The problem with downtown

Thanks for your interest in downtown Chapel Hill.

As a quick aside re. Eastgate, I'd like to point out that there are a few more "local" businesses there then you are noting.  Off the top of my head, the Loop, TCBY, and Subway are all owned by local residents.  They generate local sales tax revenue, employ local residents, and pay local property tax.  Renovations are done with their locally earned dollars.  Yes, in the process, they also (in the case of TCBY and Subway) pay royalties to a national corporation.  But these franchises are every bit as "locally" owned as another one you could come across, just like McDonald's, McAlister's, Panera, Subway, and Quizno's are downtown.

So, let's talk downtown.  To be honest, I'm not sure where do start.  Maybe a comment about perceptions vs. reality.  Maybe there is a perception that downtown property owners are evil, ornery, money-grubbing, bad landlords.  When negative press or comments about Spencer Young or Joe Riddle are published, they certainly reinforce those perceptions.  Without a dissenting opinion, talking about the value that certain property owners do bring to downtown in the form of friendly lease terms with their incumbent businesses, willingness to reinvest in their building, and generating partnerships with the town and other property/business owners, the negative perceptions I mentioned can become the reality for the indivdual on the receiving end of that limited information.  That "reality", now based on incomplete or incorrect facts, now has to be changed.

I've expanded into my simpistic view of perception vs. reality because of the perception that I have generated from Ruby's opening post.  I apologize, but my perception is that this was a fishing expedition.  Parking, panhandling, drunk patrons, landlord issues . . . well, we've now successfully identifed the challenges of downtown Chapel Hill.  They alos happen to be the challenges of downtown Durham, dowtown Raleigh, downtown Charlotte, downtown Atlanta, downtown Richmond, downtown Nashville, downtown Madison, etc. etc. 

So, instead of drawing the Orange Politics community into a free-form discussion of all that is perceived to ail downtown Chapel Hill, why don't we instead focus on some of the incredible assets of downtown, and the support that the Downtown Partnership and the town to further those assets:

 A valet parking system supporting some of the West End's finest restaurants, including Bonne Soiree, 411 West, Elaine's, the Carolina Brewery, Mediterranean Deli, and Talulla's.

Support by downtown businesses of a street outreach program in Real Change for Spare Change that is actively providing assistance and programming for people in need.

Support in negotiations between interested parties in providing additional parking resources for employees of businesses at the Courtyard, thereby opening the limited parking there for patrons.

Free downtown parking on Sundays.

And, these assets are just programming.  It doesn't even begin to touch on some of the incredible retailers and restaurants people can find downtown if they will set aside their perceptions and search for the reality themselves:

Restaurants that feature and promote locally grown food, such as Lantern and Elaine's.

Locally designed women's fasion and gifts at the Laughing Turtle.

An incredible collection of watches at David Gerald Fine Timepieces.

The N&O's top restaurant in the Triangle in 2007 at Bonne Soiree.

Chapel Hill Comics, where they feature events such as workshops where children can create their own comic books.

LONG standing contributors to our economy, and to the fabric of our commmunity, at Carolina Coffee Shop, Ye Olde Waffle Shop, and Charles House's University Florist.

A beautiful gallery at Bill Hester's Fine Art at University Square.

A children's wonderland at Kidzu.

A Chapel Hill classic at Pepper's Pizza.

Two flagships of the Chapel Hill Restaurant Group, at Spanky's and 411 West, who are actively engaged in numerous ventures to benefit our community.

A celebration of all that is good in Chapel Hill at the Chapel Hill Museum.

Fantastic pastries and gellatos at Sugarland.

A collection of eclectic retailers that you won't ever find at Southpoint, U-Mall, etc., in Hazmat, Internationalist Books, Toots and Magoos, Back Door CDs, Expressions, CD Alley, and the Bookshop.

"Fridays on the Front Porch" at Carolina Inn.

A great local music venue at Local 506.

And all of this is on the front step of the nation's first publicly chartered University, which also adds the Morehead Planetarium, Memorial Hall, and Ackland Art Museum to the downtown experience.

The reality of downtown Chapel Hill is that there are now, and, likely, always will be opportunities to bring additional value.   But a continual focus on "the problem with downtown" as opposed to a celebration of the myriad of great things only serves to discourage folks from even giving it a try.

Also saw the CHH's report on Sugarland vs. panhandler(s): http://heraldsun.southernheadlines.com/orange/10-972191.cfm

I was particularly struck by the comments below the piece online (including reference to OP). I, for one, would hope that Sugarland would NOT "move to Cary."

Coincidentally, a friend and I were enjoying gelato at Sugarland yesterday afternoon (Thursday). We were made quite uncomfortable by a man who came to our table and interrupted our conversation asking for money, because when we shook our heads and turned back to our discussion, he took a chair from the next table and moved it very close to ours and sat and stared at us. After several minutes of trying to ignore the situation, we got up to leave. He got up and left at that point. On our way out, we mentioned the incident to the woman behind the counter, who had not noticed the incident nor the man.

So I'm thinking, it's at least partly the panhandlers, although I can't say I'm 100% clear on how they should be "handled" (none actually have pans, that I can see).

But our conversation at the time happened to be about what was happening to downtown and whether landlords were "getting" their part in Franklin Street's struggles. It did seem to us that Chapel Hill's split-personality tendencies -- upscale/chic versus family/college/hometown -- are worsened by the ill-timed push toward the upscale end by landlords and developers.

What's wrong with downtown? I miss the movie theatres. When I came to town in 1986, there were 10 screens downtown. High school students could take a bus downtown and have options of multiple films and there were family films as well as the flicks the Varsity shows.

Aside from that, I'm glad to see someone else sees the issue with trying to develop a thriving downtown with uncooperative landlords.

One summer after having a baby, I went downtown for the first time in awhile to buy mascara at Sephorra and Sephorra was gone.  And there were a few other empty storefronts. It was like a ghost town. I went in SchoolKids and said "What just happened?" and was told "The landlord raised the rent so high on Sephorra, that it was cheaper for them to move to Crabtree."  I know Sephorra wasn't locally owned, but it profitable, it created a lot of sales tax and now I have to mail order those products if I want them. 

A friend emailed me last month that she saw Three Cups written up in an airline magazine during a flight. And I had to say - Yeah, it's closed, because of landlord/tenant disputes.

I'm just hoping with the development of more storefronts in Carrboro, that some of the frustrated businesses will just move to this side of the railroad tracks.

It was suggested a few years ago that the town council could fine land owners for having buildings empty or otherwise unmaintained. As I understand it the landowners get a tax write-off if they're losing money on a property so there's no incentive  for them to compromise and work with a tenant. Why not create a disincentive that balances that benefit?

Ken Jackson owner of Wentworth and Sloan, one of the oldest business on Franklin Street, just closed up the Franklin Street Store and is concentrating on his University Mall location.  Ken, who has been deeply involved in trying to keep Franklin Street viable finally decided that it no longer made business sense to keep that store open.

Given Ken's long standing and deep involvement in the community, it would be very interesting to hear what he has to say.

July 6, CHH

http://heraldsun.southernheadlines.com/archives/printfriendly.cfm?urn=0572963241

Overpriced commercial property downtown is an enormous problem.  There's a real shortage of commercial/retail space downtown, and for as long as I can remember, the only new construction has been high-end, luxury space that is far out of reach of most local businesses.  How can that possibly be sustainable?  I don't have too many data points, but I'm going to guess that the median rent on Franklin is more than $3000/month, with some big outliers on the E. Franklin block.  That's a huge barrier to entry for a local startup.

Chapel Hill is somewhat cursed by its geography, with downtown on top of a hill, squeezed between campus and residential neighborhoods.  Rosemary is a logical place for more commercial development, but there's practically nothing there but parking lots until you get to the Fuse/Nightlight block.

Also, there's something to be said for negligent landlords if it means they are willing to rent their property for, say, $1000/month or less.  Negligent landlords who hold their properties empty are jerks.

I recently asked the Chamber of Commerce for some info on downtown's status. Their response - "In terms of vacancy rates, downtown (which is mostly retail) is around 9%, our office vacancy for the entire town was 6.24% in 3Q of 2007. By comparison, Durham's office vacancy was 15.02% at the same time."

They also estimated the downtown retail space to be around 1.5 to 2 million sq ft. Approved development in the center and around town will add 180,000 sqft and proposed projects will add another 440,000 sqft, all retail. Then there's 1.3 million sqft of office and 3.3 million residential, approved or proposed in downtown and around.

Seems like empty storefronts downtown would get worse with all that new space, but there will be more residents too. How would all this affect the monthly rent?

Rents are high in that East Franklin block because it epitomizes Chapel Hill to most people.  Returning alumni, undergrads and their parents all flock there  for sentimental reasons. 

Berkeley moved his retail business from West Franklin to its location next to Whole Foods almost 10 years ago not because of high rent but because his customers complained chronically about parking near the store. 

Rents are often  quoted in dollars per square foot per year, so you can calculate the monthly rent by multiplying the quoted rent by the square footage and divide by 12.       Many retail businesses may pay a additional percentage rent on sales above a certain dollar amount. (base plus %)  They  sometimes pay  additional charges for taxes, insurance, and maintenance (triple net lease)   and retail usually pays its own utilities and garbage collection.  (office leases differently and I don't know as much about that).  

The industry where I have some knowledge---the quick service restaurant variety---benchmarks rent to be at 7% or less of annual sales to be viable.  

 Why are rents what they are  in downtown?  The simple answer is supply/demand.  If you pull out the most notorious deviations from the norm in downtown, which are operating under other kinds of market models (corner of Franklin/Columbia, Wicked Burrito site)  the locations don't seem to stay vacant very long.  

CABLEinCH.com is registered to  Spencer C. Young Investments, Inc.

My comment about "a different business model" was a bit of a sarcastic  tongue in cheek about, in the first case,

1.  a building with a tenant that is paying rent but not operating the business (FUNB/Wachovia) which, on the balance sheet, IS a performing asset

2.  a company for which 1 non-performing real estate asset (the Wicked Burrito building) represents such a small blip on the corporate books that it is overlooked during a corporate shuffle.

Another armed robbery in downtown Chapel Hill (2 armed robberies in Chapel Hill Sunday)

http://www.newsobserver.com/news/story/1148837.html

certainly cannot help to bring more businesses or more people to the downtown area. The fact that this was in daylight hours and involved a sawed-off shotgun is even more discouraging. I think the idea of more foot patrols for the downtown area is becoming more and more attractive but we're still going to have to figure out a way to pay for them if we choose to go that route.

Various things...

If there was just one thing the CH town gov't could focus on it should be downtown CH. 

 I wonder how storefronts can sit vacant for months and years on end because you'd think that even if someone wanted 8 K per year rent, they accept 7 K per year rent rather than leaving it vacant and getting 0 K per year rent.  But someone else mentioned that possibly they find that acceptable for tax break reasons.  I know little about those kinds of things but if someone is leaving CH storefronts vacant for their own personal tax break reasons then that should be remedied if possible immediately by whatever legal levers are available to the CH towm authorities.  And if possible it should be made impossible from happening again in the future.

 I also know little about zoning laws around here but perhaps that ultimately affects some things.  Here an example that may or may not be affected but I'm just using common sense type reasoning here so maybe there's some info I'm not aware off.

 There is a funeral home on W Franklin near the Columbia/Franklin intersection.  It it near HNH and the former gas station (currently under some sort of change).  Suppose your loved one died.  Would you want to go to Franklin St for the wake?  I wouldn't.  That land must be worth a fortune and if the people that owned it sold it they could probably get enough money to buy three funeral homes 5-10 miles out of town where there are more birds and trees and grass and a more funeral home kind of environment.  And yet that funeral home has been there for as long as I've lived here, which is nearly 20 years.  Can the people that own that place simply really prefer to be in that location?  Perhaps so, but it occurs to me that the price they could get for it might not be as high as a result of zoning.  Or maybe there's something else I'm missing.  But every time I walk past that place I think to myself "What in the hell is a funeral home doing here?"

 What UNC ends up doing with the University Square property is going to be mondo important in the long run. 

 Is a downtown without storefronts really a downtown?  Well maybe that is semantics, but imagine if all of downtown was like Panera and Jimmy Johns / Yeats / Etc.  Parking by a store and using it and then leaving is one thing, and parking somewhere and then walking up and down the street to various stores before you return to your car is another.  The latter seems more like downtown to me.

Although quirky businesses can be attractive, having too many quirky businesses and not enough mainstream businesses defeats the purpose.  In the end, you have to attract a large enough volume of people to support the business.

  Things like panhandlers and parking make a big difference.  Other than a tiny minority that enjoy engaging personally with the homeless, nobody likes walking down the street and having a scruffy looking person come up and ask them if they have any change.  And the farther you have to park from where you're going the more you have to walk and as a result the more people you encounter asking you for change.  I realize that homelessness is a problem in the grand scheme of things but that doesn't mean you're solving it by making people that want to visit downtown CH look at it.

 That's it for now, maybe I forgot something but I've gone on too long already.