As downtown D.C. seeks rebound, empty offices, fear of crime cast shadow

Cohen is less certain about the vacant 8,000-square-foot storefront on the ground floor. For the past year, he has sought a buzzworthy restaurant to lease the space for $33,000 a month. One deal fell through. Another may be coming together. His search, he worries, has been made more difficult by persistent reports of crime, vacant offices and A-list companies seeking to leave downtown. “That’s what keeps me up at night,” he said.

A year after Mayor Muriel E. Bowser launched a campaign to rescue downtown, her quest faces a slew of hurdles, not the least of which is uncertainty over whether Ted Leonsis’s Washington Capitals and Wizards will remain at Capital One Arena. Office attendance is at 48 percent of pre-pandemic levels, as a preponderance of federal workers still work from home. More than 20 percent of downtown storefronts and offices are vacant, driving down the value of commercial real estate — a key source of tax revenue for city services.

And while crime has dipped since the beginning of the year, a couple of recent incidents — a late-afternoon homicide during a downtown carjacking and a brazen midday robbery at a jewelry store — feed worries that the area is dangerous.

The mayor likes to cite data showing signs of progress. Hotel room occupancy has reached nearly 95 percent of pre-pandemic levels. Metro ridership is rising. Bowser (D) also touts a $400 million plan, proposed by downtown business leaders last month, to attract visitors and new employers and retailers, as well as help create housing units for 15,000 new residents by 2028.

“I love it, I love it,” the mayor said as she toured a one-bedroom apartment at Cohen’s building Monday, using the visit to announce a 20-year tax abatement program to spur residential development downtown.

In February 2020, the month before the pandemic began, downtown office attendance averaged 98 percent, a daytime population that spilled into neighborhood restaurants, bars and shops — activity that soon vanished, as it did in cities across the country.

Gerren Price, president of the DowntownDC Business Improvement District, said that the city’s core faces post-pandemic challenges that are not unique to Washington and that reviving the area is a long-term process. “If there’s a silver lining in the cloud we’re in, it’s that there’s a potential path to a future that looks different,” Price said. “There are good things happening. I do think we can begin to turn that tide. Everything is going to take time.”

In the meantime, the stark financial consequences of downtown’s decline are taking shape. In recent months, at least five office buildings have traded hands at prices far below what they cost in recent years, records show. At 13th and I streets NW, across from Franklin Park, for example, a building that cost $100 million in 2018 sold in December for $36 million — a loss of $64 million. Another building, a renovated high-rise on 14th Street NW, sold in January for $18.2 million. The seller had paid $62 million for the property in 2017.

The sales add to the growing anxiety among civic leaders, business owners and real estate executives about whether downtown, long considered the city’s economic engine, can reclaim a semblance of its former verve.

Bo Blair, a veteran Washington restaurateur who owns Surfside Taco Stand south of Dupont Circle, said he was on downtown’s east end on a recent weekday afternoon and found himself walking several blocks “without seeing one person. I couldn’t believe it.” An upper Northwest resident, he said that within his social circle “where I live, nobody’s going downtown to eat at night that I know of. It’s purely about safety.”

“The situation is embarrassing,” said Blair, whose restaurants also include Due South, at the Navy Yard, and The Bullpen, a popular bar outside Nationals Park. “That this is the nation’s capital, with all the people here, with all the security here and all the smart and important people here, and they can’t figure out a way to fix this.”

The ‘real story’ of downtown

In early February, Bowser traveled to a new cafe near Farragut Square to promote coffee giveaways and restaurant specials downtown. She told reporters that she wanted to “tell the real story of downtown” — that “businesses are opening” and that Washingtonians “are working here.”

But the challenge of communicating that message became evident when the mayor took reporters’ questions. The first three focused on downtown’s image and criticism of the city from former president Donald Trump and onetime House speaker Newt Gingrich over the death of Mike Gill, a former federal official who had been shot during a carjacking on K Street a few days before. “Frequently when I hear about downtown, it’s something negative,” the mayor acknowledged at one point. “‘People aren’t coming in.’ Well, people are coming in.”

Since the beginning of the year, the total number of crimes committed downtown has decreased compared with the same time frame last year, according to police data. There were 26 robberies downtown by this time last year, for example. As of Monday, five robberies had been reported this year.

Yet, from 2022 to 2023, the data shows that downtown crime increased 10 percent, from 1,395 incidents to 1,534. The number of violent crimes soared 59 percent, from 99 to 157; robberies more than doubled from 54 to 118, and car thefts rose 16 percent, from 116 to 135.

The crime surge prompted civic groups across the city to demand more policing. A coalition of business groups, many of them based downtown, wrote to the mayor and council in February expressing worry that the city is in danger of reverting to the days when it was known as America’s “Murder Capital.”

On Monday Bowser signed legislation intended to curtail illegal gun possession, retail theft and drug-related loitering in the city. As a result of the new law, police on Thursday established several drug free zones, including in Chinatown, where residents and business owners have long complained about drug peddlers and vagrants congregating in the area around Capital One Arena.

Concerns about crime are prompting businesses, office workers and visitors to take precautions. At Surfside Taco, for example, Blair hired two security guards to work from 10 p.m. to 5 a.m. for $8,000 a month. In Chinatown, an office building retained a van service to drive workers to two nearby Metro stations three afternoons a week (the van’s driver, parked outside the building one afternoon, told The Washington Post he has had few requests for rides).

Benda Bushell, 78, a K Street accountant, said she stopped driving her Volvo into work a year ago because she’s afraid of being carjacked. Now she commutes an hour by bus from her home near Columbia, Md., and makes a point of leaving work before dark. “It doesn’t feel the same here,” Bushell said as she walked near 16th Street NW one afternoon. “I just feel scared.”

A couple of blocks away, Stephen Jackson, 38, works as the policy director at a Republican think tank, commuting by car from his home near Union Market several days a week. He and his wife decided to “slow-walk” buying a new car because they thought their 2006 Prius would be a less-inviting target for thieves. His precautions also include researching how to recover content from an iPhone if it’s stolen and not wearing his deceased father’s wristwatch in case he’s robbed.

“I asked myself, ‘Would I be okay losing that?’ and the answer is no,” he said. “The risk of robbery feels so much higher and makes you think about these things.”

Barbara Lang, a business consultant and former head of the D.C. Chamber of Commerce, said she has cut back on attending evening events that require her to drive into or through downtown because she doesn’t feel safe. Lang, who moved from Northwest to Maryland last year, also has stopped carrying a purse when she’s in D.C., thinking it reduces her chances of being mugged. “It hurts me in my heart not to come into the city,” she said. “I was a cheerleader for the city. I can’t say that anymore.”

Matthew Rosenheim, owner of Tiny Jewel Box near Farragut Square, considers himself a downtown booster. He said that he commutes from his house in Montgomery County, Md., without worry and that he often goes out for dinner downtown before heading home.

“I feel comfortable, I feel safe,” said Rosenheim, 53, as he walked back to his Connecticut Avenue shop on a recent afternoon. His only wish, he said, is that more workers would return to their offices so that downtown could recover its former energy.

Three days later, on a Friday, a trio of thieves drove up to Rosenheim’s shop and used a sledgehammer to smash holes in an exterior display window. Before fleeing, they stole nine Rolexes with a collective worth of nearly $215,000.

It was just before 1 p.m.

Toward the end of last year, Alex Walker, a veteran D.C. real estate broker who specializes in retail, was close to signing two restaurants to long-term leases near Capital One Arena. The restaurants pulled out when Leonsis announced in December that he wanted to move the Capitals and Wizards to Virginia, a plan that has stalled, at least for the moment, after Virginia legislative leaders last week did not include it in the state budget.

Even before the drama over the teams began, Walker said, D.C.’s suburbs and residential neighborhoods were “getting more traction with groups of restaurants that, pre-pandemic, wouldn’t have thought to look there.” The reasons, he said, are a “perfect storm” of factors, including downtown crime and office workers staying home.

“The good news is that people still want to go out and spend money,” he said. “What has changed is where they want to do it.”

That’s not to say there are no new bars and restaurants downtown. Balos, a purveyor of high-end Greek fare, recently opened on N Street NW, for example. There are also restaurants that have closed, including District Chophouse, a Seventh Street NW staple that shuttered last week after 25 years.

Several restaurateurs who own downtown establishments said in interviews that D.C.’s core is not where they want to invest these days. “It’s never going to be 2019 again, the way the office habits have changed, it’s never coming back,” said Ian Hilton, whose company runs the food and beverage service at the Hotel Motto in Chinatown. Although he sees “more opportunity in Virginia” at the moment, Hilton said he can imagine opening a new place downtown in the future if the economics make sense.

“It has to come back, it’s the center of the city,” he said. “I’m a believer in the cycle, and the tide will come back at some point.”

Geoff Dawson, whose downtown bars include Astro Beer Hall at Metro Center and Jackpot across from the arena, said he thought business would pick up when the pandemic ended.

“We don’t have a happy hour to speak of,” he said, estimating that business is down 25 percent. “For a bar, that’s devastating.”

The place he’s most excited about these days is the Astro Beer Hall he recently opened in Shirlington in Arlington County, Va. He’s planning to add a 1969-themed room in the basement. “We’re doing great out there,” he said. “We’re surrounded by other restaurants, and we’re expanding.”

Overall, downtown’s retail vacancy rate is 22 percent, a bit more than double what it was in 2019, the year before the pandemic, according to the DowntownDC BID. As for office space, the downtown vacancy rate is just over 21 percent, though one forecast estimates it could reach 27 percent in three years, potentially costing the city hundreds of millions in tax revenue.

“It’s like you wake up one morning and there’s no more oil — that’s the state of downtown,” said Yesim Sayin, executive director of the DC Policy Center, a nonpartisan research group. “Things that were valuable are not worth what they were.”

The office buildings expected to survive are the most modern, though even those are not immune from unsettling news. The CoStar Group, a real estate company, is abandoning its L Street headquarters for Arlington. And Fannie Mae said it would exercise its option to leave the Midtown Center, a trophy building on 15th Street, in 2029, five years before its lease is set to expire.

Oliver Carr, whose company owns the Midtown Center, said he’s confident he can fill the space because “it’s one of the best buildings in the city.”

“The best buildings will be fine,” he said.

His optimism may be well-grounded, though Anthony Lanier, while talking to a prospective tenant, still hasn’t replaced the law firm that a year ago emptied his glass high-rise on Pennsylvania Avenue, two blocks from the White House. “The big picture was there was lot of uncertainty a year ago,” Lanier said. “Now there is certainty — certainty that there’s less demand for office space.”

The building that Cohen is turning into apartments — constructed in 1962 and the Peace Corps’ former home — was past its prime when the pandemic hit and faced an unclear future in the new world of work-from-home.

Cohen decided to turn the building into 163 apartments, mostly studios and one- and two-bedroom units with rents from $2,300 to $6,000. His project is among four conversions currently under construction downtown, with a fifth slated to begin north of Dupont Circle this summer and 11 more planned, though high interest rates could affect the timing of those. “People may not want to come downtown to work, but they want to be here,” Cohen said as he showed off the rooftop pool, surrounded by a vista of office buildings.

Cohen is targeting young people — students at nearby George Washington University, doctors and nurses, and lawyers working close by who want urban life. He knows it could take time to fill the apartments, but he’s okay with that. “We’re in it for the long haul,” he said.

If demand is slack, he said, he could offer a portion of the apartments as short-term rentals or de facto hotel rooms.

“Hedging our bets,” the developer said. “Just in case.”