New Breweries, Retail Offerings Could Help Drive Northeast D.C.'s Apartment Market
Northeast D.C., already a hub for D.C.'s craft brewery and distillery scene, is welcoming a host of new retail offerings that could help it stand out in the city's increasingly competitive apartment market.
In October, popular New York brewery Other Half Brewing opened in Ivy City, and City-State Brewing is preparing to open in Edgewood in the coming months. The Bryant Street development is delivering this year with an Alamo Drafthouse Cinema, a food hall and an outdoor bar featuring an old Metro railcar.
Eckington's new 2-acre park opened last year, and two developments are nearing completion next to it, with retail users including a rock climbing gym and a Union Kitchen grocery. The Union Market area continues to add restaurant and retail options, including a new taqueria that scored a visit from President Joe Biden last week.
These new Northeast D.C. retail offerings come at a time when apartment developers in the area are looking for ways to attract tenants.
Apartment vacancy has risen dramatically in Northeast and throughout the city, leading developers to offer generous concessions that give renters the ability to move to neighborhoods that may have previously been out of their price range. This has the potential to hurt areas like Northeast, which had been positioned as a value option, but the growth of retail destinations in the area could help attract renters back.
In Q1, Northeast D.C.'s Class-A apartment vacancy rose to 15.2%, according to Delta Associates, just below the District average of 15.6%. Northeast's effective rents fell 20.5% over the 12 months ending March 31, tying it for the city's sharpest rent drop.
"There was definitely a concern early on as concessions increased through the fall and winter that everybody could shift to a different submarket that they would have been priced out of before," MRP Realty principal Matt Robinson said. "In Northeast, the question was: 'Do people move to Mount Vernon Triangle or Shaw or the Ballpark?'"
But leasing demand so far this year has shown that the area isn't losing tenants the way some had feared, Robinson said. MRP has leased 60% of the 154 units at the Coda at Bryant Street building, and it's preparing to begin leasing on another 300 units at the development in the coming weeks.
"What we're seeing at Coda at Bryant is it's not leaving a vacuum, which was the concern in the fall and winter," Robinson said. "That's not playing out in Q1 or Q2 of this year, or else we wouldn't be seeing the strong activity."
The new retail destinations coming to the project are helping drive its leasing activity, Robinson said.
Next month, a new transit-themed bar and entertainment concept is expected to open at Bryant Street. Metrobar will feature 50 seats inside an old 5000-series Metro railcar, and another 350 outdoor seats in the area around it.
Jesse Rauch, one of the co-founders of the Metrobar concept, said the team chose to lease outdoor space at the Bryant Street development because of its accessibility with multiple modes of transportation. The project sits along the Metropolitan Branch Trail and next to the Rhode Island Avenue Metro station.
"What we really loved about this site here in Northeast at Bryant Street is it's a neighborhood that has a lot of history, it's at the crossroads of several neighborhoods, it's got the Metro line passing right by it," Rauch said. "You'll be able to drink from within or next to our train car and watch train cars go by."
The Bryant Street development will be anchored by an Alamo Drafthouse. The national retail chain filed for bankruptcy in March, but it has since announced the reopening of many of its locations. Robinson said Alamo Drafthouse is still committed to opening at Bryant Street, but it hasn't announced a specific opening date.
"Alamo has built a really good reputation, and they really differentiate themselves from a lot of other movie theaters," Robinson said, noting the chain's food and beverage offerings. "It gives people a reason, if they don't live in that area, to go there as a destination."
Bryant Street is also slated to feature a food hall and additional retail space. Robinson said these retail offerings should help drive demand to the project's apartments.
"Retail amenities really drive residential rents," Robinson said. "People want to be around places where they can be outside and social ... it puts it on the map for Class-A apartment renters."
To the north of the Bryant Street development along the trail, a new 13K SF micro-brewery is preparing to open. City-State Brewing received its building permits in January and its website says it plans to open this spring.
Just north of City-State, popular neighborhood bar Dew Drop Inn has expanded its outdoor seating area during the coronavirus pandemic and brought in a rotating cast of food trucks. Further to the north along Eighth Street, a 377-unit apartment building is under construction, and the 156-unit final phase of Monroe Street Market delivered last year, with 16K SF of retail space for which the developer hasn't yet announced tenants.
Also along the Metropolitan Branch Trail in Eckington, Foulger-Pratt is preparing to open its 327-unit apartment building, branded as ONE501 later this month. The project features 7,500 SF of retail, some of it fronting the 2-acre Tanner Park that opened last year.
Foulger-Pratt Vice President of Development Josh Etter said the developer has signed one retail lease with a fitness center user that he declined to name. And he said it has signed 10 apartment leases and sees signs of an improving market.
"Demand is back, it's increasing week over week," Etter said. "I think there's a lot of correlation with vaccinations going up."
Next to Foulger-Pratt's project, JBG Smith and LCOR are nearing completion on the 681-unit Eckington Yards development. The project has 70K SF of retail including a 35K SF Brooklyn Boulders rock climbing gym, which is planning to open this summer, and a commercial kitchen from Union Kitchen. Grosvenor Americas acquired the 45-unit condo component of Eckington Yards last year.
Foulger-Pratt is also preparing to deliver its 356-unit Press House at Union District development in Northeast. The mixed-use project has landed Hickok Cole for its office component and Scissors & Scotch for its retail piece. The project sits three blocks from Union Market and one block from craft brewery Red Bear Brewing Co., which opened in 2019.
Etter said he sees Northeast continuing to solidify itself as a hub for not only breweries but also a wide range of local businesses that make their own products. Union Market has an array of vendors, such as knifemaker District Cutlery, that produce their own goods, and Union Kitchen's Eckington location will bring in local food entrepreneurs. Food incubator Mess Hall, which has birthed restaurant concepts like Arepa Zone and Prescription Chicken, has been operating in Edgewood for years.
"There's something charming about going to a restaurant or a brewery or an artist shop where you're meeting the creators and getting to enjoy their product," Etter said. "Embracing the history and culture and physical making of a product you can enjoy is really unique and really different than some other parts of the city."
Ivy City has emerged as a hub for craft beverage production, and Other Half Brewery added to that roster with its October opening. The neighborhood also features Atlas Brew Works, City Winery, One Eight Distilling, Republic Restoratives Distillery, Green Hat Distillery and Joseph A. Magnus & Co. Distillery.
The neighborhood also last year welcomed Kick Axe Throwing in the same building as Other Half, and it has several additional restaurants and bars.
Other Half Brewing co-owner Andrew Burman, whose brewery has locations in Brooklyn and Rochester, said it was drawn to D.C. because of its growing craft beer scene.
"As we were looking at spaces and able to go through the different breweries and distilleries around that area, it made us feel like this is where we wanted to be," Burman said of Ivy City.
"Other Half has a spectacular following, almost a cult following and a great reputation," Douglas Development principal Norman Jemal said. "They take a lot of pride in what they do, and I think it's a great addition."
Jemal said he sees the new retail amenities in Northeast are helping drive apartment leasing, which he said has been improving over the past two months.
"We've seen really good absorption over the last 60 days," Jemal said. "Obviously, we saw people leaving the city during Covid, but I'd tell you in the last couple of months, absorption has been excellent."
The new retailers not only benefit the developers of the major mixed-use projects themselves, but they can also spur demand for smaller multifamily developments in the area.
District Growth's Sanjay Bajaj has multiple projects moving forward near the Bryant Street development. He broke ground last month on 47 units at 1544 Rhode Island Ave. NE, he plans to break ground soon on another 60 units nearby at 2711 13th St. NE.
He said he expects his apartments will benefit from the activity at Bryant Street, and MidCity's 1,700-unit RIA development, which won a court ruling in March that should allow it to move forward soon. He said the large-scale developments help create a more walkable neighborhood that is attractive for apartment renters.
"The MRP project is going to drive a lot of demand, and MidCity's as well, so that should help the whole area," Bajaj said. "It attracts more people and less vehicles because you can walk places."