Even as throngs of tourists line the streets waiting to taste a Georgetown Cupcake, retail space sits empty on M Street. Vacant storefronts broadcast lonely cries for attention with "Retail Available for Lease" signs.  Records from the Office of Tax and Revenue reveal a startling 83 percent decline from June 2007 to June 2010 in tax receipts for restaurants in the Georgetown ZIP Code. Not even Georgetown is immune to the faltering economy, as small business owners and large corporations alike close-up shop.

That is not to say all is gloomy in Georgetown, its residents have the lowest unemployment rate of any ward in the District and many storefronts simply change names, as Pottery Barn yields to Brooks Brother's, Nathan's to Serendipity. To get a full understanding of business in Georgetown requires numbers and long memories, both of which are in abundance. 

In 2009, Georgetown had a net loss of 15 stores, according to Jim Bracco, executive director of the Georgetown Business Improvement District (BID). The loss is evidenced in the many brown paper covered windows, though Braco expects to end 2010 with a net gain of 14. Business owners are quick to point to the high rent rates, which increase despite the decrease in demand for commercial space.

When asked if the BID was working with property owners and businesses to ameliorate the problem, Bracco said frankly, "Understand that we're not the landlords here...We wish we did control the real estate, but we don't…it would make things a lot easier."

Empty storefronts do not tell the full story. What about income? How are the businesses that are riding out the recession faring?

If you look to restaurant tax data, the answer is "not well." In the 20007 ZIP Code, which includes Georgetown, total tax receipts from January to June 2010 are just $10,000 more than those from the single month of June 2007.

The first sign of the new economic world for Georgetown restaurateurs was May 2008. April was a healthy month with over $900,000 in taxable sales, but May dropped to $417,000 and the decline continued more or less uninterrupted from there.

Despite abysmal numbers, restaurants are not the main source of flight from the neighborhood. Only 4 out of 40 closed or relocating businesses in 2009 were restaurants, several of which left the Georgetown Park Mall, a story in itself. Largely, the empty spaces were occupied by retailers—independent and chains.

Steve Turner, a retail employee and former owner of American Studio, has lived in the Georgetown area since the 1970s and first began working part-time in a Georgetown retail establishment in the 1980s. He described a shift in the type of businesses in the area: "There was a vacuum caused by the mom and pop businesses shutting down one by one. The space was filled by more 'dependable' things; as in chain stores." But the chains do not always stick it out, explained Turner, "the main reason why the spaces are empty is because the prices are too high."

Turner speaks from personal experience. His Georgetown store opened in 2000 and he was "forced" to close it in 2007 because his rent suddenly went from $7,000 to $10,000 per month; American Studio was not taking in enough money to cover the rent. Turner said, "my favorite phrase was that I was asked to pay 75 percent of what I was going to be paying in ...  Manhattan, but I had to do it with one-thousandth of the traffic."

Bracco said: "We do have some store fronts available and it's quite expensive; I wish the rents were lower." But the choice is really up to the market, up to the property owners, Bracco explained.

"Look, if you want to expect premium rent and it's going to take you 10 months and 12 months to recover, then you have to make a personal choice, whether I want that rent or I want something where I can get somebody in there now and start collecting," Bracco said. 

What about the customers? Where are the people who spent the money in 2007?

Bracco said it has to "come down to consumers wanting to spend discretionary income." He added, "those at the luxury end have been hurt pretty bad. People are not spending those kinds of dollars for those kinds of products," saying people choose to go out to a nice dinner rather than buy a $6,000 couch. Again Bracco leveled, "we have a lot people who walk the streets here on Fridays and Saturdays; a lot of them don't have bags."

Turner now works for a chain retailer in Georgetown. Business has changed there too. "A lot of people that I used to see all the time in my store and then at [my new store] ... I don't see any more. I can't imagine that all those people died or moved away, there's too many of them." The economic downturn meant many regular customers had to cut back on spending. Turner reflected on his former loyal customer base, "these are people who were fairly well off, when they had it, they had it; they had the cake and now they don't have cake any more, they've got crumbs."