Harvard Square's chain-store backlash
CAMBRIDGE -- Call it chain-store hangover. Independent retailers are gaining leverage in Harvard Square after years of taking a back seat to flashy national players.
Abercrombie & Fitch, Pacific Sunwear, HMV Records and The Limited were willing to pay record rents -- up to $120 per square foot or more in the 1990s -- to have a nameplate in the square better known for its arts and culture than cargo pants. But those chains failed, misreading the demographics and leaving behind artificially raised rents and a 4 percent vacancy rate.
The national retailer backlash has forced landlords to be more flexible with independent and locally owned shopkeepers, leading to lower rents and more flexible terms. Some say Harvard Square is on its way to returning to its retail roots, recovering its identity as an area for innovative independent retailers as more unique shops move in.
"I think in many respects, yes, we're getting back to our roots, which is returning to the right mix," said Richard Diamond, owner and operator of The Diamond Group real estate brokers in the square. "The chains realized that the consumer base was not what they thought it was."
The right direction
Though landlords, Realtors and shopkeepers concur Harvard Square will never be what it was, lower and more stable rents is a move in the right direction.
"A lot of the rents, a couple of years ago in retailing, were fueled by a whole bunch of telephone companies and banks wanting to establish a presence in the square," said William Poorvu, owner of Cambridge-based commercial real estate firm Investment Resource Group. "There was an artificial boost in rents. It's reverted to the mean, and rents are lower than they were a couple of years ago. Landlords have been forced to be more competitive."
Last month, Poorvu negotiated a three-year lease -- and lowered rent -- for Casablanca Restaurant owner Sari Abul-Jubein, which kept the longtime restaurateur in the square.
Katarina Dervisevic, owner of Baak Gallery, a fine arts and jewelry store on Brattle Street since 1976, said landlord Richard Getz Associates of Cambridge gave her a second "adjustment" on her lease -- a decrease -- this year to help her remain in the square.
"It's not only an adjustment," said Dervisevic, "but a flexibility when you pay the rent. There's no one breathing down your neck."
Leases in Harvard Square vary dramatically, and command anywhere between $50 per square foot to north of $150 per square foot -- comparable to rental rates on Boston's Newbury Street and well above the $25 to $50 per square foot landlords are getting in nearby Central Square.
Before the chains arrived about 15 years ago, commercial real estate broker Diamond said he recalls Harvard Square rents per square foot being in the range of $35 to $50 -- roughly $75 in today's dollars.
Diamond said back then he considered paying $50 per square foot "outrageous."
He speculates that without artificially raised rents, a high of $60 per square feet might be more the norm nowadays.
Brokers and Realtors said The Limited, which came to Harvard Square about 10 years ago and has since closed, paid as much as $140 per square foot at its One Brattle St. location.
Historically, Harvard Square has been an incubator for retailers who've tested an idea by opening a first or second store there, then growing the business. Newbury Comics opened its second store in Harvard Square, and now boasts 27 stores in New England. Origins, a natural cosmetics brand owned by The Estee Lauder Companies Inc. (NYSE: EL), opened its first store in the Square in 1990 and now has 123 stores in the United States.
Bastion for independents
A dip in foot traffic in the square and the artificially raised rents has put the squeeze on independent retailers, which comprise about 75 percent of the square's stores -- a fact business owners like to reiterate, since many feel they've been overshadowed by the press covering chains kicking out their brethren.
Though no statistics are available for the percentage of independent retailers in the square in the past, landlords and retailers argue Harvard Square has always been a bastion for independent retailers and restaurants despite national chains taking over key corners of retail real estate.
"I think we're always coming back to this heavily independent, novel retailer and restaurant with your appropriate, strong, well-anchored chains," said John DiGiavani, president of Trinity Property Management, which owns and leases The Garage and The Coop. He points to The Gap, Crate & Barrel and Ann Taylor as long-standing chains that do well in the square. Ann Taylor has plans to expand.
"There are a lot of independents that have survived and are working hard to rebuild that image," said Frank Kramer, second-generation owner of Harvard Book Store on Massachusetts Avenue.
Part of that fight comes from a recent initiative called Cambridge Local First, a program that lets passersby know that a certain store is locally owned by placing a decal in the shop window. Another sign of hope is the slight increase of foot traffic this year -- measured by the Massachusetts Bay Transportation Authority, which counts transit riders -- from a low of 20,000 people daily in 1997 to 23,000 daily in 2006. Independent operators who have moved in recently are hopeful the square is getting back to its roots.
Brooke Garber, co-owner with Stephanie Nist of Mint Julep, opened their second store -- the first one is in Brookline's Coolidge Corner -- in Harvard Square this past February. The women's clothing and accessories store fits into 800 square feet at 6 Church St., formerly occupied by Hidden Sweets, a candy store that moved into a larger space. Garber said she negotiated the lease for less than what was being asked, though she didn't disclose specifics.
"Harvard Square is not as fun and funky and unique as it once was," Garber said, "and of course we're hoping we'll bring a little of that back."
Longtime shopkeeper Louise Ciampi, owner of Clothware, a woman's clothing store in the square since 1972, said it's the one-of-a-kind shops like hers that keep the foot traffic flowing in the square, and that the chains -- stores that people can find at malls -- have not helped their cause.
"Stores would not be leaving and closing, and there would be no empty spaces if the foot traffic were supporting them the way they used to," said Ciampi.
If there's one recent change in the way landlords view the square, DiGiavani says now more than ever landlords look at who would be the best tenant for their retail space in the context of the whole square, not just for the space itself.
"People are being more thoughtful about the leasing," said DiGiavani. "Your best urban spaces are the ones that have a mix."
But that doesn't mean no chains are allowed.
International House of Pancakes is slated to move in on Eliot Street, American Apparel is taking the vacant spot left by Hartnett's on Brattle Street, and Cache is going into the April Cornell spot on Brattle.
"The Square is changing, and it's at a crossroads," said shopkeeper Dervisevic. "It's all about the community right now."
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CAMBRIDGE -- Call it chain-store hangover. Independent retailers are gaining leverage in Harvard Square after years of taking a back seat to flashy national players.
Abercrombie & Fitch, Pacific Sunwear, HMV Records and The Limited were willing to pay record rents -- up to $120 per square foot or more in the 1990s -- to have a nameplate in the square better known for its arts and culture than cargo pants. But those chains failed, misreading the demographics and leaving behind artificially raised rents and a 4 percent vacancy rate.
The national retailer backlash has forced landlords to be more flexible with independent and locally owned shopkeepers, leading to lower rents and more flexible terms. Some say Harvard Square is on its way to returning to its retail roots, recovering its identity as an area for innovative independent retailers as more unique shops move in.
"I think in many respects, yes, we're getting back to our roots, which is returning to the right mix," said Richard Diamond, owner and operator of The Diamond Group real estate brokers in the square. "The chains realized that the consumer base was not what they thought it was."
The right direction
Though landlords, Realtors and shopkeepers concur Harvard Square will never be what it was, lower and more stable rents is a move in the right direction.
"A lot of the rents, a couple of years ago in retailing, were fueled by a whole bunch of telephone companies and banks wanting to establish a presence in the square," said William Poorvu, owner of Cambridge-based commercial real estate firm Investment Resource Group. "There was an artificial boost in rents. It's reverted to the mean, and rents are lower than they were a couple of years ago. Landlords have been forced to be more competitive."
Last month, Poorvu negotiated a three-year lease -- and lowered rent -- for Casablanca Restaurant owner Sari Abul-Jubein, which kept the longtime restaurateur in the square.
Katarina Dervisevic, owner of Baak Gallery, a fine arts and jewelry store on Brattle Street since 1976, said landlord Richard Getz Associates of Cambridge gave her a second "adjustment" on her lease -- a decrease -- this year to help her remain in the square.
"It's not only an adjustment," said Dervisevic, "but a flexibility when you pay the rent. There's no one breathing down your neck."
Leases in Harvard Square vary dramatically, and command anywhere between $50 per square foot to north of $150 per square foot -- comparable to rental rates on Boston's Newbury Street and well above the $25 to $50 per square foot landlords are getting in nearby Central Square.
Before the chains arrived about 15 years ago, commercial real estate broker Diamond said he recalls Harvard Square rents per square foot being in the range of $35 to $50 -- roughly $75 in today's dollars.
Diamond said back then he considered paying $50 per square foot "outrageous."
He speculates that without artificially raised rents, a high of $60 per square feet might be more the norm nowadays.
Brokers and Realtors said The Limited, which came to Harvard Square about 10 years ago and has since closed, paid as much as $140 per square foot at its One Brattle St. location.
Historically, Harvard Square has been an incubator for retailers who've tested an idea by opening a first or second store there, then growing the business. Newbury Comics opened its second store in Harvard Square, and now boasts 27 stores in New England. Origins, a natural cosmetics brand owned by The Estee Lauder Companies Inc. (NYSE: EL), opened its first store in the Square in 1990 and now has 123 stores in the United States.
Bastion for independents
A dip in foot traffic in the square and the artificially raised rents has put the squeeze on independent retailers, which comprise about 75 percent of the square's stores -- a fact business owners like to reiterate, since many feel they've been overshadowed by the press covering chains kicking out their brethren.
Though no statistics are available for the percentage of independent retailers in the square in the past, landlords and retailers argue Harvard Square has always been a bastion for independent retailers and restaurants despite national chains taking over key corners of retail real estate.
"I think we're always coming back to this heavily independent, novel retailer and restaurant with your appropriate, strong, well-anchored chains," said John DiGiavani, president of Trinity Property Management, which owns and leases The Garage and The Coop. He points to The Gap, Crate & Barrel and Ann Taylor as long-standing chains that do well in the square. Ann Taylor has plans to expand.
"There are a lot of independents that have survived and are working hard to rebuild that image," said Frank Kramer, second-generation owner of Harvard Book Store on Massachusetts Avenue.
Part of that fight comes from a recent initiative called Cambridge Local First, a program that lets passersby know that a certain store is locally owned by placing a decal in the shop window. Another sign of hope is the slight increase of foot traffic this year -- measured by the Massachusetts Bay Transportation Authority, which counts transit riders -- from a low of 20,000 people daily in 1997 to 23,000 daily in 2006. Independent operators who have moved in recently are hopeful the square is getting back to its roots.
Brooke Garber, co-owner with Stephanie Nist of Mint Julep, opened their second store -- the first one is in Brookline's Coolidge Corner -- in Harvard Square this past February. The women's clothing and accessories store fits into 800 square feet at 6 Church St., formerly occupied by Hidden Sweets, a candy store that moved into a larger space. Garber said she negotiated the lease for less than what was being asked, though she didn't disclose specifics.
"Harvard Square is not as fun and funky and unique as it once was," Garber said, "and of course we're hoping we'll bring a little of that back."
Longtime shopkeeper Louise Ciampi, owner of Clothware, a woman's clothing store in the square since 1972, said it's the one-of-a-kind shops like hers that keep the foot traffic flowing in the square, and that the chains -- stores that people can find at malls -- have not helped their cause.
"Stores would not be leaving and closing, and there would be no empty spaces if the foot traffic were supporting them the way they used to," said Ciampi.
If there's one recent change in the way landlords view the square, DiGiavani says now more than ever landlords look at who would be the best tenant for their retail space in the context of the whole square, not just for the space itself.
"People are being more thoughtful about the leasing," said DiGiavani. "Your best urban spaces are the ones that have a mix."
But that doesn't mean no chains are allowed.
International House of Pancakes is slated to move in on Eliot Street, American Apparel is taking the vacant spot left by Hartnett's on Brattle Street, and Cache is going into the April Cornell spot on Brattle.
"The Square is changing, and it's at a crossroads," said shopkeeper Dervisevic. "It's all about the community right now."
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