Two major national retailers appear to be preparing to leave one of Northwest Washington’s busiest shopping destinations, raising new uncertainty for both the DC USA retail center and the broader brick-and-mortar landscape in the District. Recent reporting from The Business Journals indicates that Petco and DSW are likely to exit the Columbia Heights complex, a move that would open large blocks of space at a time when urban retail is still recalibrating after the pandemic. The mixed-use project, long considered a cornerstone of one of the city’s most transit-connected neighborhoods, could soon be grappling with prominent vacancies in a market already under pressure from shifting consumer behavior, e-commerce growth, and cautious leasing strategies.
Columbia Heights retail at a crossroads as anchor tenants reconsider their future
Behind the scenes, major chains are engaged in detailed evaluations of whether renewing leases in high-profile urban centers still aligns with their long-term strategy. At DC USA, negotiations between landlords and tenants have reportedly grown more complex, as operators like Petco and DSW weigh the costs of staying against the potential benefits of relocating or downsizing.
Brokerage sources describe lease talks that hinge on a web of factors: co-tenancy provisions that are triggered if an anchor leaves, the price of new store build-outs, evolving foot-traffic patterns, and the opportunity cost of keeping capital locked into large-format spaces. Landlords are countering with rent reductions, flexible lease structures, and short-term extensions in an attempt to maintain critical mass. For residents and nearby businesses, these decisions will help determine whether the complex continues to function as a robust regional draw or drifts toward a more fragmented mix of tenants and interim pop-ups.
Local economic stakeholders are actively mapping out what the next leasing cycle could look like:
- Landlords exploring aggressive re-tenanting campaigns, repositioning the center, and revisiting anchor strategies.
- Retailers considering moves to emerging corridors with lower occupancy costs, smaller footprints, or hybrid showroom models.
- Neighborhood organizations advocating for more service-oriented, daily-needs tenants to support residents’ routines.
| Scenario | Impact on Center | Timeline |
|---|---|---|
| Anchor renews | Short-term stability, incremental rent growth | 12-18 months |
| Anchor exits | Noticeable vacancies, reduced traffic and sales | 6-12 months |
| New concept arrives | Repositioning opportunity, potential to attract new shoppers | 18-24 months |
DC urban retail under strain: what Petco and DSW uncertainty reveals
The possibility that national brands might walk away from prominent space in Columbia Heights is part of a broader recalibration across the District’s urban shopping areas. Operating costs have risen, foot traffic remains uneven compared to pre-2020 levels, and e-commerce now accounts for nearly 16-18% of total U.S. retail sales, according to recent federal data. Together, these realities are making long-term, big-box leases far less automatic than they once were.
Retail advisors note that chains are dissecting store-by-store performance, comparing in-person sales with digital orders, buy-online-pickup-in-store metrics, and last-mile delivery expenses. The result is a more cautious approach to lease renewals, with brands prioritizing flexibility, smaller footprints, and strategic flagships over broad saturation. In neighborhood centers like DC USA, even rumors of non-renewal can slow investment, complicate financing for nearby developments, and raise questions about long-term demand for large retail formats.
Property owners, in turn, are rethinking the standard model of a few national anchors supported by smaller inline merchants. Many District landlords are broadening their tenant mix to include service-oriented businesses, medical and wellness operators, and food-and-beverage concepts that generate repeat visits and are less vulnerable to online substitution. That shift is gradually reshaping how leasing decisions are made in urban retail centers:
- Shorter lease terms with flexible options and more frequent rent resets to reflect changing market conditions.
- Adaptable build-outs that allow spaces to pivot between retail, office, clinical, or community uses.
- Expanded tenant improvement packages to attract creditworthy tenants and offset fit-out costs.
- Hybrid merchandising strategies that layer daily-needs retail, lifestyle brands, and experiential offerings under one roof.
| Trend | Impact on DC Retail Centers |
|---|---|
| Anchor lease uncertainty | Higher vacancy exposure, softer valuations, complex refinancing |
| Shift to services | More clinics, fitness studios, and coworking replacing traditional apparel and specialty stores |
| Experiential focus | Greater reliance on dining, entertainment, and social spaces to draw visitors |
| E-commerce pressure | Smaller showrooms, fewer duplicate locations, and a stronger emphasis on omnichannel fulfillment |
Neighborhood consequences: vacancies spark demand for a stronger city role
Community advocates in Columbia Heights warn that the simultaneous loss of two widely recognized anchors would ripple well beyond the vacant storefronts themselves. For more than a decade, the DC USA complex has helped sustain steady foot traffic along the corridor-supporting small businesses, informal gathering spaces, and a sense of safety tied to “eyes on the street.” A prolonged period of dark windows and for-lease signs could weaken that ecosystem.
Residents are concerned about fewer convenient shopping choices, a less active streetscape, and the potential erosion of the center’s role as an everyday meeting point for families, workers, and students. Local leaders argue that vacancies of this size warrant a coordinated response, not just incremental, case-by-case leasing decisions. They are pressing the District to partner with property owners, business improvement districts, and nonprofit groups to ensure that large spaces are quickly reactivated and that new tenants reflect the needs of existing residents rather than only chasing destination traffic.
Community organizations are emphasizing that this transition could be leveraged as a turning point rather than treated as an inevitable setback. Ideas under discussion include:
- Targeted incentives to attract neighborhood-serving retailers, clinics, child-care centers, and educational providers.
- Short-term pop-ups and cultural events to keep storefronts lit and maintain foot traffic during the lease-up period.
- Local business incubation with rent assistance or shared spaces for minority- and immigrant-owned enterprises.
- Public engagement sessions to gather input on desired uses and to shape a tenant mix aligned with community priorities.
| Stakeholder | Priority Concern |
|---|---|
| Residents | Maintaining access to daily conveniences and safe, active streets |
| Small retailers | Preserving shared foot traffic and minimizing spillover sales loss |
| City officials | Avoiding long-term vacancy and visible blight in a marquee location |
| Property owner | Protecting rent rolls, property values, and the center’s overall reputation |
Reimagining DC USA: tenant mix, local brands, and transit-oriented design
Urban planners and retail strategists see the potential Petco and DSW departures as a catalyst to rethink how DC USA serves Columbia Heights and the wider Northwest D.C. market. Rather than simply backfilling large spaces with another round of national chains, many are urging a more nuanced strategy that elevates homegrown retailers, minority-owned businesses, and service-oriented uses that better mirror the area’s evolving demographics and spending patterns.
Neighborhood surveys across major U.S. cities show residents increasingly favoring a mix of experiences, amenities, and local offerings over conventional big-box formats. In response, some market observers are calling for a curated blend at DC USA that combines essentials-such as grocery, health care, and banking-with smaller-format boutiques, coworking hubs, cultural spaces, and family-friendly venues. This kind of merchandising shift could help the center stand out from suburban malls and purely online competitors.
Transportation advocates also argue that any new plan for the complex must build on its existing strengths as a transit-rich site. Situated on top of the Metrorail and served by multiple bus routes, DC USA is well positioned to function as a model of transit-oriented retail if designed intentionally. Urban design experts are pushing for safer pedestrian connections, protected bike infrastructure, and activated plazas that invite people to linger, not just pass through.
Recommended strategies include:
- Ground-floor local eateries clustered near Metrorail and bus exits to capture commuters and late-night visitors.
- Flexible pop-up bays that can host seasonal markets, start-up brands, or cultural programming.
- Improved wayfinding between transit stops, public plazas, parking, and retail entries to create a seamless experience.
- Reduced surface parking and more landscaped walkways, seating areas, and shade to prioritize people over cars.
| Priority Area | Suggested Action |
|---|---|
| Tenant Mix | Boost the share of local and regional brands alongside select national anchors |
| Community Use | Introduce flexible event, market, and cultural spaces that can host neighborhood programming |
| Transit Access | Strengthen connections to Metro, bus, and bike facilities and integrate them into the retail experience |
| Street Design | Reconfigure circulation to favor pedestrians and cyclists over vehicle traffic |
Future Outlook
The evolving status of Petco and DSW at DC USA highlights how unstable the urban retail environment remains, even in dense, transit-oriented neighborhoods like Columbia Heights. As national retailers reassess their brick-and-mortar portfolios in light of e-commerce growth, omnichannel strategies, and changing neighborhood demographics, both property owners and public officials will be under pressure to think more creatively about how prominent retail spaces are programmed and managed.
What ultimately takes the place of Petco and DSW-if their closures proceed-will become an important signal about the next chapter of Columbia Heights’ commercial identity. Whether the center leans into another generation of national brands, embraces a patchwork of smaller local tenants, or experiments with non-retail uses such as health services, education, or coworking will be closely watched by residents, competing corridors, and landlords across the District. The decisions made in Columbia Heights are likely to inform how other urban retail hubs in Washington, D.C. approach their own repositioning and resilience strategies in the years ahead.
