that location is coming to an end. Connor McCarthy of Miller Walker Retail Real Estate said the 7,000-square-foot retail-restaurant space will be available in the spring of 2018. Marketing to find a new tenant for the space for lease has begun.
Book Arts is a DC based company that produces high-end bookbinding and printing. They have put hand-tooled leather volumes into the hands of hundreds of heads of state — including but not limited to Pope Francis, The Obamas, Hilary Clinton and President and Mrs. Trump. Miller Walker Retail Real Estate is proud to represent the Book Arts team.
The high-end bookbinder and printing operation has lived for the past 10 years at the corner of 19th Street and Pennsylvania Avenue NW, in the sole retail space on the ground floor of the International Monetary Fund. But now, that entity is re-configuring its lobby, and there will no longer be space for the 15-year-old stationer.
For their new showroom, Vanilio and Greenwalt are looking for some similarly visible space that suits its high-end customer. (Case in point: Greenwalt recently hand-delivered a funeral guest book to a customer who needed his Social Security number, because she lives on the same street as the Obamas.) They are looking for between 1,000 and 1,500 square feet of retail space in either a downtown or Georgetown location. The Book Arts team is represented in its search by Miller Walker Retail Real Estate.
The Wharf DC. The $2.5 billion, 3.3 million-square-foot project will transform the city’s waterfront. No one denies that. But there are also plenty of non-believers who feel it won’t last. Some retail brokers and restaurateurs think there are too many restaurants. Some feel that the waterfront destinations are too seasonal to sustain all the available seating. Others say both. Just in it’s first phase alone, there are 2,200 seats at The Wharf’s nearly two-dozen restaurants.
“They’re never going to have lunch, so what makes you think that they can pay twice as much as all the early JBG deals on 14th Street?” said Bill Miller of Miller Walker Retail Real Estate, who also called the waterfront project “spectacular” and does not identify as a Wharf skeptic. Read the rest at…
Thousands Of People Live And Work In NoMa, Where There Are No Sit-Down Restaurants
Stroll around DC’s NoMa neighborhood and you will see a slew of glass-box office buildings. Look left and you’ll see new loft towers loaded up with Millennials. Look right and you’ll handful of construction sites where more are coming. Be that as it may, search for a sit-down restaurant to grab dinner and drinks, and there’s nothing there.
The DC restaurant scene has seen it’s share of changes over the last few years. Chef-driven concepts are opening throughout the city and Michelin giving out its first-ever stars to restaurants in Washington D.C.. Meanwhile the developing NoMa neighborhood has been forgotten.
On June 18, 2017, BISNOW featured an article entitle “Is Retail Really ‘F*cked’? 28 Global CRE Leaders Speak Out“. The article poses the question of the future of retail real estate and if brick-and-mortor retail stores are dying. In this article, BISNOW reached out to 28 Commercial Real Estate leaders. They asked MILLER WALKER Retail Real Estate’s very own Bill Miller his thoughts on the topic. Read his comments below.
Brick-and-mortar retail is changing just like almost every business sector due to the internet. No one should find that alarming or shocking. We have seen it coming for years at this point. Simply put, what people are leaving home to buy is changing, but people are certainly leaving home and spending money.
The smoke shop’s landlord, Demers Real Estate, took the retailer to court to have the store evicted. Eventually, Capitol Hemp won the case. Technically, what it was doing—selling pipes and smoking accessories under the guise of tobacco use only—was not illegal. Yet still, they were forced to close down the store. This was due to an agreement reached to reclaim their thousands of dollars of seized inventory.
Demers could not be reached for comment.
Stories like this were common for head shops in the District. Then DC residents voted to legalize the growing and possession of marijuana and the sale of paraphernalia. Since the law went into effect last year Continue reading ..
Honeyfish Poke has several shops in the greater Los Angeles area. And now its looking to open its first East Coast locations in the D.C. market. Co-owner Duke Park has enlisted real estate broker Alex Walker of Miller Walker Retail Real Estate to find several locations for the fast-casual restaurant. Their goal is to open the first by year’s end, if possible.
Park decided on D.C. after falling in love with the area after a recent vacation here. His background is franchising. Park has opened 15 Pinkberry locations (including the first in the United States) before founding Honeyfish with partner Jimmy Hong, who hails from the wholesale fish business. Ultimately, they teamed up with a master sushi chef to develop the concept further. They also operate the Big Fish Poke chain. Continue reading ..
Ask a dozen food geeks to name the first thing they associate with Mike Isabella. They’ll probably rattle off a list of biographical highlights. He’s the “Top Chef” contestant, New Jersey bad boy, clam-shucking chauvinist, serial restaurateur, the dude with the gypsy tattoo to ward off evil.
With his next major project, however, Isabella may forever shed his tats-and-work-shirts image. He may potentially confirm his status as one of the most ambitious restaurateurs in the Mid-Atlantic. In the summer of 2017, the chef will open Isabella Eatery in Tysons Galleria. It is an ambitious, 10-concept undertaking that will combine a few brands that are already familiar to D.C. diners — and several that are not.
Bill Miller, a D.C.-based real estate broker who largely works with restaurants, has seen [the desire to experiment with a menu] play out in the chefs he’s worked with over the years. Ambitious cooks constantly tell him they just want a small place where they can literally have a hand in making every dish.
“But I tell them you can’t really make a lot of money doing that, and they’ll look at me like I’m crazy,” he says. These days, many don’t even talk about rent at first, Miller says. But eventually the whole picture has to come together — location, pricing, a concept diners will show up for — to make sure the restaurant is financially viable.
Bill and Alex were flying back from ICSC RECon 2014. They were lamenting the fact that there was no regional event for players in the DC area. Not the way there is for Maryland, DC and other nearby states. Bill had moderated panels for Bisnow events in DC for several years at that point. And slowly it dawned on him…
“I realized I knew exactly the person to put something like that together: Mark Bisnow,” Bill says, referring to Bisnow’s founder. “He wasn’t sure about it at first, but it was just such a slam dunk. He eventually came around.”
Bill spent the next few months helping Mark sign on sponsors and get the word out to potential attendees. Last year RECon rolled around and Bisnow held its first Beltway Bash. Bill says both he and Mark were thrilled by how well it went.
“Some were a bit skeptical at first, but this is what Bisnow does better than anyone else, and it went off without a hitch,” Bill says. “It drew a real ‘who’s who’ from the DC area’s retail community and a great time was had by all.”
And the rest, as they say, is history. We’re thrilled Miller Walker Retail Real Estate has joined us as a founding partner—what else would they be?—of our Bisnow Beltway Bash, to be held on May 23, at 5:30pm at the Wynn’s Intrigue Nightclub at ICSC RECon Party. We hope you’ll join us.