It Costs About $870,000 a Year to Run Eastern Market – Here’s Where It Comes From
By Larry Janezich
The restoration of Eastern Market after the catastrophic fire of 2007 came with the city’s expectation that the market would be self–sustaining.
Eastern Market is more than the building. It comprises the original fresh food market in the South Hall; the event space in the North Hall; the Farmer’s Line under the shed on 7th Street; the arts and craft vendors on the north plaza, on 7th Street, and on the sidewalk next to the Market; and the prepared food vendors in front of the city swimming pool on North Carolina – The Rumsey Aquatic Center. In the collective mind of the community, it also includes the Saturday and Sunday flea markets on the 300 block of 7th Street, operated separately from the Market by Managers Carol Wright and Michael Berman who pay rent to the city which is goes to Eastern Market. All of these components provide the revenue stream which makes Eastern Market, owned by the city and managed by the Department of General Services, largely self-sustaining.
Achieving sustainability has meant changing the Market’s character to maximize income, as the market’s role as a food provider for the community has declined in the face of competition from other markets and as the changing demographics of the community and attitudes toward food preparation have changed. This change is reflected in the amounts of revenue derived from each component of the market.
Here’s how Eastern Market’s income breaks down for 2016 (DGS was shy about releasing Eastern Market’s annual expenditures):
Income Budget Actually received
South Hall Rent 237,006 226.993
Outside vendors and Farmer’s Line 319,879 319,752
North Hall 209,574 229,678
Application/Event Fees 2,489 2,800
Flea Markets – 48,000
ATM 70,348 66,479
Total Income 839,355 893,702
According to Market Manager Barry Margeson, the Market produced a small surplus of around $25,000 over operating costs in 2016. And, according to Margeson, the following rents applied in that year:
South Hall Merchants $26 – $40 per square foot annually
Farmer’s Line $28 – $44 per day
North Plaza Arts/Crafts $28 per day
7th Street Arts/Crafts $44 per day
Prepared Food Natatorium Plaza $35 per day
Flea Markets $2000 per month each
Some observations: The outside arts and crafts vendors, the prepared food vendors, and Farmer’s Line provide more revenue than any other component. Rentals of the North Hall provide almost as much revenue as the rents from the South Hall Merchants. The ATM provides a surprising amount of income for the market – almost 7% of total income. A close look seems to reveal that some of the South Hall food merchants were behind on their rent at the end of 2016.
When the flea markets move to the newly reopened C Street between the North and South Hine Project buildings, in a month or so, that income will be lost to the Market because the new C Street will be private, and those monies will go to Stanton-Eastbanc. Mike Berman, manager of the Sunday flea market says he will be paying more to Stanton-Eastbanc than he is currently paying to Eastern Market, and will likely increase the cost of the spaces he leases to his vendors. One source claims that the Saturday and Sunday flea markets currently charge almost double what Eastern Market charges its arts and craft vendors who set up on the 200 block of 7th Street.
Eastern Market will have to make up the $24,000 shortfall in order to continue to be self-sustaining. There are two ways to do this, first, keep the 300 block of 7th Street closed to traffic and put out bids for flea market managers or other programmers to lease the space on weekends. Or Eastern Market could increase the rents for the other entities which comprise Eastern Market. Or both
To that end, DGS has commissioned an outside appraiser to determine the value of the spaces occupied by the South Hall Merchants, as well as the spaces on the 300 block of 7th Street. The appraisals are necessary to satisfy the statutory requirement that rents reflect fair market rents. Another appraisal of the value of the space around Eastern Market occupied by the various vendors, farmers, and prepared food outlets is in the works.
Eastern Market faces challenges in the face of increasing competition and will need additional funding beyond sustainability for marketing and promotion.
Eastern Market Community Advisory Committee (EMCAC) will hold a special meeting on Wednesday, September 6, at 7:00pm in the North Hall to make a recommendation on whether to continue closing the 200 and 300 block of 7th Street to traffic on weekends. It is likely that EMCAC will consider matters related to the appraisal of the space in the South Hall at its regular monthly meeting on September 19 at 7:00pm in the North Hall of Eastern Market.
CAPITOL HILL CORNER 
Why should Stanton eastbanc be paid for use of that space? Can’t they donate it to the community as an act of good will to thank us for putting up with traffic, heavy vehicles on the street and inconvenience? I’m guessing they relie on Eastern Market and the neighborhood’s reputation in marketing the space. Additionally, we will likely suffer addition traffic and pedestrian congestion when the building is fully occupied. I’d like a response from them.
The Hine plaza should be used to expand the arts/crafts market. It should be managed by a non-profit professional arts organization that can improve the quality of work. First come, first serve doesn’t guarantee quality goods. Some kind of permanent covered display space should be constructed and space for artistss to make demonstrations. Agreement to demonstrate should be required to get a space. Income from art market should go into the general fund to support the Fea-art and -indoor market.
To state the obvious, the exterior market pays almost $100,000 per year more than the interior market. For $100,000 more, the exterior market uses pavement, out-of-doors, daylight hours two days per week (plus the Tuesday farmers market). For $100,000 less, the interior market uses heated/air-conditioned space 6 per week in a magnificently renovated building six days per week, with free parking in the back all week, ample metered parking five days per week. Most likely more parking at no cost than anyone else in this city.
One of the most ridiculous and myopic aspects of the campaign by some interior Merchants to reopen the 200 block of 7th Street to traffic on weekends, is that it would diminish their own subsidy by $3000.00 per weekend during fair weather. That is $3000.00 per weekend for the 7th street only. $3000.00 is more than the highest monthly rent paid by the interior Merchants for the largest space.
Your comments are spot on. The South Hall merchants are paying rates that are far below market rates. By comparison, food vendors at Union Market generally pay rents in the area of $85 – $100 per square foot annually (restaurant vendors generally pay more). Barracks Row rents generally run between $45 – $85 per square foot, which does not include utilities, taxes, cleaning, or marketing costs. The vendors are the loudest complainers, but they are also the biggest beneficiaries of the city’s largess.
How many more vendors are outside compared to the inside? It seems more square footage is used outside compared to inside. What is the outdoor rent per square foot compared to the indoor? What are the operating costs of each? Union Market is nothing like Eastern Market. There is only one restaurant inside the Eastern Market with no alcohol. Until we have all of the facts like the actual operating costs and space utilization then how much revenue generated is worthless. The bigger problem to me is leasing the other flea markets to private entities for 48,000 a year when it seems it could generate much more revenue for the market if it was kept in house.
Very nice piece of research. Thanks Mr Janezich. This article really put things in perspective.
You forget option three. Cut the cost of operations.
I’m sure there cuts to be made. Not pleasant but have to be made. Private industry deals with this all the time and must be flexible.
You say the market costs about $870,000/yr to run. But that simply appears to be the gross yearly revenue of the market. That does not tell us anything about what it costs to run the market. What are the yearly expenses of the market? Without knowing the expenses, there is no way to know if the market is sustainable or not. Having a surplus or loss in revenue is also a meaningless piece of data without knowing expenses. This article is missing one important half of a P&L statement. Is that something you have access to and can post as well? Because I’d be very interested in seeing what that is.
Good point. Let’s separate the income from outgo.
I try to follow these and other local issues and I’m not an expert in the least. I do not know the correct solutions to issues challenging EM. So I’m sorry to pile on with only criticism. But two things bother me. First is the lack of a cohesive and properly coordinated plan for EM and its surroundings along with the ability to execute it among the multiple public and private entities. Second, why are these issues being dealt with just now when everyone knew for years that the Hine development was coming on line in 2017?
FWIW, since I became part of EMCAC in 2007, I have been advocating for an Eastern Market master plan, based on the example of the master plan created for Lancaster Central Market in PA. (Since then, Lexington Market in Baltimore has a similarly detailed planning document, although the land use context there is significantly different.) Since about 2010, concomitant with the Hine RFP process, i expanded that thesis, advocating for the creation of a “Capitol Hill Destination Development, Management and Marketing Plan,” somewhat comparable to the H Street planning process initiated by then CM Ambrose c. 2001 (the planning process started in 2002) who got the Office of Planning to get the ball rolling. The H Street commercial revitalization plan was really the city’s first big planning process in the Post-Barry era.
Ironically, while a rehabilitation “plan” was being developed (and acceleration of its execution occurred because of the fire) it wasn’t a master plan, didn’t include a space utilization plan, etc. E.g., with a plan in place already, the post-fire restoration would have been a good time to dig out the basis for marketable space, and consider use of the North Hall for food.
Similarly, we really blew it with the Hine north building — I should have come up with the idea early enough that it could have been conceptualized as an expansion of Eastern Market, a re-creation of the East Hall. But then it would have needed to be designed differently. The north Hine building isn’t well configured for retail/food from a design standpoint.
Pingback: The Hill is Home | Hill Buzz | The Hill is Home