Retail riding the wave of success
ASPEN ” In the volatile world of Aspen retail, what a difference seven years makes.
The retail market in downtown Aspen hit rock bottom in 2001, which saw more than 30 storefront vacancies. Today, there are only a handful of empty spaces, and they likely won’t stay that way for long.
“This is the tightest market I’ve seen in over 20 years of doing this,” said Karen Setterfield, a commercial real estate broker who handles leases downtown.”[The spaces] just aren’t turning over.”
There are only a few vacant retail spaces in the downtown commercial core ” one in the Isis Theatre building, and the other on the Hyman Avenue mall, where One Aspen Gallery used to be.
However, the tenant is still paying rent, Setterfield said.
Footloose and Fancy Things at 240 S. Mill St. is for lease because the owner is closing the business this fall. Also, Aspen Peak Boutique is looking to sublease its space in the Woods Building at 430 E. Hyman Ave.
The Red Onion remains empty but a tenant is expected to move in this fall so the restaurant and bar can be open by December.
Those vacancies are a far cry from what the retail scene was at beginning of the economic downturn, which began in 2000.
“It was amazing, people were scared,” said Stan Clauson, who was the co-chairman of the economic sustainability committee, which formed at the time to find ways to make downtown Aspen more successful.
Ruth Kruger, an Aspen commercial real estate agent who has been following retail vacancies since the recession and 9/11, said city government was instrumental in reviving the downtown economy.
A fire pit, landscaping along the pedestrian malls with places to sit, and other cosmetic changes went a long way to improving the atmosphere for retailers.
“The council is partially responsible for the added vitality in town,” Kruger said. “It makes the retailers and restaurants more successful.”
Helen Klanderud, who served as mayor for six years during the economic downturn and subsequent revitalization, believes downtown Aspen has reached a critical mass.
“If other investors and businesses see things are growing, they are more attracted to coming here,” she said.
Kruger remembers watching the local economy go from bad to worse once 9/11 happened.
Some stores remained vacant for two years or more. It wasn’t until October 2003 that she noticed a considerable amount of people walking around town carrying shopping bags.
City Hall Finance Director Paul Menter, who started his job in 2002 when the local economy hit rock bottom, said the city’s finances were in trouble since it relies heavily on consumption-based tax revenue ” mostly retail sales.
As a result, government operations and capital expenditures had to be scaled back considerably.
“There was 24 months of a reduction in sales tax revenue starting in 2001,” he said.”If that condition continued we would have had to consider serious service cutbacks.”
Compare that to last year, when Aspen brought in a half-billion dollars in reported taxable sales.
“That’s a pretty big number for a town with 6,000 full-time residents,” Menter said, adding that the city has experienced three consecutive years of retail sales revenue increases.”The economy is the biggest it’s ever been.
“We are riding the crest of the local wave,” he added.
All indicators show that the marketplace will remain strong in the retail sector for the current 20-year cycle. But Menter cautions that the success won’t last forever. And it’s his job to make sure city government is prepared during down economic times by investing well and saving in key areas.
“It is true that our revenue sources are volatile,” he said.”So we budget conservatively.”
There was small growth in retail sales in 2003, which is when landowners were reinvesting into their properties partly because the City Council gave them incentives to do so. As a result, properties remained vacant even longer during redevelopment.
Clauson said many people believed landlords were to blame for the vacancies because they wouldn’t reduce the rent even though the spaces remained empty. The community placed enough pressure on landowners to be good citizens, and reduced rents eventually happened.
“After [the economic sustainability] committee finished its work, landlords did open up to making it affordable for new tenants,” Clauson said.
He also added that more guests and an increase in skier visits has helped pump economic vitality into the downtown area.
Kruger said she believes the weak stock market has fueled real estate sales, which also has spurred the economy because people are using Aspen as safe investments.
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Renters in Aspen are facing rent increases this year but there are resources and COVID-19 relief available on the local, state and federal levels.