Saturday, February 21, 2004
Squeezed out
With some retailers unable to pay Newbury Street rents, space abounds
By Susan Diesenhouse
Boston Globe Correspondent
As winter slowly turns toward spring, signs of change are pervading trendy Newbury Street , but they're not all sunny.
"Going out of Business" and "Space for Rent" announcements fill storefront windows on most of its eight blocks. The economy isn't sliding into the cellar again; it's a seasonal recycling of space, brokers say, and a winnowing of tenants unable to afford rents that rose sharply in recent years.
Retailers, especially those running independent boutiques, often strive to survive after the holidays. In January, some decide not to renew leases, and in February newcomers sign up for space to open in the spring when shoppers return, explained Doug Marr, senior vice president at Keliher Real Estate Inc.
Of the approximately 400,000 square feet of retail space on Newbury, about 11 percent is for lease, compared to 5 percent in 2000 and 20 percent in 1998, Marr estimated. Rents range from $65 to $160 a square foot, up from $40 to $70 five years ago, he said.
As for the dark storefronts and the new arrivals, "It's all about dollars and cents," said Tom Brennan, vice president at C. Talanian Realty, which owns 20 buildings on Newbury Street . "The competition is too stiff for a lot of mom-and-pop stores."
Much of the competition has been coming from specialty chain retailers such as Nike, Pottery Barn, and Banana Republic, which have pushed out local businesses over the years.
Leasing activity has been brisk this month. Of about 360 retail spaces, 28 stores were available Feb. 1; in the past few weeks 10 were leased.
This may not be the best of times -- when eight to 12 spaces would be vacant -- but it isn't the worst of times, such as in the early 1990s, when 40 spaces sat empty for nine or 10 months, Brennan said. "The vacancy situation looks worse because some spaces are prominent," he added.
For instance, there's a 10,000-square-foot building available at 275 Newbury St., a former printer, and a 7,500-square-foot corner space at 45 Newbury that for 20 years housed restaurants, first the Magic Pan creperie and more recently Milano's Italian restaurant. Milano's closed in November due to rising rent and the landlord's decision to lease to retailers instead, Marr said.
Even a national chain, Parade of Shoes, left last fall after the lease expired and the rent jumped to $135 from $50 per square foot, Marr said.
But moving on can be tough. At E 6 Apothecary, a skin care and makeup shop, the frowning face on the window says it all.
"After five years here, everything was going well until we started to renegotiate our lease," said Carolyn Barber, director of operations. "Our rent was raised 45 percent. The choice was leave or cut back on our great customer service. We're very sad."
But eagerly anticipating her first spring on the Boston retail scene is Katie Tagliavia, owner of 9 Months Inc., an infants' apparel and gift shop that will open March 1 at 286 Newbury. "This location is appropriate for the brands I carry and for my customers who live and work in Boston ," said Tagliavia, who's relocating from Brookline .
Paris-based clothier Petit Bateau US Inc., a unit of Yves Rocher SA, which moved into 171 Newbury St. last fall, has high hopes for this spring. "We wanted to be on a street, not in a mall," said manager Karen Houzelle. "And Newbury Street is one of the most famous streets in Boston ."
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