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3| W aterloo C hronicle | T hursday,June 14,2018 w aterloochronicle.ca You have nominated your favourites Waterloo! Watch for the Nomination section running June 28th when the voting goes LIVE! VOTE for your Favourites June 28th - July 8th www.waterlooreaderschoice.ca CITY NEWS Visit waterloochronicle.ca for more coverage A 30-year uptown busi- ness has left the core - and the story of why is not unique to the cores of Kitchener and Waterloo. Gospel Lighthouse, a Christian bookstore, left the uptown core in Febru- ary after it was informed that its rent could double if the owners chose to stay af- ter significant renovations being undertaken by the building's owner. Gospel Lighthouse is just one example of a trend which the UpTown Water- loo BIA is watching closely. "It's really a combina- tion of factors," said Up- Town BIA chair Jeff Zavitz, who is also a building own- er in the core. "You can't pay more money for a building and not charge more for rent. Money will flee from those buildings and move into other invest- ments if you're only return- ing two per cent on your building," said Zavitz. A large part of the dras- tic increase in commercial rent prices in both uptown Waterloo and downtown Kitchener has been the ar- rival of Ion LRT. While the trains are not set to run un- til December, more than $2 billion worth of invest- ments have been made along the line. Many of those investments are in residential developments, and having more foot traf- fic in the core leads to high- er property values, not to mention the increase in property values in general across the region. Commercial renters al- so aren't protected the same way as residential tenants. In Ontario, resi- dential rent increases are limited to just two per cent per year, unless there have been significant capital im- provements to the unit or building. On the commer- cial side, rents can be in- creased on an as-needed basis, provided the lease doesn't state otherwise. It's reflective of a market de- mand model. This has created a con- cerning trend where small- er business - particularly those with small profit margins - are pushed out of the urban core because they can no longer afford it. That's precisely what happened with Gospel Lighthouse, which moved to the Frederick Street Mall in Kitchener. While Zavitz and the Up- Town BIA are concerned about the trend, there is not much they, or even the city, can do. "We're seeing across North America where you can be dropped in the ur- ban centre of just about any city and not know where you are because it's all the same stores," said Zavitz. But what the BIA and city can do, said Zavitz, is continue to promote foot traffic in the downtown core through events to en- sure continued patronage at those fragile small, inde- pendent businesses. Uptown Waterloo has seen its fair share of change over the last num- ber of years already. Long- time tenants, such as OW Sports and Sugar Moun- tain have closed up shop, while others, such as Cart- ers, have downsized. Zavitz said over the last number of years, many up- town businesses have ben- efitted from long-term leas- es which lock them into rent prices well below mar- ket rates. Some uptown businesses are still in long- term deals, but when they come up for renewal, they could be in for a rude awak- ening. "Businesses that don't take that into consider- ation are going to have a difficult time," said Zavitz. Ryan Mounsey, a senior economic development ad- visor with the City of Wa- terloo, said there isn't one specific factor that can be blamed for the increase in costs, but there is the need for some sort of strategy. "The retail environment is ever changing. The up- town is experiencing tre- mendous growth, and, new strategies moving forward could help maintain a di- verse uptown experience that includes shopping," said Mounsey. "New bike lanes on King Street North, new LRT ridership, new patios, and 5,500 new resi- dents will play an impor- tant role along with a de- fined parking strategy in supporting a vibrant core." Mounsey said in the re- tail landscape in general, higher and low cost retail- ers are seeing the most growth, while the mid-tier retailers are finding it diffi- cult to compete, especially if they are small, indepen- dent businesses. Mounsey also pointed out the unique niche high- end fashion cluster that has developed in uptown, with Channers as a pillar at the corner of King Street and Willis Way, as well as stores such as Loop Cloth- ing, Mark Nunes, Paul Puncher, Andie's, Kindred Spirit, The Sock Factory, Franks Jeweller, Robins Goldsmithing, Cobble- stone Gallery, and other successful specialty (Ten Thousand Villages) and high service-oriented busi- nesses. In uptown Waterloo, there is also significant de- mand for commercial of- fice space. Peter Whatmore, senior vice president of south- western Ontario for CBRE, said their suggestion to many building owners in urban cores is to renovate and make the space attrac- tive to new businesses. "We're seeing high de- mand for A and A+ spaces," said Whatmore, specifying that many tech businesses with a youthful workforce are looking for high-func- tioning spaces. For Gospel Lighthouse, the move wasn't as bad as originally anticipated. Lin- da Mudford, who operates the business for her par- ents, said having a retail lo- cation at a mall has turned into an advantage. "We do have a lot of el- derly customers and park- ing was an issue in uptown Waterloo," said Mudford, who moved the businesses in February. "If you would have asked me a while ago, I would have said some- thing much different about it." Mudford said she was given plenty of notice about the upcoming reno- vations and the timeline, so they weren't blindsided by the proposed price in- crease. The future is largely un- known, but rent prices in commercial cores have "ac- celerated" recently due to a number of factors, includ- ing increased public tran- sit, cost of new building space and increasing land costs. "It's been happening all that time. It's accelerated over the last number of years," said Zavitz. "The rates have gone up because more people want to be in the area and that drives more residential produc- tion, which increases the demand for goods and ser- vices, so those get built." The city has invested in a community improve- ment plan to help offset some business costs and working towards a retail strategy with the BIA. Retail rents on the rise in the region The UpTown Waterloo BIA and City of Waterloo are hoping that initiatives, such as the soon-to-be-complete uptown streetscape project, will help to support small, independent business in the core. With increasing property values, many small businesses can no longer afford to stay in the core. Adam Jackson/Metroland In some cases, retail rent has doubled. What does that mean for small businesses? ADAM JACKSON ajackson@waterloochronicle.ca