How Recession-Proof Is Washington Retail?
First, the good news: There are indeed some retailers who are having a banner year right now, smack in the middle of this big mess.
For example, wine merchants are doing splendidly, says Thomas Maskey, senior vice president for retail development at the Peterson Companies, the Fairfax-based developer that owns and manages many shopping centers and other retail and residential projects in the Washington area. And discount stores--Price Club, BJ's, Wal-Mart--are doing decently well, at least in comparison to most other retailers, Maskey says.
All in all, Washington area retailers are better off than most of the rest of the country, according to Maskey and Georgetown developer Anthony Lanier, both of whom join me this week on Raw Fisher Radio (you can listen to the full interview here.)
But of course we're not exactly immune to economic forces, and the downturn is evident in the paralysis in neighborhoods that had been booming, places such as the area surrounding the Nationals ballpark, Shaw, Hyattsville, as well as the outer suburbs, where the spread of sprawl has been at least temporarily arrested.
Peterson's National Harbor project, which opened shortly before the country began its downturn, is still opening stores and restaurants, but at a slower pace than had once been anticipated. "It's been an uphill battle," Maskey says, but people are discovering the new development along the Potomac waterfront in Prince George's County, and the current Cirque de Soleil run there is exposing thousands of visitors to the complex for the first time--creating two-hour waits for tables at some restaurants there.
Peterson's previous smash success, downtown Silver Spring, is holding its own. The rest of Silver Spring's central business district may be in something of a lull, but Maskey says the Peterson project there has the strongest sales of any of its properties this season.
Both Lanier, whose work is concentrated in the District, and Maskey, whose company tends to do projects in the suburbs, agree that for the moment, close-in developments are doing better, in part because the memory of $4 gas remains strong, even if the current drop in prices amounts to what Maskey calls a "second stimulus package."
Looking ahead, the developers see a rough patch for mid-level retailers, with low-end stores pulling in consumers who are looking just to fulfill basic needs, and higher-end shops taking advantage of the ever-present impulse buyer. "The broad middle shopping band is going to be the big sufferer," Lanier says. Both developers say they expect a fair number of merchants to be approaching their landlords after the Christmas season with requests for relief from rent payments.
"People are feeling the pinch and coming to us to ask how we can reduce expenses," Maskey says.
It's hard to see a silver lining in this economy, but the fact that developers believe the small, local businesses are more likely to survive than the big boxes and the other mega-retailers is at least a bit of poetic justice.
Malls and shopping centers are hardly ghost towns, Maskey notes. "It's basically free entertainment, so people are still coming to the centers," he says, "and occasionally they're buying stuff."
There's lots more on the radio show.
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