TRAVERSE CITY — The Downtown Development Authority is looking to commission a study on rising rental rates in downtown Traverse City, hoping to get ahead of a problem that officials say could reshape the character of the city’s business district.
“Just given the dynamics of our downtown, I think it’s something that we want to get ahead of if possible,” said Harry Burkholder of the DDA.
Nearly 97 percent of downtown retail storefronts are locally owned, a point of pride for the community. But as property values rise and building ownership changes hands, rents are climbing, putting pressure on the small businesses that define Front Street.
“Most people that we talk to appreciate the small, local, independent businesses that we have downtown. It’s part of our identity, it’s part of our character,” Burkholder said. “And so any way that we can help better understand that and plan for the future, something that this office should be doing.”
Business owners say those rising rents don’t just affect their bottom line, they get passed along to customers.
“What you think we pay for, that product doesn’t just cover that product, it covers rent, covers insurance, it covers payroll,” said Stephanie Dehn, owner of Contigo Dogs. “It covers all of the other things that those unseen costs are unfelt costs by the consumer.”
Dehn said that despite running a successful shop, breaking even can be a struggle, particularly in the off-season.
“In the winter, as business owners, we don’t get paid because everybody else has to get paid first,” she said. “And that’s also not fair to us, because we do so much to be able to be here and to be able to enjoy our community year-round.”
Dehn warned that if the trend continues, downtown could lose the local flavor that draws people in.
“If they aren’t careful, I could totally see it turning extremely corporate and it turning into like an Aspen,” she said. “And that’s a problem. I used to live in Colorado, and there’s not a lot of small businesses out there anymore because they can’t compete with that.”
Still, Dehn said the DDA’s proposed study is a step in the right direction — and that the conversation needs to extend beyond just commercial rents.
“Potentially putting a cap or decreasing rent or whatever the case is would be super beneficial for small businesses,” she said. “Affordable housing would be super great to focus on, and all of the other aspects of it as well. So I think it’s a super important idea that is very valid, and it could be very helpful for all of us to recognize and see what’s going on.”
The DDA said it is already looking at how similar communities have handled the issue.
“I think in northern Michigan, Traverse City is the tip of the spear for this kind of conversation,” Burkholder said. “But we’ve been looking at communities in Colorado and kind of look at historical ski towns about what they’re doing.”
If approved in the DDA’s upcoming budget, the study would review current rent conditions, future projections, and best practices from comparable communities across the country.
“I think it’s an issue that a lot of successful downtowns are facing, especially as they’re getting more developed,” Burkholder said. “And it’s looking at what the future of retail is in a town like ours. Understanding that costs are going up.”