Cover story: Storefronts a window into city economy

It’s about 1 p.m. on a recent Thursday, and although it’s midday and the late-summer sun makes it pleasant to be outdoors, there are few lunchtime pedestrians strolling about downtown’s Federal Square.

The area storefronts are nearly empty of patrons.

Inside the family-owned Modelo clothing store at the corner of Main and Federal streets, the twentysomething female cashier has little to do and occasionally gazes out a window while a lone customer browses through the many racks of stylish young women’s attire.

A second clerk, with no one to help, busies herself by spiffing up the aisles.

“We’ve been slow,” said Han Kang, the manager of Modelo, as he looked about his spacious, attractive and brightly lit storefront.

Modelo, which also has stores in Medford and Lawrence, has been in Worcester about 15 years and was previously located further north on Main Street past City Hall.

Mr. Kang said that, over the past couple of years, business has been steadily declining, and after the office workers head home in the evening, the nearby downtown sidewalks are nearly void of foot traffic.

“Businesses here are having trouble,” said Kang, who said he still remains optimistic that things will turn around as more and more students from the area’s colleges move downtown and hopefully frequent local businesses.

Storefronts are considered by many urban planners to be the commercial bloodlines of a municipality. Those who study the economics of cities believe that they accurately gauge a community’s real business and financial vitality.

If that’s the case, then the business activity at some stores along the northern portion of Main Street — or more pointedly, the lack of it — is a clear indication that Worcester is in serious economic trouble.

But when it comes to New England’s second-largest city, that analysis and its resultant conclusion might not be necessarily on the mark.

Perception, officials said, is not reality.

That’s because the central business district is only a snapshot of a much larger picture. In the commercial corridors outside the city’s downtown, storefronts for the most part are filled and their businesses are flourishing.

“Compared to other cities, Worcester is doing pretty well when it comes to the occupancy rates of storefronts. But we still have a long way to go.” — Timothy P. Murray, president and chief executive officer of the Worcester Regional Chamber of Commerce

A building-by-building survey by the Worcester Sun showed that storefronts on Shrewsbury Street, Green Island, the Canal District, and the Highland Street and Park Avenue neighborhoods, among others, are mostly occupied and doing a brisk business.

Surprising to many, storefront businesses in tougher neighborhoods, like blue-collar Main South or lower Grafton Hill, are also prospering. Their successes are largely credited to attempts to cater to ethnic populations living in their areas.

Even the downtown may be considered a relative success story.

While some businesses like Modelo are fighting for their lives, others are doing quite well.

Those in trouble very often have problems that are germane to their businesses, such as lack of parking or the need for a marketing plan to woo customers. Meanwhile, those doing well have created niches and are able to provide goods and services to those who live and work in their neighborhoods.

“Very often, it is about the environment,” said Paul Morano, assistant chief development officer at Worcester’s Division of Business and Community Development.

The city does not inventory the number of available storefronts, but there are hundreds nestled about.

For the most part, city and community leaders said Worcester’s economics and demographics are strong enough for individuals to invest in storefront businesses.

“Compared to other cities, Worcester is doing pretty well when it comes to the occupancy rates of storefronts,” said Timothy P. Murray, president and chief executive officer of the Worcester Regional Chamber of Commerce. “But we still have a long way to go.”

To that end, city and civic leaders are working on efforts to retain current storefront businesses and entice new ones.

On this front, stores can find assistance
The city, for example, provides a program that helps storefront business owners upkeep their properties.

It funds the rehabilitation of facades and was implemented in 2000 to enhance the aesthetics of commercial byways and draw more customers to the impacted businesses. City planners also believed the fixed-up facades would prompt nearby business owners to make alterations to their own buildings and that the rehabilitation would entice possible tenants to fill vacant storefronts.

The Facade Incentive Grant Program initially targeted Worcester’s so-called Commercial Area Revitalization District downtown, but over the years it has been widely expanded. For example, many storefronts along Shrewsbury Street and in the Green Island neighborhood have benefited.

With the money, building owners may fully renovate their facades; paint the exteriors of their buildings; replace lighting, doors and windows; install awnings, or perform work to entryways.

The program is underwritten by community block grants disbursed to the city through the U.S. Department of Housing and Urban Development.

As part of the federal requirements, at least one permanent full-time job — held by a low- or moderate-income city resident — must be created or retained as a result of the project and the maximum grant amount allowed must not exceed 75 percent of the project cost.

Grants also are restricted to certain businesses. Owners of gun shops, pawn shops, liquor stores, nail shops, sexually oriented businesses, check-cashing agencies, and “dollar stores” can’t apply. Eligible applicants must own the properties in question, although a tenant may apply if the building owner is a co-applicant.

Under the program, individuals are reimbursed for the money they spent on their projects. To get the money, they must fulfill certain obligations.

Forty five projects have been funded through the facade program and through a very similar city initiative that was only offered from 2007 to 2011. The second initiative involved specific target areas and partners — basically local community development organizations.

Of the 45 projects, 29 were implemented solely through the original facade program, at a cost of about $382,000.

Peter Dunn, business programs manager at City Hall, said Worcester also offers micro-loans to storefront businesses that are funded by HUD community block grants.

He said the loans can be used for an assortment of needs including the purchase of equipment and working capital. “But there are some restrictions,” he said. “For example, you can’t use the money to actually buy the business.”

Dunn noted that the city, through the loan program, acts as ”a lender of last resort” so business is not taken away from banks and other traditional lending institutions.

Thirty-four loans have been offered since 1993.

Overall, about $250,000 is available annually to fund both the facade and micro-loan programs.

Officials at Worcester’s Economic Development Office said they throw out the “welcome mat” to potential storefront owners.

For example, they work to find appropriate properties to fit needs and walk investors through the permitting and other processes.

“People will call us up and say that they’re looking for some space so we’ll try to match them up with something they can use,” Morano said. “We’ll look at things like how much square [footage] they need and what they’re willing to spend on rent.”

The city also regularly offers seminars to existing and potential storefront owners.

Local officials are also hoping that pending infrastructure work in certain areas will boost interest in vacant storefronts. (For a related story on the city’s streetscape efforts, click here.)

Murray, the former Massachusetts lieutenant governor and Worcester mayor, said it also is important for the city and organizations like his to  “get out the word about the city.”

He said the chamber is involved in numerous promotional efforts, sometimes in concert with City Hall and other business entities such as the Worcester Business Development Corp.

Murray said the chamber conducts building inventories and provides outreach to groups like the Massachusetts Restaurant Association.

“You have to spread the word about Worcester,” he said. “The chamber is always talking to groups.”

Murray and others are also banking on the expected growth in residential housing downtown to bolster the economy of Worcester’s core.

He said that there are a number of projects that will substantially increase living space downtown, including the renovation of the massive Osgood Bradley Building near Interstate 290. When completed, the renovated facility will offer 80 new units.

Officials also expect foot traffic from the soon-to-be developed, six-story Marriott hotel in CitySquare to boost the economic fortunes of downtown.

The $36 million project is on track, city officials say, along with others such as Roseland Property Co.’s plan for a nearby $90 million complex that will provide 370 market-rate apartments.

In addition to the traditional downtown housing groupings, such as empty nesters and single individual households, the inner core’s demographics are being bolstered by students from area colleges. MCPHS University, formerly known as the Massachusetts College of Pharmacy and Health Sciences, plus Quinsigamond Community College and Becker College have significant presences downtown.

Morano estimates that, all told, there will be about 700 new housing units downtown.

“You have to create (housing) density, especially if you want to see downtown busy after 7 p.m.,” Murray said. “People living downtown are going to want gyms, coffee shops and other places where they can spend time. That demand will increase business interest.”

Urban planners admit that fledgling storefront endeavors sometime need more help besides public projects. For example, startups have a better chance of succeeding if they are located next to storefronts that are already flourishing.

Lack of parking is also a critical issue.

For example, Kang said his Modelo patrons now depend on limited, two-hour metered parking outside his business.

He said he could draw more customers if more parking were available, and he suggested the city purchase the private lot across the street near the Denholm building.

Target an audience
Officials said it’s also advisable that potential storefront business owners find particular niches for their services and goods. A number of neighborhood businesses have done that by meeting the needs of workers or ethnic groups living in the area.

Many students now living downtown have complained that many eateries close up after lunch time and that there are few places that serve food later. … A small storefront on lower Pleasant Street that serves Middle Eastern fare took the complaints to heart by expanding the hours of operation to 7 p.m. “He’s been successful,” said Paul Morano of the city’s business development office.

For example, William T. Breault, chairman of the Main South Alliance for Public Safety, said the storefronts in his neighborhood from Webster Square to Federal Square are nearly full because they are oriented toward Latinos and other minority groups living there.

Similar business growth has occurred elsewhere. For example, stores with Vietnamese customers in mind line Green Street, while establishments offering Slavic delicacies are found on Millbury Street, a former Polish enclave. Meanwhile, Water Street maintains its Jewish roots and Shrewsbury Street is still associated with Italian heritage.

“It’s just common sense for a business to target its neighbors,” Breault said.

However, the neighborhood activist warned that stores in lower income areas face their own set of challenges, particularly crime.

“If you have constant drug dealing on your street, is that going to drive out business?” asked Breault. “If it’s unabated, the answer is yes.”

Morano said storefront owners have to be mindful of the clientele they wish to serve and added that they have to be adaptable.

For example, he said that many students now living downtown have complained that many eateries close up after lunch time and that there are few places that serve food later.

Morano said a small storefront on lower Pleasant Street that serves Middle Eastern fare took the complaints to heart by expanding the hours of operation to 7 p.m.

“He’s been successful,” Morano said.

A number of storefront business owners interviewed said they were satisfied with their decision to locate in Worcester, although some admitted they lived through some lean times.

Some community leaders said that slumping businesses should try to let potential customers know about their products and services through marketing outreach that includes advertising and leaf-letting. They said that’s especially important for businesses that need to draw people other than those living and working in their neighborhoods.

Darek Gago was in the insurance business but he and his wife, Iwona, decided to make a radical change in their lives.

In the fall of 2008, they decided to buy Tom’s International Delicatessen, a landmark on Water Street.

The business, which is now located across Kelley Square at 52 Millbury St., was owned since 1969 by the founding Haddad family.

Mr. Gago said the business is “challenging” but he said the couple is doing well.

During a recent visit by the Worcester Sun, people drifted into the storefront to buy a myriad of food delicacies. The deli counter was filled with a variety of cold cuts and other meats. Fresh olives, herring, and an assortment of pickles sat in bins in the back. Specialty foods from Europe packed the shelves.

Many customers came in to purchase Polish food items such as stuffed cabbage, dumplings, pierogi, bigos (cabbage stew), pickles, borscht and other soups, along with a number of different white and red kielbasa.

The brick storefront, which was restored with the help of a couple of thousand dollars from the city’s facade program, was filled with the aromas found in old world markets.

“It’s hard work but it’s nice to have a store you can call your own,” Mr. Gago said.

Officials said that Worcester continues to spark interest in its storefronts. For example, the British Beer Co. is planning to locate in the old car showroom on Shrewsbury Street that recently housed Coral Seafoods.