When a few businesses left Northampton's core in late 2015 and early this year, residents and visitors alike began to question the financial well-being of this 28,000-person community that has made a name for itself as a pillar of arts, culture and food.
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NORTHAMPTON -- In the first four months of 2016, Main Street has felt like a pretty, New England smile with a few teeth knocked out.
Out of downtown Northampton's 204 storefronts, 14 were vacant as of March 23, according to city data. Five of those were on Main Street, the city's major artery of commerce.
Periodic vacancies shouldn't raise alarm, those familiar with historical Northampton business trends say. But when a few retailers left the city's core in late 2015 and early this year, residents and visitors alike began to question the financial well-being of this 28,000-person community that has made a name for itself as the Pioneer Valley's pillar of arts, culture and food.
Cathy Cross, who has owned the Main Street clothing boutique named after her since 1983, said customers often ask the same question regarding the empty storefronts: "What's going on?"
"I tell them, there's an ebb and flow to retail," Cross told MassLive at Haymarket Cafe one morning in February. "Downtown goes through this every decade, probably."
But Cross and others concede that there are many factors at play here, and that the vacancies can't solely be pegged on cyclical business patterns.
Business owners, as well as those who work in Northampton real estate, have cited a cocktail of reasons for the vacancies, among them high retail rent costs, banks' hesitancy to lend to independent retailers, competition from the online marketplace and a wave of retirements.
Flat foot traffic, flat revenue
Anecdotally, downtown Northampton restaurant and store owners report varying business trends.
Molly and Alex Feinstein own GoBerry, a frozen yogurt store, and Provisions, a wine, beer, and specialty foods store in Northampton. In an interview with MassLive in January, Molly Feinstein said sales have been down at GoBerry over the past year, but up 30 percent at Provisions.
Adam Dunetz, co-owner of Green Bean and the Roost, said his revenues have waned recently at the Green Bean. Claudio Guerra said of his local Italian restaurant, Spoleto, "Profits are nothing like they used to be."
"I'm making a living and keeping a roof over my family's head," said Guerra, who also owns Pizzeria Paradiso and Mama Iguana's.
Numbers collected by the city and the Greater Northampton Chamber of Commerce point to plateaued foot traffic and sales revenues between 2012 and present day.
Meal tax and parking revenues have remained relatively flat over the past few years, the city report said, and so has attendance of city attractions such as the Academy of Music, hotels, museums, the summer concert series.
An internal survey by the Chamber of Commerce, which has not been released to the public, showed that on average, sales revenue was flat for Northampton businesses between 2010 and 2013.
A select Northampton City Council committee was recently created to look into what may be driving these trends and vacancies, according to council president Bill Dwight. The committee will hold periodic hearings with business owners and employees, he said.
"Everyone has got their theories -- greedy landlords, mortgage pressures. Are our taxes and fees too high? I really don't know," Dwight said.
Much of this trend is a reflection of a post-recession, rebounding economy, said Robert A. Nakosteen, a professor of economics and finance at the Isenberg School of Finance at the University of Massachusetts at Amherst.
"There is no doubt that the labor market has taken a long time to come back, as much in Western Mass. as in the state as in the country," he said.
Dunetz echoed the sentiment.
"It's just an interesting time economically and culturally, and I'm not sure where Northampton ends and the rest of the country begins," he said.
Cross said her sales are "bumpy" now, but on an upward trend.
"I started to take a dip at the end of '08, and that continued in '09, '10, '11. From there I slowly built up," she explained. "But sales never went back to what they were in '07."
Dwight said he doesn't believe the city's traffic numbers indicate a degradation of Northampton's commercial viability.
"They show that through the course of the recession and after, Northampton maintained a system that worked, for better or for worse," he said.
Many business owners said they've also taken a hit from increases in minimum wage, as well as mandated paid-time-off and healthcare benefits for their employees.
High rent
The high cost of renting retail space in downtown Northampton may be shutting out potential downtown tenants, entrepreneurs say.
Terry Masterson, Northampton's economic development director, said the amount some downtown business owners are paying for rent rival rates seen on Boston's Newbury Street.
A new report from the city shows that Northampton's rental cost averages are similar to those in Amherst, but starkly higher than nearby communities such as Chicopee and Holyoke. A sample of retail rents for Northampton show an average of $27 per square foot in "downtown center," and by the same metric $37.50 on Main Street.
But some renters pay much more than that. Take the Feinsteins, who pay $45 per square foot -- or around $5,000 a month, Molly Feinstein said -- for their Northampton GoBerry space at 80 Main St.
"If our rent continues to go up, and our sales keep going down, there will be a point where it's not sustainable," Molly Feinstein said of the frozen yogurt business.
Guerra said landlords still seem to be thinking in the "old paradigm," that retail shops are "wonderfully profitable" and can pay the sizable rents.
"That doesn't exist anymore, and it's going to take some time for people to realize that," he said. "Unfortunately this adjustment period is long, and detrimental to the vibrancy of our town."
Guerra went on to say that Northampton retail rents seem to be set at "arbitrary prices," intended for much larger markets like Cambridge and Brooklyn.
"Northampton doesn't have the kind of critical mass," he said.
Pat Goggins of Goggins Real Estate -- which represents many downtown spaces -- publicly stated in the fall that he would not work with property owners who charge more than $25 per square foot.
"I feel that's a number that is workable," Goggins said in an interview with MassLive. "The expectation that some property owners have -- that they can continue to generate high rents -- adds to the problem of turnover."
"I don't think that landlords can endlessly go up in rent without considering reality," he later added.
Richard Madowitz, co-owner of Thornes Marketplace and Hampshire Property Management Group, as well as owner of Cedar Chest, said "high rent is certainly a factor" in Northampton's current vacancy rate, but not a dominating one in terms of how retail tenants consider sites.
"Their first and foremost priority is how can they grow their business and develop the sales volume required to have a profitable enterprise," he said.
Main Street -- and Thornes in particular, he said -- are high sales-volume areas, so they're worth the high rent. Madowitz noted that for the first time in decades, Thornes is 100-percent leased, with the exception of newly constructed office spaces completed in December.
Holyoke businessman Eric Suher owns several Northampton music venues and vacant downtown properties, including former location of Spoleto at 15 Main Street, which has been empty for nearly four years.
Contrary to rumor, Suher said, the space isn't vacant because the rent is too high. He's just waiting for the right tenant, he explained.
"If I feel like someone is going to be great for the town, rent is secondary," Suher said, adding that two "fairly substantial restaurant groups" are currently considering the property.
But Guerra said Spoleto's former home should have been be filled by now.
"If I were a landlord of a nice piece of property downtown that's empty, I would lower my price to a point where I would get somebody in there," he said. "If the price isn't something I can live with in the long run, I'd give a short-term lease."
Cross said there's always been talk of high rents in the city , and she believes that it's all relative.
"They called me the 'rent queen,' because I paid the highest price in town in 1983," Cross recalled, laughing.
A wave of retirements
Some Northampton stores have closed simply because their owners wanted to retire, including Western Village Ski & Sports early this year and Iris Photo in Feb. 2015.
Another anchor business, The Mercantile, closed in February. All three shops opened in the late '70s and '80s.
Goggins said that people who "energized change" in downtown Northampton, transformed it from a shabby little town into an arts destination, are now at retirement age.
"A lot of people of my generation -- I'm 68 -- played an integral part in the resurgence of downtown in the '80s," Goggins said. "They're facing a phase of life where they have to decide what's next for them."
Goggins and others say Northampton is in a "transitional period," and that people are drawing conclusions from the city's vacancies "based on a very small frame of reference."
Madowitz reflected Goggins' feelings on the retirements and vacancies, saying, "Each storefront vacancy is its own individual circumstance."
Molly Feinstein said supporters of the Northampton business community should celebrate the retirements of people who have contributed so much to the city.
It's often painted as, ' Oh, look, theyr'e closing after all these years,'" she said. "it's such an unfortunate lense to look at it through."
Ideally, Madowitz said, young, energetic entrepreneurs with fresh ideas will replace the older generation of businesses. But banks are much less likely to lend to those in their 20s and 30s than they were in the past, economic experts maintain.
"Tightened credit rules are impacting mom and pop retail stores," said Masterson, the economics development director. "In the past, banks would just have faith and trust the potential success of that business."
Cross said it was easier in the '80s for a young person to start a business in Northampton. She said eb began with just a small chunk of money, and kept investing and investing.
"Now you have to have so much money to keep up," Cross said.
On the flip side, Dunetz said he's found local lenders to be "very friendly."
Madowitz noted that some businesses are re-framing this conversation, such as 25 Central and Jackson & Connor in Thornes. In those cases, ownership transferred from the original proprietors to younger employees.
"Those transactions were self-financed by the established owners and didn't require a third-party lender," Madowitz said. "That was one way of bridging that lender gap."
Online competition
Northampton store owners say that among all the forces that make it hard to sustain a business, competition from online shopping is perhaps the fiercest.
In 2013, The Mountain Goat, a downtown fixture since 1989, closed when owners A.J. Lafleur and Mary Colwell said they could no longer compete with online distributors of outdoors goods.
Nakosteen said he shops along Main Street with his wife, and while she peruses the racks he talks to the owners. He said they often complain of e-commerce affecting their ability to thrive.
"If someone buys clothing from the Internet rather than Cathy Cross, then they may not stroll down Main Street and be tempted to go into another store," Nakosteen said. "There is a cascading effect."
Ted's Boot Shop, which opened in 1964, is now downtown Northampton's longest-standing business. But hanging on hasn't come without struggle.
Kathy Hudson, who runs the store with her father and brother, said they've been able to sustain business because they offer a special service - in their case, shoe-fitting. But more often than ever before, she said, patrons will take advantage of that service and walk away empty-handed.
"We'll spend three-quarters of an hour on them, they'll leave with the name of the sneaker and go online and save $8," said John Dumas, Hudson's brother.
Cross said she has seen much of the same. She explained that her biggest competitors are the clothing companies she buys from, as they all have online stores.
"Anyone can come into my store, and if I don't have a size 10, they can go on the Internet and buy the product," Cross said. She said she's fortunate to have built a loyal customer base over three decades that has helped sustain her sales.
Cross said as a result of e-commerce, she's had to make shopping more of an experience for customers.
"It's just really hard to get new people in," she explained. "So you do Facebook, Instagram. Then you study the boomers, gen Xers, millennials. It's a new shopping pattern."
Dunetz said many people in the Pioneer Valley talk "big game" about supporting local businesses. But at the end of the day, people will opt to buy less expensive goods online.
"People's hearts are in the right place, but in practice we're all feeling pinched economically," Dunetz said, later adding, "I'm lucky you can't buy a latte or a salad online."