Area 61 Gallery is Closing in December 2024
The 5-year lease for Area 61 Gallery ends December 31, 2024. With thoughtful consideration and heavy hearts, we – Keeli and David Crewe – have decided not to renew the lease. Foot traffic, appreciation, and sales of local artists’ work in this central downtown location among the luxury and business hotels have doubled from our original Southside location. Unfortunately, the rent and ancillary leasing costs in this district are more than double and unsustainable – at least financially for us.
Many times when a local business closes, I am astonished and wished I had more time to revisit them before the closing date. I’m hoping with the extra notice that you will continue to stop in, browse, shop whenever in town and attend every open house, art demo, and pop-up event we have with our artists until the end of the year. I am hopeful that they will all have the best sales to date in the next ten months as part of our gallery artist family.
Below are some of my musings about our experience as local business owners as well as my thoughts on the economics and future of small business in Chattanooga. I hope they provide additional context and spur more thought on how we might ensure small businesses are set up to prosper in our scenic city.
Our Journey
We’ve been part of the Chattanooga downtown small business community since 2009, first as a part of the high-energy, rejuvenating Southside district and then moving in 2019 to the heart of the tourism and business City-Center district. We moved our business from the Southside district when the area transitioned to primarily an entertainment district – featuring some of the area’s best and award-winning culinary, plus nightlife experiences. Daytime foot traffic was only present during lunch hour or to patronize the many appointment-based medical, therapeutic, spa, salon and barber services.
The sales metrics in our ten years on the Southside showed that 80% were to people visiting from out-of-town who enjoy the “local” cultural experience and collecting when they travel. They were no longer drawn to the Southside, except for dining. We intentionally sought a new location in the heart of the downtown City-Center knowing that 260 new luxury hotel rooms were about to open up at The Westin hotel and the ever-growing West Village area.
Even after our city’s COVID shutdown in March – May 2000, we sold more art in the City-Center location that year than we ever did on the Southside in a good year.
Engaging with our city’s guests (tourists), adding things to do locally to their itinerary and seeing their enthusiasm and often surprise for what Chattanooga has to offer has also been invigorating and a pleasure. We’ve loved advocating and supporting local artists in their careers, sharing their works with local Chattanooga residents and the recent influx of transplant residents who have fully embraced all that is local and makes Chattanooga – well, Chattanooga.
We Are Not Closing Due to the Effects Of COVID
Contrary to what our economic development companies say about the effects of COVID, our Chattanooga Tourism Company went to work redirecting advertising funds to employee retention and efforts to lead the local hospitality and small business community through weekly conference call updates on what it would take to serve and host guests in our city safely. Once public health guidelines were established, they focused all their advertising to the “drive-to” travelers market and promoted that Chattanooga had instituted clean and safe lodging and travel protocols. People were stir-crazy from being at home and welcomed this messaging and escape opportunities just a few hours away.
Our hotels were at 70% capacity by July of 2020. Visiting guests were enjoying our outdoor assets, safely managed attractions, and high-speed internet for those who extended their stays and worked remotely.
Our art sales were strong and reflected the enthusiasm of our visiting guests. This location among the luxury tourism, business and convention hotels proved to be where local art was appreciated and sold.
Empty Storefronts
Out-of-town guests regularly ask us where they can find more local retail, similar to our gallery, in the area. We direct them to the riverfront and encourage them to enjoy the businesses between 4th and 5th streets and on the Northshore. But we often hear from visitors that they think Chattanooga was hit hard during COVID since there are so many empty street-level, storefront spaces available.
As of Tuesday, 2/20/24, I counted empty spaces in the downtown city-center from the Riverfront to 11th Street:
16 on Market Street
9 on Broad Street
4 on Chestnut Street
7 on 4th Street from Market to Walnut
1 on 7th Street between Walnut and Cherry
2 on Cherry Street between 7th and ML King
I walked the area last November after a county regional planning agency meeting and only one space has been leased since, to the Dragon Cannabis Bar at 5th and Broad Streets.
So why are there so many empty storefronts in downtown Chattanooga?
Even in the Southside district in 2010, we witnessed that storefronts often remain empty for years. Many developers and property owners seem more interested in setting a commercial space market rate for property investment groups, or maybe financial lending benefits, rather than lowering the rates to fill the space, as traditional supply and demand market forces should dictate. One friend and property owner confirmed that tax write-offs are available to them when a space isn’t leased.
Space for Small Businesses
The number of empty spaces and business closings mid-lease or at lease-end (even corporate franchises such as Walk-ons Sports Bar and Starbucks at the riverfront and Slim and Husky’s Pizza at UTC/ML King) should trigger market correction, yet empty spaces prevail.
Currently retail and commercial rates in the area are in the $25/square foot range, with some even higher. On top of artificially inflated commercial/retail rental rates for the area, business owners must also face triple-net leases.
With a triple net lease (NNN), the tenant is required to pay a portion of the taxes, fees, property management, insurance and maintenance costs for a property in addition to monthly rental and utilities. Our attorney says that triple net leases are becoming standard and definitely favor the landlord or property owner. Our landlords did make some concessions because they like what we do and didn’t want to lease to yet another downtown law firm, accounting and investment firm or bank – at least street level.
However, there seems to be little collective interest by our property owners and developers in the benefits of supporting locally owned small business, and pricing to allow a business concept that may support or advance the community. With more small businesses exiting the downtown core, future redevelopment and “reimagining” construction affecting foot and vehicle traffic patterns, our small business isn’t sustainable here.
Chattanooga’s Economic Development Narrative
Developers say many employees haven’t returned to the downtown for work, but some of their economic articles tout that there are 400 employees at downtown’s newest employer’s office, Steam Logistics. The Unum building is full and leased – the upper building to Unum employees, and the lower building is now subleased to other independent employers in the transportation and logistics industry.
Stand at 4th and Broad Street or ML King at Broad Street during morning drive-to-work and between 3 pm-6 pm. You will see by the traffic that there are still many working somewhere in the entire downtown footprint from the river to the ridge.
Residential in-fill is progressing nicely throughout downtown – almost every surface parking lot has been sold and is undergoing redevelopment. There are plenty of high-end residences on the riverfront and between the bridges to ML King. There are hotels all along Chestnut from the river to the Convention Center, campus living and walk to work from McCallie Avenue to the MLK/University district, and apartments on every block beyond to the I-24 interstate.
Where are those who live, work and play downtown going to play with all the closures and if empty spaces remain the norm?
There are 1,150 Hotel rooms in the West Village from the Convention Center to 6th Street on Pine and Chestnut Streets, and seven more hotels from 6th Street to the riverfront and adjacent to Cameron Harbor. There are two more hotels in development on either side of Broad Street between 3rd and 4th streets.
There is year-round foot traffic in these areas from residential, corporate and tourism. These areas are walkable and many are accessible by the downtown Free Electric Shuttle that runs daily from 9 am – 10 pm and later on weekends and in spring/summer.
Location, traffic patterns and parking either supports or impacts small business.
Hotel guests have their car valet parked in nearby parking garages if there is no onsite hotel-owned parking. Where do the hotel employees park?
Where do servers, coffee shop baristas or retail store employees park if they cannot afford downtown living?
How many downtown parking garage spaces are leased monthly to employees, condo or apartment residents and are therefore “reserved” to anyone making a day trip to downtown attractions and businesses?
Regional planners say “right-sizing” roads, one lane of traffic both ways, a turn lane and bike lanes will solve all our urban development problems, naturally slowing traffic for pedestrian and bike safety. Parking and traffic have been cited by locals outside the downtown and Northshore footprint as the reasons they do not stay downtown after work or return to downtown after business hours.
Ask some of our small business owners downtown who moved from other cities what happens to local culture when you don’t consider impact other than slowing down the traffic or are hoping the effect will encourage and transition all in the urban core to biking and walking.
Reimagining Streets and Public Spaces
The upcoming “Reimagining Broad Street” project is the other reason I decided not to renew our lease. Tearing up the streets to take away one traffic lane in both directions to widen some of the already widest sidewalks and bike lanes in the city will impact food and beverage delivery trucks, as well as the many business and residential package delivery carriers (USPS, UPS, FedEx, moving companies, etc.). Broad Street already has a beautiful tree-lined median – trees are good for a city offering shade, breezes, cooler temps, nature, are oxygen-producing and are especially important for a city that is positioning to be a City in a Park.
Looking from ML King north to the peaks of the Tennessee Aquarium, and at some of the city’s oldest and beautiful architecture, Broad Street is already the city’s promenade.
It seems that our truly local small business culture is being phased out in the reimagining processes often led by out-of-town consultants and by developers associated with out-of-state real estate equity groups. Our profit margin is too lean to interrupt access to our business during redevelopment and reimagining (a few legacy and recruited businesses didn’t make it through the Patten Parkway remodel and there wasn’t as much density there).
Final Musings
Though moving on from downtown small business owner, I will remain a downtown and local arts advocate. I’ve always joked that I sleep on Signal Mountain, but I’ve been living, working and playing in Chattanooga’s downtown since 1985. I’m hopeful…hopeful that local culture will renew after the redevelopment projects of ONE Riverfront and Reimagining Broad Street are finished. I’m hopeful and curious to see how the city’s newest riverside development, “The Bend,” with its same place-making and people-gathering principles will turn out. In the meantime, I’ll still come downtown to walk the bridges, Riverwalk and Sculpture Fields at Montague Park. I’ll still support our local dining options. I will still shop on the Northshore and support AVA – The Association for Visual Artists and ArtsBuild. I choose to remain hopeful.
Thank you again for your support of us, and your continued support of local businesses in Chattanooga.