For nearly 25 years, Bill and Kathy Rhee scratched out a living selling merchandise and novelties out of a bare-bones store at the District’s Florida Avenue Market. There, they were two of several dozen merchants who made up a community of wholesale supply stores helping to stock hundreds of businesses across the region.
But this spring, the Rhees’ landlord sold their warehouse space and asked them to leave. The couple has relocated to a warehouse in Hyattsville, miles from where they sold stuffed animals and gift baskets next to other similar merchants, and their old warehouse is being used as a pop-up shop. On three consecutive weekends this summer, JD Ireland, an interior design firm, took over the space, which was crowded with shoppers perusing vintage maps and $210 throw pillows.
Kathy Rhee, 68, isn’t at all happy about the change. “There’s no traffic at all right here; it’s just warehouses,” she said. “Customers can’t find my place — they’re used to coming to the market.”
The Rhees and almost 70 other similar hardscrabble entrepreneurs are part of a slow exodus from Florida Avenue Market, a 45-acre district wedged between New York and Florida avenues in Northeast Washington where dozens of small-business owners formed a distinct business community. Once populated solely by independent wholesalers selling fresh produce and meats in the city’s only district of its kind, the 85-year-old Washington institution has been known in recent years for being a melting pot for immigrant-run ethnic groceries and discount stores.
But in the past couple of years, much of the market has been bought up by developers, fulfilling the promise of a sign nearby that once blared: “Pretty soon, you won’t recognize the place. Promise.” Merchants who rent their spaces — a majority of the businesses there — are particularly vulnerable to a hot real estate market that has set its focus on the area, which is home to Union Market, a popular food hall that opened in 2012. Although only a handful of businesses have left, at least a quarter of those still there have had their buildings purchased by developers and are waiting to be told when to leave, the merchants say. Even those who own their buildings are fretting that they’ll eventually have to go.
“Of course we’re worried,” said Bill Hartman, a ruddy-cheeked man in his 60s who grew up at the market. His family’s company, Hartman Meat, has been there since it opened in 1930. “Everyone here is worried about what’ll happen.”
Hartman’s space, for instance, was bought last year by Edens, a South Carolina-based development company, for $10 million, one of the larger sums paid for real estate in the area. Like many of the merchants whose stores have been purchased, he doesn’t have to leave immediately: Edens has told him that the business can remain for 18 months. He isn’t sure where he’ll go after that.
One reason the Florida Avenue Market has been targeted for development is because it is a half-mile from the NoMa- Gallaudet U. Metro station and less than a mile from hip H Street NE, making it prime real estate, local developers and city officials said. A 2009 Small Area Plan conducted by the District’s Office of Planning outlined a vision of “vibrant restaurant and retail-based ground floors” and public plazas, recommending significant increases to the area’s building height and density.
Developers have run with that concept. About 1,000 residential units and almost 140,000 square feet of retail space have been approved by the zoning commission or are winding their way through the process, and many more of both are expected.
Edens is the biggest player. The company has plans to add a movie theater and four floors of offices or residential units to the Union Market building; the cinema is scheduled to open by September 2016. Edens, which along with other new landowners is asking the city for $90 million to modernize the area, recently was granted zoning approval for an 11-story project atop the Washington Cash and Carry building that could include as many as 680 residential units.
Other big developers are involved, too. JBG is working with Gallaudet University, which has properties on the market’s southeastern side, and Douglas Development owns a large building on the western end. And commercial real estate broker Kenneth Griffin said the market’s last big parcel — a 3.3-acre property built with city funds in 1986 — was purchased by a developer.
City officials declined to talk directly about plans for the area but said in an e-mail that “any development will continue to have the mayor’s heavy focus on affordable housing, providing opportunities for local and small businesses, the right balance of retail and restaurants, amenities based on neighborhood needs, and making sure that those communities have a voice in the overall development in any given neighborhood.”
Experts who study the fresh-food industry said the market’s situation is not unusual in many cities nationwide. Some cities have moved their wholesale markets — notably Philadelphia and Chicago, both via public-private partnerships — but it’s rarely a fast or cheap undertaking.
“The problem today is that the urban site that’s traditionally been home to these markets has become very, very valuable, and they are often redeveloped,” said Jim Prevor, an expert on the fresh-food industry who runs the blog Perishable Pundit.
Some market boosters say they believe the wholesalers, at least those who own their buildings and want to stay, can continue side by side with the developments. Paul Pascal is one of Florida Avenue Market’s biggest fans; he married into a poultry business there almost 60 years ago and served happily as the market’s on-site attorney for almost 15 years. His family still owns properties there. In 2006, Pascal led a successful revolt against a development plan that could have led to the area’s leveling, and he said he thinks these new changes are much more promising.
“I think some of the smaller ethnic wholesalers will stay because they sell both wholesale and retail, and I think that’ll create a nice atmosphere,” Pascal said. Developers won’t be able to gain eminent domain rights and kick property-owning wholesalers out, and Pascal said he thinks Edens and other companies will find a way to incorporate them. Edens did not respond to repeated requests for comment.
Others are more skeptical, though. Property taxes rose as much as 60 percent for some businesses this year and will probably continue to go up.
Just as significant are quality-of-life issues. “I unload my trucks at 4:30 in the morning, and I’m not even the earliest; the first businesses start at 3:30,” Hartman said. “That’s going to be okay with the people sleeping in condos above?”
During business hours, he said, sidewalks are crowded with backed-in trucks and stacks of boxes and can be difficult for walkers to navigate. “It can be one or the other,” Hartman said of a wholesale market and a pedestrian-scaled new development, “but not both.”
Hartman shook his head as he reflected on the loss of the market’s wholesalers. “There’s something unique about this market — it’ll never be re-created. Oh, [the city] will get more tax dollars, it’ll look pretty, but it won’t be unique.”
Indeed, few of the merchants have a firm idea of what they’ll do once they have to leave. They’re not just worried about losing brick-and-mortar stores; warehouse space is available in Cheverly, Landover and Hyattsville. The issue is losing the “one-stop-shop” aspect of the market. Shop owners come from as far away as Delaware and Pittsburgh to load up on yams from Afrik International Food, fish sauce from Thai Food Depot and bulk cinnamon from Brothers Produce.
“We support each other — we all buy food from one another when we run out, which happens just about every day,” said Cha Jen, who owns JC Enterprise, a wholesale business catering to Asian restaurants. To move en masse to a new, vacant area would be ideal but also dauntingly difficult for a disorganized group of wholesalers to pull off.
“It’s like a mall,” Hartman said. “We draw customers [because we’re together].”