Downtown Astoria’s commercial district has been hailed in recent years for undergoing a "renaissance" of business renovation and historic preservation that even drew praise from national media.
Enter the recession, which over the last two years has made making a living difficult for many entrepreneurs and slowed the pace of tourism and overall growth in communities
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Street 14 Coffee opened in February in downtown Astoria, in Commercial Street storefront space once occupied by newsstand Chris’ News. The coffee shop is on the premises of the recently renovated Commodore Hotel. The interior features artisan construction using reclaimed and other vintage materials. Photo: Peter Gearin.
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everywhere.
Most downtown Astoria businesses occupy leased office or retail space, and as entrepreneurs ponder the future, their location and how much it costs could become even more critical.
The development of new commercial space in Warrenton has become another game changer in the local business environment, as firms weigh the pros and cons of relocating to be near high traffic areas around the new Costco.
CRBJ weighed in with some of Astoria’s best-known landlords about their efforts to make their properties welcoming to business tenants, so they too, as entrepreneurs, can survive the recession.
A poll of the people interviewed for this story revealed that downtown rents for commercial space in Astoria range from 50 cents to $2 per sq. ft., depending on condition and location.
Mitch Mitchum
Astoria property owner Mitch Mitchum owns seven buildings downtown and has a total of 21 tenants.
"The biggest secret is not a secret - it’s the old real estate rule: location, location, location," he said. "Most of our holdings are on Commercial Street and that’s what makes it really work."
Mitchum co-owns the Sanborn Building with Rose Marie Paavola. The duo recently renovated the Commercial Street building after it was gutted by fire.
"In the new building, we let them choose the interior paint color and painted the space for them," Mitchum said. "We usually help by installing signs, and that saves them some expense," he added.
Mitchum and Paavola have also held down the cost of leasing space.
"We’ve made some small adjustments. Our standard lease has a cost of living bump - rents are supposed to go up 3 percent to cover the cost of living," he said. "On a selective basis we have skipped over some of those. It’s about having a personal relationship with tenants."
Mitchum, like most landlords, does credit checks on potential tenants, but he said in a small town everyone pretty much knows each other. In the case of extensive buildouts, in which tenants need the building customized for their needs, the general rule is that the tenant pays.
Mitchum said Astoria remains a special environment for business. "Astoria’s downtown is a niche sort of place. They are smaller spaces that fit an owner-occupied type of business."
Paul Caruana and Brian Faherty
Developers Paul Caruana and Brian Faherty have built a reputation in Astoria by buying up old, historic buildings and restoring them to their former glory.
They’ve been responsible for creating a 14th Street "district" that includes the Commodore Hotel, the Astor Hotel, the Norblad Building and the Shark Rock Center. Their projects are drawing new business activity to the east end of the downtown commercial area.
Caruana’s philosophy includes the maxim that quality space draws quality tenants, especially in a competitive market like Astoria where there are many affordable options for commercial tenants.
"I would compare it to selling a used car. If you’ve got one buyer and 10 cars, you would clean it up and have it in the best possible condition," he said. "There’s pride in ownership, and it adds value to your building. We always prefer to fix up a building to minimum standards even if the tenant says to leave it as it is."
Caruana said an ethical business approach is best in any economic climate.
"The same models for success work all the time," he said. "You develop a reputation, and when people have the opportunity to lease again they look at ‘how did the landlord treat me during the leasing process?’"
All but three of the 21 commercial spaces he and Faherty own are currently occupied. As they consider additional tenants, Caruana has a game plan.
"We’re hoping to get businesses that will generate foot traffic and create synergy among tenants," he said. "We want to create a walking district."
Caruana cautioned other landlords not to drop rents too much even during a recession.
"If you lower the rent so low, you may end up tying up your space with someone who isn’t serious about being in business," he said. "We are biting the bullet right now, even though it’s costing more money up front."
Warren Williams
Warren Williams’ properties include the Spexarth Building across from the Astoria Post Office, and buildings in the 13th Street block between Exchange and Duane streets.
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Developer Warren Williams owns the Spexarth Building in Astoria. Photo: Joanne Rideout
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He renovated the Spexarth Building, one of the oldest structures in town, after he bought it several years ago. Now the 4-story building has office space on three floors that is mostly rented by small business tenants. The fourth floor remains empty.
Williams said downtown Astoria has some powerful things going for it, and among them is price.
"Rents are pretty low in the retail part of Astoria," he said. "I can’t imagine their rent would be less in a new facility in Warrenton."
In response to the recession, he has held rents steady on his commercial space.
"It’s affordable for them," he said of his Spexarth tenants. "We have made the third floor very price competitive for small companies."
Williams said one of the reasons commercial rents are comparatively low in Astoria is a glut of available space. He said the construction of the Taggart Building at the Port of Astoria’s Pier 1 on the waterfront helped create more commercial space than the city had tenants to fill.
But making rents too "affordable" can backfire on landlords, Williams said, when the cost to run the building exceeds the rent being collected.
"It can be diminishing returns," he said, "if you lower your rent and still leave the heat on for just a few tenants."
Overall, Williams said, Astoria has a lot to recommend it as a commercial setting.
"Astoria has so much character," he said. "With a big box store there’s no character, it’s just a place to put your business. Character attracts tourists."