In early May, the DC Department of General Services (DGS) contracted the Marcus Asset Group (MAG) to do a certified appraisal of the stalls in the South Hall of the Eastern Market. The objective was to establish a fair market rental value for these concessions to allow awarding of long term leases to these tenants. The South Hall merchants have been operating without such agreements for some time.
MAG brought in Market Ventures Inc. (MVI) to assist in the study. MVI has extensive experience working with public markets in Portland, OR, and Baltimore, MD.
The results of the published appraisal are controversial.
Rents for the fourteen existing merchants currently range from $25 to $40 per square foot for stalls that are between 300 to 1,000 square feet. The space has been appraised at between $44 and $91 per square foot depending on its existing commercial usage.
The 1999 law governing the Eastern Market requires the charging of fair market rent for the stalls in the South Hall. It also limits annual rent increases for any operators to 102 percent of the Consumer Price Index (CPI), or to an additional amount to reflect the cost of services provided. It prohibits annual increases exceeding 110 percent of the CPI.
Despite an absence of leases, there have been no increases in rent for the South Hall merchants since 2007.
The city “requested that the Appraiser provide an upper and lower bound fair market annual rent range,” stated Barry Margeson, the market manager for the Department of General Services (DGS) in an email transmitting the appraisal to the South Hall merchants and the Eastern Market Community Advisory Committee (EMCAC) dated Aug. 31. “The city’s plan is to use the average of the upper and lower limits of each stand’s appraised value in the form lease,” he wrote.
If the South Hall merchants object to the appraisal’s findings, they have the option of hiring their own appraiser subject to appropriate certification, Margeson wrote. “If the two appraisals are within 20 percent of one another then the rents will be averaged to determine the final rates. If the two appraisals have more than 20 percent difference in value, a third appraiser will be hired. The third appraiser will be responsible for picking one of the two appraisals as the final value,” the email stated.
“It is going to drive us out of business,” reacted Bill Glasgow, owner of Union Meats. His fellow South Hall merchants are “shell shocked,” he said. Glasgow claimed business is off by over 25 percent due to the street congestion and the Hine School construction. The merchants are likely to order an independent appraisal, he stated.
EMCAC will meet to the discuss the time frame for responding to the appraisal on Sept. 6 at 7 p.m. in the Eastern Market’s North Hall at Seventh Street and North Carolina Avenue SE. The appraisal has not yet been posted publicly online.