West Elm coming back to D.C. . . . for now

June 5, 2011

More than a year after shuttering its only location in the District, home furnishings retailer West Elm is making a triumphant return . . . at least for a brief while.

The San Francisco-based company has signed a seven-month lease starting in July to occupy EastBanc’s 3333 M St. NW in Georgetown, the retailer’s first temporary, or pop-up, store in the country.

Pop-up stores caught on during the downturn as a way for retailers to test new concepts, generate buzz for a brand or simply off-load inventory, sans the risk of a long-term lease. Landlords, rocked by sky-high vacancy, were all too happy to welcome paying tenants, even on a month-to-month basis.

Even as the economy improved, temporary retail lost none of its appeal. Property owners still have vacancies. And tenants remain skittish about taking space for several years amid a volatile recovery.

West Elm, Williams Sonoma’s contemporary spinoff, had long been smitten with Georgetown, where the store tracked high Internet and catalogue sales, said company spokeswoman Abigail Jacobs.

It just so happened the opportunity to open in the nation’s capital emerged not by the Potomac River but downtown, where the retailer was lured with a $5 million, 10-year tax increment financing package. The sprawling 40,000-square-foot space at 1020 G St. NW was West Elm’s largest location when it opened in August 2007. Sales at the store, delivered at the tail-end of the housing boom, did not meet the company’s expectations. And in March 2010 it went dark, making way for Forever 21.

Jacobs said the company continued its hunt for a space in Georgetown, but wanted to try another concept. “Different concept, different neighborhood,” she said. “If you look at Georgetown and the size of stores there, this will be a perfect fit.”

A fraction of its former digs, West Elm’s pop-up pad totals 6,500 square feet, across the street from home goods stores BoConcept, Pedini DC and Contemporaria. The new tenant will round out the furnishing hub, which welcomed Crate & Barrel’s hip little sister CB2 in April.

EastBanc principal Philippe Lanier said there is no option in West Elm’s agreement to lock in a long-term lease once the space is up, but he’s open to discussion. Jacobs was mum on the matter, stressing that the company is more focused on how it will be received.

This is not EastBanc’s first go at pop-up retail. Lanier noted the company has leased out space for all types of temporary uses, including sample sales, gallery space and training grounds for hotels. Clothing designer James Perse, most recently, set up shop over a weekend in September.

Lanier would not disclose exact figures, but said EastBanc’s temporary stores typically lease at a discount to market rents. “It suits everyone’s purposes: One guy gets to come to the market at a low cost, and the other guy gets to keep their space warm while shopping it around,” he said.

The dearth of available in-town space has returned some pricing power to local landlords, who are marginally marking up rents. Leasing space in Georgetown rings up at an average $54.27 per square foot, whereas downtown stores cost an average $55.09 a foot, according to the CoStar Group.

Even popular retail hubs farther out from the District, such as Old Town Alexandria, are commanding rents near $30 per square foot. Rents that high were simply untenable for Gayla Reed and Elisabeth Squire, owners of furniture store Coco Blanca.

The friends, who refinish vintage furniture in shades of white, toured Old Town late last year, hoping to sign a lease for their first store.

“Landlords really weren’t willing to negotiate on space,” Squire said. “They wanted a five- to seven-year contract, with exorbitant rent. We were just starting up and didn’t want to take on huge risk.”

Talking to a family friend who worked at Peterson Cos., Reed and Squire learned of vacant, short-term space available at the company’s mixed-use complex in Oxon Hill, National Harbor.

There would be no build-out allowance, but the rent was significantly lower than what they were being quoted elsewhere. Reed and Squire wouldn’t disclose exact figures.

Coco Blanca started out last June with 1,400 square feet for 18 months, building a following that led the ladies to broaden the merchandise mix to include accessories and apparel. Peterson took notice of the store’s popularity and offered 3,000 square feet a few doors down.

“They’ve done a fantastic job outfitting the store,” said Taylor Chess, senior vice president of retail at Peterson. “It’s a great way to build a start-up.”

Peterson houses several other temporary stores, including Build-A-Bear Workshop and local shoe store SimplySoles, at the Harbor, where the retail is 80 percent leased.

“It makes a lot of sense in moderation,” he said. “We’re not putting any money into the space and have the flexibility to put the tenants out.”

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