DC's Disappearing Third Places

Earlier in the week, Topher Mathews wrote about the loss of one of DC's third places - the Barnes & Noble bookstore in Georgetown. While it's no surprise that the brick-and-mortar bookstore industry is on its way to becoming ancient history, it's nevertheless sad to see the neighborhood lose its store. Topher writes:
What made Barnes and Noble a particularly great Third Place was that it offered Georgetowners and visitors alike a place to escape from the heat or the cold (or just the crowds), but you didn't have to pay anything to use it.
Herein lies the dilemma. Whatever purpose Barnes and Noble serves to the community, at the end of the day it's still a business. And like all businesses, it needs to make money to survive.

(from grilled cheese on Flickr)

This all reminded me of the "Bubble Boy" episode of Seinfeld. Jerry and Elaine go to eat a diner in upstate New York, Elaine proceeds to order a glass of water, and after some back and forth, Jerry finally says:
You can't just have water... this is not like a park bench where you just come in and sit down. It's a business.
When it comes to third spaces, you can't have it both ways, but this is especially true in DC, where the overhead cost of doing business is extraordinarily high. Topher notes that the retail space Barnes & Noble is vacating is going on the market for $65 per square foot.

Over on 14th Street, Lydia Depillis calculates that the space soon to be vacated by Miss Pixies will go onto the market for $80 per square foot. This is by no means pocket change, and any business willing or able to pay such prices needs to have incredible revenue flow.

Coffee shops are a third space that are near to my heart. In the year before I moved to DC, this blog was written almost exclusively from my favorite coffee shop. These days, it's written mostly from my couch or my patio. DC simply doesn't have the same kind of coffee shop spaces that Cleveland does.

In a way, it's kind of baffling. DC is an economic powerhouse. Cleveland is an economic dog. I don't doubt for a second that there isn't demand for more coffee shop space in the Washington. What Cleveland has that DC doesn't is a much, much lower cost of leasing commercial space.

Consider a hypothetical entrepreneur thinking about opening up a coffee shop with plenty of space for people to sit and hang out. At $60 per square foot, a 500 square foot coffee shop will cost this person $30,000 every month. That's a lot of cups of coffee to sell, ignoring the fact that they also need to pay for that cofffee, labor, and a host of other things, and still think about turning a profit.

To make it work, the entrepreneur essentially has 3 options: raise prices, boost sales, or lower costs. Certainly a cup of coffee is more expensive in DC than it is in Cleveland, but it's a relatively sticky price. Rent might be 3-times as high in DC or higher, but coffee shops don't charge 3-times as much for every drink they pour. Many of them do brisk sales, with a line at nearly every hour of the day. That definitely gives the impression of success. But I suspect that ultimately the overhead costs are so high that it trumps both prices and sales.

Some coffee shops have chosen to rent a closet sized space, push their take-out business, and close their doors before the sun goes down. That's one way to keep sales up and costs down.

Others have taken the more hybrid approach. They're coffee shops in the morning, restaurants in the afternoon, and bars at night. Turning into a bar lets them tap into a lucrative business, where the margins on alcoholic drinks are much higher than margins on caffeinated drinks. At the same time, this frustrates some people, who wish their neighborhood had a quiet hangout place at night, especially when bars seem like the only other option.

So it's established that rents are high. Sometimes absurdly high, and this makes it tough for good third spaces to exist in the city. The difficult question to answer is why?

The simple answer is that there aren't enough of them. There's not enough supply to meet the demand. But dig deeper and you get into issues of regulation, zoning, and community politics. Identifying the problem is easier than identifying the solution.

1 comments:

    On September 06, 2011 Anonymous said...

    When someone says it costs $60 per square foot, that is an annual cost, thus your $30,000 rent is annual, not monthly.