Retail Activity in DC Outpaces National Average

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The Washington, D.C., retail market has made a full recovery from the pandemic, outpacing the national average in terms of total sales and store openings, according to a new report by JLL.

Since the start of 2022, more than 250 retailers have opened in the District, while only 118 have closed. And monthly retail sales grew 7 percent year-over-year as of May, which exceeded the U.S. national average by 170 basis points.

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“Across the city, retail openings have outpaced closings at a rate of 2 to 1 since 2022, and openings have outpaced closings in every retail submarket,” Tammy Shoham, research director for JLL (JLL), told Commercial Observer. 

The District’s strong retail showing is largely due to its unique demographics, Shoham said. Relative to other cities, a greater share of D.C. residents are in a kid-free stage of adulthood, which translates to more disposable income.

“If D.C. was a state, it would have the highest disposable income of any state in the country — $77,937 in D.C. vs. $55,832 in the U.S,”  Shoham said.  “They go out to restaurants, bars, and other entertainment retail more frequently, and the retail in D.C. is keeping up with their local demand.” 

The recent slate of retail openings cater to that demographic, with new restaurants and entertainment options, like pickleball courts, experiential pop-ups and e-sports bars.

Still, you have to look at things from a neighborhood-specific lens.

While openings have exceeded closings in every retail submarket, the ratio of openings to closings in office-intensive submarkets such as Downtown D.C. and Golden Triangle is close to 1 to 1, according to the report. Many of the openings are in new food halls such as Western Market and International Square.

“The bar on food quality in D.C. keeps getting higher, and some of the restaurant growth comes from new chef-driven concepts,” Shoham said.  

Georgetown is the hottest market with very few retail opportunities left.

“With 62 retail openings since 2022, Georgetown is a real standout in terms of retail recovery,” Shoham said. “Georgetown has also had more non-food/beverage related retailers open than any other submarket. Notably, online retailers choose Georgetown when opening physical storefronts in D.C. There are 11 such ‘clicks-to-bricks’ retailers that have opened in Georgetown or will open soon.”

Retailers are also flocking to the waterfront as well, the report noted. Navy Yard and The Wharf collectively had 34 retailers open and only three closures since 2022. Both submarkets could be characterized as 15-minute cities, offering live-work-play options within walkable neighborhoods. 

“The Navy Yard is also seeing increased focus by national retailers because of the heavy concentration of the younger demographic and the traffic driven by stadium events,” Shoham said.

In addition to the District’s strong demographics, D.C. retailers also capture spending from people who live in the surrounding suburbs, one of the wealthier regions in the nation. Eight of the top 20 counties in the U.S. in terms of median income surround D.C., including the top two wealthiest in the nation, Loudon County (median income $147,111) and Falls Church (median income $146,922), per the most recent census.  

“The District’s population swells from 671,000 to 1.1 million during the work week, and these office workers spend money on retail, too,” Shoham said. “Additionally, a strong rebound in tourist traffic are all mighty drivers for retail success.”

The reliance on an influx of office workers is, of course, a double-edged sword, and will depend on where office occupancy levels out.  

“The District is doing quite well, but we cannot consider retail to be doing universally well until more workers are back in the office,” Shoham said. 

JLL is also tracking 70 more retailers that will open by 2024 and expects more new leases to be announced between now and then. 

Keith Loria can be reached at kloria@commercialobserver.com.