THE ANTI-CHAIN GANG
INDEPENDENTS RETAILERS ON CHICAGO’S TRENDY ARMITAGE AVENUE ARE BRACING FOR THE BANANA REPUBLICS AND BENETTONS
Byline: Melissa Knopper
When Lori’s Discount Designer Shoes opened on Chicago’s Armitage Avenue in Lincoln Park 20 years ago, owner Lori Andre felt like a brave pioneer. “This area was not yuppified at all — it was actually very shady,” Andre recalled. “My parents wanted me to get a guard dog.” Today, Armitage is one of the city’s most desirable shopping areas, with upscale boutiques like Cynthia Rowley and Celeste Turner. Neighborhood residents, who own million-dollar historic townhouses, can stroll down the street to dine at Charlie Trotter’s world-class gourmet restaurant.
Recently, hotel concierges have been sending out-of-town shoppers to Armitage because it offers stores like Art Effect, with artistic jewelry, clothing and home decor, and Expressly Wood, with hand-crafted gifts. It makes sense, says Cynthia Warner who owns Studio 910, an Armitage women’s clothing boutique. Why would people want to shop at the Water Tower mall and Michigan Avenue, which offer Gap, Banana Republic and Victoria’s Secret? “Those stores are in every town in the world,” Warner said. “People want something different that shows a little flair.”
These days, though, Armitage Avenue merchants are concerned their shopping district is starting to look too much like Michigan Avenue. Over the past five years, national chains like Gap, Banana Republic, Lucky Jeans, Abercrombie & Fitch and Ann Taylor have taken over nearby Halsted Street. Now, the chains are starting to creep over to Armitage. Benetton is considering a lease at the former Coffee and Tea Exchange. Bebe also has been searching for vacant space along this exclusive avenue.
National chains used to dominate the suburbs, but now they are expanding into the city to capitalize on high urban population densities, said Frances Spencer, assistant commissioner for the City of Chicago Department of Planning and Development.
“They need to keep opening so many new stores a year to keep their profits up,” she explained. And with big chains come big rent increases, she added. Armitage Avenue has some of the highest rents in the city, with an average of $35 to $40 per square foot, not including maintenance and taxes.
“As national chains start moving in, the landlords want to see what the traffic will bear, and they can pretty much get what they want,” Spencer said. “I think that is probably what is pushing up the rents in the Armitage area.”
Concerned about this trend, Chicago fashion designer Jane Hamill, who has a retail shop on Armitage, decided to take control of her destiny. When a first-floor commercial condo went on the market next door to her store, she quickly gathered a down payment and snapped up the space. “I felt like rents were going up, and I didn’t want to be squeezed out,” Hamill said. “This way, I can be around as long as I want to be.”
After leaving her previous Lincoln Avenue location, then renting a store on the west end of Armitage, Hamill didn’t feel like negotiating leases or moving anymore. She set a goal of saving enough money to buy her own space. “I’m very conservative with my business, so I was always saving for a rainy day,” Hamill said. Now, she is enjoying feeling secure. She also had fun decorating the 1,500-square-foot store with luxurious touches like customized storage cabinets and a hidden computer inside the front desk. Hamill chose bright red walls, soft gray carpet, custom industrial piping racks and bright lighting. Fun touches, like fake fur trim on the desk and cabinets, are everywhere. Best of all — she now has her own parking space.
Andre shares Hamill’s feeling of satisfaction and security. Six years ago, she was able to buy some property down the street from her original location and expand Lori’s from 2,500 to 5,000 square feet. Andre plans to stay, whether the chains move in or not. “I think this is a great retail area,” Andre said. “We’re satisfying all of our customers’ needs, so they don’t have to go downtown to shop.”
Celeste Turner also made the decision to buy her space when a 850-square-foot storefront became available in 1992. As she hears her neighbors complain about their rent increases, Turner is glad she took advantage of the opportunity back then. Several other Armitage merchants own their space, including the owners of Armitage ACE Hardware, Fortunate Discoveries (a home decorating shop) and the Urban Gardener.
More independent retailers are investing in their own property, according to Keith Lord, president of the Lord Companies, LLC, a Chicago real estate brokerage that sells commercial condos. “Before, there were not a lot of retailers who understood the benefits of ownership,” Lord said. “Now, they are waking up and saying, ‘Why in the world am I paying these landlords all of this rent?”‘ With some creative financing, most store owners can get a mortgage payment that is equal to their rent, or cheaper, he added. And in an area with high property values like Lincoln Park, they can count on a considerable profit if they ever want to sell. A typical commercial condo in Chicago sells for $100 to $250 per square foot, or up to $300,000 for a 1,500-square-foot store.
Many small retailers, however, cannot afford the down payment, said realtor John Figlioli, of the Lincoln Park-based Garrett Realty and Development Inc. Property taxes can be another unexpected expense for those who own their own space.
“In Chicago, they put a big burden of taxes on businesses, and that’s unfortunate,” Figlioli said. For example, a commercial condo is assessed at 38 percent of the property value, compared with 16 percent for residential property. “With taxes and the mortgage payment combined, sometimes it could exceed what you would pay on a normal lease,” he said.
Even if they can afford to buy, merchants are having a hard time finding available space. For the past few months, Ivy Hofstadter has two real estate agents out looking for a new home for her jewelry and accessories shop, Ancient Echoes. So far, nothing has opened up on Armitage. Hofstadter wants to buy a store when her lease ends in 2005 because her rent has tripled in the past nine years. “If I haven’t bought something here by then,” she says, “I undoubtedly will have to leave.”
Meanwhile, members of the Armitage Avenue Merchants Association have been meeting to address the problem. Many are worried the chains will drive out small boutique owners and change the character of the street. “After this year, I think you will see a lot of businesses closing, because a lot of the smaller independents don’t have the capital to stay in business,” Andre said. “The retail climate is very weak right now.”
In that context, many fear the influx of chains could be deadly. “We’re just kind of holding our own here,” Hofstadter said. “We’re just banding together as retailers to drive more business to the area for the smaller retailers.”
Neighborhood friendliness and customer service are two major selling points for Armitage merchants, and local residents do make a point of shopping there. David Ginople, president of the Armitage Avenue Merchants Association, said it has sponsored events, such as an in-store art show and charity fund-raisers for breast cancer, the AIDS ride and a local animal shelter. Ginople also owns Findables, a housewares boutique on Armitage. The merchants association has lobbied the city to decrease property taxes so landlords won’t pass the cost along to retailers. Members also are working with state preservation experts to protect historic buildings that could be bulldozed to make way for large chains. Spencer, from the city planning department, offers another suggestion: Armitage retailers should recruit others to join their ranks. “They need to be proactive and not let the stores be empty, so the landlord will not be tempted to go to the nationals,” she said.
Despite serious interest from national retailers, some Armitage merchants remain optimistic. For one thing, Ginople argues, most of the shops on Armitage are 1,800 square feet or less, and most major chains require 4,000 to 6,000 square feet. “I do not think there is adequate foot traffic to sustain the voracious appetites of chain stores,” he said. Even if the numbers show a dense population in the area, said Hofstadter, that doesn’t mean sophisticated Armitage customers will spend their money at Bebe or Benetton. “People come here because they like the fact that our stores have unique items you can’t find in a department store,” she said. “I don’t think the chains would do that well here.” Summing up the attitude of most of her neighbors, Hofstadter added: “We’d like the chains to stay in the malls, where they belong.”