Downtown Kitchener revitalization could take up to 2 years

It could be up to two years before downtown Kitchener sees the revitalization it wants, according to a real estate expert.

"There's an old adage in our business, It goes rooftops before retail," says Karl Innanen, managing director for commercial real estate firm Colliers International.

"When those residents are in the downtown core or jobs in the downtown core, then retail can be supported. We're a little early on that."

I think what's concerning us, what we're watching, is just the number that are closing in a shorter period of time.-

Innanen said after new residence projects like One Victoria or the City Centre Condominiums are completed, it could still take up to 18 months before tenants are living and working downtown, supporting local businesses.

In the meantime, without the people populating the core, some businesses are struggling to make ends meet.

Downtown stores close up shop

In the last six months at least 10 businesses have said they are closing, have closed or have plans to leave downtown Kitchener.

"I think what's concerning us, what we're watching is just the number that are closing in a shorter period of time,"said CoryBluhm, the city's manager of downtown development.

"It's invariable that we'll have closures over a period of a year but to see a number of them over few months certainly has us trying to understand what is happening."

The reasons business ownersgive vary, but the reoccurring sentiments are that rents are too highand there isn't enough foot traffic in the core to make businesses viable.

Rental rates rise

Both Innanenand Bluhm admit rental rates are increasing. Costs per square foot for commercial space in downtown Kitchener ranges from about eight dollars per square foot to the mid-twenties.

Innanen said a shift in ownership is largely to blame for the growing rental rate.

"What we're seeing is a pretty classic example of a transition form a marketplace that didn't have a lot of professional landlord ownership in place and is now changing over and rolling to a market that does have that," said Innanen.

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That means larger commercial landlords are taking over spaces downtown, renovating them and then raising the rent. The problems arise when landlords with older or smaller spaces with fewer upgrades try to list their buildings for the same prices.

"The challenge is making sure mom and pop building owners understand why a neighbouring property is going up in rent. And it may not necessarily be just because a landlord is trying to hike the rate. Typically the rent is increasing because they put money into the space to make it better," saidBluhm.

Location key to success for businesses

Still, it's not all doom and gloom downtown. Both Innanen and Bluhm can list a number of success stories in the core, from development offKing Street on to Ontarioor Duke Streets, to the development of new premium business space at the Walper Hotel or 305 King Street.

"[A] great example of a tenant mix thing that's going on is up on Duke Street, you're seeing the Duke Food Block. That's something where you put some tenants together and they help feed each other," Innanen said.

The city said it is doing everything it can to help businesses who are still downtown, from incentive programs to introducing a slew of summer programming to promote foot traffic in the core.

Bluhm also said he hopes to work with landlords to adapt some of the larger vacant spaces downtown in an effort to make them appealing to potential retailers.