Downtown retailers hurting, but vacancy rates hold hope

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The last Mrs. Fields Cookies store in El Paso County will shut its doors next week after 25 years in business in the heart of downtown Colorado Springs.

“The reason we’re leaving is the same reason everyone is leaving,” said Bill Ross, who has owned the cookie shop for the last 10 years. “We just can’t make ends meet anymore.”

Mrs. Fields joins a growing list of long-established downtown businesses closing shop. That list includes Michelle’s ice cream and candy shop, Bryan & Scott Jewelers, LuLu, Couture, Idoru and Mt. Tejon.

“This has been a tough time for retail,” said Ron Butlin of the Colorado Springs Downtown Partnership.

The economy has seriously hurt a lot of businesses downtown, he said.

Ross’s cookie business grossed more than $180,000 a year in its first six or seven years he owned it, he said. But for the last three years, profit has dwindled dramatically and he’s even lost money some months. His 2010 gross revenue was less than half what it had been, he said.

“All the office space around here is vacant,” Ross said, pointing up at empty windows across from his shop. “People aren’t walking around here anymore.”

Ross said a lot of his business came from people who worked downtown and came in to treat themselves or buy a dozen cookies for co-workers or who thought of Mrs. Fields when planning parties.

He believes the new steeper parking fines have driven would-be weekend visitors from wanting to come downtown and shop.

Courtney Levy, the bookkeeper at boutique clothing shop Drama, said sales are down for this time of year this year. The shop is located at 107 S. Tejon St. next door to the now-vacant space where Couture used to be.

Butlin said Couture closed up her shop for a variety of reasons that didn’t all hinge on the economy. As far as the central business district is concerned, those shops on Tejon between Colorado Avenue and Bijou Street in the heart of the city are hanging in there the best, Butlin said.

The side streets are the ones hurting the most.

Some businesses have even taken advantage of the new spaces opening up on Tejon and transferred their shops. Phancy Pheasant and Zezoos costume shop are two that moved from Bijou to Tejon.

“We’ve had an interesting mix here of businesses going out and businesses coming in,” Butlin said. “More have closed than have opened. But still, some have opened.”

While the empty storefronts and stories of long-time businesses closing up for good paint a forlorn picture of the downtown retail market, the numbers suggest a brighter story.

Though both retail and office vacancy rates downtown are high, they’re not much higher than they are in other parts of town, and in some cases they’re lower, according to data from Sierra Commercial Real Estate, which conducts regional market research.

The central business district reported a 9.08 percent retail vacancy rate in the first quarter of this year compared with over 15 percent in the north central region of town and over 21 percent vacancy in the east, according to Sierra.

“Our downtown seems to be holding its own alright through this economy,” said Ben Lowe, Sierra’s director of market research.

He noted that areas along South Academy Bolevard are struggling much harder than downtown to keep retail shops open.

Sierra’s data also show that the 9.08 percent retail vacancy is the lowest first quarter vacancy rate seen downtown since 2007.

“Our downtown isn’t in bad shape,” Lowe said. “But it could be better.”

While this year’s first quarter vacancy rate is an improvement over previous first quarter rates, Sierra’s numbers show it is up from the fourth quarter of 2010. And there are significantly more retail vacancies downtown than there are in the nearby west and southwest parts of town.

Lease rates have fluctuated over the years and were actually higher in the first quarter of this year than they were in the first quarter of 2010, but are significantly lower than they were at their peak in 2009.

“The problem downtown is really one of geography and demographics,” Lowe said. “The population is not growing centrally; it’s growing out.”

He said downtown will have to become more of a destination if it’s going to draw shoppers in from the outlying suburban areas where they now live, farther and farther away from the center of the city.

Butlin said that the downtown partnership is striving to bring people into the heart of Colorado Springs this summer. It will host weekend concerts in Acacia Park and advertise the farmers market.

“We want to get people to come downtown, wander around and spend some money here,” Butlin said.

Downtown retail vacancy rates

Year 1Q retail vacancy % 1Q retail lease rates 1Q office vacancy %
2011 9.08 $14.46/sf 11.23
2010 12.25 $12.46/sf 13.08
2009 10.28 $16.41/sf 11.41
2008 21.14 $15.16/sf 12.72
2007 7.92 $12.03/sf 8.56

Source: Sierra Commercial Real Estate