Sep 25, 2022

Denver program offers free rent to fill empty storefronts

Posted Sep 25, 2022 1:53 PM
Image courtesy of Pixabay
Image courtesy of Pixabay

Colorado Public Radio

DENVER (AP) — A new program in Denver is offering at least three months of free rent to small businesses and entrepreneurs who set up shop in empty storefronts in areas of the city that are struggling to recover from the pandemic. Colorado Public Radio reports Downtown Denver Partnership's Pop-Up Denver program started last year with five spaces on the 16th Street Mall and $200,000 in city funds. The group is launching a second phase using part of a $2.4 million investment funded by the federal government's pandemic aid package. The goal is for participating businesses to move into the spaces permanently after the free rent period ends.

DENVER (AP) — It's about 9:30 on a Thursday morning, and the buzz at Tea with Tae on Denver's 16th Street Mall is comfortingly familiar.

The espresso machine is going, soothing music is piping through the speakers, and there's a clutch of people catching up on office chit-chat while they wait for their drinks. This is usually the busiest time of day, according to owner Tae O'Dorisio.

"It could be the 7 o'clock to 8 o'clock hour or the nine to 10 hour," O'Dorisio said. "Then sometimes randomly we get a rush from like two to three, so right when we're about to close."

It all sounds pretty typical for a place selling hot beverages downtown. But behind the scenes, there's one aspect of this arrangement that definitely isn't typical – O'Dorisio isn't paying any rent.

O'Dorisio is part of the Downtown Denver Partnership's Pop-Up Denver program, which seeks to coax small businesses and entrepreneurs to set up shop in empty storefronts in areas of the city that are struggling to recover from the pandemic. Participating businesses still need to pay operating expenses, but there's no rent for at least three months. Businesses also get a stipend for things like marketing and design.

The project started last year with five spaces on the 16th Street Mall and $200,000 in funding from the city. Now, the Downtown Denver Partnership is launching a second phase using part of a $2.4 million investment funded by the federal government's pandemic aid package. The downtown booster group is looking to add 10 additional spaces for this round. They plan to start accepting applications from businesses in February.

So far, none of the participants have opted to make their temporary storefront permanent, but that's the ultimate goal.

"That is our hope," said Sarah Wiebenson, the director of economic development at the Downtown Denver Partnership and the point person for Pop-Up Denver. "Eventually they'll be given this runway to success, that they have the time to build up a customer base by not paying base rent."

Landlords have been pleased with the results, according to Wiebenson, even though it means they're not collecting rent on the real estate.

"When you have foot traffic coming and going from the pop-up, that increases the visibility for the lease-paying tenants next door. It also shows the viability of a space that may have sat empty for quite a long time," she said.

Landlords retain the option to replace the pop-up with a paying tenant if they can find one. If that happens, the Downtown Denver Partnership will work to find the business a new space, Wiebenson said.

Empty storefronts are becoming a stubborn blight in areas like the 16th Street Mall that rely on office workers for foot traffic and business during the week. The remote work revolution ushered in by the pandemic has been great for white-collar workers that are able to cut out their commutes and work from the comfort of a home office, but it hasn't been great for the restaurants and shops where they used to spend their money.

The hollowed-out feeling of the 16th Street Mall creates a host of issues for the businesses there. Public perception of safety in Downtown Denver is becoming increasingly problematic, said Beth Moyski, a vice president at the Downtown Denver Partnership, during a recent event on homelessness hosted by the Colorado Chamber of Commerce.

"It's that person talking to themselves …. They might not have any contact with me whatsoever, but when you walk past them or when they walk past you, it might make you feel uncomfortable. And that's how people feel unsafe," Moyski said during the panel discussion.

It's hard to nail down the actual storefront vacancy rate on the mall. The number is constantly changing, and some businesses might still be paying rent even if they're not open, making it a squishy calculation. According to the Downtown Denver Partnership, roughly a quarter of storefronts in the Upper Downtown area — which includes the mall — were what the group calls inactive when they started outreach on the PopUp program last year. That's since declined to less than 20 percent, according to Wiebenson.

Tea with Tae's O'Dorisio launched her business online in April 2020, when her job coordinating influencer events for the National Cattlemen's Beef Association slowed to a crawl. Her website, where people can order different teas using a subscription-service model, was well suited to a world where people were hunkering down at home and thrived, she said.

She had no plans to open a physical store.

"Retail was hit so hard and businesses had to close down .… It honestly didn't seem like something that would be a good idea for the business. So, no, it wasn't something that was on our radar at all," she said.

But when she heard free space was available on the 16th Street Mall, she figured it could be a good way to diversify the business and get in front of more customers. She opened the storefront in July.

Tea with Tae is in a prime spot two blocks from the Denver Convention Center in what used to be a Starbucks. There was a fairly steady stream of customers during that Thursday morning rush. But it's nothing like it used to be when downtown was chock full of office workers.

Downtown Denver is showing some signs of people coming back, but office workers are still staying away

Jeff Bader, who has worked upstairs at the Denver Urban Renewal Authority since 2018, was getting his hot coffee to go. He said that pre-pandemic, there would be a line out the door at the Starbucks in the morning. He notices that a lot of businesses now are just gone, like the deli that used to be next door.

"There would just be a bigger, critical mass of people coming and going .… There's just less people, so it feels a little more empty, quiet," he said.

O'Dorisio has until February to decide whether or not she wants to sign a real lease.

"We've only had a few months of sales data to see how the space is really doing and how it's come back after COVID," she said. "At this point we're hoping that we continue and sign a long-term lease for this space."