Monday, August 13, 2007

What is the Fate of Small Businesses in America?

The article below is from the Boston Business Journal. Even though, as a part of my work, I understand the economics of why small businesses often can't continue to operate, it still saddens me. I love small shops, especially "functional" ones in cities like hardware stores and grocery stores, but I know that often, the land is just too valuable for these to continue to operate.


I feel strongly about supporting local businesses because I really do think they help the local economy more. Economic development has traditionally focused on large companies and large businesses. The jurisdiction makes concessions to the large business with the understanding that they will provide economic benefits exceeding the cost in new jobs, economic output, and attractiveness to additional spin-off businesses. However, the economy has changed. These larger companies aren't as secure as they used to be, and arguably, they never were. I think there's a general agreement in the economic development field that there is no such thing as a silver bullet, and progressive places are making attempts at stratifying their economic development strategies.


I think fostering local businesses makes sense because such a small amount can make a proportionally large impact. It's a lot like the micro-credit lenders such as the winner of the 2006 Nobel Peace Prize. Relatively little money can make a large impact and little by little, change the world. And, understand, this was a private sector business, not a government giving loans or grants.


Cities have begun making provisos in development deals that require developers to put local businesses in their large mixed-use projects, but that doesn't really happen as much as the opposite does: national chains are brought in, and the development looks like Anywhere America. I read an article once that was very revealling about the concessions developers need to make to big boxes such as Target. The developers need them for their project because they are such a draw and bring customers for other businesses in the shopping center. But because the retailer is in such high demand and can go anywhere, it can often pay little rent and won't sign the traditional operating covenants that govern many other businesses.


I admit part of my affinity for small businesses is nostalgic and not rational. I remember when I was little, and we went to the corner market for a lot of things and chatted with the family that ran it. But I admit it: I shop at Target. I don't do all my shopping at local businesses. Why? For the same reasons other people do. Buying one roll of toilet paper at the corner market doesn't make good economic sense for me. I probably shop at local businesses more than the Average Joe (as you may have seen if you read my posting about grocery shopping) but even my level of support is probably not enough to justify having them in high-rent areas.


All in all, this diatribe is just to get my thoughts out there and maybe get people thinking a little...it's Monday...and I'm admittedly not all that lucid!


Old downtown hardware store's fate is up in the air


Retail and residential seen as possible uses for antiquated building

Boston Business Journal - August 10, 2007



W. Marc Bernsau
The Hardware Outlet Co. is an odd duck among the sleek office towers on High Street. After the death of owner Francis Ramacorti, his widow and the law firm in charge of the estate are trying to decide what to do with the property.


The Hardware Outlet Co. was more than just a dirty, disorganized sliver of a store where office workers could go to find random knickknacks for home repairs.

The store, which has been closed since the owner, Francis "Frank" Ramacorti died a year ago, was somewhat of a landmark in Boston given it was the home-improvement store in a district populated by the 9 to 5 crowd. Located in Boston's Financial District at 51 High St., the store gained notoriety for its unusual location and purpose.


Ramacorti also became known himself for his refusal to sell the property, which had caught the attention of many commercial developers eyes over the years.


Now his widow, Karen Ramacorti, and Ropes & Gray LLP -- the law firm in charge of the Ramacorti estate -- are trying to decide what to do with the property which is sandwiched between the 99 High St. tower and Massachusetts Bay Transportation Authority offices.


Karen, who resides in Reading, said she is in discussions with one hardware store operator who would like to lease the property but she has not made a decision about whether she will lease or sell the building.


Though the slender building is just shy of 12,000 square feet and is assessed at $916,600, it could be an attractive site for a small retailer, boutique company or even for residential uses, said David Begelfer, chief executive officer of the Massachusetts chapter of the National Association of Industrial and Office Properties. Begelfer guessed that if sold, the property could garner approximately $1 million or possibly more depending on how many stories could be added to the four-story building. The lack of development sites in Boston, no matter how small, could also drive interest and price.


"The location is great, it's a relatively small building," Begelfer said. "You (could) own your own building, and that's rare in Boston."


Karen Ramacorti expects she'll make a decision by this fall and said although there are sentimental reasons to see the property continue as a hardware store, she acknowledged "it's not a very good business decision."


Her husband purchased the property in 1934 as a real estate investment and never intended to run the hardware store until the day he died. But Ramacorti knew a lot about hardware and repairs and grew to know his customers, said Karen. The store was so narrow that there was only one aisle up the center stacked from floor to ceiling with odds and ends.


"I think he had a lot of years invested in it and he liked it," said Karen Ramacorti. "A lot of people come in in the neighborhood ... it was almost like a social club."


Customers would come to poke around in the old, unconventional hardware store to find things they couldn't get elsewhere. Now the family is in the process of removing paints and pesticides from the building, which is stocked to the roof with hardware supplies. There are no family members interested in carrying on the hardware store's legacy, said Karen Ramacorti.


The closing of the Hardware Outlet is representative of more than just another small, family-owned business fading away or an antiquated piece of real estate ripe for redevelopment. It's symptomatic of what is happening to small businesses across the region and country, said Steve Adams, regional advocate for the U.S. Small Business Administration in Boston.


"This business is closing its doors not because they couldn't make it but because the owner died," said Adams. "This is a really interesting microcosm of what's going to happen all over the city and all over the region because small business (owners) have no plan after they retire or after they die."


Adams, who used to visit the "beat-up old hardware store," said he thought it was unlikely the store would continue as a hardware outlet, given the property's value.


Michelle Hillman can be reached at mhillman@bizjournals.com.

2 comments:

  1. This is so sad...one of the reasons that I love Boston is that it still holds on to some of those old places.

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