While downtown Raleigh's condos boom, its retail busts | Wake County | Indy Week
Pin It

While downtown Raleigh's condos boom, its retail busts 

Bob Drake and Ann Marie Baum of Trig Modern

Photo by Alex Boerner

Bob Drake and Ann Marie Baum of Trig Modern

Trig Modern, with its quirky, curvilinear furniture designs, metal and glass light fixtures, and funky, geometrical chandeliers, is exactly the kind of cool, local, independent store Raleigh wants downtown.

Too bad the owner can't afford it.

Bob Drake, a tall man with graying hair and a warm demeanor, has been in the 3,900-square-foot space at the corner of West Jones and North Harrington streets—for which he pays $12 per square foot per year in rent, or $3,900 a month—since 2012. That year, Drake received a $50,000 loan from the city to up-fit the freestanding building, which entailed knocking out office cubicles, dropping the ceiling, ripping out carpeting and vinyl tile, abating asbestos, finishing and sealing the cement floor, and redoing the electrical wiring.

This spring, however, Drake was told he'd have to move. The story is a familiar refrain in downtown Raleigh these days: An out-of-state developer bought the building. He wants to turn the lot into apartments.

"I could have been an ass about it," Drake says. "I could have parked my ass here for 30 more months."

Drake could have been an ass about it—he had a five-year lease—but instead he agreed to vacate by Jan. 16. (The new owner, Banner Company Apartments of Illinois, offered to buy him out of his contract.) He's been looking for another affordable space downtown, but it's been slim pickings: A potential location on Davie Street just fell through because Drake couldn't afford $8,500 a month in rent, not to mention all the work he'd he have to do to the place, which hasn't been updated in 40 years.

"It's back to square one," he says. "I was so disappointed that didn't work out."

Drake isn't alone in the uncertainty he feels as an independent retailer who wants to do business downtown.

Other stores—including Blake Street Shops and Studios in City Market, Phydeaux in Seaboard Station and the Kindred artisan boutique on South Wilmington Street—have had to relocate or close their doors recently because, the owners have said, their rents became too high and they weren't getting enough foot traffic to keep up. Gift shop Cimos and clothing/convenience store Estate Essentials went online-only; Glenwood South boutique Cat Banjo will do the same at the end of the month.

Meanwhile, the owners of CU Fitness (a gym) and Artcraft (a sign shop), both on Hillsborough Street, are worried they'll be pushed out of downtown as well, if York Properties, which owns their spaces, announces other plans for that block. Respective owners Alison Katschkowski and Jim Jackson rent month-to-month at a below-market rate; they say York hasn't indicated what it plans to do yet, but Jackson says he won't be surprised if he comes to work one day and finds a notice on his door telling him to be gone in 30 days.

That's just how it goes in Raleigh.

"It's kind of like this development stuff is going on under us, or behind us somewhere, or over us, and we are just the little people who are paying the taxes on the spaces and then being told to move," Jackson says.

If that happened, it wouldn't be the first time Jackson had to relocate to accommodate development. In 2006, a Charlotte developer bought up the property he'd been leasing off of Ashe Avenue. "I don't think I'm going to stay downtown," Jackson says. "I'm tired of being subjected to this exact scenario."

As rents downtown continue to climb—they're nearly double what they were a decade ago—local retailers fear they're going to be priced out. The foot traffic in many areas hasn't kept pace with all the newly built apartments—and their parking accommodations—that are driving up rental prices to unaffordable levels.

On Fayetteville Street, which sees the most pedestrians, there's no more space for retail, according to Downtown Raleigh Alliance CEO David Diaz. Around Glenwood South and Moore Square, where 16 retailers closed in the last three years, there aren't the office spaces to generate daytime foot traffic.

While the city is working on a plan to address retailers' issues, both downtown and elsewhere, some are worried that its efforts will be too little, too late.

"Retail is the last thing to come in a downtown's revitalization," says Bill King, the DRA's planning and development manager. "We don't want to miss the boat here, where we get high rents everywhere and never got the funky stores in, where you have to end up selling goods that are so expensive you no longer have the same kind of character."

Downtown Raleigh has had some success with retail—the gift shop Deco, for example, has far exceeded owner Pam Blondin's revenue expectations. And the DRA says 10 new street-level businesses will soon open. But downtown still lags behind the explosion of apartments and condos in buildings that have popped up all over, as well all the restaurants and bars that moved in hot on the heels of that new development.

If downtown Raleigh can't get and keep retail, it won't be the vibrant community the city wants it to be. It won't even be a real neighborhood, but rather an amalgamation of bars, offices and apartments, lively on weekend nights but dull during the day. As King says, the need for retail shows that downtown Raleigh is still growing up—and it has a lot more growing up to do.

PHOTO BY ALEX BOERNER
  • Photo by Alex Boerner

You need only look at old photographs of Fayetteville Street to see that Raleigh, during the first half of the 20th century, had a vibrant, bustling downtown packed with stores, the remnants of which still linger in places like the Briggs building, Boylan-Pearce, the entrance to Morning Times and along Hargett Street.

But like many American downtowns, Raleigh's fell off in the 1970s, partly with the rise of suburban malls and town centers, which were strictly built for cars, and also with the shift toward sprawl. For Raleigh in particular, the Fayetteville Street mall, where cars were banned, didn't help bring people downtown, nor did competition from shopping centers like Cameron Village and North Hills, where parking is ample.

"I can remember rollerblading on Fayetteville Street when it was like it used to be, and there was nobody there," says City Councilor Bonner Gaylord, who grew up in Raleigh and, in his day job, is the North Hills general manager for Kane Realty Corp. "There were a few retailers and restaurants, but they weren't open on the weekends. In my memory, it was a completely dead downtown."

With national trends shifting back toward downtowns again, Raleigh has been working to lure retail since the launch of the Livable Streets plan in 2003 and then the opening of Fayetteville Street to cars in 2006.

While bars and restaurants have thrived, stores that sell soft goods (clothes, furniture, books, artwork, music and gifts) and provide services (hairstylists, gyms, designers)—all of which generate money during daytime hours—have come and gone. More than 30 downtown retailers closed between December 2011 and December 2014, according to the DRA.

This doesn't surprise Ann Marie Baum, who now works with Drake at Trig Modern. She opened her own furniture store, Cherry Modern, on Glenwood South in 2004; her monthly rent was in the low-$9,000s, but she took the risk because she expected other stores to open up around her and drive business.

"The whole city was telling us, 'There is going to be so much retail down here, you're in the place to be,'" she says. "We were paying crazy money, and they were like, 'It's coming,' but all that came were bars and restaurants, nothing else."

After three years, Baum moved to Cameron Village, where the monthly rent was $3,000 cheaper. But with the move, she lost her downtown audience. She closed her store a year later. Today she finds herself in a similar position at Trig Modern.

"It seems like [retail's] going to get better, but again, are the landlords all going to just sell out to big-box stores, or bars and restaurants?" she wonders.

In May, City Council approved the creation of a retail task force, charged with examining some of the challenges independent retailers face downtown and citywide.

According to James Sauls, the city's manager of economic development, retail advocates like the DRA and ShopLocal Raleigh had a preliminary meeting in June to identify what needs to be addressed. Sauls says the 15-to-20-member task force will hold its first meeting in August. He expects the group to make recommendations to Council in three to six months.

"The group is intentionally broader than downtown," Sauls says. "We want to know if retailers in other areas are facing the same challenges, and we want to know what our opportunities are. We are seeing some success in retail, and it will ebb and flow based on the market. We want to know what's good and what's bad and push that good forward."

But with anything resembling rent control prohibited by state statute, there's only so much the city can do. Some of it has been tried, things like the up-fit loan Drake received in 2012.

Gaylord says he wants to encourage local establishments, which keep more money in the local economy than chains, boost the downtown housing market to provide more foot traffic, and provide direct interventions in the form of up-fit and, especially, façade grants. (Gaylord was the only councilor to respond to the INDY's request for comment; Mary-Ann Baldwin said she would prefer to comment after the task force makes its recommendations).

The DRA is helping on that score. This summer, it will begin providing up-fit grants, tentatively $5,000 each, though that number hasn't been finalized. The DRA's King says he hopes the city will eventually match those grant dollars. (It's unclear whether the city has any appetite for that.) Additionally, the DRA works with retailers on financing, marketing, developing business plans and finding downtown locations.

And, as always, the DRA is working on luring a "shopping anchor"—read: the ever-elusive downtown grocery store—within the next couple of years.

But even if this happens, challenges will remain. King says it has been difficult convincing downtown landlords to lease their floors to retailers. The DRA's pitch is that ground-floor retail makes the rest of the building more valuable, but the landlords aren't biting.

"Landlords have still got to make those numbers work," King says. "It's hard to tell someone 'you should make less money.'"

It's likely that the city's strategy of encouraging density downtown will eventually pay off. When 15,000 people live downtown, as has been projected for the near future, and there's a grocery store to keep them from driving to Cameron Village, downtowners won't have as much of a reason to leave the bubble.

But for retailers like Drake, who are already here and want to stay, the sense of urgency is real. He says the city should have addressed the looming retail crisis five years ago.

"It's too late to have a plan," he says. "There is an idea of having retail downtown, and then there is actually making it happen. They are two different things. To me, the City Council just likes the idea."

  • Foot traffic isn’t keeping up with skyrocketing rents

Comments (11)

Showing 1-11 of 11

Add a comment

 
Subscribe to this thread:
Showing 1-11 of 11

Add a comment

INDY Week publishes all kinds of comments, but we don't publish everything.

  • Comments that are not contributing to the conversation will be removed.
  • Comments that include ad hominem attacks will also be removed.
  • Please do not copy and paste the full text of a press release.

Permitted HTML:
  • To create paragraphs in your comment, type <p> at the start of a paragraph and </p> at the end of each paragraph.
  • To create bold text, type <b>bolded text</b> (please note the closing tag, </b>).
  • To create italicized text, type <i>italicized text</i> (please note the closing tag, </i>).
  • Proper web addresses will automatically become links.

Latest in Wake County



Twitter Activity

Most Recent Comments

A new label comes to mind: CHINO (Christian in Name Only). Most Christian sects instruct adherents to not surrender to …

by Bernard Baruch on Evangelicals in the Age of Trump (Or, Why I Was Called a ‘Jew-Boy’ at a Franklin Graham Rally) (Wake County)

Is it not lost on these people that Jesus Christ was a "Jew-boy"? I wouldn't be surprised if some of …

by PRGuy on Evangelicals in the Age of Trump (Or, Why I Was Called a ‘Jew-Boy’ at a Franklin Graham Rally) (Wake County)

Another one sided argument from the Indy. There are multiple bus stops in North Hills and north Raleigh, that contain …

by MX46 on Has Raleigh’s Bus System Been Left to Languish Because Many of Its Riders Are Poor and Black? (Wake County)

to elaborate on whatdoiknow's comment, the headline pertains to Durham as well. Transit in the triangle is run by a …

by where's the beef? on Has Raleigh’s Bus System Been Left to Languish Because Many of Its Riders Are Poor and Black? (Wake County)

Comments

A new label comes to mind: CHINO (Christian in Name Only). Most Christian sects instruct adherents to not surrender to …

by Bernard Baruch on Evangelicals in the Age of Trump (Or, Why I Was Called a ‘Jew-Boy’ at a Franklin Graham Rally) (Wake County)

Is it not lost on these people that Jesus Christ was a "Jew-boy"? I wouldn't be surprised if some of …

by PRGuy on Evangelicals in the Age of Trump (Or, Why I Was Called a ‘Jew-Boy’ at a Franklin Graham Rally) (Wake County)

© 2016 Indy Week • 201 W. Main St., Suite 101, Durham, NC 27701 • phone 919-286-1972 • fax 919-286-4274
RSS Feeds | Powered by Foundation