Wednesday, November 19, 2008

Trying Times for Small Businesses

By Ali Bhanpuri

DOWNTOWN— For 125 years there has been a bookstore at the corner of Milk and Washington streets.

In 2005, Joe Phillips bought Antiquarian Books of Boston and renamed it Commonwealth Books. The store has long drawn customers from the Filene’s Basement department store, but when the landmark was demolished earlier this year, business slowed.

“Couples would come in [to the city] on the weekend, and while one shopped at Filene’s, the other would wander around Downtown Crossing,” says Phillips, 44, who owns another used bookstore on Boylston Street. “There has been a big decrease in traffic with Filene’s gone. The area has lost some of its vitality.”

As the city tries to fill the void of store closings such as Filene’s Basement and Barnes and Noble, store owners like Phillips struggle to cope with steep rents or taxes as customers dwindle.

Kristen Keefe, retail sector manager of the Boston Redevelopment Authority, says the best retail districts have a balance between local and national businesses.

“Often national chains can increase foot traffic to an area because they can afford to do large-scale advertising and promotions,” she says. “The smaller retailers benefit in theory from the spillover of the foot traffic.”

If the balance of stores tips in favor of national businesses, small, independently owned stores are usually unable to compete on price, which can be a “stumbling block for some entrepreneurs,” Keefe says.

In January, construction teams bulldozed the Filene’s Basement to make way for a $650 million redevelopment project that will include 250 hotel rooms, 166 condominiums and four floors of retail stores slated to open in 2011. Filene’s Basement, set to re-open in the fall 2009, has the owners of many downtown stores fervently awaiting its return.

“I’d love to see Filene’s come back—it was an anchor for this part of town,” says Janine Fabiano, manager of the Old South Meeting House’s gift shop. “People feel that the clientele level has gone down [without Filene’s]—more kids hanging out instead of shoppers.”

Joyce Kosofsky, owner of the Brattle Bookshop, says the loss of the Barnes and Noble has been detrimental to the area and thinks the more bookstores in Downtown Crossing the better.

“People think we’re in competition with the larger bookstores, but that’s not the case,” says Kosofsky, who has worked at the shop’s West Street location for 24 years. “The larger bookstores bring in people who want to read. I like to think of [chain bookstores] as the breeding ground of used books.”

Phillips says independently owned businesses are leaving downtown because of increased property taxes.

“[The government] keeps raising the commercial property tax, which means businesses are paying higher and higher rents,” he says. “It’s a trickle down from the property owners onto us. The rates in Downtown Crossing are astronomical.”

The commercial property tax is assigned to properties based on how much the state assesses the property to be worth, according to the city’s website. City tax officials did not return messages.

Kosofsky, who owns the bookshop’s building, says the high market value of commercial spots in the area are hurting small businesses.

“There’s no way I could stay in business, if I had to rent,” she says.

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