ON JULY 28, 2025, the DC Council partially repealed Initiative 82, the voter-approved measure that eliminated the tipped minimum wage gradually over a period of four years. It is the second time that the will of the voters has been overruled on this issue in just seven years. The main rationale for repeal both times has been that restaurants cannot afford to pay the upfront labor costs of the minimum wage that applies to nearly every other industry.1 Therefore, a system which steals tips from workers to subsidize their own labor costs is needed.
It’s true that the restaurant industry does indeed run on thin margins, with relatively few options to cut operational costs.3 Between the new post-pandemic consumer behavior baseline, Trump-induced tourism drops, and Trump’s tariffs, small restaurants in DC are struggling to stay afloat. In 2024, 101 DC restaurant and tavern licenses were canceled, up from just 64 in 2023. Labor is an easy target for the restaurant lobby: very visible and often shut out of institutional power. Most people can easily understand how policies that increase labor costs will increase costs for restaurants. But there is another gigantic source of costs for the restaurant industry; one that, despite its damage to the financial health of the industry, is rarely mentioned directly by restaurant owners, their lobby, or their political flaks — commercial rent. Instead of stealing money from those that actually make a restaurant run, we should focus on policies that stop those that leech off of our communities’ small businesses.
Most of us have experience as tenants. We know that landlords will do as little as possible while trying to extract as much money as possible. Months can go by with unfulfilled maintenance requests.6 Many landlords count the days until they can make their next “market adjustment.” Things are difficult for non-commercial tenants: we’ve seen residential rents increase from a median of $1,982 in early 2017 to $2,164 in early 2025, a nearly 10% hike. Between 2021 and 2022 alone, there was a 13% spike in rent, and rents have been steadily increasing by a little over 2% year over year since.
This dynamic plays out similarly in the commercial realm. While there is (frustratingly) no publicly available data on what percentage of small businesses rent in Washington, DC, it is held as common knowledge that very few small businesses in DC own their space outright.5 Sources detailing how to open a restaurant assume that business owners have a landlord themselves and must account for rent in the cost of operation. Commercial leases are generally structured such that the tenant pays for property taxes, insurance, and common area maintenance. Unlike residential rents, commercial rent is not subject to any rent control or rent stabilization measures. This means that every lease end can mean hikes of hundreds of dollars. Between 2017 and 2025, retail rent rose roughly 13%, from about $26.5 per square foot to about $30 per square foot according to a report from Institutional Property Advisors. A scan through rental sites leaves one hard pressed to find anything less than $30 per square foot, with $50 or more per square foot incredibly common in high-traffic neighborhoods.7 According to a survey from Restaurant Association of Metropolitan Washington (RAMW), restaurants report an average increase of 18% in occupancy costs since 2019, and CBRE (a real estate service firm) reports that rents have increased by 8.6% since the end of 2024.
Consider: if a restaurant runs with a 5% profit margin and its rent is more than 10% of costs (in other words, 105 revenue to 100 cost, 10 of which is rent), what happens when rent goes up 10%? That restaurant has dropped an entire percent in profitability. And this leaves aside other cost pressures, such as the reported 19% increase in food costs since 2019 — which generally account for about 30% of operational costs — or the 9% decrease in sit-down dining spending due to DOGE layoffs.
Meanwhile, landlords are increasingly offering leases with increased tenant improvement allowances and options to base rent in part on a percent of sales.8 This is framed as “flexibility,” but is really a move to capture higher profits in a medium- to long-term window. With return to office policies enacted by government agencies and private companies, the $800 million renovation of Capital One Arena, and a $3.7 billion RFK stadium deal, landlords can afford to bet on an uptick in traffic to restaurants and other small businesses.9 Businesses doing well in a location makes the location of those businesses more attractive to be in, thus justifying reclassification of those units as “trophy” units (and a corresponding rent increase).
Put simply, the more successful a restaurant is, the more valuable the property becomes. And because the property taxes are borne by the renter, it’s nothing but upside for the landowner. Little risk, large reward.
Like a parasite that lucks out by finding a successful host, the landlord can hold the restaurant hostage to its own success. When they can, they will move to extract as much as possible from the renter. And when they believe that they can get a different renter who will pay more, they are not afraid to push current tenants out. Indeed, we can see this play out in real time, with rent hikes cited by multiple restaurants as a reason for closure while the vacancy rate for retail rentals sits around 12.5%.10 We’ve also seen that landlords have no qualms working in concert to push rents up, even when it violates the law. Either way, low traffic or high traffic, the landlord wins and small businesses suffer.
This graph shows the average asking rent per square foot from 2016 to 2025. This chart includes retail rentals from across the metro DC area. The average asking rent per square foot has steadily increased over the period of 10 years, the slight decrease in 2020 notwithstanding.
Despite the ongoing pressure from rents on operating costs and the uncertain trajectory of rents in the near future, RAMW has not spent a single moment advocating for rent control or stabilization. Instead, they’ve organized themselves entirely around fighting labor costs and workers’ rights, positioning themselves as the primary opposition to Initiative 77 and Initiative 82.
If this seems strange, it becomes less so when we consider that this lobby is primarily controlled by larger restaurant conglomerates, such as Clyde’s Restaurant Group, Starr Restaurants, Georgetown Events, Mission Group, and Jose Andres Group.11 The Board of Directors is a who’s who of larger concerns that can negotiate top shelf deals with commercial landlords (not to mention spend significant money on DC Council campaigns and lobbying efforts).12 Notably, the RAMW board includes large DC property owner JBG Smith, and RAMW’s legal counsel and legislative advisor, Andrew Kline, is also a commercial real estate lawyer. In other words, RAMW has deep motivation to avoid touching the third rail of commercial landlords. Through sleight-of-hand, big restaurant titans with uncharacteristically high levels of profitability can dodge crushing commercial rents with sweetheart deals and redirect public focus onto their own obstacle to further profits: their workers. They can pass off labor costs as the main pain point, cast suppressing worker wages as the only solution, and disregard the smaller concerns being pushed out by obscene rent increases.
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There is no publicly accessible database of commercial property owners. What data do exist are very narrow (address by address search available via the DC Office of Tax and Revenue) or hidden behind paywalls with corresponding legal warnings against publication. From reporting in the Washingtonian, we can get a glimpse of these and other power players in the real estate market of DC. Most of these firms work with each other and with RAMW through a web of organizations like the DC Policy Center, the Apartment & Office Building Association (AOBA),and the District of Columbia Building Industry Association (DCBIA). These powerful lobbying organizations have worked to suppress residential tenant protections and rights, and will undoubtedly work together to fight against retail rent control measures as well.13, 14 As George Carlin famously quipped, “it’s a big club, and [small businesses] ain’t in it.”
Small business owners, or the petite bourgeoisie for those of us on the Left, face contradictory class interests.15 They own capital and make their living from their ownership of their business. As such they share the interests of the capitalist class, including the desire to suppress workers’ wages. At the same time, they are squeezed by market pressures from larger capitalist enterprises. Walmart killed the Main Street shop. Amazon made itself the primary market for nearly every product and service. Economies of scale scare the small business owner as much as their own staff.
Small businesses must also contend with the rent-extracting power of landlords, but the landlords share the privilege of calling themselves fellow capital owners. In this contradiction, there is an opportunity for a temporary alliance with community-minded small businesses on commercial rents. Make no mistake, an effort to stabilize or control retail rent will not remove small business owners’ drive to reduce wages, but a fight on this terrain could fracture them from elements of the capitalist class, namely the rentier segment and the larger enterprises. This is an opportunity to highlight the tensions within the non-rentier segment of the capitalist class, as those large businesses set themselves against their own short-term interests — the reduction of an operational line item in their budget — in support of broader class alignment.
Zohran Mamdani’s campaign in New York City understood the potential of this alliance, as temporary as it may be. A core plank of his platform is making New York City affordable, a plank that he applies to the restaurant owner by promising to cut fines and fees as well as reduce the time it takes to get permits. In this offer, Zohran can indicate that costs of food from these operations should go down while simultaneously protecting smaller businesses from larger enterprises.16 In other words, he shows that left policy can protect both the local character of neighborhoods and worker wages from the monopolizing pressure of large capital.
In DC, addressing the pressure of retail rents must involve taking on powerful interests. We can expect immense pushback from a united front of large enterprises and landowners, who will work tirelessly and in concert to shift focus against the working class. An alliance of community-minded (and understandably self-interested) small businesses, left and progressive groups, and unions should examine opportunities to work together to take on the wealth-extracting forces of our city that leave us all poorer and produce nothing of value.
What policies can we consider here in DC to address the commercial landlord scourge? The Anti-Displacement Network has put together resources that serve as an admirable starting place. Their recommendations include programs for commercial preservation and property improvement, local hiring and entrepreneurial support, tax credits and incentives, zoning and form-based codes, commercial tenant protections, community ownership, and place-based management.17 Many of these are common-sense programs and should absolutely be pursued in the District as a first step. We should also acknowledge, however, that these programs do not go far enough: they leave in place a system that incentivizes rent extraction at the expense of communities.
We see this in DC with our residential Tenant Opportunity to Purchase Act (TOPA) rights. As vital as TOPA rights are, they are subject to abuse by nonprofit and for-profit developers alike, who circumvent processes and exploit loopholes to impose their wills on residents. Similar systems for the commercial space should expect similar treatment. The horizon we should set our sights on is one in which development and rent of units are determined based on need and cost required to use and build them. This is a system that is maximally productive and beneficial for the common good, unlike the current system designed to maintain permanent unchecked profitability for a small number of individuals.
A bridge to this outcome may look like legislation that applies a rent cap at some percent of business for units owned by private or semi-private enterprises. As part of this policy, we should align retail rent with residential rent, with the expectation that property tax is paid by the landowner. Vacancies should be heavily penalized with hefty taxes to discourage empty stock. For publicly owned land, rent should only account for cost of maintenance and upkeep. This policy should be complemented by an expansion and forceful application of the District Opportunity to Purchase Act (DOPA) to place properties that will inevitably be sold off under public control. Capital gains taxes and taxes on the wealthy should be implemented alongside this effort to replace property tax revenues.
Anti-worker politicians like Mayor Muriel Bowser, Councilmembers Kenyon McDuffie, Brooke Pinto, Anita Bonds, and Wendell Felder, and organizations like RAMW have tried to frame a simple demand — that tipped workers get paid at least as much as everyone else — as an attack on our community’s small businesses. According to them, it’s impossible to ensure a fair wage while also keeping restaurants open. But we know that this isn’t true: restaurants in other parts of the country manage to pay their workers the regular minimum wage and stay open. As democratic socialists, we have a duty to prove that it is possible to have enterprises where workers can get closer to the full value of their labor without businesses closing down. This is only possible when the leeches on our communities are removed from the system.
Will this resolve the eternal tension between business owners and labor? No. But if we can forge an alliance between well-meaning liberals, community staples, unions, and left organizations, we may be able to build a more livable, vibrant District.
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Kurtis H. is a member of Metro DC DSA.
1 - While somewhat out of date, a study from 2017 shows that roughly 27,660 workers (or ~3.4% of workers in DC) were employed in tipped wage occupations. 79.5% of those workers were employed in food and drink services.
2 - In early June 2025, the DC Council voted to pause the planned raise of the minimum wage for tipped workers, setting the stage for the July 2025 repeal of the initiative. Robert White voted in favor of this pause.
3 - Around 5% in DC, which puts it on the lower end of average net margins found in other industries. Margins in DC are reportedly still significantly below pre-pandemic margins.
4 - Restaurants are advised to keep rent between 5% - 8% of sales, but should expect 9% - 15% of sales, particularly in high traffic high demand areas. Anything above 10% starts to signal risk.
5 - The dearth of publicly available information is a struggle throughout this piece, and the image must be pieced together. For the rentier class, holding this data close makes sense. For the rest of us, the lack of data serves to obscure motives, hide key factors and players, and make analysis more difficult.
6 - This is called a triple net lease or NNN. Unlike nearly any other industry, commercial leasing companies expect to assume no costs while reaping maximum revenue. This model puts small business owners on the hook for maintenance costs, property insurance, and, critically, any increases in property tax as property value increases.
7 - This data is incredibly difficult to source, and different sources use different assumptions. The cited numbers from Institutional Property Advisors average across the metropolitan area and include all retail rent.
8 - Tenant improvements (TI) are allowances made for physical changes to a space to meet tenants’ specific needs. These are often offered as carrots for leasing agreements and often come with heftier rents on the backend.
9 - While the Capital One and RFK deals may mean more units, rents are unlikely to drop. These units will command high rents as high traffic “trophy” locations.
10 - In other words, availability of (or lack thereof) units are not the driving force behind high rents, and adding more units won’t mean a drop in rent. Landowners would rather keep units empty than accept lower rents. “An estimated $1 billion more worth of properties remain vacant, abandoned, or tax-delinquent, providing little to no value to their surrounding neighborhoods”
11 - Many of these groups have been the subject of union campaigns, and groups like Starr are notorious for union busting.
12 - In this interview, the former CEO of Clyde’s Restaurant Group discusses how they have deals for rent-free land and no-cost infrastructure for two of their locations and a 40-year lease at $20/sq foot at another.
13 - Previously mentioned Andrew Kline serves on the Board of Directors of DC Policy Center alongside CEO of JBG Smith - W. Matthew Kelly - under the Chairman of the Board Matthew Klein, who also serves as chairman of real estate firm Akridge.
14 - AOBA on rent control ... DCBIA on tenant protections ... DC Policy Center on rent control
15 - Classes are groups of people that share common interests based upon their relationship to production. In a Capitalist society, the two primary classes are the capitalists, or those who own and control the means of production, and the proletariat, or those who must sell their labor to make a living.
16 - “Chicken over rice now costs $10 or more. It’s time to make halal eight bucks again.”
17 - Page 12, 18, 26, 34, 43, 52, and 61 of the Anti-Displacement Network’s toolkit respectively
