Development

High rents, prohibitive zoning doom Wheaton's Dejabel Cafe

by Cavan Wilk   •   February 15, 2010 11:29 am

In late 2008, a new coffee shop, Dejabel Cafe, opened in Wheaton. It enhanced Wheaton's sense of place and also provided me with a favorite coffee shop. Sadly, Dejabel Cafe just closed its doors for good.

Photo from the Dejabel blog.

While I wish proprietor Eddie Velasquez the best and will miss him and his coffee, the bigger question is, "What went wrong?" Without knowing all the details of Dejabel's business, it had the deck stacked against it in several ways, from an inflexible landlord to a zoning code that kept potential customers away from living within walking distance.

In conversations with Eddie, he expressed frustration about Dejabel's landlord, Greenhill Capital, and its unwillingness to negotiate rent structures as the economy headed into the current recession. Dejabel signed its lease in the spring of 2008 for approximately $6,000 per month, according to Mr. Velasquez.

Greenhill Capital may have their reasons for making their business decisions. However, most of the stalls in the Georgia Crossing development, at the corner of University Boulevard and Georgia Avenue, remain empty. Many landowners have adjusted their rental rates to keep their buildings occupied. I doubt we'll see pre-recession rents for at least a decade.

The bigger problem is Wheaton's zoning. While the process for updating the Sector Plan very slowly proceeds, Wheaton continues to languish as more small businesses continue to falter.

The current Sector Plan zones most of downtown Wheaton as CBD-2. That means single-story buildings that come up to the sidewalk. No residential buildings are allowed. No residential uses above the retail are allowed.

No new businesses have opened in Georgia Crossing since Dejabel. Photo by thisisbossi.

The plan's goal in 1990 was preserve the existing urban form of the time. That plan naively assumes that nothing will change as long as the zoning doesn't allow any change. But the world does not stand still. Since that plan was drafted, a new Metro station opened, Westfield bought and renovated Wheaton Plaza, and many new residents moved to Wheaton. The Sector Plan inhibits growing the customer base for the small businesses that they were trying to preserve with the CBD-2 zoning.

According to Mr. Velasquez, Greenhill Capital originally proposed Georgia Crossing as a mixed-use project. The current single-story storefronts would have had apartments or condos upstairs, creating a build-in customer base for the new small businesses. El Pollo Rico would be even more crowded than it already is. Samantha's Diner and Bakery would have even more customers. As for Dejabel, we have no idea if the increased customer base would have prevented them from facing hardship. However, the larger customer base would have certainly given the coffee shop a better chance of survival.

Eddie told me that about 10-12 of his regular customers (including me) walked to his coffee shop. The place was often busy. That means that a supermajority of Dejabel customers drove. Georgia Crossing has a small amount of parking out back. It is usually about halfway filled up with El Pollo Rico customers. It would have surely been filled beyond capacity if more than three storefronts were occupied. An urban-formatted place works best when there is a customer base in walking distance, like in Columbia Heights and Silver Spring.

Why was Greenhill Capital's original proposal not built? The Planning Board is very hesitant to grant zoning exemptions, no matter how much sense it makes to both the developer and future small business tenants, or how imperative it would be to strengthen super-local economic development.

To build a mixed-use project under the current process, Greenhill Capital would have had to wait for the updated Sector Plan before submitting their proposal. That means they would have had to sit on property they purchased during the real estate-bubble while the new Sector Plan very slowly came to fruition, then wait the extra year or two to send the proposal to the Planning Board and get approval. That would have meant an empty parcel in the middle of Wheaton for five years, during which time Greenhill Capital would have to pay property taxes on a vacant property. Instead, they chose to build what zoning allowed and forego a great opportunity for Wheaton, creating a business environment inhospitable to a valuable Third Place.

There are a lot of lessons to be learned from this sad saga. Perhaps it's not the best idea for a landowner to refuse to negotiate rents with a small business tenant when they're struggling. After all, the tenant was brave enough to sign a lease in a new, untested building. A bigger lesson is that we need to view our Sector Plans as strong guidelines, not as 100% ironclad.

Debate about Wheaton's future has been, in many ways, a microcosm of the debate within Montgomery County about whether to focus future growth in walkable urban places around our Metro stations or to stick our collective heads in the sand and pretend that it's still 1990. When considering a proposal, the Planning Board should consider how much a Sector has changed since its last Sector Plan, and also where it's going.

Cavan Wilk became interested in the physical layout and economic systems of modern human settlements while working on his Master's in Financial Economics. His writing often focuses on the interactions between a place's form, its economic systems, and the experiences of those who live in them. He lives in downtown Silver Spring.