Since the start of The Great Recession, the one-mile stretch of Hennepin Avenue from the Walker Art Center to Calhoun Square in Uptown has become a gap-toothed smile, with storefronts empty month after month.
The dozen or so empty facades along this dense retail thoroughfare offer one barometer of how bad the consumer-driven economy has become.
So it was with great interest that I noted three long-vacant properties returning to commerce, despite the continuing confidence-rattling news of stalled job growth, the worsening euro crisis and warnings of a possible double-dip recession.
So, what are these three Hennepin Avenue entrepreneurs seeing that others perhaps are missing?
The Sidewalk Economist went asking. Granted, what I learned is not going to jump-start the economy, but it does say something about where confidence and certainty come from.
Hennepin Avenue, on its route through south Minneapolis, runs between the affluent neighborhoods surrounding Lake of the Isles to the west and the urban, apartment-dense Wedge neighborhood to the east. This stretch of Hennepin, a major urban transportation route into and out of downtown, carries nearly 26,000 cars a day, feeding and receiving both I-94 and I-394 traffic.
Like many urban neighborhoods, this particular stretch of Hennepin is packed with commercial enterprises. Within an easy stroll, you can seek repairs for a broken zipper, worn shoes, a flat bicycle tire, a noisy car muffler, broken eyeglasses, a chipped tooth or legal woes. You can learn to dance, see a movie, lift weights and go for a swim, have your suits pressed and your shirts washed, apply for a loan, buy birthday balloons for your kid, naughty things for your special friend, books for your mind, groceries for dinner, paint for your wall, aspirin for your aches, gas for your car, French antique mirrors, retro ’70s dresses – or be embalmed.
You also have your pick of more than two-dozen places to sit, eat and drink – from juice bars to bars in which to get juiced. There are sub shops, pizza shops, coffee shops, tea houses, burger joints and your choice of cuisine — Italian, Mexican, Chinese, Indian, and good ole Minnesotan/American.
Two more restaurants are joining the parade. And a relocated bank branch is filling the other reclaimed property. Here’s a look at them.
The Lowry Uptown
Stephanie Shimp and her business partner, Dave Burley, co-founders of Blue Plate Restaurant Co. — along with a new partner, Shimp’s brother Luke — launched their seventh restaurant in August. The Lowry Uptown took over the former Hollywood Video store on Hennepin, just south of Franklin, a space that had been closed more than two years except for seasonal stints selling Halloween decorations.
They took out an SBA-backed bank loan, invested $1.5 million in the leased space, employ 100 full- and part-time workers. “So far, we are hitting our number,” Shimp reported.
“A year and a half ago, we hired a vice president of operations, a corporate trainer and office manager. We’ve known we needed to add another store to the mix to help support the infrastructure we laid out. That’s always been part of our plan,” she explained.
Shimp is confident that their approach — a collection of neighborhood restaurants serving sophisticated comfort food with flair — will succeed no matter what the economy serves up. While recession-drained consumers may pass on a fancy steak dinner, they “are still going out for a turkey BLT or a fish taco and a beer,” she said.
“We’ve never really contracted. We did well through the recession in the late ’90s, made it through the dot-com bust.”
Some years, they only grew 2 or 3 percent “but always increased revenue every year,” Shimp said. “I don’t want to sound like it’s been easy or all a bed of roses. We go to our vendors and negotiate better contracts, look at menu mix, product mix.”
This year, Blue Plate expects to generate nearly $18 million in revenue, up from $16 million last year, she said.
“We always wanted to be in Uptown but never found the right spot.” The long vacancy at the former Hollywood Video store presented the opportunity to lease the property at attractive rates, she said, noting: “I don’t want to be light years ahead of the wave, but it’s good to be on the front end. Prices go up in the back end.”
Shimp describes the neighborhood’s “split personality”: “solid, established, non-transient households west of Hennepin Avenue and a very transient, young-hipster demographic on the other side.” She’s counting on one side to feed traffic during regular hours, with the younger crowd offering “the potential for late-night business.”
Rye Delicatessen & Bar
Attorney David Weinstein has worked with several restaurant owners in his commercial real-estate practice but has never operated one himself until now. Just a few doors up Hennepin Avenue, Rye Delicatessen & Bar is slated to open next month on the site of the former Auriga Restaurant, which has stood empty for more than four years.
Weinstein, who lives nearby, explained the move: “I tell you, for me it’s pretty location-specific, being in a dense neighborhood that is not well served by a good neighborhood restaurant and bar.”
He remains confident, despite the uncertain economy: “The kind of concept we’re putting in is more resistant to changes in the economy. Between the location, neighborhood and type of concept, we’ll do very well.”
Although he refused to discuss financial details, Weinstein admitted that finding financing is “always a challenge” for a restaurant. “Obviously, the economy gave us the opportunity to purchase the property at a good price [$700,000, according to Hennepin County records] and get financing at more affordable rates,” he said.
He also leveraged his business connections to bring in advisers and consultants. “Having a good management team in place, a good location, good concept and experienced operators” served up several banks who expressed interest in participating in an SBA-backed loan to launch the business, he added.
Weinstein acknowledges the competition from the Lowry a block away but expects high visibility and traffic along Hennepin to draw customers.
He hopes to create “an easy place to stop for breakfast or pick up dinner on the way home … a niche not being met in this particular neighborhood. We’re focusing on something that’s an everyday sort of place,” where customers “can get a bagel and a cup of coffee while they sit and use Wi-Fi. We’re not focusing on real high-end luxury dinner.”
Once the deli is up and running, Weinstein predicts, he’ll have 30 full- and part-time employees. He’s keeping the exterior the same but is making “pretty significant interior renovations” to make the restaurant “lighter, brighter and more user friendly.”
Relocated U.S. Bank branch
When Minneapolis Floral on Hennepin at Fremont closed in 2009, a neighborhood fixture for more than 80 years went on the market, complete with an attached greenhouse and a small, detached brick residence as part of the parcel. Unless you needed a greenhouse and a cottage, the property was a tough sell.
Meanwhile, Christine Hobrough, Twin Cities regional manager for retail banking at U.S. Bank had wanted to move an existing branch office from a small mall a few blocks away on Hennepin at 26th.
When the vacant florist shop came to her attention more than a year ago, it was already under contract. She told the agent to keep her in mind, though, and when that deal fell through, U.S. Bank picked up the properties for an undisclosed amount.
“We quite frankly outgrew the space,” she said, explaining that the old office shared a parking lot with several other retail stores, including a sub shop, dental office and smoke shop. Customers had to wait for parking, and employees often had to park on the street. “We knew our needs surpassed the space. We also wanted to add staff.”
She had been on the lookout for a new site for “five or six years” and had evaluated more than a dozen in the area, Hobrough said. She wanted to stay on Hennepin. “We’re in the retail business, like everyone else,” she explained, so the high traffic and visible location were key factors.
Even though U.S. Bank “always made money through financial crises” and did not participate in the subprime mortgage market, “we have been squeezed, but the business has not decreased,” she said. The bank has continued to add branches through the financial slowdown, growing from 84 branches in the Twin Cities in 2007 to 90 today.
To make things work, the banks had to re-divide the parcel to increase the lot size for the residence before selling it. It took down the greenhouse, added a parking lot, built out the usable space, renovated both the interior and exterior and opened its doors last month. With the additional space, Hobrough said, there are plans to add two or three new employees to the current staff of eight.
The goal of the renovation was to replicate “the look and feel… and original features” of the original 1930s building, including its tin ceiling, Minnesota stone on the exterior and leaded windows.
How much did it cost? “More than a couple of million, let me put it that way,” she said.
“Now we’re here to stay.”