Trapped by Change, Economy
Mount Pleasant Businesses Struggle to Adjust as Fortunes Sag

By Paul Schwartzman
Washington Post Staff Writer
Thursday, November 13, 2008

The palm reader left months ago, as did the laundromat, computer center and two food markets. Across the way, the charred vestiges of a four-story apartment building remain six months after a fire forced 200 low-income residents to move away.

Up and down the commercial heart of Mount Pleasant, the emptiness is a pointed reflection of a broader economic turbulence.

Like many Washington neighborhoods, Mount Pleasant has grown more affluent in recent years, as waves of professionals scooped up rowhouses and condominiums, some paying upward of $1 million to live just off the 16th Street corridor north of Adams Morgan.

Their arrival has largely meant less business for merchants who have catered to working-class Latino residents who have left the neighborhood, because of the fire or because they sold their houses or were priced out. As storefronts have gone dark, the tightening credit market and floundering economy have made it ever more difficult to start businesses.

"We're in a downward spiral," said Terry Lynch, a Mount Pleasant resident for more than 25 years. He motioned toward a ravaged apartment building and a vacant storefront. "This says, 'Don't bring your business to Mount Pleasant. Go to another neighborhood.' "

Across the city, from Anacostia to upper Georgia Avenue, civic leaders clamor for finer retail establishments and restaurants, a din loud enough that District officials initiated a study this year to figure out ways to lure businesses.

Harriet Tregoning, director of the District's Office of Planning, said merchants in working-class neighborhoods rife with new investment, such as Petworth and Brookland, have struggled to adjust to rising rents and a changing clientele.

"There's a mismatch of what residents want to buy and what is available, and, in some cases, that's because the demographics changed," Tregoning said. "People's demands are higher. They want a better retail experience. They want the windows to be clean. They want to see what's inside the store."

Once a prosperous streetcar suburb whose residents included Sen. Robert LaFollette and legendary Senators fireballer Walter Johnson, Mount Pleasant fell into a steep decline after the 1968 riots, when white homeowners across the city left for the suburbs.

A generation later, homebuyers began returning Mount Pleasant, a migration that gained momentum through the recent housing boom, further diversifying a neighborhood with substantial Latino and black populations.

Mount Pleasant leaders hoped that their commercial strip -- a hodgepodge of beauty salons, fast-food, hardware and liquor stores, and a car repair garage -- would benefit from geography. The strip is three blocks west of 14th Street in Columbia Heights, where DC USA, a Target-anchored mall, opened this year on a stretch that had been a wasteland since the riots.

Yet, as fortunes have soared in Columbia Heights, Mount Pleasant's have sagged. Along the neighborhood's four-block commercial spine, seven of 40 storefronts have sat empty for four or five months and even longer, including several spacious sites in prominent locations.

In past years, the strip averaged three to four vacancies a year, and those would be occupied within a few months, said Tom Litke, who monitored small businesses across the city as a consultant to the District government from 2004 to 2007.

"I'd be concerned if I was Mount Pleasant," Litke said. "The current businesses need to adjust to the changed market. If the tides change, you have to adjust the sails."

In recent days, workers began renovating one storefront that a laundromat vacated six months ago. They said another laundromat is supposed to open in January. A couple of blocks away, another storefront became vacant Tuesday when a fast-food restaurant was evicted. The vacancies, merchants say, sour the mood along Mount Pleasant Street and hurt remaining businesses.

"There's less flow of people," said Alex Kramer, owner of Dos Gringos, a cafe she opened nine years ago. Since last year, Kramer estimates, her revenue has declined 20 percent.

"If you have all these vacancies and all this darkness, people don't want to come," Kramer said. "No one wants to buy the last cookie."

Yet others see a silver lining in the emptiness. Sean Flynn, 38, a neighborhood homeowner who teaches law at American University, said the strip has long been dominated by "two kinds of establishments -- laundromats and mom-and-pop groceries that sell to" Latinos.

"I love those things, but I don't need 10 of them," he said. "We've always wanted more diversity in the retail. So, frankly, when some businesses close, we're happy."

When Flynn passes a vacant former supermarket on Mount Pleasant Street, he imagines a "really cool, vibey restaurant/bar" or a market that sells cheese, meats and wine.

Not everyone shares his vision of the gourmet life. Alex Maldonado, 35, considers the possibilities for the empty grocery as he hangs out in front the Mount Pleasant Street rowhouse in which he grew up.

"McDonald's," he said. "The food may not be healthy, but it provides a social structure. It's a way to bring people together."

Even if an entrepreneur wants to start a business, the economic realities are daunting. Tom Natan, 48, has scouted Mount Pleasant Street storefronts to open a wine business that he operates online. But he said the rents and the difficulty of obtaining a $100,000 bank loan have forced him to defer his plans.

"I didn't expect that it would be so difficult to get money," he said.

Mount Pleasant is not the only area feeling the effects of a pinched economy. In Adams Morgan, there are almost a dozen vacant storefronts along Columbia Road and 18th Street, a number described as unusual by Pat Patrick, president of the Adams Morgan Business and Professional Association.

Patrick said he is representing six restaurants seeking rent reductions of as much as 50 percent. "The traffic we're seeing up here has been greatly diminished," he said. "Because of the economy, because of the competition from other areas, we're losing customers."

Mount Pleasant's decline was aggravated by the apartment fire, which forced dozens of families from the neighborhood, many of whom shopped on the main street. To residents and merchants, the barbed-wire fence and concrete barriers in front of the surviving facade are a forbidding eyesore. The building's owner, Eric Kretschman, did not return calls seeking comment.

D.C. Council member Jim Graham (D-Ward 1), whose district includes Mount Pleasant, said he plans to push the city to "make a case for eminent domain" if the owner makes no moves to rebuild.

"We can't have something of this prominence being a blight for the city as a whole and for Mount Pleasant in particular," Graham said.

No evidence exists that DC USA is pulling shoppers or retailers from Mount Pleasant, community leaders say. They also say that, as District officials pumped tens of millions of dollars into development in Columbia Heights, they funneled a fraction of that to help existing small businesses in the area.

"Mount Pleasant is being bypassed by all this development," said Alejandro Yepes, of Mount Pleasant Mainstreet, a not-for-profit group that promotes economic development. "We're not hurt by Columbia Heights' development. But it's lost opportunity."

At a recent meeting, community leaders implored Neil Albert, deputy mayor of planning and economic development, to help promote their neighborhood by changing signs at the Columbia Heights Metro stop to include Mount Pleasant .

They went so far as to ask Albert to call landlords to urge them to lease their spaces at cheaper rents.

"That's not something I want to get my office involved in," Albert said, encouraging the leaders to call the landlords and "appeal to their civic mindedness."

Two owners of vacant properties said that they are actively seeking tenants but that interest has been minimal, particularly since the onset of the credit crunch.

"I have not had that many calls," said Kathie Dematatis, owner of a storefront she has been trying to lease since early September. "Everyone is waiting to see how the economy will moderate before they go into any new venture."

Roselyn Abitbol recently reduced the rent for a corner storefront she has been trying to lease for six months. Besides the economic hurdles, she said, potential investors often skip over the neighborhood because of activists who make it difficult for restaurateurs or tavern owners to obtain liquor licenses.

"Anytime they want to do something, have music, everyone screams and yells," Abitbol said. "They don't want to deal with the activists, the aggravation."

One prospective tenant, a woman opening a boutique shoe store, cited a different reason for not leasing Abitbol's space. She preferred a spot two blocks to the east, next to DC USA's underground parking and across from the Metro station that delivers a gold mine of potential patrons to Columbia Heights.