Why is there such a new business lag in gentrifying neighborhoods?

City codes and technical zoning miscellany are not my cup of proverbial (or literal) tea. I don’t claim to know much about them. In fact, my most significant act of real estate development has thus far been the impulsive construction of blanket forts in my basement. Even in that case, I sidestepped my household zoning laws by failing to acquire the proper parental permission.

I have, however, read enough layman’s literature on basic economic principles to be fairly comfortable in my understanding of supply and demand. Businesses and services ought to pop up almost organically to fulfill clear consumer needs, right? Why aren’t DC areas in the process of gentrification following suit?

Sure, in a high-turnover city like DC, gentrification can happen rapidly. Many young under-earners are competing for a limited amount of low-rent space. But it seems to be that in certain rapidly changing pockets of the District of Columbia, business development has lagged way behind the population influx – and the rent surge hasn’t slowed, either. The result is that many of the current “gentrification hot spots” are charging more and more as young professionals are attracted to the area, and there are less and less neighborhood options for them.

Columbia Heights rent prices are now almost as high as those in Mount Pleasant or U Street Corridor. But has anyone ever set foot inside the CVS on 14th and Irving? It’s a human tornado every time. Lines snake down the aisles, and their self-checkout machines are constantly out of order. The same goes for Meridian Pint and Wonderland Ballroom – our two big local bars – which are slammed and without seating every time I go. Set foot in the Chipotle or Starbucks, and you’ll see what I mean – there is obviously a massive consumer demand in Columbia Heights that is not being met. Where are the new bars, pharmacies or eateries? Why don’t investors and real estate developers see this? What is the issue? When I go out, I barely ever stay in my own neighborhood – it’s too much of a feeding frenzy.

I see so many more new residential developments than ads for new businesses. That means that a seat in Meridian Pint is going to get tougher and tougher to get, so why the hell isn’t someone opening a new bar? Where is the invisible hand of capitalism that is supposed to do us a solid here?

Is it because DC is overregulated? Overpriced? Is this a problem in other neighborhoods? Am I inventing a problem that doesn’t exist?

Anyone out there feel like opening up a new bar in Columbia Heights? Or Shaw? Or Bloomingdale? Or Stadium Armory? I just want somewhere I can walk in and sit down.

– Natalie

About Natalie Shure

literature, life and latte lady

9 Responses to “Why is there such a new business lag in gentrifying neighborhoods?”

  1. To be fair, Meridian pint only just opened up recently (at least it seems that way in my mind), which represents a strong year over year growth rate, IMHO. Add to that the (thankful) fact that CH is not a bar corridor like AdMo, U Street or H Street and you come out ahead, especially since two of those are within short walking distance. CVS and 7 Eleven are across the street from each other, and Giant, Harris Teeter and Target are within spitting distance of each other (if you are on the top deck of the titanic with a strong wind at your back). All that leaves is fast food (order online… it works) and coffee.

    To me, coffee is the real deficiency, since there is nowhere good in the neighborhood to go. Again, in my opinion.

    • That’s a good point – I totally forgot about that. Columbia Heights Coffee is great, but it is really tough to get a seat if there are more than a handful of people at a time. I am also disappointed that it closes so early, which rules it out for evening wi-fi.

      You’re right that it’s good CH isn’t a bar corridor – I could do without 24 hours of staggering bros – but I must say that I do venture to AdMo and U St. for dinner dates when I wish I could find a nice option closer to home.

      As for Giant, Target and Harris Teet. Giant is an example of an overrun place – I get panicky just walking in. Target doesn’t have as many produce options, nor do they carry Rold Gold pretzel rods – my very favorite snack. Harris Teet is a great option for residents like me in South CH, but is far less accessible from someone in the northeast pocket of the ‘hood.

      • andymakkolli 2011/07/12 at 12:29 am

        You’re not wrong. But we get really spoiled living in DC too. If you told me one mile was too far to walk to anything in Chicago I would laugh. In DC that’s like half way to the White House.

  2. Ah, the pitfalls of bourgeois economics, as illustrated here by the greatest bourgeois economist, Adam Smith (in The Wealth of Nations, Book I, Chapter 7):

    When the quantity brought to market is just sufficient to supply the effectual demand, and no more, the market price naturally comes to be either exactly, or as nearly as can be judged of, the same with the natural price.

    Supply-and-demand models of economy sadly don’t play out this way in reality, Natalie, or else capitalism would attain a state of perpetual equilibrium, in which there are no crises of overproduction or acute shortages. Our present economic situation demonstrates that this cannot be the case. Plus, with the relationship of a tenant to his landlord, one is dealing with ground rent, which operates a bit differently than the simple circulation of commodities. It becomes a bit more difficult to parse.

    I will thus end here my needless (and pedantic) intervention.

  3. north capitol resident Reply 2011/07/15 at 5:17 pm

    i think there are a few reasons.
    1. its really hard to be a small business in dc.hopes, hurdles, costs, licenses.
    2. property owners are very quick to charge downtown rental rates for sketchy neighborhoods. or shells of buildings will cost 900,000 dollars. the cost of gettign a space is crazy high.
    3. Codes require an amazingly costly buildout since so many of dcs buildings haven’t been upgraded since the 1950’s or 60’s. but codes have advanced rapidly. adding fire suppression, bathrooms, electrical, etc….then waiting and waiting for the dcra to inspect.
    4. gentrification in dc has been lightning fast. it’s really hard for business to catch up.

    • I think another factor could be that property owners who own a derelict building are waiting for an even higher price for that building. Why should they sell to a developer now in the early stages of gentrification, when waiting a year or two will yield a much higher price once gentrification is in full swing?

  4. Julian Sanchez Reply 2011/07/15 at 6:17 pm

    Ask the folks who run Big Bear Cafe sometime. One significant factor is a system of ANCs whose sole real power is to act as a veto players. Even if that didn’t tend to attract candidates who enjoy saying “no”—which it seems to—there are strong institutional incentives to overuse that veto power. First, a commissioner is far more likely to catch flak over a change that a few people dislike than over an (invisible) change that never happens because it was blocked, even if it would have been preferred by most residents had it happened. (Big Bear was the extraordinarily rare case where an existing business had built a highly motivated and engaged community of hyperloyal patrons who actually followed the Cafe’s attempt to secure a liquor license, and the efforts of several now-ousted ANC commissioners to block it.) Second, lacking direct power to appropriate funds for projects or regulate, the ability to block things like liquor licenses and sidewalk cafes becomes a mechanism for extracting concessions (or commitments to fund pet projects) from business owners.

    There’s also the notoriously byzantine DCRA permitting maze, which judging by some of the horror stories I’ve heard seems to have been modeled on Terry Gilliam’s “Brazil.” On top of all the inherent risks and costs of starting a business, an entrepreneur looking to open up shop in an emerging neighborhood basically has to be willing to (at least potentially) pay rent on a property that’s earning no revenue for a year or more while they navigate all the permits, licenses, zoning variances, etc. Obviously, this means any businesses that DO try to open will actually open their doors much longer after demand is apparent than would otherwise be the case—but it also deters plenty of folks from trying in the first place. I know there’s a small business/entrepreneurs group that does a yearly ranking of how friendly or hostile state regulatory environments are to small businesses, and DC pretty regularly comes in dead last.

Trackbacks/Pingbacks

  1. Well-played, DC | broadsofthebeltway - 2011/07/15

    […] surly Midwestern grouch which an appetite for nothing but whining. When I am not bitching about bars with no chairs or inappropriate things to sprinkle on comfort food, I manage to find things about this city I […]

  2. Columbia Heights Greatest Hits | broadsofthebeltway - 2011/07/25

    […] Conduciveness to cycling: Although riding up the hill to reach Columbia Heightsis a surefire way to ruin your life, once you get there, it is probably the best neighborhood for cycling in the city. And, as a two-month bicycle owner, I am an asshole about that sort of thing now (as evidenced by the fact that I call it ‘cycling,’ and not ‘bike riding.’) With its many bike lanes and easy-to-ride side streets, Columbia Heightsis quite bike-friendly. There is also a very high bike rack-to-business ratio, which means you won’t be scrambling to find a random item to tether your ride to.  This also means your bike will be within easy reach when you discover that wherever you are going is already jam-packed.  […]

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