While some local merchants say rents on Broadway are too high, forcing some businesses off of the city’s main commercial street, landlords and real estate agents believe rents are an accurate measure of market rates.
Rents on Broadway are more expensive than those on side streets and elsewhere in the city and they have increased over the years, leading some business owners to move their stores off Broadway, said Eugene Bizzarro, owner of Eugenio’s Gelato.
“A lot of people’s rents have gone up,” Bizzarro said.
Bizzarro’s rent has doubled from its original $2,500 a month in the seven years he’s been on the west side of Broadway.
Bizzarro is moving his business across Broadway into a smaller space because he doesn’t need the entire 1,700 square feet at his old location and because the rent is cheaper at the new 1,100-square-foot location in the former Subway storefront. And he can have an outdoor cafe at that location, which Bizzarro said he is looking forward to.
Cindy Spence said her 6-year-old store, Saratoga Needle Arts, can’t afford to foot the bill for Broadway rent for its operation of selling yarn to knitters and offering classes.
That’s not the main reason she’s closing her store at the end of this month and hoping to find a buyer to take over the business, but Broadway rent hasn’t helped.
“It’s got to move off Broadway, definitely,” Spence said of the store, which is not likely to attract many walk-in customers.
She has paid over $300,000 in rent in the past six years, an average of $31 per square foot a year for her 1,600-square-foot space.
“I could have bought a nice little house for that,” Spence said.
She said her rent has increased 1 percent a year, so it hasn’t risen as dramatically as Bizzarro’s did at the gelato shop. And her landlord gave her a break on rent over the past 10 months, she said.
Supply and demand
Broadway rent of up to $45 per square foot for prime storefront space gives some local business owners sticker shock, said Andrew Brindisi, president of the Downtown Business Association.
“I think in the 10 years I’ve been here, that’s always been kind of the consensus,” Brindisi said.
But landlords and real estate agents point out that simple market forces dictate the rent prices on Broadway as well as in the rest of the city.
“Pretty much they’re determined by supply and demand,” said Frank Panza, who owns The Shoe Depot as well as a building at the corner of Broadway and Spring Street that he rents out. “The whole town has done very well for itself.
“Thirty years ago, it was so easy to find space on Broadway and you could pretty much walk into it,” Panza said.
Now it’s much harder to find space and there are few vacancies on Broadway.
Businesses from elsewhere also are looking to relocate here.
Last month alone, Panza and his wife, Jenifer Flynn, fielded several calls from potential commercial tenants from Long Island, New York City, Lake Placid, Connecticut and near the Vermont border — all of whom faced recessionary slumps in their own cities.
“Saratoga has been known to hold its own during tough times,” Panza said. “It’s surprising with the uncertainties that are enveloping everyone, particularly on the commercial side of things, that there would be as much interest as there is.”
Tenants are also competing for space against people like Panza and Flynn’s new tenant at 15 Spring St., the former O’Dwyer’s Pub, who prepaid their rent while they are redoing the interior of the former pub.
“They were very proactive in securing what they felt was going to be a good thing for them,” Panza said. He declined to disclose the new tenant’s name but said the store will sell unique Martha’s Vineyard items.
Panza and Flynn charge about $40 a square foot per year for the Broadway storefronts and $18 per square foot for storefronts on the Spring Street side of their building.
Taking a gamble
Julie Dwyer, commercial real estate agent for Roohan Realty, said those are the going rates for Broadway and off-Broadway storefront space.
She believes rents are starting to correct themselves after rising for several years.
“They’re really starting to level off and become more realistic,” Dwyer said.
“There are obviously going to be the few landlords who are going to be unrealistic or demanding. If you’re charging too much money for rent, you don’t have anybody in there,” she added.
Landlords face their own rising expenses that they’re passing on to tenants: higher real estate prices, property taxes and insurance, for starters.
Even though businesses are clamoring to be on Broadway, many still go out of business or have to move to a cheaper place, Dwyer said.
“That happens quite often because someone has not done their homework. If I’m going to be renting to a new business, it’s very much my practice to say to them, ‘Where is your business plan? Have you talked to an accountant? What are your projections?’ ”
She said only about 9 percent of new businesses start with business plans.
“If you don’t have that, it doesn’t matter what your rent is, you’re not going to make it,” she said.
Adirondack Trust offers an incubation program to new businesses locating in its new Mabee building on Church Street, with cheaper rent and help from a Skidmore College economics professor.
One storefront, recently rented to Pamela Worth, who plans to open a women’s clothing store, was offered for lease at $12 a square foot, a steal compared to other retail spaces around town.
“That gives somebody an opportunity to build up a clientele and not pay Broadway prices,” said Flynn, who applauds the program.