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How Downtown DC May Be Changed Forever



Pre-COVID 19, DC was known as one of the world’s premier cities. The downtown area was known for its busy restaurants, packed offices, and marquee entertainment like concerts, museums, and professional sports. It often felt like developers were hosting a new ribbon-cutting ceremony every other month.


Now, empty streets are the norm. The COVID-19 pandemic has transformed the thriving downtown scene into a ghost town over the past year. A new economic report produced by the Downtown D.C. Business Improvement District, a nonprofit that promotes and supports business and property owners of downtown DC, weighs in on the situation. The summation of the report says Downtown D.C.s’ economy has been crushed by the pandemic and may never be the same.


Tell us something we didn’t know. Well here’s why…Attendance at cultural institutions and entertainment venues has plummeted since the start of the pandemic.


What does this mean for property owners and developers, you may ask?


First, some good news depending on how you are positioned: There will be lots of opportunities in play to buy and renovate new properties, opportunities to develop new Post-COVID facilities, and opportunities to address long-standing development issues that have plagued the city for decades. Since the start of 2021, office workers have slowly started to make their way back to work but the damage has already been done.


Now the bad news. According to the report businesses in downtown D.C. offered about 7,000 fewer jobs than they did at the end of the previous year. Per the report, the decline is attributed to permanent closures and staff cuts made by suffering hotels, restaurants, stores, theaters, and event venues. Bars, clubs, music venues, museums, and sports arena have laid off massive amounts of part-time and contract workers while most of the people who work in the area’s office buildings are still employed but working remotely.


Office vacancy rates hit record levels in downtown D.C. (15.2%).


Anyone looking to rent a floor of offices right now is going to get a good deal. Landlords are offering record levels of rent concessions, including space improvements and months of free rent. According to the Downtown D.C. Business Improvement District report, landlords are beyond eager to attract new tenants, as many existing ones are waiting to make any long-term decisions about revising their work-from-home policies or renovating their existing office spaces.


As for retail, vacancy rates have also gotten worse over the past three months. The retail vacancy rate reached an all-time high of 18% in October, up from 12% at the end of 2019.


And restaurants continue to take a beating. Though more restaurants are now offering indoor and outdoor dining than they were in the summer, restaurant sales are only reaching 30%-50% of 2019 levels. No new restaurants opened in the last three months.


More businesses and cultural institutions like the Smithsonian National Portrait Gallery unlocked their doors for the first time as the city moved into Phase Two of reopening at the end of June.


However, many culture and entertainment spaces within Downtown DC remain closed, including Capital One Arena, the Walter E. Washington Convention Center, the Shakespeare Theatre, and Madame Tussaud’s Wax Museum (that perennial favorite of out-of-town tourists). Over 1,000 theater shows and other performances were canceled between March and December 2020. The ensuing loss of patrons — around 400,000 of them, according to the report — hurts restaurants, bars, parking garages, Metro, ride-sharing services, and other businesses.


These numbers spell trouble not just for downtown workers, business owners, and landlords, but for the city as a whole. Last year, downtown D.C. contributed nearly 16% of D.C.’s local gross tax revenue, according to the Downtown D.C. Business Improvement District’s State of Downtown 2019 report.


Lost tax revenue could mean deep cuts in spending on many needed programs for DC residents far into the future.


When will the economy rebound to pre-pandemic levels? NO-One knows. What happens next is dependent upon the pace of decline in the spread of COVID-19.

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