Keeping Small Business in Durham



There's no Applebee's in downtown Durham. The nearest Starbucks is a kiosk within the Harris Teeter just off of 9th St. Durham shops small. Durham shops local.

I recently read this post from StrongTowns.org: What's up with all those empty commercial storefronts in new mixed-use developments? 

The examination of empty retail space within new constructions immediately made me think of the Liberty Warehouse apartment building. The retail spaces at the ground level of Liberty Warehouse remained empty for a year and a half and I had no idea why. The Central Park neighborhood of Durham is booming with Motorco, Fullsteam, the Farmer's Market, bars, restaurants and foot traffic at all hours of the day.

Wouldn't shops be clamoring for space in that area? The author of the post, Rachel Quednau references Milwaukee, WI in her article, but the principles seem to hold true in Durham as well.

The obvious conclusion is that the rents are too expensive for small and upstart businesses. However, the explanation gets more interesting. In part, the high rents are due to the prime location near Durham's Central Park, but it also has to do with the size of each division of commercial space.

Developers have an incentive to create only a few, large retail spaces as opposed to a lot of smaller ones. They don't want to manage too many retail tenants, add more water and electricity metering, and deal with more management hassles and higher costs.

So, these developers build larger spaces. They have deep pockets, so they can afford to let the space remain empty until they find a tenant that can afford the larger space. Many times, regional/national chains are the ones that can not only afford those rents, but also require more space for their operations.

So far, Foster Street Coffee has opened in Liberty Warehouse. The new Dame's Chicken & Waffles location as well as the Durham Food Hall are coming soon. The fact that we haven't seen a national chain at Liberty Warehouse is a testament to Durham's commitment to local businesses. The Durham Food Hall will feature many small, local vendors/pop up restaurants. The food hall is essentially doing the developer's job and subdividing the space themselves to make it possible for startup food concepts to thrive there.

So, the retail landscape at Liberty Warehouse has been encouraging. However, what's going to happen at 555 Mangum, The Bartlett, Foster on the Park, and the Five Points redevelopment? All of these projects have retail and they all have the same incentives to build large spaces.

Even if local shops and restaurants like Dame's are able to fill those locations, certain types of businesses -- the kind that create a vibrant downtown with local, community-minded owners -- will be crowded out. These storefronts won't be small, locally-owned barbershops, tailors, quick deli counters, or independent clothing shops. They will be businesses that are established and efficient as opposed to businesses that are active community participants.

Meanwhile, the Durham City Council has set Durham businesses as a priority. The Small Business Advisory Committee and many local non-profits work to support local entrepreneurs. The county also has a Minority and Women Business Enterprise program, hoping to encourage local, minority and women-owned business to start and thrive in Durham. All of these initiatves help guide and launch local businesses, which is great. However, City Council seemingly has another tool that they can use to spur local business: incentivizing smaller retail spaces in new developments.

Encouraging smaller-sized storefronts would benefit small, local businesses and would be in line with Durham's identity. At the same time, it would give Durhamites a wider variety of local shops and restaurants to visit and create a more active and vibrant downtown!

Comments

  1. I wasn't sure where to post this but I thought you'd be interested in this article. https://www.bizjournals.com/triangle/news/2018/07/23/new-owner-eyes-density-at-durham-s-venable-center.html

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    1. Sorry for the late reply -- thanks for bringing this up. I was able to post a quick hits about it!

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