February 16, 2004
The perfect space | In the retail hothouse of Portland's Old Port, some corners are hotter than others
By Sean Donahue
Last fall, when Celia St. Onge began planning a home décor store specializing in furniture, linens, table wear and kitchen accessories, she knew she wanted to open it in Portland's Old Port. Her three years as a wholesale sales representative and occasional retail store manager for Hue, a Vietnamese fabric and homewares company with a store in the Old Port, had shown her the strength of the shopping district.
But that experience also convinced her not to put her boutique, called Celia Bedilia, on lower Exchange Street, the boutique-laden heart of the neighborhood coveted by most merchants. "I wanted to be on upper Exchange. It's becoming known as a home store area," says St. Onge, who opened Celia Bedilia on Feb. 7. "I heard a lot of people say I was crazy, but I think the quality of the shoppers up here is more reliable than on lower Exchange."
In one way, St. Onge, who immediately moved into the spot vacated by Hue (which is closing to concentrate on the wholesale and online parts of its business), is taking advantage of an annual reshuffling of the Old Port's retail landscape. Every January, a handful of storefronts typically open up as leases expire, or struggling retailers that have hung on through the holiday shopping season decide to pack up for good. But her move is also atypical, given that demand for retail space on lower Exchange Street ˆ between Middle and Fore streets ˆ means those spots usually fill immediately. Storefronts on or above Middle Street, however, often sit vacant for weeks or months.
"The real estate market has been very active from Middle Street down," says Steve Baumann, a commercial broker with CB Richard Ellis/The Boulos Company. "Middle Street is pretty much the break off between the primary locations where merchants want to be and the substandard areas in and around the Old Port."
Calling any section of the Old Port "substandard" may sound unusual, given that the area enjoys an estimated 97% occupancy rate and that most of its retailers have managed to post decent sales for the past few years even in the face of a nationwide recession. But the prevailing opinion among current and would-be Old Port merchants is that the shopping district's true benefits only extend as far as the typical tourist is likely to wander on a summer afternoon ˆ essentially, the area between the waterfront and up Exchange Street to Middle Street. That foot-traffic pattern has pushed rents in the area to historical highs of $35-$40 per square foot, compared to about $18-$20 for space on the other side of Middle Street.
For the past few years, though, those high rents have inspired merchants like St. Onge to buck the prevailing opinion and move out to the Old Port's fringes. The idea is to create micro-districts within the Old Port ˆ in St. Onge's case, a high-end home goods and fashion cluster that includes Celia Bedilia, Folly 101, Stiletto shoes and destination restaurants like Bandol and Natasha's ˆ that have a unique identity and cater to a smaller but more dedicated audience.
Convincing shoppers to gravitate toward these micro-districts isn't easy, though. Just as Celia Bedilia opens its doors, a few blocks away on Middle Street the Asian art and furniture retailer Journey East is getting ready to shut down, two years after owner Joseph Bauer envisioned a similar cluster developing among his store and neighbors F.O. Bailey Antiquarians and the Clown, a wine, art and furniture gallery. "I knew there were some problems with foot traffic down here, but I figured I'd market a lot and develop a customer base. I saw that the Clown was doing events every week and figured that eventually more retail would move in around here," says Bauer, who was able to get out of his lease early when F.O. Bailey announced earlier this year that it was leaving Portland. "It simply hasn't worked here. This entire end of the street just died."
The magic intersection
Visitors strolling around the Old Port in early February might have noticed the roughly half-dozen empty or soon-to-be empty storefronts (see "Open space," next page) and thought a significant shakeup was underway. But local commercial real estate brokers insist that 2004's turnover rate is typical for the time of year. Demand for prime locations remains strong, as evidenced by the still rising rents and the fact that most Exchange Street stores have a new tenant signed up before the outgoing leaseholder has even moved out. Baumann says he usually has a waiting list of three to five retailers looking for an opening on Exchange Street.
Among the changes this year, J. Dostie Jewelers moved onto Exchange Street after eight years around the corner on Middle Street. Likewise, shoe and clothing retailer J.L. Coombs, which operates four stores in Maine and New Hampshire, took over a larger space on Exchange Street a block from its existing shop on Milk Street. Late last year, longtime Old Port jeweler Oscar Benoit closed its shop on the corner of Fore and Milk streets, and that spot has since been leased (to the horror of some Old Port merchants) to Dunkin Donuts.
Putting aside differences between the shops and the ongoing national chain vs. homegrown store debate, Baumann points out that the new tenants are seasoned retailers, some with years of experience operating in the Old Port. Their market savvy, he says, helps underscore the advantages of being as close as possible to the intersection of Exchange and Fore streets.
Demand is less for sites beyond lower Exchange street for a number of reasons, including the fact that spaces on upper Exchange Street and Middle Street tend to be larger ˆ about 3,000 sq. ft., compared to about 1,500 sq. ft. for a lower Exchange Street location. Upper Exchange and Middle streets also have a wider mix of tenants and features, including office space, parking lots and parks, which tend to stop wandering shoppers in their tracks. "Visitors see an office or a park and they don't know that they should continue walking down the block," says Baumann.
Despite those factors, St. Onge maintains that increased foot traffic doesn't justify paying the significant rent premium to be closer to the waterfront. Though she admits she might sell more small, trinkety items to summer visitors on lower Exchange, she plans to cater more to local residents and people who work in downtown Portland, who are more likely to buy larger items or return frequently to check out new merchandise. "I've been working in this location when cruise ships have come in, and though you do get a larger volume of people, they're not buying much," says St. Onge. "You can have a lot of people coming through and even buying little things, but if you don't sell furniture and other big items, you don't make it."
Beyond Exchange Street
Bauer of Journey East doesn't discredit the value of casual browsers and small trinket sales. He believes that type of foot traffic is essential to building a store's brand through word of mouth or even simple name recognition. The lack of foot traffic in front of his store helped contribute to his decision to close the shop.
But Bauer and other merchants on the east end of Middle Street also faced a few key disadvantages in their attempt to shift the retail gravity away from Fore and Exchange streets. Most importantly, an entire block of the street is taken up with large office buildings and a parking lot, breaking up the consistency of retail stores that keeps shoppers strolling along. Even the retail space that is available doesn't have its doors at street level ˆ shoppers have to walk up a small flight of stairs, which retailers and downtown development experts say inhibits people from entering.
During the past two years, several new retail locations also have opened up on Commercial Street along Portland's waterfront, as old buildings have been rehabilitated and office space has been converted to retail. Those new sites have absorbed some of the spillover from Exchange and Fore streets that otherwise might have gone to upper Exchange and Middle streets.
While acknowledging the physical and architectural limitations of their locations, Bauer and other merchants on the fringes of the Old Port also feel the City of Portland, and marketing groups such as Portland's Downtown District and the Old Port Retail and Restaurant Association, could be doing more to coax shoppers into less-trafficked areas. Some ideas include asking the Portland Economic Development Center to work harder to attract retail tenants to storefronts that have sat vacant for months; closing certain streets, including lower Exchange Street and portions of Middle Street, to automobile traffic in the summer or adding eye-catching features like new trees, planters or banners; and doing more marketing that highlights shopping options beyond the Old Port's main corridor.
Rena Masten, executive director of Portland's Downtown District, says it's inevitable that any shopping district will have one or two main streets that see the most activity. But she also says her organization has been working to push foot traffic away from the waterfront and Exchange Street area through visitor guides that encourage shoppers to explore other areas of the city and a new visitor information kiosk located on upper Exchange Street.
Further efforts, such as attracting new businesses to specific locations or changing traffic patterns, fall under the bailiwick of the Portland Economic Development Center or the city council, though. And despite recognizing the additional needs of some parts of the Old Port, it's difficult for PDD or any other group to focus its efforts on one street or one block, says Masten. "We look at both the Arts District and the Old Port, and we try very hard to balance and equal out the attention given to those areas," says Masten. "It's important to look at the entire city." That means that as long as the Old Port as a whole is thriving, smaller sections of the area are not likely to command much additional attention from the city, merchants say.
To thrive in these areas, businesses must become destinations in their own right, says Kyle Wolfe, owner of the Clown on Middle Street, who uses weekly wine tastings and art openings to create the store's core following. (Despite that following, Wolfe is trying to sublease the space, which she says is too large, and find a new location.) St. Onge also knows she must rely on additional marketing and special events to bring people into her store, such as a planned champagne and cheese event near Valentine's Day and frequent mailings highlighting the store's new merchandise.
But even as she takes comfort in the additional draw of the established businesses and restaurants around her, St. Onge also hopes the trend of high rents and low vacancies continues to push other merchants toward the so-called substandard locations of the Old Port. Homescapes, another high-end home furnishing store across Exchange Street from Celia Bedilia, is set to close in March when its owners move to Massachusetts, and St. Onge wonders how long the space will remain vacant. After watching other retailers struggle in fringe areas of the Old Port, she knows that a few gaps in the block can derail attempts to create vibrant shopping districts in these challenging locations. "I'm not concerned with who's going to go in [to the Homescapes location], I'm concerned that it won't have a new tenant until May," says St. Onge. "Empty space is even worse than a competitor next door."
But that experience also convinced her not to put her boutique, called Celia Bedilia, on lower Exchange Street, the boutique-laden heart of the neighborhood coveted by most merchants. "I wanted to be on upper Exchange. It's becoming known as a home store area," says St. Onge, who opened Celia Bedilia on Feb. 7. "I heard a lot of people say I was crazy, but I think the quality of the shoppers up here is more reliable than on lower Exchange."
In one way, St. Onge, who immediately moved into the spot vacated by Hue (which is closing to concentrate on the wholesale and online parts of its business), is taking advantage of an annual reshuffling of the Old Port's retail landscape. Every January, a handful of storefronts typically open up as leases expire, or struggling retailers that have hung on through the holiday shopping season decide to pack up for good. But her move is also atypical, given that demand for retail space on lower Exchange Street ˆ between Middle and Fore streets ˆ means those spots usually fill immediately. Storefronts on or above Middle Street, however, often sit vacant for weeks or months.
"The real estate market has been very active from Middle Street down," says Steve Baumann, a commercial broker with CB Richard Ellis/The Boulos Company. "Middle Street is pretty much the break off between the primary locations where merchants want to be and the substandard areas in and around the Old Port."
Calling any section of the Old Port "substandard" may sound unusual, given that the area enjoys an estimated 97% occupancy rate and that most of its retailers have managed to post decent sales for the past few years even in the face of a nationwide recession. But the prevailing opinion among current and would-be Old Port merchants is that the shopping district's true benefits only extend as far as the typical tourist is likely to wander on a summer afternoon ˆ essentially, the area between the waterfront and up Exchange Street to Middle Street. That foot-traffic pattern has pushed rents in the area to historical highs of $35-$40 per square foot, compared to about $18-$20 for space on the other side of Middle Street.
For the past few years, though, those high rents have inspired merchants like St. Onge to buck the prevailing opinion and move out to the Old Port's fringes. The idea is to create micro-districts within the Old Port ˆ in St. Onge's case, a high-end home goods and fashion cluster that includes Celia Bedilia, Folly 101, Stiletto shoes and destination restaurants like Bandol and Natasha's ˆ that have a unique identity and cater to a smaller but more dedicated audience.
Convincing shoppers to gravitate toward these micro-districts isn't easy, though. Just as Celia Bedilia opens its doors, a few blocks away on Middle Street the Asian art and furniture retailer Journey East is getting ready to shut down, two years after owner Joseph Bauer envisioned a similar cluster developing among his store and neighbors F.O. Bailey Antiquarians and the Clown, a wine, art and furniture gallery. "I knew there were some problems with foot traffic down here, but I figured I'd market a lot and develop a customer base. I saw that the Clown was doing events every week and figured that eventually more retail would move in around here," says Bauer, who was able to get out of his lease early when F.O. Bailey announced earlier this year that it was leaving Portland. "It simply hasn't worked here. This entire end of the street just died."
The magic intersection
Visitors strolling around the Old Port in early February might have noticed the roughly half-dozen empty or soon-to-be empty storefronts (see "Open space," next page) and thought a significant shakeup was underway. But local commercial real estate brokers insist that 2004's turnover rate is typical for the time of year. Demand for prime locations remains strong, as evidenced by the still rising rents and the fact that most Exchange Street stores have a new tenant signed up before the outgoing leaseholder has even moved out. Baumann says he usually has a waiting list of three to five retailers looking for an opening on Exchange Street.
Among the changes this year, J. Dostie Jewelers moved onto Exchange Street after eight years around the corner on Middle Street. Likewise, shoe and clothing retailer J.L. Coombs, which operates four stores in Maine and New Hampshire, took over a larger space on Exchange Street a block from its existing shop on Milk Street. Late last year, longtime Old Port jeweler Oscar Benoit closed its shop on the corner of Fore and Milk streets, and that spot has since been leased (to the horror of some Old Port merchants) to Dunkin Donuts.
Putting aside differences between the shops and the ongoing national chain vs. homegrown store debate, Baumann points out that the new tenants are seasoned retailers, some with years of experience operating in the Old Port. Their market savvy, he says, helps underscore the advantages of being as close as possible to the intersection of Exchange and Fore streets.
Demand is less for sites beyond lower Exchange street for a number of reasons, including the fact that spaces on upper Exchange Street and Middle Street tend to be larger ˆ about 3,000 sq. ft., compared to about 1,500 sq. ft. for a lower Exchange Street location. Upper Exchange and Middle streets also have a wider mix of tenants and features, including office space, parking lots and parks, which tend to stop wandering shoppers in their tracks. "Visitors see an office or a park and they don't know that they should continue walking down the block," says Baumann.
Despite those factors, St. Onge maintains that increased foot traffic doesn't justify paying the significant rent premium to be closer to the waterfront. Though she admits she might sell more small, trinkety items to summer visitors on lower Exchange, she plans to cater more to local residents and people who work in downtown Portland, who are more likely to buy larger items or return frequently to check out new merchandise. "I've been working in this location when cruise ships have come in, and though you do get a larger volume of people, they're not buying much," says St. Onge. "You can have a lot of people coming through and even buying little things, but if you don't sell furniture and other big items, you don't make it."
Beyond Exchange Street
Bauer of Journey East doesn't discredit the value of casual browsers and small trinket sales. He believes that type of foot traffic is essential to building a store's brand through word of mouth or even simple name recognition. The lack of foot traffic in front of his store helped contribute to his decision to close the shop.
But Bauer and other merchants on the east end of Middle Street also faced a few key disadvantages in their attempt to shift the retail gravity away from Fore and Exchange streets. Most importantly, an entire block of the street is taken up with large office buildings and a parking lot, breaking up the consistency of retail stores that keeps shoppers strolling along. Even the retail space that is available doesn't have its doors at street level ˆ shoppers have to walk up a small flight of stairs, which retailers and downtown development experts say inhibits people from entering.
During the past two years, several new retail locations also have opened up on Commercial Street along Portland's waterfront, as old buildings have been rehabilitated and office space has been converted to retail. Those new sites have absorbed some of the spillover from Exchange and Fore streets that otherwise might have gone to upper Exchange and Middle streets.
While acknowledging the physical and architectural limitations of their locations, Bauer and other merchants on the fringes of the Old Port also feel the City of Portland, and marketing groups such as Portland's Downtown District and the Old Port Retail and Restaurant Association, could be doing more to coax shoppers into less-trafficked areas. Some ideas include asking the Portland Economic Development Center to work harder to attract retail tenants to storefronts that have sat vacant for months; closing certain streets, including lower Exchange Street and portions of Middle Street, to automobile traffic in the summer or adding eye-catching features like new trees, planters or banners; and doing more marketing that highlights shopping options beyond the Old Port's main corridor.
Rena Masten, executive director of Portland's Downtown District, says it's inevitable that any shopping district will have one or two main streets that see the most activity. But she also says her organization has been working to push foot traffic away from the waterfront and Exchange Street area through visitor guides that encourage shoppers to explore other areas of the city and a new visitor information kiosk located on upper Exchange Street.
Further efforts, such as attracting new businesses to specific locations or changing traffic patterns, fall under the bailiwick of the Portland Economic Development Center or the city council, though. And despite recognizing the additional needs of some parts of the Old Port, it's difficult for PDD or any other group to focus its efforts on one street or one block, says Masten. "We look at both the Arts District and the Old Port, and we try very hard to balance and equal out the attention given to those areas," says Masten. "It's important to look at the entire city." That means that as long as the Old Port as a whole is thriving, smaller sections of the area are not likely to command much additional attention from the city, merchants say.
To thrive in these areas, businesses must become destinations in their own right, says Kyle Wolfe, owner of the Clown on Middle Street, who uses weekly wine tastings and art openings to create the store's core following. (Despite that following, Wolfe is trying to sublease the space, which she says is too large, and find a new location.) St. Onge also knows she must rely on additional marketing and special events to bring people into her store, such as a planned champagne and cheese event near Valentine's Day and frequent mailings highlighting the store's new merchandise.
But even as she takes comfort in the additional draw of the established businesses and restaurants around her, St. Onge also hopes the trend of high rents and low vacancies continues to push other merchants toward the so-called substandard locations of the Old Port. Homescapes, another high-end home furnishing store across Exchange Street from Celia Bedilia, is set to close in March when its owners move to Massachusetts, and St. Onge wonders how long the space will remain vacant. After watching other retailers struggle in fringe areas of the Old Port, she knows that a few gaps in the block can derail attempts to create vibrant shopping districts in these challenging locations. "I'm not concerned with who's going to go in [to the Homescapes location], I'm concerned that it won't have a new tenant until May," says St. Onge. "Empty space is even worse than a competitor next door."
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