‘Alternative’ retailers help fill empty storefronts

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Hookah King owner Sam Samara, whose shop is on Bijou Street, knows some of his neighbors aren’t thrilled by his shop’s proximity to theirs.

Hookah King owner Sam Samara, whose shop is on Bijou Street, knows some of his neighbors aren’t thrilled by his shop’s proximity to theirs.

Tattoo parlors, hookah bars and medical marijuana dispensaries are fast changing the complexion of the local retail scene, filling locations left vacant by Baskin Robbins, chic boutiques and computer retailers.

At the moment, there are close to 50 tattoo parlors registered with the El Paso County Health Department. While there are still only a handful of hookah bars scattered throughout the city, 126 marijuana dispensaries or suppliers have so far filed sales tax applications. That’s up from 64 as of Feb. 1.

The proliferation of these “alternative lifestyle” shops, while typically a turn-off to parents of young families and upscale shoppers, has found a ready audience among over-leveraged landlords trying to fill buildings left half-empty by the recession.

With the vacancy rate in retail space in the market at a historic high of 1.3 million square feet, the trend is not surprising.

Faced with empty stores, buildings that have lost value and pressure from nervous lenders, more owners have give their brokers and property managers the green light to introduce non-traditional players into the retail tenant mix.

As a result, edgier shopkeepers who in the past couldn’t afford a prime location or were turned down by landlords worried about keeping a conservative image are now negotiating attractive deals.

New neighbors

Uintah Station, a small strip-center at the corner of West Uintah and 17th streets, added its first marijuana dispensary last year. Retail Group broker Jon Winsor said the property’s owner was willing to lease 3,150 square feet to Total Health Care dispensary owner Kyle Wendland rather than let the space remain vacant.

Wendland didn’t return calls, but a spokeswoman for his operation said that so far business was good and continuing to grow. “We’re very happy here,” she said.

But Sue Sasinka, the owner of neighboring Mountain Mama Natural Grocery, wasn’t pleased, not at first at least.

“We’d been here for 23 years; I had some reservations,” she said. “They’re quiet and seem like good tenants, but I worried about burglaries.”

Some of those concerns have now dissipated. “I feel more neutral now, and wish them well,” Sasinka said. “I’m sure the city’s thrilled to get the (sales) tax.”

Susan Godec, owner of the Phancy Pheasant, which until recently was located across the street from a hookah bar and a tattoo shop in downtown, wasn’t at all crazy about her new neighbors.

Her antiques and designer accessory shop caters to those with discretionary income.

Once she saw cookware retailer Sparrow Hawk and Zeezo’s, a costume shop, move on to Tejon Street from Bijou Street last year, she made her own plans to relocate.

“I’m glad I made the move,” she said. “I feel like my store is classier, higher-end retail — it just doesn’t fit in with smoking and tattoos. … We need to be a place that is sought-after, a destination. Theirs isn’t the clientele we represent.”

Most of the city’s vacant retail space is located in older strip centers and neighborhood centers found in the east, northeast and northwest parts of the city. The central business district has faced its own share of dark storefronts.

And like Winsor, many retail real estate brokers get weekly — sometimes daily — calls from “alternative” business owners looking for space.

Fountain Colony listing broker Julie Phillips, for example, said she hears from alternative users “all the time” about space in the former Listen Up building on the southwest corner of North Tejon Street and East Platte Avenue.

So far, the building owners have held off because they are unsure of how city and state medical marijuana dispensary regulations will be written.

“If the law changes, we’ll look at it again,” she said.

Sierra Commercial Real Estate broker Mark Useman gets the same types of calls but said the owners he represents aren’t interested.

“A lot of the newer, nicer centers keep tattoo parlors, hookah bars and marijuana stores out simply by charging higher rents,” he said.

But there’s no shortage of landlords who are willing to talk. In fact, some are already competing for the business.

The owners of the hookah bars and other such businesses appear to be generally happy in their digs.

“I found this location between the tattoo shop and Taste of Jerusalem after another guy on Kiowa (Street) wanted too much rent,” said Sam Samara, who owns Hookah King on Bijou Street. “It was perfect — I draw customers both from people getting a tattoo and from those who want to smoke hookah after they’ve had lunch.”

Samara knew that Bijou was the second-busiest street in the downtown.

And now, because the number of new marijuana dispensaries has mushroomed since late last year, he’s considering applying for a license to operate his own clinic.

He realizes that some of his retail neighbors aren’t thrilled with the new tattoo, hookah or marijuana shops around them, but figures that everyone can get along.

“I wish for everybody, whatever their business, good luck. You can run your business your way, and I’ll run mine, but you cannot tell me what to do,” he said.

Downtown Partnership executive director Ron Butlin has a free-market view on the situation.

“So far, our tattoo shops and hookah bars have been good business citizens,” he said. “They’re legal and are fine as long as they behave. I’d rather have a place for people to smoke at their leisure than have people in doorways and pedestrian areas.”

Besides, he said, tattoo parlors have become “pretty mainstream.”

Boosting tax revenues

Sgt. Steve Noblitt of the Colorado Springs Police Department acknowledged that there’s a perception that these new retailers will attract crime. So far, however, statistics don’t support that conclusion.

“Do tattoo parlors or marijuana dispensaries have a higher incidence of trouble calls? Nothing we track supports that. Anyone in retail — 7-Elevens, jewelry stores, donut shops — knows they can be hit by a robbery,” he said.

Landlords may have more to fear than unhappy tenants or an occasional burglary, however.

If pending state legislation passes this month, many dispensary owners may disappear overnight, leaving vacant space once again.

On June 17, El Paso County’s temporary regulations that allow medical marijuana stores to operate will expire. And proposed state legislation introduced by Sen. Chris Romer (D-Denver) would mandate an increase in license application fees to between $10,000 and $35,000 — similar to the fees charged to license a liquor store. The proposal also calls for criminal background checks on owners and would require them to grow any marijuana they sell.

Some elected officials worry about an over-reaction.

“I think we should bring structure and controls to (the medical marijuana business), but not over-regulate,” said City Councilman Sean Paige. “And once rules are in place, I think it will be easier to tell the good from the bad actors.”

Paige is the co-chair of a task force trying to develop a local medical marijuana ordinance.

“I’ve talked to a number of commercial landlords, including those in downtown. They’re glad to have these businesses,” he said.

City leaders, however, may not be completely objective.

According to an estimate by the Colorado Springs Medical Cannabis Council, the city could see a $1.6 million increase in annual sales tax revenues this year thanks to all of those dispensaries.