"And I walked and I walked and I walked," said Kohler, whose family owns a cluster of home and decorating companies, including Baker Knapp & Tubbs, which in April opened Baker Georgetown at 3330 M St. NW, six long blocks from the Four Seasons. Look there for $1,300 chairs and $4,000-plus tables.
"I passed the tattoo parlor, I passed the nail salon . . . and I thought, `What am I doing?' "
And then she met her would-be landlord, Anthony Lanier, and he began talking.
He talked about changing run-down buildings into magnets for big-spending shoppers; he talked about European-inspired Main Street retail; he talked about Georgetown as an "urban village."
"You've walked down M Street. . . . It's a little questionable," Kohler said. "That would not have been an obvious choice for us. We really made the decision because Anthony painted a very compelling vision of the future."
"What inspired us was . . . his passion for it. It's not just leasing his space on M Street, it's creating a community around it."
Lanier, 47, a gregarious man with a wide smile and an Austrian accent, describes himself as "just a bean counter." That may be so, but he's a charming bean counter who is guiding the investment of hundreds of millions of dollars of European money into the redevelopment of the commercial district of Washington's oldest neighborhood. His goal, he says, is to bolster Georgetown as an "urban village," a prosperous place where people live and a destination where people from around the region come to shop.
Many people in the city say they welcome the changes that Lanier (pronounced lan-yay) is making as he turns decrepit or empty historic buildings into expensive stores. Others say they fear that the big national retailers he is courting will disrupt the balance of the neighborhood, pushing out smaller shops, bringing more traffic to already crowded streets and making life miserable for residents.
Lanier's company, EastBanc Inc., is involved with "40 or 50" buildings, he said -- "I couldn't tell you" exactly how many. Along with New York development firm Millennium Partners, it is working on two big mixed-use projects, one at the old Georgetown incinerator site on the riverfront and the other at 22nd and M streets NW, in the West End. Those two projects amount to an investment of $400 million, Lanier said. His firm also owns many smaller buildings along the Georgetown stretch of M Street, an investment of another $150 million. The company has also been involved with projects downtown and in Arlington and Alexandria.
EastBanc's capital comes from European investors, many of them German. Lanier attracts this money through his European background and contacts, as well as a track record of profitability. "Nobody would let me do this at a loss," he said.
His European investors, he said, are willing to wait longer for a payoff than U.S. investors would. "The U.S. market is not inclined or doesn't have the patience to say, `Let's take a 10- or 15-year view.' "
Lanier said he has access to the money "through an old relationship with a couple guys I grew up with . . . who had been always advising high-net-worth individuals."
Those "guys" are partners in TMW Real Estate Group LLC, one of the largest investors of German money in American real estate, with a portfolio valued at more than $2 billion. They have become Lanier's partners in Georgetown Partners LLC, the entity doing much of the Georgetown development.
TMW guides the U.S. real estate investments of numerous German insurance companies, banks and wealthy industrialists; it has stakes in more than 13 million square feet of office and retail properties in 40 U.S. cities. The Georgetown properties fit the profile of one of TMW's investment targets, "unique urban investments in `24-hour' locations"; the company has also invested on Newbury Street in Boston, near Union Square in San Francisco and on North Michigan Avenue in Chicago.
"We have an unending appetite for capital," Lanier said. To get that capital, his proposals are always vying with other investment opportunities. "We're competing, even in my own partnership, with San Francisco, Boston, Miami. If my returns are 10 percent and theirs are 12 percent . . ." he said, trailing off. "And we're competing against the rest of the market. [Investors] put their money where it's profitable, not where they like the people best."
One recent morning, Lanier walked down M Street to give a tour of his buildings. Along the 3300 block near the Key Bridge, where Baker opened this spring in a space that had been empty for a decade, he envisions a complex of design and home-related stores. He owns or has under contract about three-quarters of the buildings on the south side of the street. On the north side, he already owns the former Eagle Liquors and Staples sites, which he plans to turn into parking. He has plans to buy other buildings there, too.
This overhaul of almost an entire block is one of Lanier's biggest current projects. He's still working on getting all the government permissions he needs to combine the interiors of some of the buildings, and to create more space in the alley.
The size of the project, which he hopes to have finished by 2001, makes it the current focus of both Lanier's supporters and those who are leery about his plans.
For years, that block of M Street was decrepit bordering on scary. "It was never maintained very well," said Jonda McFarlane, chairwoman of the local Advisory Neighborhood Commission. "It's very exciting and wonderful to see those buildings restored and have it done with sensitivity."
But another ANC commissioner, Barbara Zartman, said she worries about traffic and also about what combining buildings to allow bigger stores will do to the fabric of the neighborhood.
"We are seeking a balance between the appreciation of property and letting development occur, and not creating so much traffic that you take away the joy of living in Georgetown," Zartman said.
As Lanier walks along M Street, he points out the other buildings he's working on and those he has already renovated. There's Barnes & Noble and Eddie Bauer, a project he and TMW bought from Chicago developer Daniel McCaffrey in 1996. There's an old Burger King that's now BCBG, a trendy clothing store. He has also finished space for Smith & Hawken and the Pottery Barn.
He strolls into one storefront under construction, the former Cafe BaBaLu. "You have fabulous volume -- look at the ceiling height. . . . What we did was buy a building with probably 3,000 square feet of retail space and converted it into 8,000 square feet."
Upstairs, as in his other buildings, there will be an expensive duplex apartment.
"If you say, `I live on M Street,' people say `Why?' today. In two years, when you say, `I live on M Street,' people will say, `Do you have one of those flats?' "
He points at another building that's being gutted. "Remember Georgetown Seafood? This is going to be Sephora," the French cosmetic superstore.
As he walks, he greets neighbors, construction workers and shopkeepers. He wanders into Georgetown Tobacco, where longtime proprietor David Berkabile treats him to some expensive German cigarettes.
Has Lanier bought this building yet? No, says Berkabile, who has rented the store for decades and has a sometimes tense relationship with his landlord, "but he's welcome to."
In Potomac Liquors, the owners urge him to try a sip of an Austrian wine they've just imported. He compliments it; they compliment him.
"Anthony, people are raving about Baker's!" says the man behind the counter.
Georgetown was a working port town for years before the swampy, uninhabited land around it became the nation's capital. By the 1960s, it was Washington's most famous neighborhood: The Georgetown dinner party is national shorthand for where real political power is wielded, even if just about everyone who lives here swears he or she has never been to one.
People who lived in Georgetown in the 1960s and '70s talk about the main commercial strips, Wisconsin Avenue and M Street, as a cozy and wealthy little downtown, a place where unique shops and chic restaurants nestled near a drugstore run by a man everyone called Doc.
In the 1980s, Georgetown was increasingly dominated by bars and restaurants. Crowds of youths cruising with their car stereos up loud became a staple of weekend nights. A lot of the shoppers were tourists who didn't know any better, and there were plenty of T-shirt shops to serve them.
There was trash and graffiti; retailers and residents traded crime stories. In 1991, retail vacancy rates hit a high of 19.1 percent.
By the mid-1990s, though, major national retailers who for years had ignored cities began grabbing upscale urban locations around the country. Georgetown's large longtime commercial landlords spruced up their buildings, attracting stores such as Patagonia and Dean & DeLuca.
"It's a strong market, but it's been a very underserved market" as far as top-of-the-line retailers, said Richard H. Levy, whose Levy Group Ltd. is one of the neighborhood's biggest property owners. "It was heavily running shoes and T-shirts."
He said, "People want to be in Georgetown; the history is here. The challenge is making it successful." Lanier, he said, "is bringing some foreign capital to bear. To the extent his investors are happy, Georgetown can only be happy."
Lanier says his investors indeed are happy, both with their current returns and with the long-term promises he has made to profit by creating a retail neighborhood "that gets people excited and takes their money away."
Lanier says his vision of Georgetown as urban shopping magnet is shaped by his European background. He was born in Brazil but raised in Austria. He went to school at the University of Vienna and a Jesuit college. He speaks some French, Italian and Spanish, and he's fluent in English, German and Portuguese. (He says he didn't learn Portuguese in Brazil, but rather after he met his Portugal-born wife, Isabel, who spoke no English at the time. They've been married 25 years.)
He "somehow got into real estate through family friends," he said, and "ended up here in the early '80s." For several years, he worked as a mortgage executive for a now-defunct company, DRG Financial, that specialized in financing low-income apartment complexes.
In 1987, he started EastBanc; in 1990, he became a retail developer by buying a distressed Norfolk shopping center. Using his European capital, he also bought Washington office buildings.
Lanier bought his first Georgetown property along with TMW in 1995, the building that now houses the Gap at 1258 Wisconsin Ave. He knew and liked the neighborhood because he has lived there since 1987.
Being a Georgetown resident has smoothed Lanier's business path. For a Washington developer, he has a congenial relationship with the community where he's building. He gets a noticeably friendlier reaction in Georgetown than he did even in the neighboring West End, where he and Millennium Partners faced some vocal traffic-oriented opposition to their Ritz-Carlton project.
"We find ourselves . . . to be building trust with Mr. Lanier," said McFarlane, the Georgetown ANC chairwoman. "He's done a number of projects, and they have been done with sensitivity."
She said, "It's pretty hard to see how we could find someone to do it better. One of the things he has going for him is he lives in our community and he doesn't want to be a hated member of his village."
Although he's renting out his space to giant chains, Lanier says it's that image of a village that drives him, not West 57th Street or Fifth Avenue.
"If you have a choice of living anonymously in a city, or recognized in a village, with all the pluses and minuses, the tendency is to say I would like to live in a village," especially if it's close to work. "It basically lets you live without a car," he said.
"What does a village have? It has local merchants. It allows you to know your policeman, your postman, your neighbor -- really know your neighbor. It allows your children to go to school in the neighborhood. Georgetown is the only space in the metropolitan area that qualifies as that."
It's exactly that feel that some in Georgetown fear Lanier is changing with his chain tenants that are willing to pay the higher rents in upgraded buildings, rents that weaker businesses might not be able to afford.
"The thing we're primarily concerned about is that Georgetown has transformed itself from a neighborhood shopping center to a more regional shopping center," said Don Crockett, chairman of the Georgetown Residents Alliance.
He said, "It's not good for Georgetown to become just like any suburban mall, with the same stores."
Zartman said, "What you hear from your neighbors in Georgetown is, `Gee, we'd like to have some human-scale shops.' As people see large box-type stores trying to fit into historic buildings, they get concerned."
But an idyllic balance between prosperity and local charm is rare in modern America, where profitability, not sentiment, determines which businesses survive. There's a Gap in Greenwich Village, and Wal-Mart has drained shoppers from little Main Streets everywhere. Towns that somehow go upscale while staying quaint and charming may not remain livable; few locals can afford Aspen anymore. The other extreme can be worse: No big, flashy retailers are bidding to fill empty spaces in the desolate downtown of Camden, N.J.
"In one way, I would love to see it back to the 1960s and early '70s, when I moved to Georgetown, when all the businesses were unique, but I don't think that's happening in many places," said Barbara Woodward, president of the Citizens Association of Georgetown. What residents can push for, she said, are businesses that operate in a way that respects the residential character of the area.
Realistically, some of Georgetown's older shops aren't that wonderful, said Bill Cochran, an architect and resident who was chairman of the ANC for several years in the 1980s. For instance, he said, Wisconsin Avenue is studded with "little stores that sell two types of suits, purple and orange."
Along M Street, he said, "Hey, it's great. They're not pushing out local businesses. What's Anthony displacing? He found a new home for Zed's," a restaurant, "and that's the only one anyone cared about."
Michael Sendar disagrees. He's a lawyer and a founder of Big Wheel Bikes, which is losing its warehouse space near 33rd and M streets to Lanier's project. He settled that dispute out of court and won't talk about the details, but is now representing another business being kicked out of the 3300 block of M Street, Tropical Tanning.
"I take exception to EastBanc's attitude toward its tenants in general," he said. "It has taken a bullying approach."
Sendar said, "I think Mr. Lanier talks out of both sides of his mouth. . . . I don't look for handouts. Business is business, but let's call it what it is. He's a callous businessman. He didn't go out of his way in respect to finding me alternative business space."
He said, "They hold themselves out as white knights, and that is not the case."
Lanier has little sympathy for some of the vanished or vanishing businesses. "Local retailers are not nonexistent because Anthony Lanier started buying their buildings," he said. "They're nonexistent because they went out of business."
For instance, he said, locally owned Potomac Liquors is thriving, while Eagle Liquors opted to sell to him. "We never bought a local retailer and put him out of business. We always bought when the local retailer had decided to go out of business and wanted to sell."
As far as businesses that are tenants rather than building owners, "If you can only survive if you pay $10-a-square-foot rents," you can't survive in a market where rents are $30, $40 and higher.
Indeed, he maintains that the changes he is bringing about should make Georgetown a friendlier place for strong local businesses. "Those retailers who have an interest in this community and serve this community always have and always will do well," he said.
National businesses, he said, "will establish this again as a retail area," because their strong credit ratings allow him and other landlords to get the financing needed to upgrade the buildings and the neighborhood.
When that happens, in his vision, there will be shoppers eager to spend. Unique and local stores that can attract enough of that money will be able to afford the higher rents and can thrive, he said.
"This city is ready for communities," he said. "The epitome of that community is when we get a little butcher to come in, a little baker. If that doesn't happen in the next five years, then I think people can say, `You destroyed the village.' "
Title: Founder and president, EastBanc Inc.
Background: Born in Brazil; reared and educated in Austria
Business: EastBanc, founded in 1987, acquires, develops and manages property; it has about 2 million square feet of real estate and nine employees.
Personal: Married, three children
Current personal project: Renovating a large Georgetown town house. "I'm taking all the stuff I learned from these buildings and building a beautiful house."
What he drives: Black Mercedes M430 sport utility vehicle -- but he doesn't drive it often.
What he's reading: "Selling Places: The Marketing and Promotion of Towns and Cities, 1850-2000," by Stephen V. Ward, and "Kiss, Kiss," a collection of Roald Dahl short stories
Favorite Austrian hotel: Landgasthof Schloss Kammer in Maishofen, near Salzburg
Georgetown Partners LLC Projects
1. Fino, 3033-35 M St.
2. Sephora, 3065 M St.
3. 9 & Co., 3067 M St.
4. Pottery Barn/Smith & Hawken, 3077 M St.
5. Hats, 1237 Wisconsin Ave.
6. BCBG, 3210 M St.
7. 3233-35 M St.
8. 3265 M St.
9. Radio Shack, 3269 M St.
10. Eagle Liquors, 3345 M St.
11. Design Center West
EastBanc Advisory Projects
1. Barnes & Noble, 3040 M St.
2. Another Universe, 3060 M St.
3. French Connection, 1229 Wisconsin Ave.
4. Britches, 1247 Wisconsin Ave.
5. Gap,1258 Wisconsin Ave.
6. 3333 K St.
1. 3025 M St.
2. 3263 M St.
EastBanc/Millennium TMW Project
1. Georgetown Incinerator
CAPTION: Developer Anthony Lanier's vision of an "urban village" in Georgetown includes the new Baker Georgetown store at 3330 M. St. NW.
CAPTION: Lanier's reach is pervasive: He bought the Barnes & Noble on M Street in 1996.
CAPTION: Anthony Lanier, at Baker Georgetown, sees a bright future for his adopted hometown.