PORTSMOUTH — Judging from social media, a lot of people were surprised at the bang-bang closing announcements of two downtown coffee shops late last month.
But, for two real estate brokers based in Portsmouth, the changes are just part of the normal ebb and flow in the downtown market that they say remains very desirable to commercial and retail enterprises.
“The demand is there in downtown Portsmouth,” said Christian Stallkamp, senior broker with the Boulos Company, a commercial brokerage company at 14 Manchester Square at Pease International Tradeport. “Businesses want to be there, and they’re willing to pay that dollar amount.”
“Leases come up all the time,” added David Choate, executive vice president of Colliers International at 500 Market St. “There’s always that ebb and flow. New tenants come in. Some tenants just move from one location to another for better visibility.”
Social media started to buzz in late December with the announcements that Breaking New Grounds and Profile Coffee Bar were closing.
Breaking New Grounds, located in the heart of Market Square, announced Dec. 28 it was closing for good Jan. 3 in order to sell its building to Tuscan Kitchen, which plans to move its market from its current location on Lafayette Road to the downtown location and add a café.
The property at 14 Market Square, assessed by the city for $1,848,500, sold for $4,250,000, according to a deed filed on Monday at the Rockingham County Registry of Deeds.
BNG Properties LLC, owner of the business and the building, sold the property to J&S Investments LLC of Salem. BNG has financed the purchased with J&S paying a $3,150,000 mortgage to BNG, according to registry documents.
Breaking New Grounds, which opened its coffee shop and café some 25 years ago, is maintaining its coffee shop in Durham.
Profile Coffee Bar, at 15 Portwalk Place, closed Dec. 30. Its Facebook posting of the announcement gave no reason. An inquiry to Andrew Levinson, who opened the coffee bar in July 2015, went unanswered.
For many people, the closings, particularly Breaking New Grounds, was indicative of a change in Portsmouth toward a more corporate, more sterile look and feel.
“Portsmouth has been losing charm on a regular basis over the last 20 years to condo development, art stores turning into banks, and too many nail salons. People don't come to Portsmouth to buy boutique Italian food items, and they are not going to start just because Tuscan is here,” said one Facebook poster.
“This makes me so sad,” a fan of Profile said in her Facebook posting. “This has been my favorite downtown destination since you opened. Thank you for always being so warm and kind and for making the absolute best and most beautiful cappuccino in town.”
While some posters moaned the little guy is getting pushed out by the big guys, even large enterprises haven’t always met with success in the downtown market.
“If you look at the downtown market, being a regional or national tenant doesn’t necessarily guarantee success,” Stallkamp said. “If you look at Gap and Banana Republic, they could not figure out the Portsmouth formula and left the city.”
“It takes the right type of business to succeed downtown,” he added. “In my opinion, it’s a business that can win the hearts of the locals that live in the Seacoast and not just rely on the summer tourists, and that has consistent great food and service for restaurants or unique clothing or accessories for retail.”
Tuscan Brands includes four Tuscan Kitchen restaurants (in Salem and Portsmouth, and Boston and Burlington, Massachusetts) two Tuscan Market locations (in Salem and Portsmouth), and the $1 billion, 170-acre Tuscan Village that is being developed in what was the Rockingham Park racetrack in Salem.
Tuscan Brands founder Joe Faro, who describes himself as “Chief Food Taster,” notes he graduated from the University of New Hampshire in Durham, and takes great pride in being part of the Portsmouth community.
“We hope our revamped open-air Tuscan Market in Portsmouth's historic downtown district will serve as a destination for the local and tourist communities coming together to share in the finest artisan Italian offerings including house-made salami, artisan breads, pastry, gelato and premier imported Italian coffee both in a cafe and marketplace setting,” he said.
Matt Govoni, owner of Breaking New Grounds, encouraged people to give Faro and Tuscan Kitchen a chance. He noted the pushback he received when he replaced Café Brioche with Breaking New Grounds.
“A few of you have expressed some concern over the change and I know change is hard,” he said. “Let’s not punish success with preconceived notions. We too got negative feedback when we took Café Brioche’s spot. As a local, Joe is very aware of the charm of our magnificent city. I know he will be a great addition.”
Renting and buying space in downtown Portsmouth is more expensive than other locations in the city and region, but Choate and Stallkamp said that hasn’t tamped down interest in locating there.
According to Choate, leased retail space downtown goes for about $45 per square foot a month, without utilities. Elsewhere in the city in strip malls and other locations, rents are in the $30 to $40 range per square foot per month.
Local restaurateur and innkeeper Jay McSharry has announced his intention to buy the 1876 Salvation Army building at 15 Middle St. and convert it to a hotel and restaurant. Tax records show its current assessed value at $1,478,000.
“It’s still desirable for businesses that want to be downtown,” Choate said. “Some of them do better than others, obviously, and coffee shops and restaurants seem to be the most resilient, but there’s always a couple of spaces available.”
Stallkamp said the market will ultimately dictate whether space and property is expensive to lease and buy.
“As it relates to pricing I like to see an open and free market take care of the pricing with the natural ebbs and flows of the economy,” Stallkamp said. “Right now, the economy in Portsmouth is strong or perceived by the tenants as being strong and the place to be. It should be pointed out that rents have increased downtown but not a level compared in to the increase in downtown residential. There has been a lot of growth in the city and it will take some time to sort out exactly where the rents will end up.”