The District is still stuck in a pandemic funk. Most days, the city, especially the core downtown blocks around the White House, looks more like a ghost town than a vibrant capital city. Before the coronavirus shutdown, visitors to Washington were often in awe of how many cranes punctuated the skyline. Now, it’s hard to find a building without a “for rent” sign. Coffee shops and restaurants are serving limited hours, if they’re open at all.
Hopes were high for a revival this fall. Schools reopened. Covid cases were way down. Businesses were calling their employees back. But the city has remained at about 45 percent of workers back in the office since Labor Day. That’s worse than New York, Chicago, Houston and the national average for major cities, according to data from the security firm Kastle Systems.
A key problem is federal employees are still largely at home. President Biden vowed in March that “the vast majority of federal workers will once again work in person.” Months later, it’s not even close to that. According to the Office of Personnel Management (OPM) Federal Employee Viewpoint Survey, nearly 40 percent said they work fully remotely or at home three or more days a week. Another 17 percent say they are at home one or two days a week. The DowntownDC Business Improvement District’s tracking indicates fewer than a quarter of federal workers are back in the office. Mayor Muriel E. Bowser (D) has been imploring the White House to change this. Allowing each agency to set its own rules was a mistake. Mr. Biden needs to set a clear policy of at least three days a week on-site for all federal workers who aren’t already back more than that.
They are the linchpin for downtown. When they aren’t around, lawyers, consultants, lobbyists and other workers also see little reason to return. While many big marquee law and other firms that have long dominated downtown D.C. have policies stating their workers should be in the office three days a week, few are enforcing it.
The fallout is evident. Walking along K Street Northwest from 14th Street to 20th — prime real estate near the White House — reveals 21 retail spaces for rent and 10 office spaces for lease. At happy hour on a recent Friday, many bars along this stretch had plenty of available seats. This desolate scene would have been unimaginable a few years ago.
It doesn’t help that several prominent businesses are ditching downtown altogether to move to the revamped Wharf area in Southwest D.C., where they can get river views and brand-new buildings. Law firm Williams & Connolly left 700 11th Street — right at Metro Center — to relocate to the Wharf. The downtown building’s owner, Hines real estate, has basically given up on the property. The lender has put it up for sale.
No one wants to see the capital city of the United States deteriorate. Many remember how grimy and desperate it was in the 1980s and early 1990s. There’s a lot that needs to happen to revive this downtown (and others across the nation), but, at heart, it comes down to two key things: get more workers back and transform some office buildings into apartments and entertainment hubs.
It’s unrealistic to expect a return to 2019 levels of attendance in the office, but if the federal government and most businesses would fully commit to requiring workers to come back at least three days a week, it would make a substantial difference.
At the same time, leaders of America’s biggest cities are grasping the fact that remote and hybrid work are here to stay. A D.C. Policy Center report in May summed up the city’s challenge: “Our best estimate is that of the 401,481 workers who commuted to D.C. from elsewhere prior to the pandemic, 155,550 can do their jobs from home.” There simply won’t be as much need for office space going forward. That’s a massive problem for downtown D.C.‚ which the mayor’s office says consists of more than 90 percent commercial space and only 8 percent residential.
Former city council member Jack Evans recalls standing in Franklin Square in the 1990s with former mayor Marion Barry, who lamented, “I should have surrounded these squares with residential 20 years ago.”
As depressing as it can be to walk around parts of the city, especially on Fridays, this moment marks a major opportunity. D.C. can become a leader in office conversions to apartments, museums, university hubs, indoor golf and more. In fact, it’s already beginning. D.C. saw the most office-to-apartment conversions in the country in 2020 and 2021, according to real estate data firm Yardi Matrix.
While downtown struggles, along with retail hubs in Friendship Heights, other parts of the city are thriving. The Wharf in Southwest, the area of Southeast by the baseball stadium and the Union Market area near the train station are all examples of how the city has used its funds to partner with developers and community members to transform neighborhoods. These parts of town now have more of a 24/7 vibe. They are busy during the day with workers, but also at night and on the weekends thanks to residents and entertainment venues that draw people into the city. Union Market has approximately 50 percent commercial space and 50 percent residential, a far more sustainable mix in this new normal.
There are reasons for cautious optimism. The city continues to attract new museums (the Museum of Illusions opens in December) and expand university campuses. Marquee venues such as the Kennedy Center and Capital One Arena are running nearly full event schedules again. Metro service is starting to improve, especially with easier access to Dulles International Airport. And violent crime, while still too high, is beginning to come down. Conversations with numerous developers indicate many of them are in wait-and-see mode. They’re watching what federal workers — and city officials — do.
Transforming downtown will require investment by the city. It’s not cheap to turn offices into apartments that need bathrooms and air conditioning in every unit. The big jump in mortgage rates this year also makes developers more hesitant to act without extra incentives. But the alternative is a dead downtown that won’t generate much revenue for the city. An influx of federal pandemic aid and infrastructure dollars afford the city a bit more money to work with than normal, at least for a while.
To the mayor, council members, investment leaders, developers, businesses and residents, we have one message: Be bold.
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