July 26, 2023
For Immediate Release
Contact: Braulio Agnese, firstname.lastname@example.org
The year’s challenges — and successes — lay the groundwork for future progress
Washington, D.C. — Although the District of Columbia’s downtown has faced a number of challenges since the pandemic’s arrival in spring 2020, and several economic sectors continue to struggle this year, seeds of optimism sprouted in 2022 and the first few months of 2023 for the DowntownDC BID area’s recovery and reimagination. To provide a complete view of this complex landscape, the DowntownDC Business Improvement District (BID) has released the 2022 State of Downtown report.
This comprehensive document, which the BID has published annually for the past two decades, collects and analyzes data for nine DowntownDC economic sectors for 2022 and the first quarter of 2023 and offers some projections for the year to come. What this year’s report reveals is a story of two downtowns: one successfully recovering in a number of ways from the pandemic, the other still wrestling with COVID-19’s lingering impact, as the office market, everyday shopping, and office-serving food businesses continue to struggle.
Due to factors including the Omicron variant, Metrorail woes, concerns about crime and congestion, and the ongoing effects of remote work, DowntownDC economic uncertainty was at a 25-year high in the first quarter of 2022. But across the year and into the first quarter of 2023, DowntownDC’s economic activity rose to an overall level of 65% of pre-pandemic levels — up from 55% in fall 2022 and 47% in March 2022 — with multiple sectors showing strong or complete rebounds as compared to pre-pandemic economic activity; see the percentages below for current economic activity as a percentage of pre-pandemic activity:
- culture attendance: 75%
- convention center activity: 80%
- hotel occupancy: 93%
- entertainment attendance: 95%
- destination dining: 108%
- luxury shopping: 130%
“What this demonstrates is that people want to be in DowntownDC,” said Ella Faulkner, the BID’s Vice President of Planning and Economic Development. “This part of the District contains the most attractors for area residents and District visitors, from museums and theaters to Capital One Arena to an incredible diversity of restaurants and bars, not to mention Franklin Park and other great public spaces. Now we need to leverage these destinations and assets to continue this recovery and growth while we address other important downtown challenges.”
And those challenges are in keeping with what other metropolitan downtowns are experiencing, in which office and retail continue to be the hardest-hit sectors. 2022 and Q1 2023 saw the office markets in DowntownDC and across the city decline to their lowest performance in decades: reporting vacancy rates of 18.8% in the BID area and 18.5% in D.C. as a whole and approximately 42% of office workers are coming to the office in DowntownDC and 48% in the rest of the District (45% in D.C. overall). The weak office market has resulted in office property taxes declining by $135 million per year from FY 2019 through FY 2022, and the D.C. Chief Financial Officer estimates they will decline another $123 million per year by FY 2025. Ultimately, this means less support for D.C. schools as well as housing and social programs, because DowntownDC’s 1 square mile of land (1.6% of D.C.’s total area) contributes significantly to the city’s coffers: 15.8% of revenue in FY19, which is estimated to decline to 13.4% in FY24.
The downtown retail vacancy rate was 22% in March 2023, up from 21% in December 2021 and December 2022 and from 10% in December 2019. In large part this is because many retail businesses are office-serving and rely on steady workday foot traffic to stay open. Placer data shows the total number of people in Downtown was 60% to 70% of pre-pandemic levels in the first quarter of 2023. This loss of regular customers has led to the closure of many retailers since the pandemic’s arrival.
But there is good news: Eight projects totaling $1.2 billion are under construction as of Q1 2023 — including buildings for Georgetown University and Johns Hopkins University, as well as new residential projects, hotels, and cultural destinations. In addition, there are 15 planned projects, totaling $1.6 billion, that are estimated to generate $70 to $100 million per year in new tax revenues for the city. Also, importantly, as of July 2023, there are three office-to-residential projects under construction, 12 announced, and several more projected, signifying a shift in DowntownDC’s mix of building uses and removing 5 million square feet from the city’s office market.
Office-to-residential conversions are just one of many topics under discussion in the Downtown Action Plan, the ongoing collaborative effort by the DowntownDC and Golden Triangle and BIDs, in partnership with the Federal City Council and with support from Mayor Muriel Bowser and the Office of the Deputy Mayor for Planning and Economic Development. Combining engagement, research, and analysis, the effort will develop a list of initiatives and actions to support downtown’s recovery and reimagination into a vibrant, economically sustainable, diverse, inclusive, and equitable area at the heart of the city. This project builds on DC’s Comeback Plan, the city’s 2023–2027 economic development plan announced by Mayor Muriel Bowser in January 2023, which includes the recovery and reimagination of downtown as one of six goals to achieve by 2028. The Downtown Action Plan’s final report is expected to be released in the first half of December 2023.
“As the 2022 State of Downtown report shows, there is a vital need to rethink downtown’s traditional primary role as the center of 9-to-5 office and business activity,” said BID President and CEO Gerren Price. “The Downtown Action Plan is a perfect opportunity for residents and visitors, private- and public-sector stakeholders, and, indeed, everyone interested in the future of the region’s metropolitan core to contribute to how this part of the city will evolve. We hope everyone seizes this once-in-a-century chance to help shape the future of downtown D.C.”
The 2022 State of Downtown report is available to read or download at the DowntownDC BID website. To learn more about, as well as contribute to, the Downtown Action Plan, visit reimaginedowntowndc.com.
About the DowntownDC BID
The DowntownDC Business Improvement District was founded in 1997 and is a private nonprofit organization that provides capital improvements, resources, and research that keep the BID area clean, safe, economically and environmentally strong, and accessible. The DowntownDC BID is a catalyst, facilitator, and thought leader in diversifying the economy, promoting public-private partnerships, and enhancing the downtown experience for all. DowntownDC encompasses a 138-block area of approximately 520 properties, from Massachusetts Avenue on the north, including the convention center at Mount Vernon Square, to Constitution Avenue on the south, and from Louisiana Avenue on the east to 16th Street on the west.