Denvers small businesses struggling with high rent costs

Many small business around Denver are struggling to make rent each month in an economy that, despite producing low unemployment, faces uncertainty with still-high inflation and the prospect of interest rates rising even higher.

Finding a way to pay the monthly bills is forcing small-business owners to consider all options: from cutting back staff and hours of operation, to changing a business’ focus and raising prices, to moving into a smaller space, and even to making the difficult decision of closing up shop.

The historic Denver neighborhood of Bonnie Brae is an example of a retail area noticeably impacted by the strain of rising rents on small businesses.

The Saucy Noodle, an iconic Italian joint established in 1964 at 727 S. University Blvd., shuttered its doors for good in August 2022. At the time, co-owner Erin Markham told The Denver Post that the family business was struggling to make rent under its new landlord, Otto Petty of Endurance Real Estate Partners, and was “unexpectedly evicted.” Petty didn’t respond to a request for comment.

One year later, the green-tiled building on South University Boulevard where The Saucy Noodle once churned out pasta has three new storefronts. Despite that change, a reminder of the past still lingers: the old sign for Jim Sano’s Pizzeria, The Saucy Noodle’s predecessor.

Butcher shop Rugby Scott Ranch Provisions, 731 S. University Blvd., is up and running now, and will hold its grand opening next month, according to its website.

Health food restaurant My Vision Nutrition, 727 S. University Blvd., prepares meals for pickup and delivery. It held its grand opening in March as the brand’s second Denver location, said manager Alejandro Gurrola in a Wednesday interview.

He lives nearby, and that played a part in the reasoning behind choosing this specific spot — “I know this neighborhood, and it’s beautiful,” with a lot of families, he said. Gurrola described business as busy over the past five months.

“Honestly, I think the rent is expensive here, but the people are great, and helping us to pay,” he said.

At 723 S. University Blvd., We Knead Donut — a Denver area chain — sells its breakfast sweets, as a flag with the words “Now Open” waves in the wind outside.

What it costs

In the Mile High City, the average retail rent is between $20 to $50 per square foot annually, according to commercial real estate firm Cushman & Wakefield. The average size of available retail space usually falls at around 7,000 square feet, according to commercial property marketplace LoopNet.

For that size, a business owner would have to shell out between $11,500 to $29,000 monthly, depending on the specific location. For instance, Lower Downtown, Cherry Creek and the 16th Street Mall may offer “prime retail locations in popular areas,” resulting in potentially higher rent, the Cushman & Wakefield report said.

By comparison, rent for a retail space in San Diego typically goes for $2 to $8 per square foot per month — or $24 to $96 per square foot annually — while the same type of space in Las Vegas is estimated at $1 to $5 per square foot per month — or $12 to $60 per square foot annually, according to Cushman & Wakefield.

But across the board, “retail space rents in Denver may experience upward pressure in the coming years,” according to the firm. It highlights the city’s population growth, strong economy and capped supply of retail spaces as contributing factors.

Denver business owners not only have to keep up with rent, but also the ambivalent U.S. economy. Inflation is softening, but consumer prices and housing costs still remain higher than this time last year, business consulting company Deloitte reported.

Lani Langton, a business advisor in Denver, called it “a tough time” to be a business owner in the Mile High City because of “the costs, the costs, the costs,” including rent, taxes, Denver’s minimum wage and more.

Right now, it’s a renewal period for many business leases, so “people are trying to sell their buildings or trying to collect a lot more in rent,” she said in a Thursday interview. For some of her clients, “their rent has doubled if they stay.”

Langton pointed to downtown as the “area of mass exodus” for entrepreneurs, who are instead moving farther east toward Aurora or farther south to Sheridan — with some opting to go as far south as Parker. “Not many people are going to the west side because there’s just not a lot of availability,” she added.

New business owners

Jacob Lemanski, owner and artist at event venue Ant Life at 2150 Market St. near Coors Field in Denver, is navigating the current economic climate as a new business owner. Pivoting from engineering to the art industry, he opened Ant Life a little over one year ago as a gallery.

“The art was so good that I couldn’t not show it to people,” Lemanski said. “I just wouldn’t have been happy with myself, never trying.”

Quickly, the gallery became a venue, too, hosting about six events monthly — from birthday parties to wedding receptions to corporate workshops — for an average of $1,500 each. Lemanski’s goal is to eventually double that number.

Right now, he’s “still getting it off the ground.” Lemanski rents the space for around $10,000 monthly, and “it always kind of feels month-to-month.”

He started his gallery with three part-time employees, but had to let them go a few months ago.

“Business is too slow to sustain them,” Lemanski said, adding that he saw more action in the spring. “If I get busier, I could afford a staff.”

He’d eventually like to turn his attention back to creating more art, but venue rentals are “paying the bills.” He remains positive about the future of Ant Life.

“I still feel like success is ahead of me,” Lemanski said. “But, here at the beginning, and especially through the summer, it’s felt a little tight, for sure.”

KaraKara Blooms, located off of S. Broadway at 17 E. Fourth Ave. in Denver, will hit its first anniversary in September. Co-owner Kara Admire didn’t initially dream of opening a flower shop when she moved to Colorado in 2019.

Although she’s worked in the wedding and events industry for over a decade, she planned to go to University of Colorado Denver and pursue a career in architecture instead.

There, she met her future business partner, Connor Jordan. The pair made some extra cash in school by working side-gigs at weddings and events, and Jordan joked about opening a flower shop.

After graduating, they discussed the idea more seriously. “And, then, two months later, we were in this location, and having our grand opening,” Admire said.

Business started off slowly, with Admire attributing that to tight wallets in the face of a potential recession. “The flower industry is an industry that can be heavily affected by the economy,” she said.

As a result, the florist focused less on selling daily arrangements and more on servicing special events because “everybody still gets married; everybody still has parties to celebrate big moments.”

With that business move, “we just had a really big uptick in sales, and we’ve finally been able to pay our rent and our bills,” Admire said.

KaraKara Blooms’ expenses include paying two part-time workers and herself as a full-time employee, utilities, software, marketing, vehicles, gas and, of course, flowers. “We’ve got to spend money to make money in that way,” she said.

She declined to specify what they pay for monthly rent except to say, “I feel like our rent’s a little bit lower than a lot of the other retail places around here.”

Looking forward, “we have a lot of big growth coming,” Admire added.

“I racked up a bunch of debt”

Nikki Hazamy runs a collective of businesses on a block on Ogden Street in Capitol Hill, including vegetarian restaurant The Corner Beet at 1401 Ogden St., Rooted Heart Yoga and Wellness at 1409 Ogden St., and Balanced Root Apothecary at 1405 Ogden St. — her latest venture, which opened in 2022.

She started with The Corner Beet in 2014 through a “really quirky opportunity” from the landlord, who found her vending on a street corner. She “literally threw keys at us, and said she’s going to Thailand — get it up and going,” Hazamy said.

In 2018, she opened the yoga studio, with monthly rent priced at $14,000. “Then, COVID happened, and that was really rough,” Hazamy said. “We were really struggling.”

But when a tenant vacated the building’s upstairs, Hazamy’s interest was piqued. Her landlord offered the space for a monthly rate of $8,800, which would eventually grow to $9,200.

Hazamy described her initial response as hesitant, but signed the deal. Afterward, she remembers thinking, “Wow, $8,800 a month feels impossible to get things going.”

Hazamy offered to rent the upstairs rooms to different practitioners for $1,000 monthly, but has had to lower that number.

Now, she’s run into problems with her landlord, and “I racked up a bunch of debt” to pay the combined rents. Hazamy also pays her utilities, maintains the facilities herself and more, she said. Right now, her businesses support 26 employees.

She’s made business decisions to include tipping in the restaurant and raise prices on yoga classes because “there’s no way to sustain with our rent so high.” Hazamy foresees that she may need to cut down to “bare bones” staff, shorter days and slimming down the restaurant menu, as “the cost of goods at the restaurant are just astronomical” because of rising prices.

Ultimately, “we’re doing what we can as a collective,” Hazamy said. “I’m feeling very squeezed out.”

Barry Raphael of Lumonics Light & Sound Gallery at 800 E. 73rd Ave. in north Denver — close to Welby — first opened the gallery in 2008, alongside his associates. He described that year — when a financial crisis wreaked havoc across the globe — as “the most difficult” for their business.

Then, “we were the new kids in town,” he said.

Artists Dorothy and Mel Tanner started the light art project in Miami in the 1960s. Raphael, along with Marc and Barbara Billard, joined the Tanners’ team as time progressed, eventually bringing Lumonics to Denver.

The COVID-19 pandemic counted as another strenuous time for the gallery, temporarily shuttering it. Hope came in the form of a Small Business Administration loan. “That was really very helpful to us, and still is,” Raphael said.

Today, the business is facing rising expenses. The Lumonics team rents its facility for $2,850 monthly.

“And it keeps going up,” Raphael said. “Utilities have gone up, and insurance has gone up.”

On top of that, they’re renting a nearby storage space to hold the remainder of their collection of 200 light sculptures, as the facility can only accommodate 75.

In spite of those hurdles, Lumonics has made a name for itself over the past 15 years, creating art for Meow Wolf Denver, Children’s Hospital Colorado and other spaces.

“We’ve been trying to stay afloat by initiating many different projects,” Raphael said.

The Lumonics facility consists of art galleries, a studio to construct the pieces, a performance space for Lumonics Immersed — a multisensory art experience held on every Saturday — and the Lumonics School of Light Art, which Dorothy Tanner founded in 2018 to teach students how to build their own illuminated cubes.

Raphael pointed to their greatest challenge yet as the passing of both Tanners — Dorothy in 2020 and Mel in 1993.

“It’s been quite a transition,” Raphael said. “We’re just charting new territory without the founders alive.”

But he describes himself as “optimistic.”

“We’re just trying to stay as open as we can to different possibilities, and reach as many people as we can — and try to cover our expenses,” Raphael said.

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