OLYMPIA – Downtown businesses largely have withstood the slower economy this year because consumers are spending again after withstanding the one-two punch of a falling stock market and poor weather, merchants say.
However, the recession’s casualty list is growing, with the Clubside Cafe set to close because of financial struggles if it doesn’t sell by May 31. Looking forward, some merchants say they are concerned about the effect state worker layoffs could have on downtown, and others have noticed that storefronts abandoned last year have not been occupied by new tenants. Still others predict that more businesses likely will close.
Last spring, a new pattern emerged in downtown Olympia.
A handful of businesses, unable to survive the slower first and second quarters, closed in May and June. Among them were a restaurant called Cielo Blu, Otto’s bagel shop and Jing Jing’s Art and Antiques. All of the space they occupied remains vacant.
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REASONS FOR OPTIMISM
That has not occurred yet this year, giving downtown merchants hope.
Ginger Street co-owner Joe Cattuti said he expects the year will continue to improve now that consumers have realized they have money to spend.
“They still have jobs and still have money, but they were scared out of spending,” Cattuti said about consumers’ reaction to the sudden downturn in the economy.
Cattuti, who operates the home-decor and antiques business with his wife, Laura, acknowledged that the fourth quarter of 2008 was a challenge. In addition to the economic downturn, South Sound was slammed by a winter snowstorm that kept many shoppers away from stores during the key Christmas earnings season for retailers. Some businesses closed during the heavy snow; others, such as Ginger Street on Capitol Way, closed early.
“The weather really hurt,” he said.
Since then, consumers have started to pry open their wallets again, Cattuti said. Other factors assisting downtown merchants recently has been an increase in shoppers coming to Olympia to attend seasonal events, such as graduation ceremonies, he said.
“The store is becoming an attraction,” Cattuti said.
Alpine Experience and Olympic Outfitters co-owner Joe Hyer, an Olympia city councilman, agreed that an uptick in consumer spending has helped.
“They (consumers) tightened up on spending so much that they are going back to average (spending), which is going to make downtown come back to normal,” he said. “Even in this economy, they have to have something.”
The local economy isn’t out of the woods yet; state worker-related layoffs this July could undo some of the recent progress, Hyer said.
“That could dampen things for three to six months locally,” he said.
He also is concerned that new businesses haven’t replaced the ones that closed last year.
“We should have five to 10 new businesses downtown,” he said.
Standing in the way is the fact that credit, such as bank loans and lines of credit for businesses, remains tight, Hyer said.
“The credit crunch is killing everybody right now,” he said.
There are exceptions, of course.
Downtown business owner Sydney Hann runs the clothier Hot Toddy on Capitol Way. She opened a second business, Yolli Shoes, in December, during the thick of the recession. The former restaurant Plenty successfully reopened as Cascadia Grill this year, too.
SELL OR CLOSE
Not all businesses have had similar luck. If the Clubside Cafe doesn’t sell before May 31, it will close that day, co-owner Kenny Trobman said.
Trobman and his wife, Katherine Mahoney, have run the business next to Eastside Club Tavern for more than six years and brought an authentic Philly cheesesteak sandwich to downtown, he said. But much has changed since Trobman opened the business in October 2002. The past six months have been tough on the business, including a two-week period in December in which the business had to close because of the winter snowstorms. Two weeks later, their cash reserves had evaporated, he said.
“Financially, we might have been able to struggle through, but it really came down to a lifestyle choice,” Trobman said.
He will continue to run a part-time gyro, falafel and souvlaki stand in front of The Brotherhood tavern Thursday, Friday and Saturday nights, and he also plans to open Kenny’s Gyro Spot part time, tentatively set to open in a storefront Trobman said is in the 400 block of Fourth Avenue.
“We have an incredible downtown community, and over the next five years, it is going to realize some tremendous growth. I see a lot of revitalization once City Hall goes in there,” he said about the new project sprouting on a block where a Safeway store used to be.
Florist Lena Shedd, the owner of Newbury Bay Ltd. on Fifth Avenue, isn’t as optimistic about downtown’s future.
She said that after a seven-year run downtown, she has decided to cut her overhead costs and leave her 2,000-square-foot location for a home-based business that will open June 1.
Newbury also sells home- decor, gifts and personal-care items.
Shedd said she began tracking the local economy two years ago and noticed a slow decline in retail sales.
“There’s no way to maintain a business down here,” she said.
Ongoing parking issues and a lack of new development create challenges downtown, Shedd said.
“Creating a sustainable downtown isn’t going to happen until we allow development,” she said.
Shedd predicted that longtime downtown businesses could close this year.
“There are a lot of folks who are struggling terribly,” she said.
“Their (sales) numbers are not there, and it’s not down 2 or 3 percent, but down 20 percent and 30 percent.”
Rolf Boone: 360-754-5403