A perfect storm of challenges in downtown Apex has business owners considering closing. Their landlords are raising rent, passing on a new increase in city property taxes and rising insurance rates. Coupled with an on-going downtown construction project causing sales losses that is expected to extend through next year, many business owners are unsure they'll survive the pinch.
In short, the simultaneous changes could mean fewer mom and pop stores and more chains occupying downtown Apex. Business owners say they’re seeing rent increases across downtown, so relocating is not an option and the prices are so high only chains could afford them. The rent hike has one shop announcing it’s closing its doors.
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Jack Otepka and his wife own Alleyway Bookstore, which is now closing. They started the small business which has become a space for the community to connect over a love for reading. More than a month ago, Jack Otepka got a text from his landlord about a rent increase.
"He sent the number over, and it was 64 percent more than what we're paying right now. And with the construction out front and our business model, that's just not sustainable," he said.
His landlord Dorothy Shearin would not speak on camera and said her son-in-law is largely in charge of the decision as she is aging, but she texted a response to our question about why the rent was increasing that cites a different figure.
“The 67 percent increase is a correct number but that number reflected bringing it to market level in rent. He was never paying taxes and insurance before ... It was actually only an increase of around 40 percent in rent," Shearin wrote.
Echoing that sentiment, broker Tom Colhoun who represents another Apex landlord told us that rent is going up across town as building owners are facing escalating insurance rates, the increased cost of maintenance and new, higher property taxes.
On June 10, Apex council members voted to pass a property tax increase from 35.6 cents to 37.35 cents per $100 of assessed value. According to state records, the building owned by Shearin & Shearin, LLC, where the bookstore rents its space, is valued at $2.1 million. That equates to a $500 tax increase.
Two years ago, Apex began a project to increase the parking in downtown, which business owners say is helpful now, but during construction hindered their sales. Now, the city's streetscape project meant to create a more pedestrian-friendly downtown is again delayed and is now slated to extend through the holidays.
Just outside of Alleyway Bookstore's front door is a gravel path. And it's clear to Otepka that customers prefer to walk on the other side of Salem Street, where a sidewalk is still in place. That alone, he says, has impacted downtown shops.
"I mean, there's a lot of the elderly community that come downtown, then you know, or even ADA accessibility, that's one thing the shop owners here fought for, was that there was at least going to be some sort of entryway and stuff into the stores while the construction was going on. It has been okay, but it's a lot of dirt and gravel, and it's just not helping with walking traffic," he said.
Just a block down Salem Street that is torn up with construction, Cocoon Gallery has held this spot for nine years. But owner Cynthia Mollenkopf is expecting her rent to go up as well. After two years of downtown construction impacting sales, she says it’s bad timing.
"At this point now, we all thought we were going to get a little bit of time to recover from these two years, but now all of the - I can't say all - but many of the landlords are raising their rents," she said.
Mollenkopf doesn’t know how she’d generate more revenue without fundamentally changing her local artisan-driven business. She wonders if the owners of all the buildings downtown realize what reacting to market shifts will do to the make-up of downtown.
"Is there a balance between whatever it is they want to make on their buildings and what the retailers can afford to pay? Can we, can we work something out there," she asked.
That’s the question Mayor Jacques Gilbert plans to raise when he gets Apex landlords to the table.
"We have the town, we have the property owners, and then we have the business owners. So, I sent a letter out and I posted it on my social media. Basically, contains like, 'What can we do together, understanding that they have rising costs and tax increases, everything, we all have it, but what can we do together,'" Gilbert said.
While there have been productive conversations with a number of landlords, according to Gilbert, there is nothing too firm to report yet on any action that will come from his request.
Otepka is not optimistic that the mayor’s effort will help as there is no prescient of a city capping commercial real estate lease increases. He shares Mollenkopf's concern that the abrupt rent increase will create a downtown filled with national chain stores who can afford to pay those rates.
"What will become downtown Apex if small businesses, mom and pop shops, can't afford the rent? It happened with, you know, a few other businesses here. And now we have shops that are national chains, and who knows what will be in this space," he said of his bookstore.
Business owners are hoping that despite the street construction, shoppers will come out to support their shops and keep Apex local.