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Are D.C.'s rents blocking the city's food scene?

Friday - 7/12/2013, 3:03pm  ET

Much has been said during the past two days in response to Chef Mark Furstenburg's takedown of the Washington, D.C., food scene in the Washington Post Magazine. Now, much has been said in response to Furstenburg's article, both on Twitter and in other Washington publications. (Naturally, the city's foodies — and chefs and mixologists — were a bit nonplussed.)

Furstenburg, the former owner of the Marvelous Market chain and Breadline, argues that D.C.'s food scene is still lacking, despite all the buzz surrounding all the shiny, new restaurants opening in the city.

One of Fursternburg's arguments, that the city's smaller independents can't afford to pay the exorbitant rents that D.C.'s landlords charge, is a complaint I hear often. In conversations with the handful of retail real estate brokers who lease most of the space in this city, many of them also say they seek to find interesting concepts that increase the vibrancy of a restaurant corridor, despite a ready-and-waiting CVS with unlimited capital to pay market-rate rents.

But it's a matter of scale, said John Asadoorian of Asadoorian Retail Solutions. While retail rents have doubled in certain corridors in the past decade — 7th Street NW in Chinatown being one of them — it's because the businesses there have been able to do the kind of sales volume that supports it.

"Most businesses want their rent to be somewhere in range of 10 percent of sales," said Asadoorian. "People say, well, independents can't pay that, and the nationals can, but there's still that rule about 10 percent of sales."

Fuddruckers recently renewed its lease in Chinatown for more than double its rent rate from 10 years ago, Asadoorian said.

"Fuddruckers is doing enough business to afford it," he added. "If you're an independent, and you can't afford $200 per square foot, then maybe your business model doesn't support being on the corner of 7th and H."

That's why, as Asadoorian put it, the small, local businesses often start out somewhere that's "kind of weird," where the rent might be closer to $35 or $45 per square foot.

"They say, 'I'd rather open somewhere where rent's not so high, where maybe we have to build our business, than pay way more than we can afford,'" Asadoorian said. "And then they do 7th street or Dupont Circle for their second store."

More generally, Asadoorian believes that even with the influx of national brands who may have more leeway to carry high rents, only the best of those concepts will survive in the long term.

"Twenty years ago, we were just having a conversation about whether we can get the nationals to come here," he said. He's encouraged by the mix of growth.

"It's that natural evolution: Rents are going up because the corridors are becoming better, the businesses are incubating and growing, and the best businesses will pay these rents if they are good at their game," he said. "But you're going to be able to grow your business no matter what, because the local consumer base is also evolving, and their attitude to where they spend their money is changing."

© 2013 American City Business Journals, Inc.