This Is How Georgetown Goes Generic
Even as retailers put on a cheerful face for Christmas shoppers, the pain is palpable and spreading. At Wisconsin Avenue and M Street NW -- the place Georgetown developer Anthony Lanier calls "the corner of Main and Main" -- the hurt takes the form of customers who just aren't there anymore.
"I can't tell you how many people I run into now who say, 'Oh, Nathans, I used to go there all the time,' " says Carol Joynt, the owner of the saloon and restaurant that has graced that Georgetown crossroads for four decades.
Even before the financial crisis blossomed, business was down 14 percent from last year, Joynt says. The cost of food is soaring far faster than customers' willingness to accept higher prices.
Joynt's lease expires in April, and the owner of the building is looking to sell or find a national chain store to move in. Joynt, a former journalist who took over Nathans after the death of her husband 11 years ago, watched as summer foot traffic waned and the crowd shifted from mostly neighborhood residents to mostly visitors from nearby hotels. And with the hotels suffering from lower occupancy, that meant empty seats at the bar.
"We're run better than Lehman Brothers, but banks don't want to lend us money, and we're not going to get any bailout," Joynt says.
All around Georgetown and other retail areas, struggling merchants scramble for relief, landlords sniff around for tenants with deeper pockets, and banks are holding back on loans -- making it even tougher for small, locally owned businesses to survive and accelerating the trend toward the malling of America, the takeover of retail space by national chains.
Georgetown merchants such as Joynt are finding that landlords, far from forgiving losses, want to raise rents or seek higher-paying tenants. In the case of Nathans, the landlords, descendants of one of the neighborhood's oldest property-owning families, are looking for what everyone craves in tough times: maximum return on assets.
"Everything's up in the air," says George Heon, one of a handful of family members who are weighing selling their Georgetown properties, renting them out to national chain stores or working out a deal with their existing tenants. "But Georgetown isn't the same kind of draw it used to be, because so many other parts of town have gentrified."
The Heon family, Greek immigrants who came to the neighborhood nearly a century ago, once ran its own businesses in the 18th- and 19th-century buildings along M Street and Wisconsin Avenue NW. "Now we mostly collect rent checks," he says. "We'd all like it if there were still family businesses there, but more and more, it's all national chains."
Chain stores, landlords generally believe, are better suited to withstand the ebb and flow of retailing's fortunes. But as the smattering of empty storefronts in prime Georgetown locations demonstrates, those chains are quick to pull out if a store is not pulling its weight.
Dimitri Mallios, a lawyer who represents many Washington restaurants, says there's no shortage of entrepreneurs who want to open eateries in Georgetown, even during a downturn, but landlords increasingly want the relative security, in normal times, of tenants that sell clothing or electronics rather than burgers and beer.
If the Heons sell or choose a different tenant, the loss of Nathans would hit first in the 55 jobs the business provides for bartenders, waiters and kitchen staff. The loss would extend to many Georgetown residents and visitors.
(Joynt can't move; she says it would be too difficult to borrow money, and in any event, because of her bar's name, "if I move more than three blocks, Nathan's Famous will sue me." The New York-based hot dog chain and the Georgetown bar signed a deal years ago that allows Joynt to keep the name, but only at that location.)
"Harsh economic reality is coming up against nostalgia," says Lanier, who developed Cady's Alley, the chic cluster of furnishings shops just behind M Street. "Restaurants are not any longer the highest and best use of properties on high-rent streets such as M Street or [New York's] Fifth Avenue. The question is whether we, as owners, choose to maintain the fabric of the community. A responsible developer wants to keep a variety of stores. A jeweler pays higher rent than a Dollar Tree store, but you want the Dollar Tree there to generate foot traffic, so you charge them less rent. A large developer can make those choices. A family like the Heons has mouths to feed, and there comes a day when they want to cash out."
Credit crunches are "really just reality checks," says Lanier, who expects Georgetown businesses to weather this season in somewhat better health than suburban retail clusters because Georgetown merchants are less reliant on holiday shoppers. "This Christmas is likely to be big trouble for most retailers, but hardly anybody ever came here for Christmas shopping -- our customers are more metropolitan, more international -- so we won't be hit as hard."
That is small solace for Joynt, who finds it hard to square the scene at her still-busy place with the likelihood that Nathans is in its final months.
"Georgetown used to be this marvelous indigenous community with its own unique shops," she says. "If we lose those, what's left? What makes this a distinctive place?"
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