Comments on Busboys & Poets not coming to Anacostia quite yet - Greater Greater Washington

Comment by DavidDuck

Fri, 14 Sep 2012 20:39:52 EDT

Interesting - but I am already concerned that B&P is, to be blunt, expanding too fast. I haven't been in a while, but the two times I am been to the Hyattsville location, the service was quite bad. Franklin's service is not exactly lightning fast, but it makes B&P Hyattsville look pretty bad. As do some of the other B&P locations... I would rather see Shallal get all his locations up to snuff before he continues expanding...

Comment by Thayer-D

Fri, 14 Sep 2012 20:17:31 EDT

I like to think of myself as street wise as the next guy, but you make Anacostia sound like Beirut. While I agree there's some social function, I think it's a bit unfair to suggest that "it will be hard to get good personnel" there. I every nightspot outside of Georgetown and Dupont went through these changes, and while Anacostia has been historically poor, I'm sure it will see better days.

Comment by Richard Layman

Fri, 14 Sep 2012 17:38:35 EDT

FC -- continued good points. But one point you aren't thinking of... the issue isn't that the clientele is chill, it's that the business is in an area where many people are not. It becomes a target in many ways. (I make the same argument about new residents in neighborhoods like H Street. Long story. I won't go into it. It's basically a kind of application of the arguments in _Streetwise_ and _Code of the Street_ but extended to businesses.)

It will get burglarized without question--virtually every new business did on H Street at one point anyway, and I know of a couple retail clothing stores that were completely cleaned out, if there is a patio, people will be hassled. There could even be terrible inside jobs like what happened at Colonel Brooks (a former employee was robbing the place, recognized, and killed the three employees there, although the same kind of thing happened at a Starbucks on Wisconsin Ave. NW as well, more towards Glover Park).

It's why it's good for local residents to band together and open businesses, although as the Uniontown debacle proved, capital formation is an issue. (Note the same thing happened with the diner set up in the Ohio Restaurant. The proprietor had previous ties to the drug trade, and she was killed, and the business closed. Similarly, I've talked with someone who suggests that the reason that there are so many beauty salons-nail salons in inner city commercial districts is that girlfriends/wives were set up in business by similar kinds of business interests.)

Comment by Falls Church

Fri, 14 Sep 2012 17:06:55 EDT

Richard,

You make some good points about the difficulty of buying. Most operators looking to open in Anacostia couldn't afford it but Shallal is someone who could.

wrt/Crime and other factors making it harder to operate in Anacostia, that's why a potential buyer like Shallal could still get a reasonable price.

I think one reason a guy like Englert isn't looking to take his H ST model to Anacostia is the factors you mentioned making it difficult to operate there. That said, the B&P clientele is a lot more chill than the Englert bar scene or the Uniontown Bar crowd. I don't think they'd have as many problems.

Frankly, Shallal needs to suit up and take the plunge in Anacostia. It's a good business decision if nothing else.

Comment by Richard Layman

Fri, 14 Sep 2012 14:42:48 EDT

wrt Shallal, I've never talked with him. But I talked with a journalist who did. She said wrt NoMA that he said how he would only locate in an original building (there are a few, on the east side of the tracks, like the Uline) because they're the only buildings with cred over there.

I snorted and said other than his original investments like Skewers and Luna Cafe/Grill in Dupont Circle, all his Busboys & Poets restaurants are in spanking new buildings. E.g., the Shirlington restuarant is in a Federal Realty Investment Trust (they did Bethesda Row) owned building.

In all of those buildings they were likely to have received significant buildout allowances. (For a new construction building where it's possible that my bike business could have participation in a retail business, the build out allowance is $45/s.f. I don't know yet if they are willing to consider a graduated rent schedule also.)

Although to be fair to Mr. Shallal, the likelihood of a buildout allowance from an independent property owner in Anacostia is miniscule. Buying and rehabilitating significantly increases costs.

And regardless of the people willing to make a poster to recruit him, opening a restaurant in a place like Anacostia has big risks. It could be a great success, but there will likely be big problems too.

It will be hard to get good personnel. Security expenditures will be required. Insurance will cost more. Etc.

e.g., http://www.washingtonpost.com/local/dc-politics/shop-owners-gun-apparently-will-land-him-back-in-prison/2011/11/14/gIQA4x0XMN_story.html

I refer not to the fact that an ex-felon store operator had a gun, just the experience this guy had running a store in that community.

Comment by Richard Layman

Fri, 14 Sep 2012 14:31:52 EDT

FC -- your point about buying vs. renting is very important, although I bet post Lumen8 the prices have gone up significantly, because property owners are banking on future improvements and believe that they should get that price premium _now__ even though current market conditions and building conditions don't justify it.

This was a counterintuitive learning from H St. Once the H St. revitalization plan was produced in 2003, all the property owners raised their expectations and therefore their prices by more than double.

SO ironically, the H St. revitalization plan delayed improvement, because of the increase in asking prices and the delay in property turnover.

I remember arguing with Jane Lang about the space that is now H St. Country Club. She thought the building, one of the largest on the corridor, was overpriced at something like $800,000. I said "buy." She didn't. I don't know how much Joe Englert interests paid for the building, but the property tax database says $2.1MM in 2010.

The issue is that many entrepreneurs don't have the means to buy buildings. SBA has a program that assists entrepreneurs in buying buildings, but you have to be in business for at least 2 years and have a lot of collateral. Typically people willing to open in places like Anacostia don't meet either criteria.

The thing to do would be to have a fund that assists entrepreneurs in doing this, would buy the buildings, but then the entrepreneur would do a kind of lease to buy.

2. One of the "secrets" to the success of Joe Englert is that he buys the buildings. His success is built first on being an early entrant into areas with potential, and his creation of a business network that can efficiently reproduce nightlife concepts--he links people with ideas and concepts, experience operators, buildings, financing, and vendor support--along with his experience and staff dedicated to dealing with DCRA, DOH, and OTR.

3. It can be possible to elicit developer interest in funding restaurants in areas where they have sites. Although they are more likely to invest in operators that are already proven.

I have been meaning to do an update of my Richard's Rules for Restaurant Based Revitalization to reflect achievement of critical mass of new demographics and income in more DC neighborhoods, allowing more creative and exploratory concepts to succeed.

Anyway, I learned this week that Chez Billy, opened by the Hilton brothers in Petworth (the Hiltons model their business practices after Joe Englert), is funded in part by property developers active in the Petworth neighborhood. While this isn't atypical in big developments (the Carr Family owned/owns the Occidental Restaurant on PA Ave., probably Related Companies are investors in some of the upscale restaurants in their shopping center at Time Warner Center in Manhattan), it's atypical in a "neighborhood" restaurant located in an off-site property not controlled by the developer.

5. Boston has a program that specifically supports the development of restaurants in underserved neighborhoods. (Comparable to DC's TIF program for supermarkets.)

http://www.cityofboston.gov/dnd/OBD/G_restaurant_initiative.asp

Comment by A Anacostia Tribe Called Arrival

Fri, 14 Sep 2012 14:12:58 EDT

Looks like a rope-a-dope. I am not a fan of busboys but they are free to exploit whomever they want as long as people are there to be exploited. Mr. Shallal's mouth would appear to be writing checks that the rest of him is not ready to cash. Yet again there could be a larger plan here or a method to his madness of talking up he is going to open in Anacostia. Residents want these places not just yesterday but last year, last decade and now there is finally a little bit of attention. Uniontown for its horrible service and club atmosphere showed and proved the neighborhood will and can support a sit-down restaurant. Shallal might be waiting to see what happens in the next 6 to 24 months but his rap game makes it appear he is going to start accepting applications before the end of the month. For that reason he is being misleading and should just leave well enough alone. DC govt lies to us like nothing so we have no problem seeing through Mr. Shallal.

Comment by Falls Church

Fri, 14 Sep 2012 14:06:26 EDT

Richard Layman makes a great point. One of the best things a small business looking to open in a transitional area can do is buy their space instead of renting it. Otherwise, the shop owner will find themselves as the catalyst to gentrification that eventually prices them out of their own neighborhood. Plus all the things Richard said that makes it difficult and costly to rent space in a disinvested commercial district.

Buying commercial real estate with interest rates so low in a place like historic Anacostia makes a lot more sense than renting. Especially if you think your shop will be a catalyst for further development.

Comment by cmon

Fri, 14 Sep 2012 14:03:15 EDT

Please no more social service programs. they are often ineffective and do nothing for the people they are designed to help.

Comment by H Street LL

Fri, 14 Sep 2012 13:24:32 EDT

Nice little post.

Just took the bus down to Historic Anacostia. The commercial, though obviously not complete, looks great!

I also noticed that several (residential) properties there now have now sold for over 300 a sq ft.

Also used the bikeshare. The hills can be tough though!

Comment by Richard Layman

Fri, 14 Sep 2012 13:11:19 EDT

One of the problems in getting buildings back online in a disinvested commercial district is that the buildings have experienced multiple decades of little investment and maintenance and so the buildings are wrecks and require tens or hundreds of thousands of dollars in rehabilitation costs, irrespective of the cost of building out for a restaurant.

And mostly, the buildings are owned by individuals and they don't have the interest or capacity to provide significant $ for buildout allowances. (TDC TIF is supposed to aid that now, but I think it's still pretty cumbersome.)

Even worse, property owners usually expect rental payments starting once a lease is signed, rather than what I would do, which would specify that rent payments would start only after a certificate of occupancy is received and the business is open.

(This sends many undercapitalized entrepreneuers to ruin.)