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Alexandria: Big Trouble in Little Businesses
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Alexandria: Big Trouble in Little Businesses

Why Not closing, Old Town Coffee Tea and Spice hanging in the balance, and questions surround future of small business in Old Town.

Kate Schlabach, owner of Why Not.

Kate Schlabach, owner of Why Not. Photo by Vernon Miles.

Within the next few months, Old Town Alexandria will be losing one of its small business institutions and a second one remains at risk for closure. The shelves of Why Not, an iconic Old Town toy store once full of toys and books for children of all ages, are almost empty. A few blocks away, the fate of Old Town Coffee Tea and Spice remains precariously balanced. While Alexandrians celebrate the many years of fond memories at these stores, many are left concerned whether these closures are dark omens for King Street’s future.

Kate Schlabach, owner of Why Not, said the last few weeks have been a whirlwind of emotions.

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Frank Poland (left), owner of Old Town Coffee Tea and Spice, with customers Emma Youcha (center) and Mina Hofkosh-Hulbert.

“I knew people loved the store, but I had no idea it meant this much to them,” said Schlabach.

The store suffered a share of setbacks over the year, but ultimately said it was competition from online businesses like Amazon that killed them.

“It was online stuff that did it,” said Schlabach. “Slowly but surely it brought us down. I saw people taking out their phones and ordering online while they were in the store.”

Schlabach said she considered banning cellphones from the store, as other small town businesses have done, but decided against it.

“We’re going to ruin businesses if it’s just online,” Schlabach warned, noting that there’s something special about being able to touch things before buying them, especially toys. “We’re heading into a boring world. Maybe in 10 years, it can come back around, when people realize how much they miss this.”

For the potential new toy store owner in 10 or 15 years, Schlabach passed along lessons learned over the years at the store.

“Do it with your heart,” said Schlabach. “It will be fun. Most of the time I was here, it was fun … Don’t buy what you’re told to buy, don’t just buy the hottest thing. We used to do what the salesmen told us to do, but when we bought what we wanted to, that’s what made the difference.”

But while Schlabach says the internet’s growth was the coup de grace for the small toy store, it was not the only hindrance to the business.

“The city really messed up with parking,” said Schlabach. “It used to be two-hour parking here, now it’s paid, and we saw a huge drop off after that.”

Schlabach also referenced incidents where city workers would be planning to install lights or utilities on King Street on a Monday, and would leave “no parking” signs up over the weekend.

In the future, Schlabach says she hopes someone younger and with more energy should try and start their own Old Town toy store, but it more than likely won’t be her. After retiring, Schlabach says she plans on moving to Richmond.

“Carytown [in Richmond] is what Old Town was, it’s what King Street used to be,” said Schlabach. Why Not started in Old Town in 1962 and moved to its current location in 1965. Schlabach started working there in 1968.

“Old Town used to be so much fun,” Schlabach said, remembering some of the stranger stores in the area, like a quirky furniture store and a tire store. “We might only get two or three customers a day, but we grew. We did great for some years… I feel sorry for the people of Alexandria now that there’s no toy store. Every town needs a toy store.”

Schlabach said the decision to close wasn’t directly related to waterfront development plan, but said it didn’t help.

“I’m glad I’m not going to be around for that,” said Schlabach. “If it’s going to be anything like National Harbor, it’s going to be a disaster.”

Schlabach owns the building Why Not is located in, but that if she’d had to pay the rent other Old Town stores face, they couldn’t have stayed in business as long as they have.

While Why Not’s future is sealed, other small businesses in Alexandria remain in jeopardy. Old Town Coffee Tea and Spice recently announced that they would be closing the doors to their business on South Union Street, though a possibility has recently emerged that this may mean a change of location rather than permanent closure. The narrow store is covered, floor to ceiling, in various types of chocolates, coffees, treats and accessories. According to the owner, Frank Poland, the idea was to create a European-style store in Old Town.

“Old Town was known for its small businesses,” said Poland. “It attracted visitors. But when the city leased a lot of space to larger national businesses, the rents were driven up.”

For Poland, when his lease was set to expire, his landlord suggested that the rent could raise by more than a third and would transition the agreement into a “triple net lease,” meaning that Poland would have to pay for utilities and other property owning aspects. Ultimately, Poland said this effectively would have doubled the rent. Poland’s store is located directly across the street from 220 S. Union, site of the new Indigo Hotel and diagonally across Duke and S. Union streets to Robinson Terminal South, the planned site for a new mixed use apartment and retail complex.

“The rent increase comes from the larger chain stores [moving in] and taxes, which have gone up steadily,” said Poland. “I don’t think the city has ever nourished its small merchant population, but they go out of their way to take care of hotels.”

Poland says he’s been extremely happy with his years working as a small businessman, and that in his time he’s tried to keep his nose in the store and stay out of the local politics.

“I’ve had a great 20 years here,” said Poland. “I will miss it. Alexandria has been good to me, but I am disturbed to see that they’re killing the goose that laid the golden egg. They’re pushing out small businesses and bringing in big box retail, who won’t stay if they can’t make a profit, and then what are we left with? An empty King Street. Change is going to happen, and the hotel is an improvement over what is there now, I recognize that … but when small businesses are gone, people won’t have a reason to come back here.”

Many of the current development problems, Poland said, stemmed from the initiatives 10 years ago at the beginning of the push for Waterfront redevelopment. Poland even noted that initiatives the city tried to undertake to help businesses on King Street, like the art festival, hurt more than they helped.

“People drive here, walk up and down King Street, and they park but they don’t shop,” said Poland. “It costs me half one weekend revenues each year.”

Old Town Coffee Tea and Spice has been in business in Alexandria for 35 years. Poland bought the store 20 years ago. If it closes, Poland says he plans to move with his wife to Maine. But as of the second weekend in January, Poland might have to delay that trip to New England. A possibility has emerged that the store won’t close but will rather relocate to another area of Old Town. Poland said that the store wasn’t closing for sure, but at the moment he couldn’t say more than that they were looking at moving to a new location in the Old Town area.

Stephanie Landrum, president of the Alexandria Economic Development Partnership, said that changing store locations is one of the many options available to Old Town small businesses to stay alive with new development coming in.

“Businesses need to manage their real estate footprint,” said Landrum. “There are oppurtunities to do more with a smaller space. Rents everywhere in the region continue to grow. Some tenants negotiated leases for 10 years ago in a different real estate scenario. We’re currently working with [Old Town Coffee Tea and Spice] to find another space.”

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Types of retail in Old Town as of 2011, the latest numbers available to the Alexandria Economic Development Partnership. According to Stephanie Landrum, president of the AEDP, nearly all of the businesses that have closed since 2011 were replaced by like-businesses, meaning national chains replaced national chains and local stores replaced local stores.

According to city officials and financial leaders, it may be a little premature to cry doom and gloom for Old Town.

“[We] recently discussed looking at recent announcements of businesses leaving to see if there are common reasons,” said Robert Shea, chairman of the board for the Alexandria Chamber of Commerce. “One of the things I want to make sure we do is not respond to anecdotes and get some data that tells us the root causes, some say this is unusual, others say this is seasonality.”

But while it may or may not be an indicator of a larger problem, the closing of Why Not has drawn attention all the way to the top of city government.

“Immediately upon seeing the story about Why Not and Coffee, Tea, and Spice, I called [City Manager] Mark Jinks immediately to express my concern at the loss of these institutions,” said Mayor Allison Silberberg, who said she’s arranged meetings with AEDP and other local financial institutions to discuss this problem. “We’re not the only city that has rising rents. We need to look at what other cities have done. What is in our arsenal and what can we do to be even more business friendly.”

One area where Jinks said Alexandria has provided an advantage over other localities is a quick turnaround in permitting.

“In some places in Northern Virginia, it may take a month to get a permit,” said Jinks. “In Alexandria, it can be as quick as a few days or up to a week.”

Despite concerns surrounding the small business closures and potential closures, according to Jinks, it’s premature to look at these as an economic indicator for the city as a whole.

“What we’re seeing is the cyclical brand shift,” said Jinks. “December is the biggest retail season, and after that, that’s when many retailers and leases are timed to say ‘do we go forward or do we close?’”

Like many Alexandrians, Jinks lamented the loss of Why Not, saying it was his go-to place to take his kids for toys.

“It’s tough, with increasing rents and competition from the internet, to make a go of it with retail space,” said Jinks. “We have looked and continue to look at ways we can support those small town retailers. They’re what makes Old Town unique.”

Jinks noted that some of the stores that closed recently, or are at risk of closing, do not have an internet presence, and said that the city might need to look at offering additional counseling and advice on building an online store.

Like Jinks, Landrum said that Old Town’s businesses will need to find ways to deal with new markets.

“Any independent business faces challenges in competition, especially online. They should have an online presence.”

Even for businesses like Why Not, Landrum said there are options to maintain small businesses in that space if the building owners work with the city.

“We should be talking about succession planning,” said Landrum. “Options include selling to employees, which is what happened to Chadwick’s restaurant.”

Landrum emphasized that it was more important to celebrate the success of businesses like Why Not and Old Town Coffee Tea and Spice.

“The average lifespan of a business is three years,” said Landrum, “I don’t want us to miss that we should be celebrating their success.”

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Frank Poland, owner of Old Town Coffee Tea and Spice

Not all of Old Town’s unique businesses are worried about incoming development. The Tea and Spice Exchange and Blackwall Hitch are both relatively small franchises that are still fairly new to Alexandria, at least in comparison to stores like Why Not.

Sherri Moxley, manager at The Tea and Spice Exchange, says her King Street store has been in Alexandria for six years and most of her business comes from tourists. This is part of why Moxley says she’s not particularly concerned about new development. If anything, Moxley said development brings in more visitors, which spreads store advertising by word of mouth. Moxley believes development could also bring in new types of stores to draw in more visitors. Additionally, as Landrum said was vital for small businesses, Moxley said they have a monopoly on the local tea and spice industry with a strong local following. With Old Town Coffee Tea and Spice in jeopardy, that could be more true than ever.

Blackwall Hitch, the second location for an Annapolis-based restaurant, is one of Old Town’s newest restaurants. In June, the restaurant will celebrate its first anniversary on the waterfront, and manager Alex Basili says they’re going strong.

“We’ve found a lot of support in the local community,” said Basili. “It’s a wonderful place and it’s been very smooth so far. I believe Waterfront development will be positive. [It is] bringing more people and providing a better Waterfront that will really help our business.”

Academics from George Mason University noted that there were both pros and cons to new Waterfront development for the city.

“It’s an oversimplification to say it’s all good or all bad,” said Kat Grimsley, director of the Masters in Real Estate Development at George Mason. “If you’re increasing density, that brings more heads and bodies into the area, especially if the businesses are demand driven. But on the other hand, if you’re improving the amenities, something that comes in is more modern than what’s there, and that brings with it higher rents than what’s already there. The problem with that, for cons, is that landlords of existing spaces can justify increases in existing rents even if there’s no added amenities.”

Grimsley noted that these rent increases can have a serious effect on the types of business that come into an area.

“Quiet sleepy areas with lower rents suddenly face newer buildings with newer amenities, and then where you are is worth more, and landlords can charge more,” said Grimsley, but warned that it can get even worse. “If a brand new building goes in near you, there’s more traffic in the area and landlords think they can get more out of you. But what happens if the building you’re in becomes a target for redevelopment itself? It’s a displacement. Forget rates going up, if the area becomes more valuable, the owner of the building can sell and the building can be torn.”

As Silberberg noted, Alexandria is far from the first city to deal with challenges facing small businesses in the wake of redevelopment. Frank Shafroth, director of the Center for State and Local Government Leadership, noted similarities between Alexandria’s Old Town redevelopment issues and Detroit’s Riverfront.

“I looked at the Economic Impact Study for the Detroit Riverfront, which found that it had helped create a vital sense of place that significantly benefited the development of residential units, and enhanced the ability to attract businesses,” said Shafroth in an email. “Those changes, quite naturally, have affected both residential and business development rates (and assessed property values) — and attracted some $639 million in private sector investment.”

Like Grimsley, Shafroth noted that development is almost never a question of being all-good or all-bad.

“The report notes it increased visits to the area by close to 60 percent from outside the city — and has increased the premium on rates that can be charged for riverfront located properties by approximately 12 percent,” said Shafroth. “While, of course, Detroit and Alexandria are very different; I think the 12 percent is not an unreasonable approximation of what Alexandria could expect. That would mean, for existing small businesses; they could anticipate increases in property tax assessments or higher rental rates: the changes, after all, make this property considerably more valuable. That would also mean, therefore, pressure on those who could not afford higher costs — just as it would mean greater opportunities. Change will be disruptive, especially to anyone on a fixed income.”

For the owners of Why Not and Old Town Coffee Tea and Spice, the fondest memories in the store was seeing the impact on children and teens who worked for them.

“We had a lot of high school kids work here,” said Poland. “They really recruited each other, and they come back every Christmas. I get to teach the kids about business and customers .... They like it here, and that’s been a great reward.”

“So many kids started here as teens,” said Schlabach, “and they’ve stayed important to me.”

Additional reporting was provided by Celine Anderson, Isabel Knight, Eduard Saakashvili, and Rose See.