NORTHAMPTON — Despite a handful of prominent empty storefronts downtown, a midyear economic report shows vacancies remain stable while meals and hotel tax revenues are on the upswing for the first time in years.
Expanding on a report compiled earlier this year, Mayor David J. Narkewicz and Economic Development Director Terry Masterson released the report Friday detailing the economic state of the city’s downtown. The report comes just a few months after residents and business owners expressed angst about the downtown’s health as vacant storefronts cropped up around the city.
“There has been a lot of discussion about downtown and the future of downtown,” Narkewicz said. “This is a more complete picture.”
This picture is important to have given that city officials are looking ahead and working to ensure downtown Northampton is in a “strong position” when the $950 million MGM Springfield resort casino opens in 2018, Narkewicz said.
Out of the 230 downtown storefronts, 20 have changed hands since January 2016 through the arrival of 12 new businesses and eight relocations.
Some of the new businesses include Brits R Us, 7 Strong and Theory Skateboard. Relocations include Happy Valley, Northampton Running, and Deals N Steals. Additionally, several Amherst-based businsses have opened a second location downtown like Glazed Doughnut Shop, which opened Friday, Pita Pockets and Oriental Taste, which opened in July.
These additions are offset by 13 business closings so far this year, including Berkshire Yogurt, Hinge, and Ibiza Tapas.
According to the report, the downtown vacancy rate remains at 7 percent, similar to the report earlier this year. There are currently 16 vacant storefronts downtown, a figure that has not changed in 2016, though the locations of those vacancies has varied, the report says.
Of those vacancies, six are new — two on King Street and three on Main Street and 10 are considered long-term, meaning they became vacant before 2016. The mayor said the long-term vacancies are “a separate animal” because they can be traced to specific ownership structures and practices.
The report found encouraging signs for the economy thanks to increases in taxes on meals and hotels.
Meals tax revenues for 2015 were $725,000, representing a 10 percent increase, or $65,000 more than the previous average. Data from 2016 is not yet available. By comparison, the meals tax revenues were “consistently flat” between 2011-2014, averaging $660,000, Narkewicz explained.
Meantime, hotel tax revenues increased by $107,215 to $658,131 in 2015, which is a 19.5 percent increase over the previous year. Narkewicz and Masterson said the increase can be attributed to the Fairfield Inn, which opened in fall 2014. Even with the Clarion Hotel closure in November, revenues increased.
“The Clarion folks are permitted for another hotel,” Masterson said, and he added the city is interested in the revenue it could bring.
According to Masterson, a hotel can bring more revenue to the city than a retail building. Hotels bring 18,000 to 25,000 guests each year, who fuel the economy by spending money on food, gasoline and entertainment. Hotels also pay more money in taxes, Masterson said.
Patrick Goggins, owner of Goggins Real Estate, of Northampton, said he believes quantifying the city’s economic factors like vacancies and storefronts is a way to clear up confusion and better track progress. The Realtor does about a dozen leases each year for downtown businesses on Main, Pleasant and King streets, he said.
According to Goggins, many concerns about vacancies downtown came at a time when businesses often go under, in late winter and early spring. Mid-to-late summer is a more popular time for businesses to set up shop and find success, he said.
“It was the time of year. People ride out the holidays and afterward they can’t make it, and that provides a vacancy,” Goggins explained. “Then (in late summer) businesses get the incoming college students coming and the ripples around that. Then there’s the holiday season, which is good for all merchants. It’s the best time of the year.”
According to the report, downtown Northampton has 230 storefronts. The boundary lines used are the Smith College entrances gates; Market and Hawley streets; Center and King streets and Allan Place; and Pleasant and Holyoke streets.
The total is larger than the number of storefronts in Amherst, 74, and Easthampton, 82, combined. Goggins said the number is revealing, because it brings some perspective to comparisons between Northampton and neighboring communities.
“People compare Northampton with Easthampton, which has started to solidify its downtown business community in the past few years,” Goggins said. “But at the end of the day, Northampton has a lot more inventory.”
As for the MGM’s casino in Springfield, Narkewicz said he initially fought the project and was denied surrounding community status, which would have meant financial relief for the city.
A report commissioned by Narkewicz in early 2014 found that Northampton businesses would stand to lose between $4.4 million and $8.8 million a year in sales to the casino.
Despite his worries, the mayor said he will continue to focus on downtown Northampton to keep current businesses working steadily.
He said investments like newly-redone Pulaski Park and projects including Northampton Community Arts Trust building on Pleasant Street and plans to make downtown more pedestrian and bike-friendly will strengthen Northampton as a destination. Additionally, the city is launching a study to ensure signage is sufficient for travelers to navigate the city.
Narkewicz pointed to a statistic that states only nine of the 230 storefronts in downtown Northampton, or 5 percent, are national chains. He said the number speaks to the city’s locally-owned flair.
“Yes, the casino presents a challenge, but at the end of the day I’ve always said, ‘You can’t create a movie lot of what Northampton is,’” Narkewicz said. “MGM’s going to try to create a mini-Northampton, but I still say at the end of the day what’s unique about Northampton is the local businesses, the art and culture … That unique vibe is going to still differentiate us.”
“There’s the replica,” Masterson started.
“And there’s the real thing,” Narkewicz said.