Real estate and retail markets spur change in Nob Hill
If you've traveled along Central near Richmond lately, chances are you have seen the huge going-
The gallery, which specializes in Oriental textiles and antiques, is closing next week, and a weak economy isn't to blame. In fact Eleck’tic is closing for the opposite reason: The economy is going strong—at least strong enough for the market to command a higher rent for the space the shop occupies. Eleck’tic owner Robert Vander said he has decided to close rather than endure what he calls the “middle-class squeeze.” The out-of-state owners of the property—where he has sold goods for the past three years—won't renew his lease unless he agrees to a hefty 25 percent rent increase. For Vander that increase represents the difference between “making it and breaking it,” and he doubts many retail businesses could ingest such inflated operating costs while maintaining their obligations to employees and customers.
“I want to give my employees a living wage. I don't want to pay them $7 an hour and tell them 'Hey this is all I can afford,'” Vander said. “If they feel … [they have] no stake in the business, they aren't going to perform.” Vander is one of many Nob Hill shop owners who has been presented with the tough decision of whether to stay and eek out a living or move on to greener pastures, and he won't be the last. In 2012, the Bike Coop relocated from its former location on Central, a block and a half north of Eleck’tic, because of a similar rent hike. After 29 years selling and repairing bicycles in the heart of Nob Hill, the Bike Coop moved rather than absorbing a 22 percent rent increase, which would have flattened the small business's bottom line.
Bike Coop mechanic Stuart Knight-Williamson said the move from Nob Hill initially cost the shop some of the business it has relied on for years. But with cheaper operating costs and an increase in student business, things are turning out better than expected. “Really, they cut our overhead by forcing our hand in the move. Our rent had been too expensive for a long time,” Knight-Williamson said. “I like our location, and I think most of the mechanics do. But if we would've had this type of overhead in Nob Hill, we would have flourished.”
Eleck’tic Gallery Robert Vander said although Albuquerque's economy remains sluggish, there will always be entrepreneurs willing to lease Nob Hill's storefront property. But he adds that with the proliferation of virtual commerce, the type of store is changing. He predicts food-related businesses will gobble up the space once occupied by retail establishments, and he isn't the only one.
Commercial real estate agent Tom Jones said the rent increases that Vander and the Bike Coop refer to seem high, but there is no way of knowing for sure without understanding the complex lease agreements involved in commerical real estate.
Vander said although Albuquerque's economy remains sluggish, there will always be entrepreneurs willing to lease Nob Hill's storefront property. But he adds that with the proliferation of virtual commerce, the type of store is changing. He predicts food-related businesses will gobble up the space once occupied by retail establishments, and he isn't the only one.
Nob Hill Neighborhood Association (NHNA) board member Beverly Hill said that while she is happy to see the “new and improved Nob Hill,” she is disheartened that high rents are causing many of the area's local retail shops to disappear. “We are going through the growth stage that has occurred in the Santa Fe Plaza, where rents get so high [that] local businesses with a lower profit margin can no longer afford to stay or are forced out, and large national chains and high-profit aggressive business models move in to take their places,” Hill said.
Fellow NHNA board member Susan Michie-Maitlen said that although prior and proposed sector plan changes—or rules for governing development—favor developers, rent increases are an unavoidable part of doing business. “They probably couldn't afford them [rents] in Uptown either. That is just the way it is. Part of the retail [sector] suffered from recent recession, and people just got so far behind they couldn't get back on top again. And that is part of the problem with retail,” Michie-Maitlen said. But she admits the sector plan's less stringent zoning requirements for parking will create additional obstacles for area retail shops to overcome. “It's harder for those retail places to stay in business because now they are competing for parking with the restaurants,” Michie-Maitlen said.
City of Albuquerque Planning Department spokeswoman Deborah Nason said the plans were devised after careful review of comments from planning staff and members of the community. Nason said planning staff attended several meetings on the issue, and a final meeting is scheduled for August 8, before the proposal is sent to the City Council for final approval.
Meanwhile Vander is comfortable with his decision. “Landlords and tenants are people of the same race. They see inflation hacking away at their income. They see inflation nibbling at their retirements,” Vander said. “It's all a cat chasing its own tail. At some point, you have to say, 'it was a nice try.'”