Chinatown In 'Crisis Mode' As Empty Offices, Safety Concerns Spur More Retail Closures

When Swati Bose and Kabir Amir opened Flight Wine Bar in Chinatown nearly 10 years ago, they hoped the area would turn into a connected neighborhood like Shaw, somewhere people would live and go out to eat, shop and seek out entertainment.

Though the couple never saw that image fully take shape, Flight did well for most of its life, maintaining a good enough crowd of regulars to make the rent. But business slowed during the pandemic, and it never recovered, Bose told Bisnow. And now, the bar near the corner of Sixth and H streets NW is preparing to close next month. 

“Chinatown has, I think, been in crisis mode,” Bose said. “And we hate to leave it. We don't want to be one of those businesses that leave a neighborhood because it gets tough, and then we're also adding to the problem. But we just couldn't foresee how we can sustain.” 

The Chinatown/Gallery Place area is suffering from a confluence of factors — many exacerbated by the pandemic — making the neighborhood an increasing challenge for the city. Like the rest of downtown, office vacancy is a major hurdle, while some of the neighborhood’s most prominent retail establishments have shuttered. A new entrant to the neighborhood that filled the vacant Circa space when it opened in December, Tom's Watch Bar, in September was reported to be closing after less than a year. 

Drug use, crime and homelessness were labeled as top concerns for the area in a February report from the DowntownDC BID, and office brokers told Bisnow that tenants are worried about these issues. This year has created new uncertainty about the future of the neighborhood’s main economic drivers: Capital One Arena and the Gallery Place property. 

“The pandemic had its effects on pretty much every community throughout the city, but it especially impacted downtown, and I think for the Chinatown, Gallery Place, Penn Quarter neighborhood, that recovery journey has been a little bit of a mixed bag,” DowntownDC BID President Gerren Price told Bisnow Wednesday. 

Two major streets in the area, F Street and Seventh Street NW in the East End, have two of the highest retail vacancy rates in the D.C. metro area, according to Dochter & Alexander Retail Advisors' summer retail report. F Street was at 36.5% vacancy, and Seventh Street NW was at 24%. The streets' percentages of vacant space plus shadow space, or storefronts that are still occupied but are actively marketing for new users, are the highest of anywhere in the region, with F Street at 44.6% and Seventh Street NW at 37%.

“We've had a number of businesses that we've lost,” Price said. “And that's always unfortunate. We hate to lose any businesses that bring viability to the area.”

Bose said that dwindling foot traffic was a major factor in Flight’s closure, as the streets saw fewer workers commuting to offices and consumers shopping in stores. Even concerts, basketball and hockey games seemed to be drawing smaller crowds, she said.

Regaining the area’s vibrancy is a top priority for city officials, Price said, adding that the area will be an important factor in the Downtown Action Plan, though he couldn’t give specifics.

“It's been a really high-priority topic in many of the conversations that have been happening throughout the year,” he said. “And we're encouraged by and really looking forward to some really specific investments that will help to make that area more pedestrian-friendly, more attractive, more conducive to big events and festivals and activities that we know bring people.”

In its study of the corridor earlier this year, the DowntownDC BID highlighted visible drug sales, increased presence of those experiencing homelessness, and disruptive panhandling and amplified busking as challenges to the area. 

“The perception of safety and feeling comfortable in the Corridor is a major issue across all stakeholder groups and the public,” the report says.

Mayor Muriel Bowser introduced a bill last month aiming to address “organized retail theft” and open-air drug markets, the Addressing Crime Trends Now Act. In September, Ward 2 Council Member Brooke Pinto unveiled her Secure DC Plan, a proposed package of legislation and initiatives aiming to “take urgent and targeted action to address public safety.” 

Office brokers say crime is a factor tenants are taking into consideration when looking in the area.

Stream Realty Executive Managing Director Kyle Luby said his firm was managing leasing at an office building at the Ninth and F streets NW intersection until earlier this year, and it had a “difficult time selling that intersection.”

“I think there were a host of issues, whether it was noise, foot traffic, crime, loitering and just an overall concern about tenant safety,” he told Bisnow. “A lot of these companies are thinking about employees in a way they never have. Not only asking them to come back to work but back to an unsafe environment was something we struggled to sell around, understandably so.”

In a 1,000-foot radius around Capital One Arena, the number of total crime incidents over the last two years was 30% higher than the prior two-year period, according to the Metropolitan Police Department's crime database. Robberies rose more than 300%, from 16 to 50 incidents. 

Miller Walker Retail Real Estate principal Bill Miller said he sees crime as the city's “biggest problem” and is looking to D.C. and the business improvement districts to enact a plan. 

“We have a crime issue,” he said. “And it has been pointed out that that crime issue does exist in that immediate halo around the arena. So what's the plan to systematically keep it safe?” 

Lincoln Property Co. Senior Vice President Adam Biberaj raised the issue of crime in the Chinatown area at a recent Bisnow event. 

“There is a significant concern that folks have about the happenings around Capital One Arena, particularly on the north side, the Metro station, folks hanging around on those corners and overall concerns about safety,” Biberaj told Bisnow in an interview after the event.

Still, Biberaj said the neighborhood has the advantage of location for his clients looking for office space, with its optimal location for companies looking to be close to Capitol Hill but also near places to entertain their clients and employees. 

“That's really what’s getting people excited about being in that market,” he said. 

The area landed the largest office deal since 2019 earlier this year when law firm Crowell & Moring took 199K SF to anchor the redevelopment of the former WMATA headquarters at 600 F St. NW. The firm expects to relocate to the property, which is undergoing a $375M overhaul, by 2026.  

“Having a location that is in a vibrant neighborhood and one that will increase, we believe, in vibrancy, that was important to us,” Crowell & Moring partner David Schnorrenberg said at a Bisnow event last month. “And that's what we think we have found.”

He pointed to the benefits of having Capital One Arena, the Shakespeare Theatre Co. and the National Building Museum in the area, as well as easy access to the courts. 

Some new restaurants have popped up in the neighborhood to replace places that closed. New York-based taqueria Dos Toros chose Seventh Street NW, directly across from Gallery Place, for one of its first D.C. locations. Gordon Ramsay’s bottomless pizzeria, Street Pizza, is preparing to open at 501 Seventh St. NW, as is New York-based Maman bakery, which appears to be opening any day at 750 Ninth St. NW. 

But new concerns have emerged this year that the neighborhood might lose its largest economic driver: Capital One Arena.

Monumental Sports owner Ted Leonsis, who owns the arena, the Capitals and Wizards, reportedly expressed displeasure at the safety and quality of life around the arena, Axios reported this spring, citing an anonymous source. 

Monumental is reportedly looking at relocating to Alexandria’s Potomac Yard, The Washington Post reported earlier this month. At the same time, the company is asking the D.C. government to contribute $600M as part of an $800M renovation effort, a sign — albeit one with a hefty price tag — that the owner could be persuaded to stay. 

“We are laser-focused on the future of the Capital One Arena,” Price said. “We've been very vocal at the DowntownDC BID that it is critically important that the arena stays downtown, and we absolutely believe that needs to be a priority in the minds of every city leader, every elected official, making sure that that arena stays because of the enormous economic impact that it brings to the city and to downtown as a whole.” 

There is also concern about what will happen to the iconic Gallery Place mixed-use property next to the arena. Owner Oxford Properties agreed to relinquish control of the building after saying it didn’t plan to stay current on its $185M loan, the Washington Business Journal reported last month. 

Gallery Place has seen a series of retail tenants close in recent years, though some have been replaced with new concepts. Monumental in March opened an esports venue in the former Bar Louie space. Bar Rescue host Jon Taffer opened Taffer’s Tavern in the former Penn Commons space.

Ultimately, brokers and neighborhood leaders said the Chinatown-Gallery Place area is a cultural hub of the city that can continue to draw retail tenants for years, as long as it can address the challenges it faces. 

“It has a ton of potential,” Miller said. “We've got challenges right now. And it is one of the really essential heartbeats of the city that adds culture and adds exciting sporting events and all of that stuff. And I know that we're all rolling our sleeves up and working toward having a successful conclusion here, and right now, we've got work to do.”