It shouldn't come as a surprise that officials of Hechinger Mall in Northeast Washington are having difficulty getting retailers to sign up as anchors for Hechinger Mall II, a complex of 60 stores that would be built across from the existing Hechinger Mall.
In retailing, as in real estate, the name of the game is location. And major retailers don't think of the site for a new mall at the gateway to the H Street corridor a desirable location. Neither do they consider any part of Prince George's County desirable as a location for so-called upscale stores, for that matter. Nor, indeed, is downtown Washington on national retailers' lists of desirable locations.
Major shopping center developers, too, continue to avoid those areas.
Hechinger officials are getting a close-up look at what might be called retail redlining. It's not all that different from the contemptible practice in which so many financial institutions engaged for so long before yielding to pressure to make loans in certain neighborhoods. The locations weren't desirable. The wrong types of people lived in those areas. There was no money to be made in those communities.
The same philosophy seems to be at work in decisions by national retailers and shopping center developers to turn thumbs down on Prince George's County and most areas of the District. Again, the demographics are all wrong. The wrong types of people live in those areas. It's not possible to generate enough sales in those areas to make an investment worthwhile.
The success at Hechinger Mall stands as a strong rebuttal to each of those reasons, stated or implied, for redlining areas in the vicinity of the center, which is at the intersection of H Street, Benning Road, Bladensburg Road and Maryland Avenue NE. Merchants at Hechinger Mall gross twice the retail industry average of $150 a square foot, according to a recent story in The Washington Post.
If Hechinger's do-it-yourself store and others in Hechinger Mall quadrupled sales over the next couple of years, the H Street corridor would still be considered a huge risk by investors. The H Street corridor unfortunately will always be remembered as ground zero in the 1968 riots, which laid waste to a thriving commercial shopping district, along with other areas of the District. The D.C. government, meanwhile, has achieved little in erasing that image, failing to spur significant economic development in the area.
The demographics of residential areas on the periphery of the H Street corridor continue to undergo dramatic changes, nonetheless. High- and middle-income professionals who continue to settle in many of those communities, including extended areas of Capitol Hill, have added substantial buying power to the market. Other neighborhoods in Northeast Washington hold substantial numbers of middle-income families with considerable amounts of disposable income. Objective market studies will substantiate that.
What's more, Hechinger Mall is situated at one of the busiest intersections in the District, making the center convenient to commuters from nearby Prince George's County. Of course Prince George's County residents help support many of the larger malls around the beltway. National retailers and mall builders have chosen not to go to Prince George's County, so consumers there drive to places like Tysons Corner, White Flint Mall, Wheaton Plaza and Landmark Center, where they enrich the very retailers who are convinced that the county's demographics just aren't right.
Prince George's County's demographics have changed significantly over the past two decades because of major population shifts. Nonetheless, statistics compiled by county officials show that the median after-tax family income climbed to more than $42,000 in 1988, from just $30,000 in 1982. More than a third of the county's residents are in the over-$50,000 after-tax income bracket. Many of them are the lawyers, doctors, bankers, corporate executives, college professors, physicists, chemists, teachers, principals, real estate developers and engineers who have sufficient buying power to shop in Northern Virginia and Montgomery County where it's "safer" for shopping mall developers and retailers to invest.
They're no different from their counterparts in the District who drive or ride Metro to suburban malls because of the limited merchandise choices in the downtown shopping area.
The area around Hechinger Mall may not be attractive enough for major retailers because of the blight that remains along with memories of 1968. The same elements certainly aren't part of the picture in downtown Washington or in Prince George's County, where commercial development exploded between 1980 and 1989. Indeed, downtown continues to be the most active area for commercial development in all of metropolitan Washington. A lot of people certainly are convinced they're making the right investment decisions.
To be sure, now is not a good time for added investment anywhere by retailers and shopping center developers. Commercial real estate is practically in a recession and the retail industry is hamstrung not only by a slumping economy but also by debt and disruptions from ill-advised mergers and acquisitions.
Two or three years from now, when the slump is over, however, getting big-name retailers to open stores in a new mall built by Hechinger Enterprises -- a real estate partnership controlled by the Hechinger family -- or in downtown or in Prince George's County, will still be a tough sell.