Trading spaces: Vacancies not such a bad thing, says DDA

Traverse City has long been noted for its vibrant downtown. Residents and visitors often point with pride to the unique collection of shops, restaurants, offices, venues and pathways linking Front, Union, Cass and beyond with an eclectic energy that is uniquely "TC."

Considering the sense of ownership that many of us share for "our" downtown coupled with the recent economic downturns, one can understandably feel a sense of unease when we watch such longtime shops as Martinek's Jewelers, the Gold & Silver Center and Lutfy's Cards & Gifts close their doors.

According to Rob Bacigalupi, deputy director of the Downtown Development Authority, vacancies are slightly higher this year, but the trend offers more opportunities than problems.

"In the past, downtown's retail turnover rates were 2.5 percent," he said. "That sounds good but, in the Downtown Market Analysis our consultants said that a 6 percent turnover would actually be healthier because it would allow more movement within the district."

The Downtown Market Analysis was conducted in 2007 by Economics Research Associates (ERA) of Chicago to evaluate retail, residential and office development trends for the DDA. It also cited that the average vacancy rate for the rest of the city was 8.3 percent, while Grand Traverse County's rate was 4.4 percent at the time of the study.

Downtown's current vacancy rate is 4-5 percent, with total retail space at approximately 500,000 square feet. There is close to 750,000 square feet of office space.

Bacigalupi noted that the DDA has had a long and steady list of retailers and businesses looking for available space. Currently 60 have placed requests. Low vacancies, coupled with the prospective owner's location or size needs, often resulted in lengthy waits with limited opportunities.

"In the past we just haven't had enough space," he said, noting that existing downtown shops were facing the same challenges when they sought to expand their current business. Low turnover limited their business growth.

Locations will now shift with Ella's moving from a tiny shop in the 100 E. Front block into the former Lutfy's storefront. Owner Wendy Buhr will continue her vintage clothing collection but expand to include antiques and alterations. What to Wear is shifting into the former Gold and Silver Center, while Robert Frost Shoes will join the downtown line-up in the former Martinek's space.

According to DDA Director Bryan Crough, helping existing businesses grow has been a downtown priority for many years.

"Today, we call it 'economic gardening,'" he said, "but, at the DDA, we have continually tried to help our existing downtown retailers grow."

Crough noted that such thriving businesses as Horizon Books and Miners North had both started their unique stores on a much smaller scale.

More movement is also on the horizon. The proposed 101 N. Park Street building will add 12,000 additional feet of prime retail plus four additional floors with 40,000 square feet of office space. (See story pg. 10.)

Downtown's retail presence is also extending further along and near Front Street, as evidenced by the increasingly popular Warehouse District, the popular food-related shops on West Front and the newer storefronts along Union and Cass.

Maurie Allen, owner of Captain's Quarters, has seen downtown take many shapes as businesses have opened and closed during the past four decades. "We've been here for 43 years…downtown was once dominated by major chains and large department stores," he said. "Now, it's totally changed. Downtown is filled with specialty shops."

"We reinvented ourselves and became a shopping destination," he said, noting the shift after the larger stores left.

Allen also feels that turnover isn't unusual. "It's the nature of a shopping district, especially a downtown," he said, noting that Traverse City is fortunate to still have a downtown, when they are nonexistent in so many communities. "We shouldn't panic when we see openings…I think it's exciting."

Bacigalupi predicts that downtown will continue to expand its retail repertoire with shops that complement each other and help drive sales for themselves as well as neighboring storefronts. Restaurants will continue to comprise a growing share of the mix, while venues like the State Theatre will continue to be a catalyst for downtown activity.

Crough notes that all contribute to the sense of "place" that downtown offers and has helped shield the district from the economic challenges felt elsewhere in the state.

"That sense of the unique and rare experience has served us well," he said. "The retailers offer the sort of unique experience that is in keeping with the surroundings. Differentiating that experience is key to our continued success." BN