Nothing contributes to the decline of a downtown so much as vacancy. Every empty storefront is a chilling sign of deterioration. Turnover is natural, and businesses that aren't successful will inevitably close their doors, but if there isn't a new operator to move in behind them, the effect on the block, and the entire district, is distressing.
Moxie's café is now officially out of business. There had been a coy "remodelling, open soon" sign in the window for a month or so, but now there's a For Lease sign on the door, and a look inside confirms that the site is lifeless.
I have fond memories of Moxie's. I played there many times with my trio, booked and promoted other artists there, and made several live recordings there. It was not an especially suitable venue in terms of acoustics, but it was one of the few venues in town where you could hear pretty much any kind of music, from entry level open-mike types to touring recording artists. They held poetry slams there as well, and while they served beer and wine, it was family-friendly, and a place where teens could hang out. Back in 1999, I installed and supported the computer network for patrons to surf the internet. It was, by a month or so, the first "internet café" in Chico (Has Beans opened shortly after the Moxie's network was available).
Perhaps Moxie's failure is a sign that downtown Chico has become overcaffeinated. It's not as though downtowners are at any risk of not being able to find a cup of coffee within a few steps of their door, after all. Since Moxie's opened at the old Sienna Café location, downtown has been inundated with coffeehouses. In addition to the aforementioned Has Beans, the Naked Lounge (my personal favorite even though it's terminally trendy, especially among the pierced-and-tattooed set), Augie's, Peet's, and Starbuck's have opened. Upper Crust and Brooklyn Bridge Bagel Works have been serving coffee for awhile, as well. Plenty of options for a cup of joe and a crust of bread in the city center.
Of all the coffee joints in town, Moxie's was probably the most "bohemian". It served as the unofficial gathering place for lefty politics, and was the main venue for election night return watching for the self-described progressive community. I can idly speculate that the demise of Moxie's might indicate an eroding momentum for the Esplanade League and its ilk, but it's a vain hope, certainly.
I'm much more likely to believe that Moxie's is the victim of accelerated mediocrity. Competition is stiff, and as Yogi Berra says, if people don't want to go the ball game, you can't stop them.
Of a larger concern is the absence of a tooth in a very prominent smile. That's the first block of Broadway, nearest the University. When a coffeehouse that explicitly caters to students and provides a casual, comfortable place to study and visit with friends can't turn enough business to thrive, something is wrong. When the students return in the fall, if that store is still shuttered, it's going to make a very bad impression on a critical market segment for downtown.
Confetti Party Headquarters is closing its doors, as well. This is also an unhappy sign. I'm told that the business is continuing, with an online commerce model, but no longer a downtown institution. This is troubling, inasmuch as these storefronts, in prime downtown locations, are joining the other 30,000 square feet of retail space in the downtown core sitting empty, and 30,000 feet of second-floor office and commercial space untenanted.
I hear people saying that the downtown is the heart of the community, but the truth is that Chico has heart trouble. Downtown is at a critical crossroads, and it could go either way. It could benefit from increased private investment, new businesses locating there, and more patrons visiting. Or it could continue to disintegrate as businesses fail or relocate and are not replaced.
There are no easy answers, but it is clear to this observer that the current strategies for sustaining the downtown as the community's cultural, civic, and commercial center are inadequate. And that makes me worry.
About Me: From commentary on local politics to critiques of art and culture to random philosophical musings, my occasional observations are a Dog's Breakfast of media criticism that is sometimes surprising, sometimes unappetizing, but always colorful.
Your observations show you have done your homework. Is it possible to put a finger on why the stores close? Taxes too high? Competitioon from stores where the principal uses his family to do the donkey work at virtually no cost? Poor parking facilities? Inappropriate merchandise? Inventory too large?
Perhaps the city should perform some researxh work on the subject as it has a profound effect on the city and its attractiveness.
Stores closing is just a fact of business life. 24% of new businesses last less than two years, 51% last less than 4 years, and 63% fold within 6 years. Why? Bad inventory planning, competition, a myriad of personal reasons. The problem in downtown is that when one closes nobody wants to take its place. As a business owner in downtown, I think there are two reasons for this. Firstly, many of the landlords think they can demand Bay Area rents and so are content to wait for a chain store with deep pockets to come along. Secondly, I have looked at many of the properties currently vacant and they pretty much all have one thing in common ... they are falling apart. The same landlords that want the big bucks are not willing to spend any money to renovate their buildings. Makes a brand new spot in a mall look pretty attractive.
Alan--
Thank you so much for your observations. Indeed, there are a great many factors contributing to the uneasy state of affairs in Chico's downtown. I appreciate your front-line perspective. Please continue to furnish your insights.
--Ax
Alan,
I have to say I’m a little distressed by your response to Mr. Rice’s comments (or lack of). Your blog was a comment on the cleanliness of the downtown sidewalks and the conditions of things like window glass. In most situations this is the contractual responsibility of the tenant, not the building owner. Sure, the building owner has the responsibility to see that the tenant lives up to that responsibility but when tenants don’t comply, the process is difficult. Granted, this comment does not apply to vacant buildings and I share your concern and Mr. Rice’s, that the environment (sidewalk and windows) around some of the vacant buildings is not maintained. But, in a healthy retail environment, this would not be a show stopper. The condition inside the vacant buildings is not an issue also. No building owner would invest to change the inside until he has a tenant, because he may create something the tenant will want to change (at the building owner’s expense). You wait for the tenant and then invest in changes. Building owners understand this and so do businesses looking for space.
The buildings that have been vacant, long term, shed some light on the real problem downtown. These are the large buildings like the old Bank of America, and Oser’s buildings. Viking Furniture was a concern but has been leased by someone that is already committed to the downtown area and plans to vacate two other downtown buildings to consolidate their two operations in one location. The large downtown sites are too large for most businesses that are willing to venture downtown. The type of businesses that would require that much space require a higher parking space to square footage ratio than the downtown offers. The parking charette’s goal of 1.8 parking spaces per 1000 square feet was off by a considerable amount. Major retailers (meaning the successful ones like Target, Walmart, and other business in the mall area.) require 5 to 6 spaces per 1000 square feet. They know what is necessary to be successful. Right now the downtown can’t meet 5 to 6 spaces with existing parking usage and definitely can’t if current vacant space was filled. So what we get downtown are businesses that don’t understand this, increasing their possibility of failure and again, the large spaces remain vacant
I also do not agree with Mr. Rice’s assessment that the building owners are asking too much for the rent in the downtown area. Currently, vacant space is running about $1.00-1.25 per square foot NNN or $1.50- $1.60 gross. This is definitely not Bay Area rents that currently run $2.50 – $5.00 per square foot NNN. Space near the Chico Mall (adjacent to Best Buy) is going for $2.25 – $2.50 per square foot NNN. The point is, the rents downtown reflect a discount because of the current situation downtown. I always hear the argument that the building owners should take less if their buildings are vacant. Keep in mind, a commercial lease is a commitment of 3 to 10 years. Most building owners are willing to wait for a tenant if necessary rather than commit to a money losing contract for significant time period. In many cases, the buildings wouldn’t be taken at any price because they are too large and there is insufficient parking to support their space. Case in point, Oser’s is planning to break up their space into smaller spaces because the larger retailers that could use a building that size are not interested because of the parking situation.
Granted, if you are a downtown business coming off a 5 year lease with a rent of $0.75 per square foot the new rent of $1.00- $1.25 probably seems like a big jump. However, owning a building is just as much a business as owning a retail business. When your costs go up, you have to charge more for the product. In this case the product is the building space. Based on replacement costs for the buildings as a method to determine the building’s value (the most conservative method) and using the current market CAP rate of 6.5, the low end for rents should be about $1.10 per square foot NNN. Well in the range of what is being asked. (Alan, you are a business consultant. How about a blog entry to show the calculation of what an acceptable rent should be for the downtown? I can provide my figures if you like.) Building owners investing in the downtown are expecting a net return on investment of only 6.5%. For crying out loud, I can get 5% on a CD without the headaches of owning a building. Yet, Mr. Rice wants me to reduce my rents so I’m making less than 6.5%. Mr. Rice, what is your return on investment on your business? Would you stay open if you were making only 6.5% on the money you invested? Building costs and building expenses have driven up the building owners cost of their product offering. As a result, rents have gone up. Mr. Rice, if your wholesale costs went up wouldn’t you raise your prices? If you couldn’t because people were only willing to come downtown to your business because of your low prices wouldn’t you be forced to move to a different location? Well I can’t move my building!
I believe in the downtown area and I believe the problems in the downtown are problems that can be solved easily. The two major problems in the downtown are parking and law enforcement. We need more parking and a greater police presence. If the city made a commitment to provide those two things along with the recognition that the downtown is a major commercial area and should be supported as such, we would see a healthy downtown. Investors would be coming out of the woodwork to invest in and improve the downtown buildings. Businesses would consider placing their businesses downtown and the vacancies would disappear. We might see a reduction in the rate of sprawl in the mall area if businesses viewed the downtown as a reasonable commercial location. Wouldn’t it be better if we supported the health of the downtown rather than have a ghost town in the downtown with all new businesses filling new construction on currently undeveloped land.
Just my opinion!
Tom Hall
Tom--
Thanks for your remarks. You make some very good points, and I will be posting additional articles emphasizing the critical need for additional parking and enforcement resources in the downtown.
I will get together with you to discuss a post on rent rates and the factors that drive them. I appreciate your help with this.
Great comments Tom and I agree with you on the parking and policing issues. In fact, I really don't have an issue with the amount of rent that I have to pay in downtown either. I would gladly pay $1.50 per square foot for somewhere that has an infrastructure that can support a specialty retail environment (which is what downtown is all about). However, I don't want to pay $1.10 a square foot for a building with leaky plumbing, inadequate electrical cicuits, no alarm system, 25 year-old carpets, and a 35 year old swamp cooler. I am currently looking to move my business within the downtown area but spending $50,000 or more to get somebody else's building up to scratch sticks in my throat. I just have not experienced the willingness of landlords to make those kind of investments.
Alan--
Great response! And I would be remiss if I didn't point out that Tom offers a lot of what you're proposing at the Garden Walk Mall...
I guess you never saw my post earlier in which I more or less demolish your current location...
--Ax