Look at two major developments during the past five years: Carmel City Center and Sophia Square. City Center boasts nearly full occupancy for its retail spaces, but a few of its closures have made headlines. When Mangia!, a long-time locally owned Italian restaurant, moved into an expanded space at the City Center, there was much excitement. For a number of reasons, the move didn’t work out and the establishment closed this year. Owners told the media that parking was a big problem, while Carmel politicians and City Center officials shot back in defense of the development, saying there were many factors at play besides parking. Holy Cow Cupcakes, which relocated to the City Center, went through a somewhat similar situation, but without much public back-and-forth. I can’t pretend to know what really led to these closings, but it’s important to note that it’s a big topic of conversation among Carmel citizens. People always ask me if I know why a business closed, and they are too eager to share their gossip or theories.Look at Sophia Square, which has had some successes and some turnover. Detour: An American Grill turned into Scotty’s Brewhouse. Cafe St. Tropez turned into a the Thai Pad restaurant. It appears that Huddles Frozen Yogurt, which closed as a result of a pipe breaking, some were purportedly told, isn’t likely to reopen. Many storefronts remain vacant, but we always hear rumors about new tenants. And there have been some exciting new developments, such as The Pint Room, which has been hugely popular since it opened. Before any commercial developers contact me to complain, let me say that I am not saying that City Center or Sophia Square is struggling. For one, you can’t just focus on the vacancies when there are plenty of new and existing businesses thriving.
Also, I am not privy to their financial records and even if I did see them, I don’t have an accounting degree so who am I to comment on their state of affairs? I don’t even feel confident saying that a storefront vacancy is a concern. It could easily be par for the course. But I do feel confident making this statement: The people of Carmel play close attention to business vacancies and they want to see storefronts filled. They tell me this: It’s a lot more interesting to stroll down Main Street in the Carmel Arts & Design District and see lots of businesses. Some have gone as far as to tell me, “Why build new shopping centers when we can’t rent out the spaces we have now?” I don’t know if I can really answer that question, but I’m just telling you what people say.
WHY DO WE HAVE VACANCIES?
I’ve talked to a lot of people and all I can really say with confidence is that every business is different and sometimes the business and the location aren’t a good fit. I won’t reveal names since most of these business owners shared their problems with me in private conversations, but some say their rent is too high and some say there’s not enough parking. But then I’ll hear from a business owner next door for whom neither of those issues is a concern.
Sometimes when I see a property that’s vacant for a long time – many years and in many cases ever since I moved to Carmel four years ago – I wonder, Why doesn’t the landlord just lower the rent? (It would make sense to me that it’s better to get half of what you would like to receive because right now you are receiving nothing for your property. I’ve asked people about that and while some agree with me others say it sets a bad precedent for rental values for other properties the landlord might own in the area. So, it’s up to one’s own philosophy. I’ve written many times about business owners voicing their concerns about parking, both in the district and at City Center. Some people still don’t feel comfortable using the parking garages, or maybe they aren’t aware that they exist. I can tell you right now that from my opinion that these garages are safe. Look at police statistics and you’ll see that in Carmel you should not have a safety concern parking in these garages. But still, some find it inconvenient to drive into a garage and walk a good distance for a quick stop at a store. If you’re buying meat from Joe’s Butcher Shop or cupcakes from a bakery, you want to get in an out and if you have kids with you it’s not fun to have to drag them all the way from a garage. So that’s one reality. But I also understand the city’s perspective.
Mayor Jim Brainard has told me repeatedly that you can’t build sprawling parking lots in our downtown area. It’s unattractive and bad for property values. He said there needs to be a certain level of density to promote a livable, walkable downtown full of merchants. He prefers parking garages, so much so that he believes it’s a good investment to spend city money – or TIF money – to help pay for these garages. Developers like them, too, because now they can get more building on a smaller piece of land, meaning more bang for their buck. You also have to give credit to City Center for implementing its free valet service. I’ve used that often instead of parking in the garage, and it’s really easy and convenient. Especially if you’re running late for a date. Another important element that isn’t always considered is sometimes businesses are just poorly run. I’m not thinking of any particular business and I don’t know enough about all the ones mentioned to me to even come close to making that statement, but it’s just a reality; not all businesses are going to succeed, no matter where they are. Just keep that in mind.
WHAT CAN THE GOVERNMENT DO ABOUT VACANCIES?
It’s a tricky situation. We live in a free-market society and Brainard can’t step in and tell a developer, “You have to charge this much for rent and pick this certain type of tenant,” but there are certainly things can be done at City Hall to promote full occupancy at retail developments.
The city has invested money improving roads and access points to businesses. City councilors have properly assisted businesses with permits and zoning because everyone wants to see businesses succeed. Advice often is given. Most people don’t know that if you are looking for a location for your business that you can call the mayor’s office and they can put you in touch with people who can help you find a spot. They can’t make a decision for you or negotiate a deal, but they can put you in touch with the right people. In some situations, the city can buy commercial property. While it’s not done that often, the city has obtained assets such as the old Shapiro’s building and Party Time Rental, and now the city has control over making sure these locations are filled with magnetic tenants that will be good financially for the city and good for the image of Carmel.
There have been subsidies available for some businesses to pay rent. While it’s not an official government agency, the Carmel City Center Community Development Corporation – otherwise known as the 4CDC – has given grants to art galleries to help them pay rent and provide their services in the Arts & Design District. Again, the 4CDC is not part of the government but it’s a close partner, being led by Carmel City Councilor Ron Carter. And while some might say I’m being naive and that the reality is that the government pulls the strings and decides which businesses succeed or fail, I’m not going to go down that road. I don’t take sides. I just raise questions and this is an issue that many people have discussed with me so I thought I’d throw it out there to let others chew on.
Tell me what you think. Why do you think there are vacancies? What can the city do? And is this a problem?