West Elm grabs $4.9M in incentives for new store in D.C.
by Sean Madigan
Senior Staff Reporter


D.C. put up $30 million of incentives for downtown retail attractions nearly three years ago and now the District has finally gotten someone to take a piece of it. City officials announced Wednesday they have reached an agreement with furniture retailer West Elm to open a 37,000-square-foot store in Douglas Jemal's Woodies building. The city will give the California company $4.9 million in tax increment financing (TIF) to help the retailer cover build-out costs. A portion of the new sales taxes generated by the store will be used to pay back the debt.

The city started its retail TIF program in July 2003 to try and attract new retailers downtown. Retail boosters say the city's central office district lacks vibrancy and merchants that cater to folks who live downtown rather than customers who work in nearby buildings. To date, the program hasn't been very effective in attracting new retailers. A handful of retailers flirted with the program, but for various reasons the deals fell through.

Some smaller retailers, officials concede, don't qualify for enough of a subsidy to justify the cost of the loan transaction fees. Officials also have struggled to get buy-in from banks. Jemal's major Woodies retail tenant, H&M, was awarded $2.9 million in retroactive incentives from the fund in March -- almost four years Jemal reached a deal with the Swedish retailer.

West Elm, meanwhile, is exactly the kind of tenant city officials want. The company doesn't have another store in the city and only recently entered the Washington market. Officials are banking on the mid-priced furniture seller will draw shoppers downtown and keep a fraction of the hundreds of millions of dollars in retail spending that flows from city residents to the suburbs.

Jemal is shopping the Woodies building, which he bought in 1999 from the Washington Opera for $28 million. Industry experts say the building could fetch as much as $250 million today, now that it has been renovated and leased to major retailers and office tenants.