Half of Block 100's 10,000 square feet of first-floor retail space has been leased to a new restaurant.
For the past two years, A Room of One's Own has enjoyed a somewhat unusual situation for an independent bookstore: Business is doing pretty well.
Sandi Torkildson, the store's owner, says the store got a boost from the demise of the Borders chain three years ago. But she sees another significant reason: "There do seem to be more people downtown."
Torkildson and others hope the current boom in apartment construction will spark a boom in retail.
"I'm hoping it not only helps the retail here, but increases the retail downtown," Torkildson says. "It should be an incentive for businesses to locate downtown."
Mary Carbine, executive director of the Central Business Improvement District, is also optimistic. "2014 is going to be a year of transition for downtown," she says. "Retail follows customers."
And those customers are coming. Carbine calculated in January that there were about 1,200 apartment units approved or under construction within four blocks of the Capitol Square, adding more than 2,000 beds. There are other projects slightly beyond that region, and more have since been proposed.
Those residents will help support existing and new retail stores, Carbine says.
"Businesses will respond to what they see the market interest is," she says. "We may see more businesses catering to kids and families. We are already seeing more people with small children living downtown. We hope that trend continues."
Carbine expects to see more new services, such as health clubs, salons, pet stores and food shops.
John Bergh, president of White Box Commercial Property Group, is also cheery about the prospects for downtown retail. His company is now looking for commercial tenants for the Hub, a high-end apartment tower in the 500 block of State Street that is currently under construction. The development will include 26,000 square feet of commercial space fronting both State and Frances streets.
"We have 10 proposals we're entertaining," Bergh says. "That's a tremendous response given it doesn't open until August 2015."
Bergh says his company is looking for exclusively non-food retail. "There's a lot of food retail right now. We view this as an opportunity to broaden the mix."
He would not give any details about proposals being considered, except to say that some of them are stores with a national presence. He adds: "Madison has been on the edge of being able to support more women's apparel stores, furniture stores and jewelry."
Traditional retail wanted
Down the street from the Hub, the Block 100 development adjacent to the Overture Center is nearing completion. The contractor will turn over the project in early June, says Lee Ferderer, chief executive officer at Fiore Companies, which is leasing the space.
The development has about 30,000 square feet of space, a third of which is first-floor retail. Half of that retail space has been leased to a Food Fight restaurant called Cento, on the corner of Mifflin and Fairchild streets.
Ferderer says the company has seen interest in the remaining 5,000 square feet of retail space. "We don't have anything [else] inked yet," he says. "We have a letter of intent for about 1,500 square feet of the 5,000 square feet of State Street frontage."
Unlike the Hub, Fiore has not ruled out the possibility of more restaurants. "We have not foreclosed the possibility of having additional restaurant space on the frontage, simply because the mix of users skews that way," he says.
"But we'd like to see more traditional retail, more service retail, as opposed to all restaurants. We'd like to see an interesting mix of users on the block."
Davy Mayer, president of Capitol Neighborhoods Inc., would love to see more retail, especially something along the lines of a small urban department store.
"It'd be nice to have a Target or a mini-Target," he says. "Anything that could prevent the need to go out to the suburbs or malls would be nice."
Bergh thinks the density in downtown is high enough to support such a venture. He plans on visiting a prototype mini-Target that is opening on the University of Minnesota's Minneapolis campus this summer. Target was rumored to be interested in the University Square development on University Avenue, but that never materialized.
However, density might not be the issue in bringing an urban department store to Madison, Bergh says. "The more difficult question is finding the footprint to make it happen. Coming up with a 20,000- to 25,000-square footprint is very difficult [downtown]. Not that it couldn't happen."
Torkildson says that retail struggles with extremely high rents downtown. She says many storefronts rent for around $40 a square foot, out of range for most businesses.
"It's hard right now for a retailer. $40 a square foot requires a lot of foot traffic," she says, adding that her own landlord gave her a break when she moved into her West Gorham Street store two years ago. Her rent is slated to slowly increase in future years.
Torkildson has long worried that the downtown is becoming overwhelmed with restaurants and bars, which tend to bring in much higher revenue than stores, and thus can pay higher rents. She's advocated for limiting the number of bars and restaurants in the area through zoning.
Ald. Mike Verveer, who represents a downtown district, agrees that retail spaces are often converted into restaurant uses. When Lands' End closed its store on the 400 block of State Street, for example, it was converted to the sandwich shop Which Wich.
The Central Business Improvement District keeps statistics on the mix of businesses and has found that bars and restaurants make up 30% to 40% in the last 15 years. Now, retail stores make up 26% of the mix -- a percentage the BID would like to see grow to the 2009 level of 35%. It was 50% in 1998, according to the BID.
Like others, Verveer is hopeful for the prospects of more retail downtown. "It's always been my hope that one would be able to purchase everyday items downtown, and that dream has yet to be realized," he says. "But we're doing better and better. There are way more options for grocery items downtown now."
He adds: "There is a lot of optimism among the downtown business community that the thousands of new residents will really provide an even stronger market for retail downtown."
Torkildson hopes that it comes soon. Stores depend on other stores for success, she says.
"My take on retail after many years of experience is that there has to be a certain density [of stores] for retail to be successful. We're at a pretty critical point downtown. If we lose much more retail, it's no longer going to be looked at as a retail street. It might be looked at as a place to go to dinner, but not for retail."