Restaurant Closures In Clarendon Don't Foreshadow Softening Regional Market, Owners And Brokers Say
With its high population of Millennials, Clarendon is widely considered a hot dining and nightlife area. But a spate of restaurant closings this year has cast doubt on the strength of this local market.
Just last week, popular fast-casual chain Amsterdam Falafel Shop shuttered its Clarendon location, ARLnow reported, marking at least the eighth restaurant to close in Clarendon this year. Last month, Fuego and Spice both closed their doors, as did Park Lane Tavern.
Greg Cahill, owner of Whitlow's on Wilson and head of the Clarendon Business Association, attributes the closings to an oversupply of restaurants all catering to the same market and not offering anything unique.
"Clarendon has been a real hotspot with a lot of young professional people," Greg tells Bisnow. "That attracted a lot of people in the restaurant business, they opened up a plethora of restaurants and bars and there were too many. They were after pretty much the same market so it was just too many places."
Clarendon Alliance executive director Matt Hussman says the market has seen growing rents, especially for restaurants with large footprints, that have not been matched by an increase in restaurant demand.
"Maybe if these restaurants were smaller and had less rent pressure, they’d still be here," Matt says.
Amidst these closings, some good news is on the horizon for Clarendon, Bisnow has learned. Dochter & Alexander Retail Advisors' Dave Dochter (above, right, with C&W DC head Peter Carroccio) says his firm has closed two restaurant deals in Clarendon in the past week, but could not provide more details. He believes there is still opportunity for restaurants to succeed in the market if they offer the right product.
"If you’re going to engage the local community and have a good happy hour, dinner menu and brunch, that’s where there’s still opportunity," Dave says. "The biggest challenge for Clarendon is its daytime population."
Given Arlington's office vacancy and the lack of companies working in Clarendon, the area does not have a strong lunchtime crowd. Dave says any restaurants coming in banking on a significant portion of their business to come during the day will struggle.
He says this specific lunchtime softness is largely unique to Clarendon and doesn't signal a softening in the larger DC market, but he notes all submarkets have challenges of some kind. As the possibility of an economic downturn looms, David says restaurants all over the DC region need to pay attention to what makes each individual market unique.
"The critical thing is lining up the business model with the specific submarket that you're in," Dave says. "In the DC region, we have a lot of submarkets that are very unique. It's very important if you’re going to Shaw you’re providing a different atmosphere than if you're downtown in the Penn Quarter or at the Capitol Riverfront. Each one of these submarkets requires a little bit of a different business model."
Restaurant Association of Metropolitan Washington president Kathy Hollinger declined an interview, but in a statement, said restaurants close for many different reasons, and she doesn't see the Clarendon closings as a sign of a softening regional market.
"The Washington, DC, Metropolitan region has a dynamic restaurant market and we believe, as do so many who are investing and building in the region, that demand for quality food service continues to thrive," Kathy said in an emailed statement to Bisnow.
Many Clarendon restaurants, like Greg's Whitlow's (above), the Green Pig and Don Tito, have found the formula for success in the market. He believes there are opportunities for other restaurateurs to come in and replicate that success as long as they focus on the right things.
"If someone comes in and offers something different and unique and makes an effort to have good food, they can be fine," Greg says. "The market is still there but you have to make an effort. You have to know what you’re doing and you have to have a new concept, you can’t just throw something together."
Greg expects some of the space left vacant by this year's closures will be leased soon, especially spaces that are completely built out like the one American Tap Room vacated in August. He says he has seen restaurants in Tysons get tenant incentives of up to a year of free rent, and with the growing rents in Clarendon he says he wouldn't be surprised to see landlords begin to offer similar incentives.
"Landlords will say, 'I’ve got this space and I want to have someone paying rent, it might not be as much as I’m used to but maybe I’ll give six months free rent and I’ll help them get started," Greg says. "A normal lease is for 10 years, so if I can give help up front they’ll be in there for 10 years and maybe longer."
Matt also expressed confidence in the future of Clarendon's restaurant market and landlords' ability to fill the vacant space, but he thinks the market needs to find a good balance of unique offerings.
"We want to keep a diverse mix of restaurants here," Matt says. "I think probably some of these restaurants spaces will reopen, some of less desirable locations may not for a while...The market is going to be strong, this is a neighborhood known for people going out and that’s going to continue."
Clarendon will be one of many neighborhoods discussed at Bisnow's State of Arlington County and Alexandria event on December 7.