DC Retail Action Strategy

Shaw - Convention Center

SWOT Analysis, Retail Demand Analysis, Strategy and Preliminary Planning Diagrams
Shaw-Convention Center SWOT Analysis
 Introduction

= Core commercial area

Boundaries
Both sides of 7th and 9th Streets, from Convention
Center (Massachusetts Avenue/New York Avenue)
north to Rhode Island Avenue, centered on the O
Street Market

Zoning
The Convention Center district is a commercial
extension of retail-centered Penn Quarter to its
south. The surrounding residential area extends
into the commercial area at the northeastern end
of the Convention Center (near the Mt Vernon
Metro station), as well as just south of Rhode
Overview Island Avenue. The commercial zone narrows near
the northern end of the district to cover only 7th
This historic neighborhood north of downtown DC is experiencing tremendous growth and Avenue, which turns into Georgia Avenue further
transformation, in part because of the recently built Washington Convention Center. The former north. Other nearby commercial corridors include
home of jazz legend Duke Ellington, the Shaw neighborhood is a historic center of African- 14th Street and Florida Avenue.
American culture. As such, it has great historic buildings, including the O Street Market, which
is slated for major redevelopment. This area has a prime location just north of bustling Gallery
Place/Chinatown and south of Howard University. It is also positioned on a major corridor (7th
Street/Georgia Ave), with access to the Metro’s Green and Yellow Lines.
 Retail Opportunity
1 Neighborhood Heart 1A
NODE 1
This upper portion of the Shaw- O Street Market
Convention Center submarket is Giant
7-Eleven
the area’s residential core, with Tiki Food Carry-Out
China Express
residences ranging in size from 1A Laundromat
Dollar Plus
densely arranged rowhouses to 10- Azi’s Cafe
story apartment buildings. While BP

the new Convention Center defines 1B

the lower portion of the submarket
(see below), the historic O Street
Market is this area’s most iconic 1
building. Although the market is no
longer in use (it is slated for a major
redevelopment called City Market 1B

at O Street), it reflects this area’s 2A

focus on neighborhood goods and
services.

2 Convention Center N Street Northwest

2A
The 6-block Convention Center
dominates the area below N Street.
This state-of-the-art facility is a 2B
regional draw and has brought
improvements to the area’s
streetscape. However, its retail NODE 2
component took longer than
expected to build-out and lease, and
Altersteins Furniture
Ruppert Real Estate
Warehouse
2
Mercy Medical Center
it also has not yet revitalized vacant Happy Cleaners
shops along 7th and 9th Streets. Subway
Enterprise Rent-a-car
2C
Even so, this area has more potential Old Dominion Brew House
Mongolian Grill
for denser development (7th Street Tokyo Sushi
2B
Modern Liquors
is the more promising corridor) than 2C
points north because of its proximity
to downtown and its visibility along
busy New York Avenue.
Note: Tenant lists do not include all businesses located in the submarket.
 Retail Node 1: Neighborhood Heart
= Major Intersection Community Anchors comprise the center of the Neighborhood
Heart; it is surrounded on both ends by Residences and Retail.
= Minor Intersection

= Neighborhood Intersection
= Sub-node A
= Sub-node B

A - Residences and Retail bookend this node. Large-scale

public housing lines 7th Street, while rowhouses run along

7th Street Northwest

9th Street. While 7th Street shows great potential for
revitalization in Node 2, this northern node is occupied by
A residences with minimal retail (although the Parcel 42 project
at the corner of 7th Street and Rhode Island Avenue will
bring 8,000sf of ground-floor shops). This node is suited to
remaining neighborhood-serving; store depths are limited
B by adjacent residences and this area does not have the same
drawing power as Node 2. The current offerings are in poor
condition and need physical improvements.

B
B - Community Anchors like Giant, the O Street Market, and
O Street North- the JFK Recreation Center form the heart of this community.
Similarly, several large religious buildings line this central part
of 9th Street, where residences and retail are revitalizing.
For example, rowhouses on 9th Street across from Giant are
in good condition, and nearby Azi’s Cafe and Vegetate offer
1 pleasant settings for neighborhood eating. This area shows
real potential to anchor the community with neighborhood-
serving shops. The City Market at O Street has been granted
preliminary development and financing approvals and can
N Street North- provide the necessary momentum.
 Retail Node 2: Convention Center
The Washington Convention Center divides this node
= Major Intersection
south of N Street NW into 2 distinct sub-nodes: 7th
= Minor Intersection Street and 9th Street.
= Neighborhood Intersection N Street Northwest
= Sub-node A
= Sub-node B

A - 7th Street contains the Mt. Vernon Square

7th Street-Convention Center Metro station at its
B A intersection with M Street. This intersection has
public housing on 3 corners, including one corner
where the Convention Center is wrapped in housing.
This prime intersection has great potential for retail;
M Street Northwest however, like the northern part of 7th Street (see
Node 1), its redevelopment is limited both by the
9th Street Northwest

presence of existing residential uses and by building

configurations that are not conducive to retail. Just
south of this intersection, however, housing gives
way to vacant inline shops. This area has the most
potential for immediate retail development; it has
the necessary visibility from New York Avenue and
momentum on 7th Street coming from downtown.

B - 9th Street contains smaller-scale buildings that

are mostly boarded up, as well as vacant ground-
floor retail in the Convention Center. While
significant redevelopment is slated for the area
near Massachusetts Avenue, 9th Street does not
have quite the same drawing power as 7th Street.
Therefore, redevelopment along this corridor should
focus on improving neighborhood and Convention-
serving offerings.
 Retail Infrastructure
Streets & Blocks Intersections Buildings Alleys & Service
7th Street is the submarket’s Rhode Island and Massachusetts Besides the Convention Center As most retail is small and
dominant street and is a major DC Avenues create major intersections and historic O Street Market, marginal, there are no clearly
artery. In addition to following the where they meet 7th and 9th the most prominent buildings established areas for service and
Metro’s Green and Yellow Lines, it Streets. The northern intersection are mid- to high-rise public loading. There are small parking
runs alongside the Verizon Center at Rhode Island Avenue is housing apartments that line lots behind many buildings on 7th
to the south and turns into Georgia scaled for automobiles rather 7th Street. 9th Street closer to and 9th Street accessible from
Ave to the north. 7th Street has 2 than pedestrians. Although this Mount Vernon Place has a few tall narrow alleys; however, these
northbound lanes of traffic and 1 intersection contains the Shaw- buildings, including new office and are not intended for patrons, so
southbound lane, and parked cars Howard University Metro station, it residential buildings. Retail shops, customer parking is problematic. If
occupy an extra outer lane in both is hardly visible behind a chainlink which are scattered throughout it is completed as planned, the City
directions. Although it is secondary fence. Moreover, buildings at the the submarket, tend to be in small Market at O Street redevelopment
to 7th Street, 9th Street has more other corners are imposing, with 1-story buildings or on the ground- may help ease this problem with
lanes of traffic (2 in each direction). few windows and blank facades. floor of 3-story residences. Many its 700 proposed underground
The streetscape is in good The southern intersection at of them are vacant and in need parking spaces.
condition around the Convention Massachusetts Avenue is more of substantial improvements in
Center, with brick sidewalks and successful, and uses a change in order to function as good quality
regularly planted trees. There are material to help denote pedestrian retail space; some exceptions are
even occasional historical plaques crosswalks. Other than these on 9th Street between M Street
geared toward tourists. North of two major intersections, most and P Street, where buildings with
N Street above the Convention intersections are small. Even the ground-floor retail space have
Center, however, the streetscape intersection of M Street and 7th been upgraded. Civic buildings on
becomes less manicured, and Street, where the Metro station 9th Street generally tend to be in
the neighborhood takes on a less is located, is not noticeable as a better condition and help form the
maintained appearance. major intersection. core near the O Street Market.

Shaw-Convention Center–Working Group Draft–May 2008 7

 SWOT Analysis
Strengths
• As a high-powered regional draw, the Washington Convention Center is a major impetus for revitalizing the area
• The area’s proximity to Gallery Place/Chinatown and Penn Quarter makes it appealing and convenient to office workers and tourists alike
• Its location near Howard University gives it access to a sizeable student body of approximately 11,000
• 7th Street follows the Metro’s Green and Yellow Lines and thus is primed for transit-oriented development
• 7th Street is also a major traffic artery in and out of the city, as it turns into Georgia Ave further north
• Although many buildings are rundown, the building stock is good overall, with many historic structures
• There are many new development opportunities in the “gaps”, particularly along 9th Street
• There is momentum for redevelopment and the City Market at O Street has already gained preliminary development and financing approvals

Weaknesses
• The Convention Center is a very large, insular building that currently does not fully activate or engage its surroundings
• The Metro intersection at 7th St and M St is underutilized
• Many retail spaces are vacant and often restricted by height (ie. tucked into the ground floor of a large building)
• Although 7th Streets shows promise as a Main Street, much of it is residential, which limits the amount of retail development that can occur
• High crime rates, vacancy, and gaps in the urban fabric may negatively impact retailers’ perceptions and the willingness of shoppers, including
Convention Center visitors, to frequent retail in the submarket

Opportunities
• Strengthen the Convention Center’s connection to Gallery Place/Chinatown and Penn Quarter by obtaining parcels of land along New York Ave, K
Street, and Massachusetts Ave (e.g., NPR headquarters up for sale)
• Develop retail and other mix of uses, especially around the Mount Vernon Sq/Convention Ctr Metro station, with 7th Street as a clear Main Street
• Improve offerings along 9th Street and fill in the gaps; focus on Convention-serving goods and services near Massachusetts Avenue and continue
to improve neighborhood-serving shops in the northern section
• For both 7th and 9th Streets, the blocks between Mount Vernon Place and L Street have high visibility, making them especially promising sites for
retail redevelopment
• Implement streetscape guidelines to promote a pedestrian culture at the northernmost intersection with Rhode Island Avenue, taking advantage
of the area’s proximity to Howard University
• Improve visibility and accessibility at the Shaw/Howard University Metro Station so it can anchor the Rhode Island Avenue intersection
• Develop more office buildings along New York Avenue to help activate retail during the day and transition from downtown
• The City Market at O Street redevelopment could revitalize the northern part of the submarket, with its new grocery store and preserved market,
600 residential units, hotel, and shops

Shaw-Convention Center–Working Group Draft–May 2008 8

 SWOT Analysis
Threats
• The former Convention Center site (to the south) is slated for a huge redevelopment, which could take away from the retail viability of shops here
• While the Convention Center fits in with new development further south (such as the Verizon Center), it detracts from the neighborhood’s authentic
urban fabric, which has evolved over time; redevelopment efforts should be sensitive to this contextual balance
Shaw-Convention Center Preliminary Planning Diagrams
 Planning Analysis Node 1: Neighborhood Heart
= Major Intersection
General Observations about Existing Area:
= Minor Intersection 1) Shops along 9th Street comprise a neighborhood-serving
= Neighborhood Intersection
commercial corridor. Residential and civic uses dominate the
= Node 1
streetscape of 8th and 7th Street.
2) The Giant grocery store currently turns its back and
exposes its loading area to 9th Street, although the proposed
City Market at O Street mixed-use redevelopment will more

7th Street Northwest

dynamically engage the surrounding streets.
3) Retail locations in converted ground-floor residential
townhomes are unappealing for traditional retail; however,
lower rents in these locations have created good opportunities
for local start-up businesses.
4) Single-use retail anchors with surface parking are no
longer appropriate for this dense, urban neighborhood.

Retail Planning Principles:

1) Redevelop large, single-owned commercial parcels to a
higher-density, mixed-use product.
2) Implement streetscape and storefront guidelines that
promote a cohesive retail environment and celebrate the
unique qualities of the Shaw district.
O Street North-
3) Promote this node as a neighborhood shopping destination
that serves the everyday needs of the Shaw community.
4) While this area will remain distinctly community oriented,

1
it could benefit from the built-in consumer base associated
with nearby Howard University and the Convention Center.
Consumers from these areas will be more likely to shop here
if the tenant mix and aesthetic quality of the retail space are
N Street North- improved. Signs of this change can already be seen on 9th
Street between M and P Streets.
 Planning Concepts Node 1: Neighborhood Heart
= Prime Corner
= Mixed-Use Opportunity
= Reinvestment Opportunity The following concept diagram is intended to be used as a general guide for retail improvement opportunities.
= Major Intersection Actual building configurations and mix of uses should be reviewed on a parcel-by-parcel basis.
= Minor Intersection
= Neighborhood Intersection
Redevelopment Option 1
NW
ue,
en
Av HIGH-DENSITY, MIXED-USE DEVELOPMENT OPPORTUNITIES
nd
R Street, NW sla
d eI
Rho The City Market at O Street site has the greatest potential for a high-
density, mixed-use development. Commercial development at this
location will benefit from clear visibility and ease of access from both
major corridors, 9th Street and 7th Street. Due to the elimination of 8th
Street and merging of 2 city blocks, this location also has the advantage
of being the largest single-owned commercial property in the node.
Q Street, NW The large site area allows for optimal parking dimensions, a critical
component to urban mixed-use projects.
Smaller opportunities for mixed-use buildings exist between O and
9th Street, NW

8th Street, NW

7th Street, NW

N Streets, and are currently being constructed by local developers.

Retail in these areas should continue to focus on meeting the needs
of the surrounding residential community, daytime Convention Center
patrons, and Howard University students.
P Street, NW
From a retail perspective, 9th Street has potential for immediate
improvements. However, on 7th Street, large residential buildings
limit retail expansion opportunities in the near term. Please note that
redevelopment along this portion of 7th Street in the future is strongly
O Street, NW
encouraged as a result of more than adequate site dimensions and
close proximity to the major mixed-use grocery-anchored center in the
submarket.

N Street, NW
 Planning Concepts Node 1: Neighborhood Heart
= Prime Corner
= Mixed-Use Opportunity
= Reinvestment Opportunity The following concept diagram is intended to be used as a general guide for retail improvement opportunities.
= Major Intersection Actual building configurations and mix of uses should be reviewed on a parcel-by-parcel basis.
= Minor Intersection
= Neighborhood Intersection
Redevelopment Option 1
NW
ue,
en REINVESTMENT/REPOSITIONING OPPORTUNITIES
d Av
R Street, NW Islan
de The City Market at O Street redevelopment will increase critical
Rho
mass, thereby bolstering retail on 9th Street. A hotel is also planned
in association with this development. Building improvements and
reinvestment into retail space should conform to a strict set of design
guidelines and a merchandising strategy that encourages basic
neighborhood goods and services.
Q Street, NW Streetscape improvements along 9th Street are necessary for a more
pedestrian-friendly sidewalk. Defining the character of the streetscape
will also stitch together retail blocks and create a cohesive pedestrian
9th Street, NW

8th Street, NW

7th Street, NW

experience.

P Street, NW

O Street, NW

N Street, NW
 Planning Analysis Node 2: Convention Center
General Observations about Existing Area:
= Major Intersection

= Minor Intersection 1) The majority of commercial space within the

= Neighborhood Intersection
N Street Northwest Convention Center exists along 9th Street.
= Node 1 2) Housing on the eastern side of the Convention
Center limits retail redevelopment opportunities.
3) Multiple ownerships and limited site depths
make for difficult consolidation efforts along 9th
Street.
4) Retail space within the public housing along 7th
Street lacks good visibility due to the breezeway
M Street Northwest
that lines the first floor of the building.
9th Street, NW

7th Street, NW
Retail Planning Principles:
1) The retail needs of the daytime Convention
Center patrons and the needs of the surrounding
neighborhood are not dissimilar. Direct a
merchandising strategy that includes quick-bite
and casual restaurants will satisfy the needs of
both groups.
2) Allow the momentum of new development
along the upper part of 9th Street (see Node 1)
to drive reinvestment efforts to historic mixed-use
buildings along this lower section of 9th Street
parallel to the Convention Center.
3) Extend downtown’s retail development along
7th Street with a major mixed-use offering at the
intersection of New York Avenue and 7th Street.
4) Encourage a repositioning of the residential
buildings to a more appropriate high-density, mix-
use product that can better serve the needs of the
growing community.
 Planning Concepts Node 2: Convention Center

= Prime Corner
= Mixed-Use Opportunity
= Reinvestment Opportunity The following concept diagram is intended to be used as a general guide for retail improvement opportunities.
= Major Intersection Actual building configurations and mix of uses should be reviewed on a parcel-by-parcel basis.
= Minor Intersection
= Neighborhood Intersection

Redevelopment Option 1
HIGH-DENSITY, MIXED-USE DEVELOPMENT OPPORTUNITIES

N Street, NW
Large, single-owned parcels that border the Convention Center south
of L Street offer the most viable options for near-term mixed-use
developments. The parcel along 7th street can capitalize on its proximity
to the established Gallery Place/Chinatown retail and the expanding Mt.
Vernon Place district. New retail should consider the needs of both the
Convention Center patrons and the nearby office workers.
As seen in the first node, housing limits the mixed-use potential along
M Street, NW
7th Street north of L Street.
9th Street, NW

7th Street, NW

L Street, NW

Ma W
ssa ,N
chu nue
set ve
ts A
ven rk A
ue, w Yo
NW Ne
Mt Vernon Place, NW

K Street, NW
 Planning Concepts Node 2: Convention Center

= Prime Corner
= Mixed-Use Opportunity The following concept diagram is intended to be used as a general guide for retail improvement opportunities.
= Reinvestment Opportunity
Actual building configurations and mix of uses should be reviewed on a parcel-by-parcel basis.
= Major Intersection
= Minor Intersection
= Neighborhood Intersection

Redevelopment Option 1
REINVESTMENT/REPOSITIONING OPPORTUNITIES

N Street, NW Grade change along 7th Street, particularly between L and M Streets,
are problematic for existing retailers. Clear signage and wayfinding can
alleviate some of the access difficulties; however, significant changes
cannot be made without undergoing substantial renovations to the
buildings and to the streetscape.
Historic buildings along 9th Street that lie vacant with empty storefronts
are opportunities for retail reinvestment. Due to the limited site depth,
M Street, NW
retail merchandising should focus on local “mom and pop” retailers
9th Street, NW

7th Street, NW

that complement larger-format retailers that can occupy space within

mixed-use developments to the south.
In places where potential retail opportunities have elevated residential
entries, creative planning strategies can address issues with access and
L Street, NW
visibility. For examples of successful non-conventional retail entrances,
look to strategies employed in the retail corridors of Adams Morgan, U
Street, and The Golden Triangle.
Ma W
ssa ,N
chu nue
set ve
ts A
ven rk A
ue, w Yo
NW Ne
Mt Vernon Place, NW

K Street, NW
Shaw-Convention Center Retail Demand Analysis
The retail submarket is located along 7th and 9th Streets (both sides) from Convention Center
(Mass Ave/New York), north to Rhode Island Avenue, centered on O Street Market

Key Elements

• Trade areas assess residents and other potential cus-

tomers who could be drawn to the site

• The primary trade area encompasses the block

groups within a ¼ mile of the retail submarket; the
secondary trade area includes the block groups within
a ½ mile of the retail submarket (reasonable walking
distances for pedestrian shopping)

• Primary trade area residents are expected to be fre-

quent customers, with a focus on those living closest to
the site; secondary trade area residents are expected to
be consistent, but not frequent customers

• Potential customers who are not primary or second-

ary trade area residents are accounted for by an “inflow”
factor; this is a percentage applied to potential expendi-
tures at the site
New households in the Shaw-Convention Center trade area will make a significant impact on retail
demand

Trade Area Population Growth, 2007 and 2012

• Strong increases in population and households, along
with continued visitation at the Convention Center will
provide opportunities to capture retail expenditures in
the retail trade area

• Total population in the trade area is projected to

increase from 32,009 in 2007 to 39,926 in 2012; an
average annual growth rate of 4.5 percent

• New residential projects from the development

pipeline may add 3,225 households or approximately
6,772 new residents (based on average household size
in each trade area) in addition to projections by ESRI.
ERA accounted for this addition in the 2012 figures for
population and households

• Major new projects include City Market at O Street

and City Vista Trade Area Household Growth, 2007 and 2012

)*+mated
 Projected
2012
2007
Primary 6,983 8,485
Secondary 8,651 11,333
Total 15,634 19,818

Source: ESRI Business Analyst; ERA 2007

Shaw-Convention Center Key Demographics- Trade Area Profile Summary

Income Statistics, 2007

• The Shaw-Convention Center trade area is comprised
of mostly middle-lower income households

• Median household income in the primary trade area is

$34,666 and is $41,606 in the secondary trade area

• Median family income is $39,831 in the primary trade

area and is $40,533 in the secondary trade area

• Per Capita income in the primary trade area is

$24,027 and is $34,286 in the secondary trade area;
compared to $27,916 nationally

• The trade area is primarily African-American (51%) fol-

lowed by White (31%) and Other (11%)*

*“Other” includes mixed racial populations or self-identi-

fied as such. The group may include Latinos or Hispan- Racial and Ethnic Groups, 2007
ics who do not identify with another race. Latino and
Hispanic are ethnic groups, not racial, but may include
people of several racial groups

Source: ESRI Business Analyst; ERA 2007

Significant increases in population aged 20 to 34 and 45 to 64 are positive indicators for retail
and residential demand over the next five years

Trade Area Population by Age, 2007 and 2012

• The 20 through 24 age cohort is expected to see the
most significant increase in population over the next five
years

• Age cohort 25 to 34 will also see an increase in

population over the next five years, a positive indicator
for residential demand, as these cohorts typically begin
forming households

• Growth in the 55 to 64 cohort will increase demand

for goods and services associated w/ “Empty Nesters”,
including personal care (pharmacy and foodservice, for
example)

• Population decreases in the 35 to 44 age cohort is a

negative indicator for demand, however the strength in
those just younger and just older should provide signifi-
cant opportunity to make up demand

Source: ESRI Business Analyst; ERA 2007

Shaw-Convention Center Key Demographics- Trade Area Profile Summary

Home Ownership, 2007

• A significantly higher percentage of households in the
Shaw-Convention Center submarket rent their homes,
versus own (74% v. 26%)

• In 2007 trade area residents spent a total of $224 mil-

lion on products and services in the categories repre-
sented on the graph. This is total spending everywhere,
not just in the trade area

• Household expenditures in the trade area show lower

amounts being spent for personal care and household
furnishings. The stronger performing categories are gro-
cery, entertainment and food & drink away from home.
As previously noted, projected age cohort changes
will continue to support entertainment and foodservice
businesses, but personal care may increase as the area
includes more “empty nest” households Household Expenditures (In Millions) by Category,
2007

Source: ESRI Business Analyst; ERA 2007

Development Pipeline

Pipeline Projects

• Approximately 204,600 square feet of retail is current-

ly under construction in the Shaw Convention Center
trade area

• There are currently 30 projects under construction in

the Shaw-Convention Center trade area. These projects
will deliver:

204,573 square feet of retail space

2,234 residential units

• There are another 19 projects planned in the Shaw-

Convention Center trade area, including the CityMarket
at O Street which will have a 65,000 square foot Giant
Grocery Store. In total, the planned projects will deliver:

108,042 square feet of retail space

991 residential units

Overview of Market Demand Analysis

The purpose of the market analysis is to provide quantitative data that, combined with qualitative analysis in the Strengths-Weaknesses-Opportunities-
Threats (SWOT) section, inform the retail development strategy for the submarket and provide a tool to DC government, private developers and retailers,
and community organizations for developing retail business opportunities.

Developing Estimates of Supportable Square Footage

A key component of the quantitative analysis is determining how much retail space is supportable in each submarket. To calculate this, retail demand or
spending within the trade area along with an estimate of the spending that the submarket could capture are measured. Various factors are taken into ac-
count in developing submarket capture rates, such as the quality of existing retail offerings and trade area competition. Retail spending potential for each
major retail category (Convenience Retail, Specialty Retail and Food & Beverage/Restaurants other Food Service) is divided by the retail industry stan-
dard for sales-per-square foot (sometimes called retail sales productivity) to arrive at an estimate of retail square footage that the submarket can support.
Submarket demand is compared to supply by subtracting the existing retail inventory to determine the net supportable square feet for retail space.

For potential future development in 2012, pipeline residential and commercial projects, and associated increases in trade area expenditures, are factored
into future demand. On the supply side, the pipeline of “under construction” and “planned” retail projects is subtracted from the estimate of supportable
retail space, as it is assumed that the new space will absorb an equivalent amount of space at the threshold productivity levels.

Generally speaking, retail market demand analysis should not be considered conclusive, as it combines “typical” and “industry average” performance
measures with professional judgment based on local conditions and knowledge of the market and retail industry. There are several factors that will deter-
mine the success or failure of any individual retail business; that is why the industry is constantly changing. This analysis is intended to guide the Retail
Action Strategy to opportunities to recruit potential successful retail categories based on estimated demand potential.

*Estimated retail spending potential is based on household spending patterns, household income and household composition as reported by the Con-
sumer Expenditure Survey prepared by the US Census for the US Bureau of labor Statistics. For retail sales productivity rates, ERA used a range of retail
industry-based sales per square foot estimates based on the company’s experience in urban commercial districts similar to each individual submarket,
as shopping center industry standards do not always reflect comparable performance in either market orientation or financial structure by locally-owned
businesses or by smaller/older commercial buildings.
Retail Demand: Primary Trade Area Supportable Retail Space

Retailers measure business success by comparing their sales per square foot or productivity against their costs and revenue objectives as well as report-
ed retail industry standards for comparable types of stores. The amount retailers can afford to spend for rent is also determined by annual sales (both the
total amount and sales per square foot per year). Retail rents usually range between 8 percent and 12 percent of total annual sales. This industry stan-
dard is a benchmark by which retail performance can be determined.

Local retailers whose sales fall below these industry standards may be considered to be underperforming; the reasons for underperformance may be
a result of the size of the market, stronger competitors with better merchandise, merchandising, and/or better pricing, or undercapitalization. Under-
performing retailers may cause the analysis of supportable square footage to be underestimated. The higher performing operators can capture market
share from existing retailers as well as new customers not currently patronizing a commercial district. When considering a commercial location or district
such as the submarkets included in this analysis, retailers often review the levels of rent achieved by property owners as an indication of the level of sales
that other retailers are generating.

Lower average rent levels also influence the amount that property owners can afford to invest in property improvements to retain existing tenants or
recruit new ones. If property owners are unable to offer tenant improvements because rents are too low, the retailers are then required to increase the
amount they must spend to prepare a building to become a store, café, or consumer service business. The greater the amount the retailer is required to
invest in space improvements, the greater the financial risk, resulting in additional financial pressures during the early years while the retailer is becoming
established and building a customer base. Districts presenting a higher risk of failure have difficulty attracting well managed, well capitalized businesses.

This relationship establishes the connection between the total sales that retailers can achieve, the amount they can afford to pay in rent, and whether the
property owners will be willing (or able) to invest in major needed building upgrades (electrical systems, HVAC, tenant improvements) to attract or retain
retail tenants.
Trade Area Resident Spending

Retail opportunities are measured using trade area retail expenditures, Trade Area Expenditures per Household By Category, 2007
which describe consumer spending patterns

Expenditures typically cover resident spending, but have been adjust-

ed to include worker, visitor, and other spending, as appropriate

Key categories

Apparel and Apparel Services

Entertainment and Recreation

Personal Care

Household Furnishing and Equipment

Grocery

Food and Drink Away from Home

• Entertainment and Recreation includes expenditures such as fees

and admissions, TV/video/sound equipment, pets, toys, recreational
vehicles, sports equipment, photo accessories, and reading

• Personal Care includes stores such as, drugstores (excluding

prescription drugs), cosmetic stores, and services (nail salons, hair
salons, shoe repair, etc.)

• Grocery (food and drink for consumption at home) absorbs the most Source: ESRI Business Analyst; ERA 2007
expenditures for the households in the trade area
Capture rates are applied to total trade area expenditures in order to estimate potential expendi-
tures within the retail submarket

A capture rate is calculated as a percentage of sales expected from Shaw-Convention Center Submarket
Capture Rates By Category
households or inflow shoppers in the entire trade area.

The rate is developed by examining the trade area’s existing retail

offerings, quality of retailers, the potential for increased sales with
improved retail operations, size of the trade area, and a professional Primary Secondary Inflow
judgment considering nearby competition and other available retail Apparel & Apparel Services 10% 7% 2%
purchasing opportunities for customers. Entertainment & Recreation 10% 7% 3%
Personal Care 15% 12% 5%
The analysis utilizes capture rates specific to the trade area to calcu- Household Furnishings and Equipment 8% 5% 1%
late likely on-site spending within the retail submarket. For example: Grocery 40% 25% 15%
Food and Drink Away From Home 30% 15% 15%
• A 10% capture rate = $10 of every $100 spent will occur in the
retail submarket Source: ESRI Business Analyst; Economics Research Associates, 2007

• Note that 100% capture rate is not possible, as the rate reflects all
retail purchasing opportunities available to the shoppers in the trade
area

• The capture rate is generally a major determinate of a retail sub

market’s viability

Source: ERA 2007

Estimated Captured Spending within the Retail Market

Estimated Captured Retail Trade Area Spending, 2007

$45 Million

• Captured spending in the Shaw-Convention Center retail trade area

was estimated to be $45 million in 2007 compared to total trade area
spending of $224 million in the same year

• Captured spending in the Shaw-Convention Center retail trade area

is expected to be $58 million in 2012 compared to total trade area
spending of $290 million in the same year

• ERA estimates by 2012 that Grocery spending accounts for more

than $30 million annually and Food and Drink (away from home) ac-
counts for more than $15 million annually

• Captured spending in the retail trade area is expected to increase by

more than $13 million between 2007 and 2012, due mostly to signifi-
cant changes in population and income levels
Estimated Captured Retail Trade Area Spending, 2012
$58 Million

Source: ERA 2007

Productivity and Typical Store Size

• A calculation of store productivity is typically based on optimal per- Shaw-Convention Center Submarket
formance of quality retailers, not actual operators Comparable Productivity

• However the lower quality of the retail space available in this retail
submarket requires that a lower than “optimal” productivity rate must • The best way to estimate a site’s productivity is to assess annuals
be used to adjust the supportable square footage calculation sales per square foot for comparable projects

• The square footage of retail type does not indicate number of stores • The type of retail often impacts the sales per square foot (i.e. jewelry
since stores sizes vary versus furniture)

“Typical” stores sizes might be:

• Apparel 3,500 SF Sales per Square Foot

Category Low High
• Accessories 2,000 – 10,000 SF Apparel & Apparel Services $ 250 $ 400
Entertainment & Recreation $ 300 $ 350
• Personal Care 2,000 – 10,000 SF Personal Care $ 350 $ 500
Household Furnishings and Equipment $ 350 $ 500
• Household Furnishings 3,500 – 10,000 SF Grocery $ 450 $ 650
Food and Drink Away From Home $ 400 $ 550
• Grocery Stores- 30,000 to 65,000
1/ International Council of Shopping Centers, Dollars & Cents of Shopping

Centers 2006
• Restaurants 3,000 – 6,000+ SF Source: Economics Research Associates, 2007

• Quick Service food 1,200 – 3,500 SF

While the productivity rates used for this submarket were based on
• The retail submarket offerings could be anchored by a supermar- national averages as reported by the International Council of Shopping
ket, a collection of restaurants and neighborhood-focused goods and Centers (ICSC), ERA used the lower national rates to reflect space limi-
services tations and likely performance in the submarket. The rate still reflects the
minimum productivity that would be needed for a quality retail operation
return on investment.
2007 Net Supportable Square Feet

• Based on the current and projected level of households in the Estimated Net Supportable Square Feet, 2007
trade area and their spending patterns, the Shaw-Convention Center
submarket can support between 103,200 and 137,600 square feet of
retail in 2007

• The existing retail inventory totals 219,686 square feet within the
retail submarket. In order to take into account the lower quality space
it was discounted to 96,662 square feet

The retail submarket has a net supportable square foot range

between 6,538 and 40,938 in 2007

• Based on typical store size and spending patterns, the site can sup-
port a grocery store, multiple restaurants, and one or more entertain-
ment/recreation stores such as a gym or bookstore

• While there is evidence suggesting support for a couple of apparel

stores, such businesses perform best in a larger cluster
2012 Net Supportable Square Feet

• Based on estimated trade area expenditures and capture rates, the Estimated Net Supportable Square Feet, 2012
Shaw-Convention Center submarket can support between 132,400
and 176,500 square feet of retail in 2012

• There is approximately 312,600 square feet of new retail planned for

the trade area, including space at City Market at O Street, City Vista
and Broadcast Center One

• The existing retail square footage and planned new projects are sub-
tracted from the subtotal to arrive at net supportable square footage
for 2012

• Due to the large amount of retail planned or under construc-

tion in the trade area there is approximately (262,177) net nega-
tive square feet of supportable demand in the submarket by
2012
What Does Negative Supportable Square Feet Mean?

• Negative supportable square feet indicates that, at a certain point in time, there may be more retail space than the current market expenditure potential
can support

• Many existing retailers in Washington DC

(a) operate in lower priced spaces that can be considered functionally inefficient/obsolete (too small, too shallow, in poor condition, etc.) or

(b) are not well capitalized to compete in an improved environment. ERA has ‘discounted’ the square footage of these retailers in many areas to
reflect the qualitative/competitive differences in operating capacity

• Markets evolve and shift as the amount and type of available retail changes; what today may appear to be oversupply can attract new spenders from
outside the immediate trade area and become positive over time (such as Adams-Morgan or downtown Washington near the Verizon Center). A ‘nega-
tive’ supportable square footage estimate in 2012 does not mean an area is permanently oversupplied

• Retail submarkets may have a store mix imbalance and unfulfilled retail potential. These areas may have too much of one kind of retail and not enough of
other types. An improved retail mix could increase demand and reduce the perceived oversupply of space.

• The retail subdmarket strategies will include programs and incentives to assist local retailers operating in growth/expanding markets where substantial new
retail is being introduced
Commentary on the Current Retail Inventory

According to CoStar Group Real Estate Information Services, there is

1,072,467 square feet of retail space in the Shaw Convention Center
trade area. Within the retail submarket itself, there are 219,686 square
feet of retail space. To determine net supportable square feet, the exist-
ing retail space is subtracted from the gross supportable square feet.
One major determinant of opportunity relies on the quality of the existing
space – how competitive is the space relative to the rest of the trade
area and other competitive districts?

A recent study of Great Streets neighborhood retail for the Office of the
Deputy Mayor for Planning & Economic Development studied the quality
of the existing retail space in several commercial districts to determine
the feasibility of a tax increment finance (TIF) district, including Shaw
Convention Center. While the study area did not coincide directly with
the trade area, the assessment of the relative quality of the existing
building stock suggests the general condition of the property inventory
Source: Office of Deputy Mayor for Planning & Economic Development
in the area.

The study concluded that 56% of the retail inventory in the trade area
was Grade “C”, or inadequate, for contemporary retailing needs. It also
stated that 16% of space was classified as “build to suit” (BTS), mean- Inventory Adjustment
ing space constructed for a specific purpose or tenant in such a manner
Existing Retail Inventory in Submarket 219,686
that makes conversion to another use or tenant impractical. Only 9%
Less Discounted Space ("C" Grade) 123,024
and 19% were rated Class A and B, respectively. In order to calculate
supportable square footage, the existing space was discounted by Adjusted Existing Inventory 96,662
removing the Grade “C” inventory from the equation.
Source: CoStar; DC Office of The Deputy Mayor for Planning and
Economic Development; Economics Research Associates
Multiple factors will ultimately affect the supportable square feet and success of the submarket’s
retail offerings over the long-term

Factors Affecting Store Supportable Square Feet, 2007

6,538 SF 18,038 SF 40,938 SF

Well-formed Merchandise
Mix The success and appeal of a retail district is directly linked to its mer-
chandise mix and its function as a destination.
Incorporation of Other Uses
Incorporating other uses and programs may limit retail space, but
complement overall project

Higher Store Productivity

The trade areas are capable of spending a certain amount. If more $$
are spent in one store less $$ will be spent elsewhere

Factors Affecting Store Productivity

Low Sales / SF High Sales / SF

Location, Design, & A store’s size, placement within the district, interior and storefront de-
Configuration sign are part of total appeal for customers

Stores Cater to Market

Characteristics Price-points and merchandise should accurately reflect the demograph-
ics and lifestyle characteristics of the customers
Type of Store
Merchandise quality/price positioning/merchandising/mark-up relative
to cost of goods, as well as store size and other operating factors, influ-
ence a retailers’ profitability (Sales / SF)
Detailed captured retail spending on site by category and market

2007 Potential Captured Spending on Site

Shaw-Convention Center Strategy
Shaw - Convention Center

Introduction

The Shaw-Convention Center district is changing rapidly. It stands to benefit from major mixed-use developments that include the new DC Con-
vention Center at the southern end of the district and the redevelopment of the City Market at O Street at the northern end. Other areas of major
residential and commercial growth that are proximate to the submarket include Penn Quarter to the south, NoMA to the southeast and, from a retail
influence perspective, the old Convention Center site immediately to the southwest of the new Convention Center.

Strong increases in population and households, along with continued visitation at the Convention Center will provide opportunities for the sub-
market to capture more retail expenditures. Total population in the trade area is projected to increase from 32,009 in 2007 to 39,926 in 2012 including
new residential projects that may add 2,853 households (approximately 5,647 new residents). Strong population growth in residents aged 20 to 34
and 55 to 64 are positive indicators for increased retail demand.

The submarket is bounded by 7th and 9th Street, and broken up into two nodes. The southern node is anchored by the six-block long Convention
Center. The proposed City Market at O Street development, to include a new 65,000 square foot Giant grocery store as well as new residential and
retail, sits in the northern node. Retail demand from the surrounding residential neighborhoods exists, and there is also considerable development
activity, with over 300,000 square feet of retail space under construction or planned in the trade area. The Convention Center already includes ap-
proximately 30,000 square feet of retail, food service and consumer services, providing many of the basic needs of convention visitors during the day.
While the Convention Center generates demand for food service, the Shaw-Convention Center submarket faces steep competition from the supply of
high-quality restaurants closer to the hotels where convention visiors currently stay. The Hines development at the old Convention Center site is ex-
pected to include a major restaurant cluster that should attract both Convention Center visitors as well as establish another dining destination within
the downtown core to serve a regional audience.

Much of the existing retail space near the Convention Center node and the future City Market at O Street node is comprised of smaller store spaces
in residential/commercial buildings, sometimes located in English basement/ground floor spaces in either single-story stores, or in the ground floor
of three-story residential buildings (an exception is the Giant Food Store). Most of these storefront locations are in need of substantial renovation
and investment to become competitive retail spaces. According to a recent study for the Office of the Deputy Mayor for Planning & Economic Devel-
opment, 56% of the retail inventory in the trade area was Grade “C”, or inadequate for contemporary retailing needs. Also, the large-block, uninter-
rupted format of the DC Convention Centers discourages a vibrant street life along the enclosed sides; the Center’s sides create retail streets that are
single-loaded (that is, streets with retail only on one side, a less desirable condition than a double-loaded retail street with stores and food service on
both sides). Most movement within and around the Convention Center is directed by major Center entrances and proximity to transit. Because the
principal entrance is located on the southern end of the building, exiting convention visitors will be close to the new Hines redevelopment of the old
Convention Center site.
Market positioning for Shaw-Convention center should focus on selectively-located convenience retail, services, and food and beverage for two
primary market segments: 1) nearby existing (and future) residents, and 2) convention center visitors, contractors, and employees. Both market
segments will patronize moderate to mid-level restaurants and cafés, carryout food, coffee shops, and upscale wine bars and liquor bars. The
new City Market at O Street will capture most resident-based grocery expenditures from the larger resident trade area, but is not expected to
draw much support from the convention visitor market. Existing retail services located within the convention center will continue to capture a high
percentage of on-site sales, but the visibility, proximity, and scale of the historic buildings at the southern end of the study area provide a selective
opportunity for redevelopment and clustering opportunities for additional food services (a carry out deli such as Potbelly Deli), coffee shop, and
business supplies and services. Example by category and size are listed in the Merchandising Concepts section.

Merchandising Concepts

The recommended retail mix for the Shaw-Convention Center district should blend carefully placed retail uses that respond to both the resident-
based market to the north and the conventioneer demand for convenience retail to the south. Retail in each location will need to reflect the
physical characteristics of the spaces that are available. The greater range and depth of resident-oriented retail and dining options in neighboring
areas downtown and in NoMA suggest that Shaw should accommodate the convenience and service uses required by its residents and visitors,
but should not position itself as a destination retail district attempting to compete with larger, better merchandised shopping areas nearby.
Quick-service food and beverage such as cafes, bars or snack-stores (sized at approximately 750 to 1,200 square feet) serving convention attendees
should be clustered in the lower blocks of 7th Street NW and 9th Street NW, and made visible through better signage and clear sight lines to the Con-
vention Center entrance areas.

The physical characteristics of retail spaces in the historic residential buildings along 7th Street NW and 9th Street NW can best attract selected smaller
locally-owned businesses. The more restricted access and layouts in the buildings will make it easier for smaller local businesses to enter this market
without the higher rental pressures that large mixed-use projects may require.
Specific retail opportunities include local and national restaurants (for example, Mia’s, Pizza Paradiso, and Lauriol Plaza), a bank/ATM (1,200 and 75
square feet, respectively), and business supplies (such as a FedEx Kinko’s or UPS Store or a Staples, sized at approximately 1,200 to 5,000 square feet,
assuming that a large enough retail space is available). Other retail niches include a local or national coffee shop (Murky Coffee, Mayorga Coffee, Star-
bucks, or Caribou Coffee sized at approximately 750 to 1,200 square feet). In the personal services category a unisex hair salon, women’s hair and nail
salon, or spa would also complement the mix (for example, Hoopla DC, or AVEDA Institute at 900 to 1,200 square feet).

Attracting Retailers

The Shaw Main Street program has been involved in retail improvements for several years and should continue to be involved in coordinating
retail attraction programs. Storefront improvements, interior renovations and appropriate signs (and financial assistance to encourage these im-
provements) should continue to be focused on the 7th Street NW and 9th Street NW corridors. The City Market at O Street is seeking substan-
tial financial incentives to encourage development of the Giant/retail/housing components, and is expected to create a grocery-based attraction
that will draw from the surrounding neighborhoods, splitting market share with the P Street Whole Foods Market and the new Safeway Pavilions
grocery concept in NOMA.

To encourage recruitment and sustainability for locally owned businesses, provision of ongoing technical support (offered through the Department of
Small and Local Business Development and other city-supported technical assistance providers, cooperative programs with local universities and the
DC Main Streets Program) should be combined with selective use of available financial incentives.

Supportable Square Footage and Evolving Markets

The Shaw/Convention Center study area is an evolving market that will be heavily influenced by development of the Old Convention Center and
there developed City Market at O Street Market. When pipeline projects are taken into account, the study area will have more retail space than
is supportable under existing and near-term market conditions. This estimate, sometimes indicated by so-called “negative” supportable square
footage, should not be viewed as a permanent condition, and will be affected by both near-term improvements as well as longer-term (beyond
the five-year study period) growth through projects such as the projects listed above and other nearby development projects representing mil-
lions of square feet of new residential and office space. Available expenditures and the rate at which retail businesses in Shaw/Convention
Center can capture a share of those expenditures will be based on both increases in median household income levels over time as well as by the
quality and quantity of retail uses that are retained and recruited to the area.

Key Recommendations

1. Focus mixed-use with retail development on 7th Street for “Main Street”-type retail environment to contrast with the Convention Center and
new retail at the former convention center site.

2. Support the development of the City Market at O Street to serve as a retail anchor for the northern node of the submarket. Promote the north-
ern node as a neighborhood shopping district.

3. Implement streetscape improvements north of N Street to link the northern node commercial area (including City Market at O Street) with the
rest of the submarket and the neighborhood.