Pam Zhang is slowly clearing out the inventory of jewelry and art in her Robson Street store, anticipating its closure by the end of this coming summer.
Eighteen years after opening the doors of Silver Gallery on Vancouver’s main shopping thoroughfare, Zhang said she can no longer afford the lease. It works out to $140 per square foot after taxes and fees.[column size=”two-third”]“We’ve been shouldering this for quite a long time and it’s pretty hard,” said Zhang. “We were hoping the landlord [would] come up with a solution so we could help each other, we could stay with more reasonable rent.”
“It’s not happening and so we have to find a lower-rent place.”
The space will soon be up for lease. It will add to a landscape of over 30 vacant storefronts in the West End’s main shopping streets — Robson, Davie and Denman — that have always been the busy, thriving centres of one of the city’s densest neighbourhoods.
But now, many stores are emptying out and staying vacant as developers, landlords, and tenants wait to see what happens when the West End community plan comes into action. The uncertainty adds to challenges businesses already face due to wavering numbers of tourists and a recovering economy.[/column]
[column size=”one-third” last=”true”]Renting in the West End
[li]Average retail rent in the West End ranges from $30 to $90 per square foot.[/li] [li]On Robson Street east of Bute Street, retail rent jumps to $50 to $300 .[/li] [li]In 2007, average rent in the area was $25 to $65.[/li] [li]New West End buildings in 2007 charged over $100.[/li][/column][/list]
The West End plan was approved by the city in November. It is a roadmap for how business, residential and recreational areas of the neighbourhood will grow and change over the next 30 years.
Attached with the plan were new zoning policies that will allow for taller buildings on major West End streets like Thurlow and Davie. The possibility to redevelop at higher density is an incentive for some owners to keep buildings empty.
The number of vacant retail spaces in some areas of the West End is the highest it’s been in at least the last 15 years, said Roger Chan, a local commercial realtor.
“I seldom see so many vacant spaces,” Chan said.
There are many other reasons for empty stores, closures, and higher rental prices.
“It is not just complex, like a clock is complex, but it is dynamic with many factors involved that change based on things like personal preferences, changes to transportation policy, marketing acumen, etc.,” said Stephen Regan, executive director of the West End BIA.
No tourists, no profit[column size=”one-half”] The economy, tourist volumes, and monthly sales influence rental and vacancy rates.
Zhang feels that her business has steadily declined, with fewer tourists visiting and locals spending less as both are hit by economic uncertainty.
“I observed two major changes. One was for the SARS that happened and 9/11… the second hit for us really was 2009, the economic crisis in the United States,” Zhang said.
“After that instance I noticed some changes in the tourist traffic, we started to feel some impact.”
When it came time for her to renew a five-year lease for Silver Gallery, she said her landlord offered a price that was close to the current rate.[/column] [column size=”one-half” last=”true”] [fve]http://vimeo.com/90139426[/fve] [/column]
But the current rental rate, along with taxes, is 40 per cent higher than when the store first opened 18 years ago, Zhang said. Sales have dropped by half.[column size=”one-half”]Zhang is not the only business owner feeling the pinch.
Andrew Parker, owner of The Dish on Davie Street, has also seen a decline in the number of shoppers in the area. He said it’s because the neighbourhood’s character has changed, with fewer retail stores and many more restaurants.
“There’s very few businesses that are diverse so therefore you’re not attracting the walk-by traffic, it’s not a shopping district anymore, it’s restaurants,” Parker said. “If you don’t allow destination stores to open and succeed, and all it is restaurant, restaurant, restaurant, then you’re not going to increase foot traffic.”
Another factor keeping retailers out of the West End is the emergence of more attractive options in the city.[/column] [column size=”one-half” last=”true”] [fve]http://vimeo.com/90139745[/fve] [/column]
Some retailers — particularly fashion retailers — are waiting for opportunities to move close to areas that are showing new signs of life, like Georgia and Granville, where the giant American department store Nordstrom is about to open.
Changing landscape creates uncertainty
The high vacancy rate is an unexpected change for the West End, which has always had a large population base and an active tourist industry to support many big-name and independent businesses.
It houses about 13 per cent of commercial properties outside of the Vancouver’s downtown. Over 50 per cent of the neighbourhood’s 743 businesses are retailers, according to 2007 data from the West End Business Improvement Association.
Vancouver staff hope the community plan will help to keep the West End as an attractive business district.
The plan includes proposals to make commercial streets more attractive with patios, wider sidewalks and public art.
“An attractive street will draw not only local residents, but also people working in the downtown, and visitors,” said city planners in a statement.
The city is not only aiming to attract visitors to the area but open the door for developers to build new residential spaces. The neighbourhood is expected to be home to an additional 10,000 people in the next 30 years.
But that plan, approved only last November, has created uncertainty.
Many retailers and landlords are being cautious to enter into new lease agreements. They are opting to wait and see how the neighbourhood will change.
“Yes the community plan is out, but precedents have to be set like in any other market,” said Mike Hodge, a retail leasing and sales associate at Avison Young. “It certainly depends on city decisions.”
While the plan will likely mean a boom in new development, there are no projects actually slated to go ahead at the moment. So everyone is waiting.
Store owners caught in limbo
In older, smaller buildings, landlords may only want to offer short-term leases in case they decide to develop — something that would make any prospective tenant anxious.[pullquote align=right]On paper it sounds great, but until you change the businesses that are already there, you’re not going to have an increase in pedestrian traffic[/pullquote]Parker, at his Davie Street location, said the demolition clause on his building — that allows his landlord to evict him at any time with little notice — means he doesn’t have any guarantees that he’ll be able to stay put.
“That’s standard within the city. Especially with older parts. That allows the landlords an out of six months or whatever’s in the lease if they choose to tear down or sell,” Parker said.
During the time it takes for buildings to get knocked down and rebuilt, business owners are caught in limbo.
“These individual businesses that are in these old stores now, once they’re torn down, it’s going be six months to a year for rebuild. And then to move back in again is a cost that some small businesses just can’t afford.”
And there is no guarantee that when businesses move back, the plans to give the area a facelift will actually benefit retailers.
“On paper it sounds great, but until you change the businesses that are already there, you’re not going to have an increase in pedestrian traffic. By putting up lights, by fixing pavement aren’t going to increase the foot traffic if [people] have got nothing to go to.”