Downtown DC Economy Maintaining a Solid Foundation in Changing Times
WASHINGTON, D.C. – The DowntownDC Business Improvement District (BID) has released its 2012 State of Downtown report, which shows the fundamentals of the Downtown economy are strong, despite experiencing modest declines in several sectors. This economic stability exists because the DowntownDC BID area, and D.C., benefits from the still stabilizing impact of federal government employment and spending in addition to both public and private investments.
Overall, DowntownDC and the Golden Triangle BIDs contributed more than an estimated $1 billion in net fiscal impact benefit to D.C. tax and other revenues, or 125 percent of the D.C. non-charter school budget.
“The Downtown economy had a solid year,” said Steven Jumper, director of corporate public policy for WGL Holdings and chairman of the DowntownDC BID. “As we approach physical build-out, the Downtown will welcome two big development projects: Phase One of the CityCenterDC mixed-use complex this fall, and The Washington, DC Marriott Marquis convention center headquarters hotel next spring. Both projects will boost the number of people coming to Downtown.”
The State of Downtown report is published annually to update public and private decision makers on the historical, current and projected performance of the major sectors of the DowntownDC BID area and D.C. economies: development, employment, office, population, housing, hospitality, tourism, culture, entertainment, restaurants, retail, and transportation.
Some 2012 report highlights:
- BID area employment grew to 181,500, an increase of 2,200 since 2010.
- DC is maintaining its regional market share, with employment at 24.1 percent and population slightly increasing market share from 10.8 percent to 10.9 percent.
- D.C.’s population increased by 13,000 in 2012 and 14,000 in 2011; about 50 percent of that growth occurred within two miles of the Verizon Center.
- D.C. and BID area office markets continued to be strong relative to the region and the nation, although both had significant negative absorption—547,000 SF in the BID area; 567,000 SF in D.C.
- Retail is nearing the requisite critical mass to be a successful shopping district: two significant shoppers goods retailers, J.Crew and T.J. Maxx, opened, and while the total number of restaurants open at the end of the year was slightly down from 2011, 136 in 2012 vs. 138 in 2011, there were nine restaurants under construction or in development at year-end, three of which have opened in the first few months of 2013.
- Hotels experienced a modest decline in operating performance and revenues, but revenues were still higher than any other year, except 2011. (Hotel revenues for the first three-and-a-half months of 2013 are up 5-10 percent over 2012.)
As stated in the report, the BID area and D.C. are holding their own in all major economic sectors, but they face significant competition from Suburban Maryland and Northern Virginia on cost and, increasingly, on amenities. D.C.’s commercial real property and corporate tax rates are significantly higher than those in the region’s other jurisdictions. While some premium is warranted because of the amenity base and location, bringing the rates into alignment with the rest of the region would better position D.C. and the BID area to capture their share of growth in office space and corporate tenants. An increase in office space and corporate tenants would further protect D.C. tax revenues from potential federal decreases.
“Continuously monitoring the economy is critical to adjusting both the city’s economic development and investment strategies,” said Richard Bradley, executive director of the DowntownDC BID. “A strong economic development strategy, a robust investment program and phased and contingent moderate commercial property and business tax rate reduction should allow D.C. to maintain and manage a high quality public realm, so that the BID area and the city continue to be attractive to organizations, businesses and residents in the years to come.”
Bradley added that the BID is extremely pleased with Mayor Vincent Gray’s 5-Year Economic Development Strategy, which is focused on diversifying and growing the city’s employment base. “We look forward to continuing to partner with the city on this effort,” he said.
To obtain copies of the 2012 State of Downtown report, contact Jeannette Chapman at 202-626-1131. The report also is available on the DowntownDC BID website at www.downtowndc.org/state, and will be available soon via the iPad by downloading a new app which provides the report in a digital format. The link to the app will also be available soon at www.downtowndc.org/state.