Walmart Backs Out Of Skyland, Capitol Gateway Stores

After pledging years ago to anchor two developments east of the Anacostia River, Walmart announced this morning it's backing out of putting stores in the under-construction Skyland Town Center and Capitol Gateway projects.

The massive retailer announced the decisions as part of a broader closure of 154 US stores and the discontinuation of its small-format Walmart Express line. But locally, the cancellations set back major developments that have been planned for years, and the DC government—under the administrations of mayors Vincent Gary and Muriel Bowser—has paid about $63.6M to help build Skyland alone.

Walmart already operates three stores in the District—one near NoMa, one on Georgia Avenue NW in Brightwood and one at Fort Totten—but the two Walmarts canceled were the ones the city was counting on most.

In a statement, the company says "opening two additional stores in Washington, D.C. is not viable at this time. Our experience over the last three years operating our current stores in D.C. has given us a fuller view on building and operating stores in the District." 

The three stores already open are in neighborhoods where development is either strong or growing. But around the mixed-use $256M Skyland, being developed by WC Smith and Rappaport, and Capitol Gateway, by A&R Development and The Henson Cos, there is less activity.

"It's a big hit," Dochter & Alexander co-founder Dave Dochter told Bisnow today. "East of the river, it was a good anchor, and it would have been a shot in the arm for the market. I don’t know who comes in and fills that void. If it's a grocery store, that's good, if it’s Target, that’s fantastic. But Walmart and Target have more pull than a traditional grocery store anchor."

.@MayorBowser says she's "blood mad" about @Walmart backing out of DC stores

— Mark Segraves (@SegravesNBC4) January 15, 2016

It's unclear what happens next. Development of Skyland had been held up for years as Walmart negotiated, and Safeway settled for $3.6M to terminate a decades-old covenant that could have prevented Walmart from operating. DC Council member Vincent Orange has already said the city should sue Walmart for backing out of the Skyland deal.