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New restaurants keep the good times rolling at Bethesda Row

Two developers who are planning a new residential and retail development in Bethesda, Md.

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By Danielle Douglas
Monday, October 18, 2010

Boisterous laughter and clanking wineglasses nearly drowned out the music at Jaleo on Bethesda Row one recent Saturday night. Nearly every bar stool and dining chair at the Spanish eatery was filled with patrons, sampling tapas and sipping sangria. Outside, couples streamed into Mussel Bar across the street or took a place in line at Yogiberry around the corner.

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If anything, the restaurant scene there is as vibrant as ever, with the addition of a crop of new eateries, such as Mussel Bar, Vapiano and American Tap Room. These offerings round out some 15 years of development by Federal Realty Investment Trust that has turned a sleepy suburban main street into a thriving downtown enclave, running at 97 percent occupancy.

The new kids on the block replaced local staples, such as Austin Grill and Levantes, signaling a new era at Bethesda Row. Some are regional mainstays, such as Five Guys and Sweetgreen, while others have a downtown D.C. feel, such as Taylor Gourmet. They all speak to the evolution of the area, and bring into question what effect their presence will have on the wider business district.

"I was somewhat of a skeptic that adding four or five new big restaurants to the area would help, but I have to give ours friends at Federal Realty credit," said Robert Wilder, co-owner of Jaleo, a fixture on the row since 2001. "Our business is up pretty significantly this year. It seems like all of the buzz the new places are generating is working."

That buzz may serve the area well, as it kicks off the annual Bethesda Row Restaurant Week on Monday, (Oct. 18). Wilder, whose restaurant is participating in the event, is bullish on the swath of Bethesda bound by Arlington Road, Elm Street and Bethesda and Woodmont avenues. Still, he said the area is not without challenges.

SLOWER IN THE SUBURBS

For all of its urban appeal, Bethesda Row is still in the suburbs, which can mean fewer seatings as well as sluggish lunchtime and weeknight business for the 33 eateries within the district. That pressure is often compounded for the 160 other Bethesda restaurants that exist nearby.

Simon Hewson, manager at RiRa Irish Pub just west of the area, said he's used to the flow of customers ebbing for a few weeks following a restaurant debut. But with four places opening one after the other, that "honeymoon period" has been longer.

"The grass isn't always greener on the other side," he said. "And when the honeymoon period is over, customers come back to where they feel most comfortable. We know we will get our customers back, but not every restaurant is quite so lucky."

Having lived on and off in Bethesda for 12 years, Hewson has seen the evolution of Bethesda Row, which he said has benefited the area by drawing larger crowds. But those crowds only go but so far, leaving many of the restaurants further north, namely in Woodmont Triangle, with less traffic.

An eclectic mix of 75 mom-and-pop bistros and cafes, brimming with small-town charm, Woodmont Triangle was once the centerpiece of Bethesda's restaurant scene. A few Saturdays ago, diners could still be seen filing into neighborhood haunts, such as Black's Bar & Grill and Positano's, but the foot traffic was far less than that witnessed further south.

"Bethesda Row has always been a little more popular because there are more shops there, it's better to walk around," said Roberto Pietrobono, co-owner of Olazzo, located on the southern tip of the Triangle. "But you do well depending on how you run your business." He said business at his 62-seat, Italian restaurant has held steady, despite competition and the recession.

"People do business with people they know," said W. David Dabney, executive director of Bethesda Urban Partnership. "You have chefs that are owners that love to interact with their customers, and that's the kind of thing that keeps these places going."

He said, however, that the "ambiance and character" of Bethesda Row heightens competition.

PAYING FOR LOCATION

Since purchasing the Bethesda Row development from Thomas B. Miller in 1993, Federal Realty has completed eight phases of build-out to the tune of $197 million. Much of Bethesda Row has the feel of a Parisian-style streetscape, complete with indie theater and trendy boutiques. Moviegoers pouring out of Landmark Cinema or shoppers leaving Lululemon are quite likely to file into neighboring eateries.

"Co-tenancy and critical mass are critical," said Bill Miller, a broker with Transwestern Retail. "Woodmont is cute and quaint, but it just doesn't have the activity needed to drive aggressive rents and attract newer, better restaurants."

Synergy comes at a premium. Rents at Bethesda Row, according to area brokers, can range between $60 per square foot to upwards of $80 a square foot. Ralph Ours, senior leasing associate at Federal Realty, declined to confirm that range, but said, "The more interesting retailers we bring in, the higher the sales they do and the rents follow."

On the outskirts of the development, however, lease rates are typically capped at around $50 per square foot, trending in line with District rents.

"Developers are pricing Bethesda like downtown [D.C.]," said Wilder of Jaleo. "As good a market as it is, the sales patterns are more suburban, which means you only have two or three nights where you're really at capacity. Weeknights are slower and days are slower because you have so many restaurants."

Wilder said the Jaleo on 7th Street in Northwest Washington does far more volume than the one on Woodmont Avenue.

"The dinner hour is shorter in Bethesda and you are less likely to get the pre-theater business of late-night diners," he said. "Even though sales are relatively strong [in Bethesda], they will always be lower than downtown [D.C.] for us, and probably others."

Pietrobono suspects the fewer number of seatings per night is related to the larger number of families that frequent Bethesda. They are less likely to eat late or even eat out on weeknights, he said. High-rise rental and condo developments have attracted more single, young professionals, but not at a pace that radically changes the demographics.

Robert Wiedemier, owner of Mussel Bar, contends that his watering hole is pulling a pretty diverse crowd that has kept him busy in the past three months. "It's been awesome here," he said of his Bethesda Row locale. "We've been really successful."



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