Retail on Capitol Hill: Part I
by Larry Janezich
Posted April 20, 2026
“Why can’t we have something on Barracks Row besides bars and restaurants?”
–CHC reader comment
Small-scale retail – brick and mortar businesses* – are essential to the charm and desirability of the Capitol Hill community. Even locally owned bars and restaurants are important for the quality of the lifestyle of neighborhood.
Walking Capitol Hill’s commercial corridors one encounters numerous empty store fronts on Barracks Row, Pennsylvania Avenue, SE, and H Street, NE. New occupants tend to be restaurant chains. For many residents, retail on Capitol Hill is less vibrant and less interesting.
The DC Office of Planning has launched a new H Street Land Use and Market Study covering 3rd to 15th Streets NE. The goal of the study is to help shape what gets built, what kind of businesses residents support, how public spaces are designed, and how to strengthen H Street’s identity for the long term. For more on the study, go here: https://engage.dc.gov/w68032
So far, how to bring that help to Barracks Row and Pennsylvania Avenue, SE, has not been the coordinated focus of the city or its local institutions.
ANC6B has floated the idea of a roundtable to bring together commercial stakeholders to brainstorm ideas as to why a better retail mix seems unachievable on Barracks Row. This is not a new idea. In 2019, ANC6B formed a Working Group on Barracks Row to address challenges facing commercial/retail outlets on 8th Street, SE. After an initial burst of enthusiasm, the effort dwindled and then faded away without resolving anything. A proposed moratorium on bars and restaurants on Barracks Row in 2009-2010 likewise went nowhere.
CHC conducted several interviews to try to better understand the issues in play. Here are some of the most commonly cited factors that make it difficult for local retail business to survive on Capitol Hill.
Amazon
It’s easy – just click and buy something on Amazon.
High Rents
According to a former Capitol Hill business owner, “it is incredibly difficult for small retail to be successful – rent for retail space on Capitol Hill is astronomical.” A real estate broker told CHC rents can range from $30 to $80 per square foot, depending on the buildout.
Triple Net leases
According to a former small business owner, many commercial retail outlets on Capitol Hill have what is known as “triple net leases” – “so that’s really, really scary for a small business.”
Triple net means that a lessee not only pays base rent but also pays property taxes, insurance and upkeep for the building – property owners don’t pay anything. Potential tenants may know their base rent but have no idea what annual costs of maintenance or property taxes will be.
A small locally owned retail outlet like the former Radicci related their monthly payment was $17,000 a month (which appears to have included triple net). One locally owned bar on Barracks Row is reportedly paying $25,000 a month in rent and triple net.
Financing Issues
Many of residents pass by empty storefronts and wonder why the landlord does not respond to the market by lowering rent. A knowledgeable source says that part of the reason for high rents is financing. A commercial building’s value is directly tied to income from the lease. If a landlord signs a long-term lease at a lower rent, the property’s appraised value drops. Commercial loans generally come up for renewal every five or ten years so landlords are very reluctant to lower the rent because it’s going to affect the amount for which they can finance their properties. This could trigger a refinancing and result in out of pocket expenses for the landlord.
Preference for Restaurants
Landlords often let a building sit empty, waiting for a long lease from a national franchise fast food place – say a tenant like Taco Bell. Leasing to a local tenant at a lower rent precludes leasing to tenant with deeper pockets. The former Capitol Hill business owner says: “I definitely think that has been a problem on Capitol Hill…When I was looking for a place I had multiple landlords tell me that they wanted restaurants to go in which I think is hilarious because most of the restaurants need highly engineered spaces.”
City Obstacles
Many current, prospective, and former tenants agree that the city’s permitting process is too burdensome, especially when compared other jurisdictions. The former business owner says “it’s very difficult to find out what you need to do to open and every time you talk to somebody they will tell you something different.”
Michael Warner, co-owner of DCanter with his wife Michelle, who recently opened an outlet in Old Town Alexandria, says that “the regulations in Virginia and DC are not that different – what is different is the ease of complying with regulations in Virginia. Within one or two phone calls you are on the phone with the person who can help you walk through the X, Y and Z that needs to be accomplished to get that permit. In DC by comparison it tends to be a bit of a rabbit hole and you spend a lot of time and a lot of effort trying to get through to the right people.”
*Some current and former brick and mortar include apparel stores (the former Bitter Grace), gift shops (Groovy’s and the former Monkey’s Uncle), second-hand dealers (Clothes Encounters), book shops (Capitol Hill Books), artisanal goods (the former Fridge and the former Homebody), antique shops (the former Capitol Hill Antiques and the former Found on the Hill), and consignment boutiques (Clothes Encounters), specialty food shops (the former Souk and the former Mason & Greens ), barber shops (Ja-Jo’s), hair stylists (Blackbird), florists (the former Ophelia’s), hardware stores (the former 8th Street Hardware), leather goods, (the former Quavaro), and custom furniture (the former Septcarres).
Next: Retail on Capitol Hill Part II
CAPITOL HILL CORNER 
Maybe it would be worth an experiment – after NYC Mayor Mamdani – have the city buy a few buildings and rent them out at reasonable rates – maybe with commuity review every few years. Part of the problem is that, in spite of what people say, fast food restaurants do well because people go there. What people say they want and what they say with their pockebooks are often different.
If the city bought buildings and then rented them out at a “reasonable” (by which I think you mean “below market”) then a few things would happen:
I said it below but I’ll say it again: let’s get local residents to pony up money to buy 8th St properties through a co-op model.
Let’s say a building costs $1,500,000. If you got 300 people to buy one share at $5000 each (probably not a big ask for many of our well-heeled neighbors) then they could rent it at whatever rate they like to whichever cute retail operator they like.
And if they don’t want to put up $5,000, then do they really have much standing to tell property owners what to do with their property?
Let’s not ask taxpayers across the city to subsidize 8th St. Let’s ask neighbors that care about 8th St retail to put up capital and then accept a below market return on that capital in exchange for making Capitol Hill the retail-friendly neighborhood that they want it to be.
Incentives are perfectly aligned: people get the gain in neighborhood charm that they want in exact proportion to the financial pain that they are willing to absorb.
Beautiful!
I think part of the problem is we’re sandwiched between Navy Yard and H Street/NoMa. A lot of the high quality chains will open in those locations but probably consider Capitol Hill to be too close to open another.
Yes, 100% –and the SW Waterfront. Those are newer and trendier areas. 8th St. will cycle back at some point, probably when those start to age –but probably not immediately. I wonder if we could turn 8th St into a 100% pedestrian area like the Third Street Promenade in Santa Monica, CA –though it’s not like the Promenade is doing very well right now!!
Great piece and great original reporting. I am looking forward to Part II.
There is some great retail along 8th St. Yes! Market is where I go the most but I also like Union Market and do miss 7-11.
I think the combination of Amazon delivery and being surrounded by fairly low density $1 million+ houses (where people can pay to eat out regularly) goes a long towards explaining the very high rental rates. The market just isn’t big enough to support more than a handful of grocery stores (and we have, off the top of my head, Safeway, Trader Joe’s, Whole Foods, Aldi, Harris-Teeter, Yes!, and various bodegas) and there are just not enough people in the neighborhood to support most kinds of specialized retail. When was the last you went to a dress shop or a local furniture store? But, there are enough wealthy people in the neighborhood who can afford to eat out regularly (though that is changing as prices go up and up and up thanks, in part, to the changes in tipped wages for servers –big thanks to everyone who voted for that terrible idea).
I don’t buy that tenants have “no idea” what their property taxes are going to be. The value of a building does not swing dramatically. Maintenance costs? Sure –there is some uncertainty there but would the tenant rather have that baked into the lease? The maintenance costs create an incentive to take care of the building since the tenant will be there (possibly) for decades. And, it makes repairs easier since the landlord does not have to coordinate with the repair techs and the tenant to minimize business disruption.
And, please, let’s not hear the usual complaints about “greedy landlords.” Landlords are trying to make a living just like everybody else. They also must deal with long vacancy rates (to say nothing of months or even years of free rent to get a tenant into a space and, of course, the times when the tenant simply doesn’t pay). High rents make up for the long stretches when there is no income on the property and when the landlord is absorbing property taxes, insurance, and (often) a mortgage.
If having local retail is important to us as a community, let’s patronize local merchants and pay the prices needed to help them pay their rent, even those prices are above what Amazon, Target, and Wal-Mart charge.
Or, even better, let’s try to Mott’s Market model of community ownership. Not government ownership, mind you, but voluntary community ownership and management. It’s amazing how putting one’s own money up sharpens the mind, clarifies the tradeoffs, and incents people to shop local.
The biggest structural problem on the Hill is that there is too much commercial space chasing too small of a population. The zoning of commercial districts occurred in an earlier era when residents couldn’t order off of Amazon, shop at large grocery stores, or hop in the car for a quick run to big box stores in other parts of the region.
The solution is to: 1) Rezone many of the commercial properties so that they can be converted to residential on the 2nd – 4th floors, and, 2) Update the Vacant Property Tax so that a vacant street level space triggers the increased tax rate.
These two simple changes will simultaneously create a new revenue opportunity for landlords on the upper floors and a financial disincentive for leaving the ground floor vacant.
David, those are two outstanding thoughts. First that Capitol Hill has too much commercial space for too small a population, and second, that easing the conversion of commercial space to residential is worth considering. After all, the neighborhood used to have many more corner stories and other commercial activities that are now residential. The movie theater property at the corner of 11th and NC SE became a townhouse complex in the early 1970s. The corner store at 10th and NC SE became a dentist’s office in the mid-1970s, and is now a residence.
The separate topic, more controversial and more intractable, is who should be leasing the commercial spaces. This is where taste, snobbery, classism, and race often rear their annoying heads. Dan
I believe any commercial building can be re-purposed for residential. So, no issue there. In fact, lots of residential development on or immediately off of 8th St now (including the old garage on E St.).
I’m not sure I’m into a vacant property tax. It just drives down the value of buildings if you are forcing landlords into long-term leases that they don’t want.
More generally, I have always found the combination of very aggressive historical preservation regulation / enforcement and vacant property taxes to be appalling both morally and in terms of public policy. Not everyone can afford to pay for the exquisitely precise requirements that so excite our betters in the Restoration Society.