The broken escalator in Penn Branch Center, which used to transport shoppers from the parking lot along Pennsylvania Avenue SE down to the former Safeway grocery store, is so old that its new owners cannot even locate parts to repair it, forcing visitors to trudge around the side of the building 20 years after the Safeway closed its doors.

The escalator is just one of many annoyances D.C.-based ICG Properties inherited when it bought the property at the end of 2005, among them an odd two-level design, 1970s-era signage and parking lot pavement that feels like it was laid over tree stumps.

But Penn Branch rarely has a retail vacancy and developers at ICG say they can see why. Pennsylvania Avenue carries 30,000 cars past the shopping center per day and nearby Branch Avenue another 18,000. The location is smack amongst some of the most upper-scale D.C. neighborhoods east of the river, with average incomes within the nearest mile over $60,000. And with plans to redevelop nearby Skyland Shopping Center stuck in legal tangles, Penn Branch could serve as a needed dam against the hundreds of millions of dollars in retail sales the city loses over the state line to Prince George's County every year.

ICG - which had planned a major mixed-use overhaul of the site - is moving closer to that vision, kicking off a scaled-down rehabilitation.

The developer will rebuild stairwells, install elevators, redesign the top parking lot, build two new retail pads along Pennsylvania Avenue and maybe some outdoor seating.

But like a lot of development these days, the plans rely heavily on the government. D.C. holds a lease of about 45,000 square feet in the old Safeway store through 2012 for some operations of the D.C. Department of Motor Vehicles and the police department, and ICG Principal David Stern says he is in negotiations to extend those leases, perhaps for 10 years or more. "Renewing the D.C. lease preserves value at the center and allows us to make us to make the investment for phase I," Stern said.

Councilwoman Yvette Alexander, D-Ward 7, who lives two blocks from the center, said she expects the city to maintain about 38,000 square feet in Penn Branch so that the project can move forward. "Our community is tired of going to neighborhoods in other wards to get basic services," she said.

The mix of shopping on the Pennsylvania Avenue side will likely remain book-ended by Wachovia, which signed a seven-year lease in 2007, and a pharmacy, currently a CVS.

But ICG has hired D.C. broker Tom Papadopoulos to begin looking at hardware stores, restaurants and neighborhood-serving retailers for some of the remaining 12,500 square feet. "We're hoping to bring the sort of amenities that residents in the community deserve and have been asking for, for a long time," said Stern. Papadopoulos sees the thousands of cars coming in from Maryland each morning as an ideal opportunity for a coffee shop - provided there is one still willing to open stores. "It's an ideal location for a Starbucks- or Dunkin Donuts-type operation," he said.

ICG still plans two levels of underground parking, about 150,000 square feet of offices and homes along the property's backside, but are content with a rehab up front for now. "It just makes a lot more sense to phase it," Stern said.