Correction to This Article
An earlier version of this article incorrectly identified the name of restaurant Bobby's Burger Palace.

Washington looks tantalizing to New York's restaurateurs

By Danielle Douglas
Capital Business Staff Writer
Monday, August 23, 2010

A growing number of New York City-based restaurants are scouting locations or setting up shop in the District, hedging against some weakness in their hometown market.

Since the economic downturn began, no fewer than 10 Empire State restaurateurs have made designs on the District. Among them is the Gerber Group, which is cruising downtown for sites for its line of bars, including Whiskey Blue and Stone Rose. Michael Wang is looking to bring his Luke's Lobsters to the area.

Food Network star Bobby Flay is in negotiations to open his first local Bobby's Burger Palace, a New York and New Jersey staple, and Shake Shack owner Danny Meyer recently announced plans for a spot in Dupont Circle.

"Guys from New York are coming down here because they can pay half the rent and do 75 percent of the business," said broker Thomas N. Papadopoulos, who has represented several Big Apple transplants.

The downturn, he pointed out, made the D.C. market appear even more appealing, as "generally anything inside the Beltway was still doing pretty well, while New York took a big hit."

Restaurant lease rates in the District generally stay in the range of $30 to $40 per square foot, while Manhattan rents can climb as high as $150 a square foot, according to LoopNet, an online aggregator of available commercial real estate space.

"If you are a restaurateur and you're going to grow your business, you are pretty much tapped out in New York. So you are going to go elsewhere," said John Asadoorian, principal broker of Asadoorian Retail Solutions. "And when you start looking elsewhere, one of the best spots in the country is D.C."

This year will mark the debut of another handful of New York establishments. P.J. Clarke's is slated to open in the former Olives Restaurant space at 16th and K streets. Over in Penn Quarter, construction is under way on the smoked barbeque joint Hill Country, which will rise across the street from another newly opened New York eatery, the Italian restaurant Carmine's. The popular Greek restaurant Kellari Taverna got ahead of the game, when it opened up on K Street last year.

Papadopoulos said his clients, which includes the Gerber Group and Flay, are focused on such high-traffic areas as Penn Quarter, Georgetown and downtown. Local hot spots, such as 14th Street and U Street, he said, have not quite registered on the radar of New York operators.

"The out-of-town guys don't quite understand those neighborhoods because they don't have the office density or the tourist traffic that they are used to," he said.

In many respects, the region is the natural next step for national expansion because of its worldly population and burgeoning restaurant scene. Yet the capital has in the past been passed up for more trendy locales, such as Los Angeles or Miami.

Now demographics, more than economics, have tipped the scale in the District's favor, he said. The area has a diverse and affluent population, which Asadoorian thinks is largely underserved.

"The news is out about Washington," Asadoorian said. "Washington has become this really dynamic place where it's not just government workers. [It] has a growing creative class, making it more exciting."

With so many eyes on the District, Asadoorian said finding space to satisfy new potential tenants could become a challenge. But as more New York restaurateurs become familiar with the area, they might venture out to the surrounding suburbs.

"Some of these guys that are looking at Washington are beginning to see that not only could they do well, but they could do really well," he said.

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