“Downtown is a great opportunity”: Rochester retail recruitment efforts launch

“The west side of town was pricing me out, and downtown had affordable space,” she said of the decision to open a consignment shop for outdoor gear in the Queen City Center complex on North Broadway Avenue.

She said the happenstance has worked well. She shares off-street parking, and neighboring businesses help drive traffic.

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Landing in the overlapping districts of Destination Medical Center and Rochester Downtown Alliance has been an unexpected benefit, since both efforts have reached out to offer advice and insights in her first year.

“If I was one block further north, I wouldn’t have those resources,” she said.

Seeking retailers

Now, an effort led by the DMC Economic Development Agency is an attempt to attract more retailers to downtown Rochester.

“There have been a number of retailers that have said ‘we want to know more about the Rochester market’ and I’ve been able to introduce them to various brokers,” said Chris Schad, the DMC EDA’s director of business development. “Then, we get out of the way.”

The EDA has started developing an inventory of available downtown retail spaces, as well as identifying what visitors, residents and local business owners see as gaps in the downtown market.

Schad said a fitness center, such as a yoga studio, and stores selling essential items and a larger variety of clothing styles and choices are among key gaps identified by all parties interviewed.

With the information in hand, the DMC EDA has been working with metro-based retail consultant Liz McClay, who has been helping design a strategy intended to help property owners and real estate brokers fill now-vacant storefronts.

McClay said the key is sending the message that opportunities exist.

“To have over 3 million visitors a year that come from all 50 states and around the world is a pretty great opportunity,” she said.

It’s something Nicole Lasker, president of Lasker Jewelers, said her company has known for decades, with a store at 101 First St. SW on the Peace Plaza since 1973.

“Downtown is a great opportunity,” she said, adding that it can also be a struggle in the current climate.

The depressive effect of the COVID-19 pandemic has been compounded by DMC-related construction on Lasker’s doorstep.

While customers are returning and construction is ending, Lasker said she’s unsure how long actual recovery will take. Better circumstances will be needed to attract people willing to take a risk in the current retail landscape, she said.

“I think it’s going to take years for things to come back, and they may be different,” she said.

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Lisa Ihrke, owner of ELL Boutiques, is another long-time downtown retailer who has doubts.

“It’s a weird retail environment, definitely,” she said.

ELL Boutiques has shops in the Galleria at University Square and pedestrian subway under the Marriott Hotel, but Ihrke has also had street-level stores on Peace Plaza and Historic Third Street in the past.

While none of the Galleria shops closed during the pandemic due, in part, to the assistance of landlord Andy Chafoulias, Ihrke said other locations can be challenging when weather turns colder, especially for a business whose primary customers are Mayo Clinic patients and visitors.

“In the winter people won’t come out there,” she said, adding that being close to the Galleria’s doors wasn’t enough.

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“When it was icy, snowy or cold, they would not make the little trip it takes from Chester’s to my door,” she said of the Peace Plaza location she operated for five to six years.

Today, several storefronts on the plaza are inactive, including Jerk King, which has a lawsuit in federal court claiming city and DMC Corp. actions hampered its business, but others continue to operate as work on the public space wraps up.

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When a Barnes and Noble book store was in the nearby Chateau Theatre, Ihkre said, customers were more likely to venture out.

“That closing did hurt everybody, because (the store) did drive traffic,” she said.

Spurring growth

Rochester Deputy City Administrator Cindy Steinhauser said such key retailers are important and can help attract others.

“There are national chains that come that create enough interest for other local investment to happen, but certainly you would not want to abandon growing local business over national recruitment,” Steinhauser said. The was the city’s Community Development director before moving to her current position.

McClay said Rochester’s downtown retail market has been slowly transforming in a way that is common in other urban centers.

“From an urban retail standpoint, coffee shops and restaurants are usually the first in the neighborhood,” she said. “Then it’s local retail — it’s your local boutique, your local grocer — and then you start to see personal services build out from there.”

Brokers looking to help fill the downtown storefronts said they are seeing some increased interest among the downturn, but it’s not coming from national retailers.

“It’s good to see some activity,” said Rochester Realtor Bucky Beeman of RGI Inc.

He pointed to Janky Gear and Treedome’s creative studio, which recently opened at 309 S. Broadway Ave., as local and regional businesses that are taking a risk on downtown.

Treedome neighbor Threshold Arts opened its South Broadway retail location a year ago, and Executive Director Naura Anderson said the location was an obvious choice.

“I didn’t even give something outside of downtown a second thought,” she said. Her nonprofit sells artists’ work on consignment.

Anderson said foot traffic and vibrancy makes downtown an ideal location with access to Mayo Clinic visitors and employees, as well as a growing number of residents.

“This block is a dream,” she said of the location that includes Cafe Steam as a neighbor. “I can’t imagine a better fit for us.”

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Schad said areas like the 300 block of South Broadway are key when it comes to expanding retail, since one business is likely to support another.

Jahnke said she’s noticed that impact at Janky Gear. When Hollandberry Pannekoeken is busy, people waiting for tables often wander into her store or other nearby businesses.

Additionally, she said Mayo Clinic patients and visitors often rely on one store to provide insights into other retail opportunities.

“I get a lot of people asking about the other shopping spots,” she said.

Lasker said the downtown’s three shopping levels can serve to disconnect one area from another.

“We get a lot of out-of-towners and many of them don’t know there are things below us in the subway,” she said.

Ihrke said her second-floor and subway stores aren’t helped by RDA events and other street-level activities. She suggested more effort be put into helping people understand how to move around downtown and what shopping opportunities exist in the subway and on upper floors.

She said that might help more downtown residents venture out for local shopping.

“I’d love to see it, but I haven’t seen it,” she said of any impact related to a growing number of downtown residents.

Changing environment

Schad said the increasing number of residents working and living downtown is playing a factor in the DMC EDA marketing effort aimed at retailers.

“We’ve heard downtown Rochester described as the fastest-growing neighborhood in Rochester,” he said.

Holly Masek, the RDA’s executive director, said many of the new apartment complexes close to the downtown core are filling up.

“The last time I asked the building managers, which was probably midsummer, they were up in the 90% occupancy rate,” she said.

Census estimates show that the population living within a half mile of the center of downtown has risen from 3,126 to 4,020 in the past decade, with a projected 4,417 residents in 2025.

At the same time, the population living within 1.5 miles of the downtown center has reportedly increased by at least 3,000, according to Census estimates.

Masek, who lives adjacent to downtown, said interviews and focus groups conducted while researching the potential impact of increased downtown residency shows a desire to be able to fulfill most of their shopping needs downtown on the weekdays, rather than being required to drive elsewhere for necessities.

“People who choose to live downtown or in the core neighborhoods now want that experience,” she said.

Schad said the research being done on market gaps could help address some of those needs.

“That might be an opportunity for existing retailers to adjust a little bit or it might be an opportunity for new retailers to enter the market,” he said.

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Darci Fenske, a Paramark commercial sales and leasing agent, said opportunities exist.

“Any tenant looking for space in downtown Rochester has a choice of great, beautiful spaces in downtown Rochester,” she said, pointing to opportunities ranging from Peace Plaza to further out.

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While Lasker and Ihrke questioned how a $17 million remodel of Peace Plaza and two blocks of First Street will benefit already-existing store owners, Fenske said she believes it will help attract new retailers by bringing more activity to the area.

“In my opinion, it’s beautiful and is only going to enhance what we had,” she said.

Schad said the DMC EDA effort to improve marketing of downtown as retail space is an extension of efforts to transform the district during the past six years.

“This is the job we’ve been tasked with,” he said. “We’ve been tasked with growing the economy of Rochester through the DMC legislation. We’ve been tasked with creating a place people want to move to and people want to visit and people want to run a business in.”

Now, he said, the pandemic has added the necessity to help address other concerns. While the DMC EDA is limited by state guidelines in what it can do for specific businesses, Schad said it can help address key factors related to running a downtown business.

Those include identifying available space, offering support programs and attracting a customer base through the design of public space.

DMC EDA Executive Director Patrick Seeb said the work wasn’t initially planned, but is needed to enhance the overall economic development effort.

“None of us anticipated when we began this work, or at least I certainly didn’t, that we would play such an important role in helping support downtown retail and helping expand the downtown retail,” he told the state DMC Corp. board during its last meeting.

Any discussion of retail shopping in downtown Rochester quickly turns to parking.

During the summer, Rochester used a portion of its federal COVID-recovery funds to offset an anticipated $20,000 monthly revenue loss related to providing an extra hour of free parking in the city’s public ramps.

“Businesses really liked it, because two hours is enough time to do what you need to do,” Rochester Downtown Alliance Executive Director Holly Masek said.

According to Rochester parking data, 69 percent of the non-contract ramp uses in October were less than two hours.

While activity in the city’s parking ramps has been increasing since a sudden drop in early 2020 in response to the COVID-19 pandemic, the number of users is well below the traffic count at the end of 2019.

Nicole Lasker, president of Lasker Jewelers, said the reality doesn’t always match perception for local customers.

“In their heads, there’s no place to park,” she said. “It doesn’t matter if it’s free.”

The Eau Claire, Wisconsin, resident, who frequently travels to the downtown Rochester Lasker store, said she never has a problem finding a space in one of the nearby ramps, but the decrease of on-street parking has some people believing parking options don’t exist.

Other downtown business owners have cited similar concerns throughout the years as parking has been changed for various downtown projects.

Masek said she believes extending free parking hours through the end of the year is helping address some of that.

“It’s actually also good to train people to use the ramps, rather than expect to park right in front of their businesses,” she said, noting that on-street parking costs customers from the first minute and that the downtown meters have a tighter time limit.

Rochester Deputy City Administrator Cindy Steinhauser said city staff is working to determine whether free ramp parking will return to one hour at the start of the new year.

She said the amount of use, availability and potential costs to the city are components of the discussion, along with asking business owners whether they’ve seen benefits.

So far, she said she’s heard from some who think the added free parking has helped amid COVID recovery efforts.

“Those are active conversations at this time,” she said.

Defining downtown retail can be tricky.

For some, it’s solely stores that sell goods, but others add in restaurants and bars, and some include businesses that provide services, such as banks and law firms.

Destination Medical Center Economic Development Agency Director of Business Development Chris Schad said they all have a place in the downtown landscape.

“To us, they are all important parts of the local economy,” he said.

At the same time, he said, some businesses tend to be more active than others, which can attract more customers and, in turn, more business for their neighbors.

Rochester Deputy City Administrator Cindy Steinhauser said that’s the thought behind city efforts to encourage the creation of stores and restaurants on the ground floor of mixed-use buildings.

Most recently, the city opted for a compromise with owners of The Maven.

An agreement with the mixed-use complex at 429 S. Broadway Ave. initially limited first-floor use to a strict retail definition, but allowable use has been expanded to allow a potential restaurant in the space after owners said they have had trouble finding a tenant.

A request for office use, however, was denied.

Steinhauser said such decisions based on definition of use are important to protect public investment that has been occurring in downtown Rochester.

“When you have areas in transformation, because they are in transformation not everything can completely be left up to the free market, if you want to think about how that district grows and becomes successful and how you choose to invest public dollars,” she said.

She said a drive to more active spaces also helps to create a welcoming environment and to enhance the sense of safety.

“Psychologically, people do not like to walk long distances where there’s not much activation, particularly in an area they are not familiar with,” she said.

Holly Masek, executive director of the Rochester Downtown Alliance, said the inactive spaces also reinforce the perception that nothing is happening downtown.

She said the addition of more people living downtown also draws the desire to see more obvious activity on the street at later hours, rather than having businesses that are only open 9 a.m. to 5 p.m. weekdays.

“The dynamic is shifting to night and weekend traffic, where people want to be outside and be on the street seeing other people,” she said.