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Published December 04 2010

Several high-profile Fargo buildings struggle to find tenants, despite booming downtown

No fewer than seven signs hang in the windows of Nachhattar Gill’s building at 66 Broadway. Some are handwritten, one is draped down most of the second story, all bear the same message: this space for rent.

In a downtown that has seen substantial development in recent years, Gill’s building is something of a throwback to the days before Broadway’s revival. The ground floor has been without a permanent tenant for years (the last occupant was a political office, long since departed), and a second-story office space also is available.

“We have a very nice space,” said Gill, who spent $85,000 to renovate the storefront in 2006 (including a $25,000 storefront rehab grant from the city) in hopes of attracting a taker. He said he’s looking for an office client for the second floor and perhaps a bar or restaurant for the first.

Right now, he says he has prospects and interested parties but no firm deals (he also owns adjacent buildings on Broadway that house a sandwich shop and a beauty salon).

That Gill’s is one of just a few downtown properties with lingering vacancies is a testament to the pace at which businesses have snapped up Broadway real estate in recent years, bringing new eateries, specialty shops and housing to the area.

The “missing teeth” of downtown described in 2006 by former Downtown Community Partnership president Dave Anderson have by and large been restored. But the smile still has a few gaps to fill here and there.

Mike Hahn, current head of the Downtown Community Partnership, said vacancies are inevitable in an ever-evolving market like downtown. He said there’s a distinction between healthy churn – which keeps an area lively – and persistent openings that won’t seem to fill up.

“It’s OK to have vacancies occasionally,” he said. “It’s the idea of getting them filled as soon as possible, so you’re not having huge gaps or holes.”

In that respect, downtown developers have been largely successful. Most businesses that have closed their doors in the past few years have had a successor close on their heels. When a.k.a. men’s clothing closed in February, it was replaced by Spicy Pie pizzeria three months later.

When Vlana Vlee closed in October just across from street from Gill’s building, the Kilbourne Group had a replacement lined up – the newly opened KotiKites and WindSports – before the going-out-of-business sale was over.

But if a property stays vacant for too long – more than about six months, Hahn said – it runs the risk of getting stale. Hahn said a variety of circumstances can make a property difficult to rent. The owner’s demands might be out of line with what the market will bear. The storefront might need sprucing up to catch a potential tenant’s eye. And in the wake of the recession, big spaces in particular might scare off businesses that are being cautious about making new commitments.

“The larger the space, the harder it can be to fill it,” Hahn said.

For years, that was the case for the Great Northern passenger depot, an expansive site that housed four failed restaurants in succession from 1995 to 2005. The last restaurateur to leave cited crippling utility costs (the heating bill reportedly ran five figures in the winter months) among other stumbling blocks. The site was vacant until Island Park Cycles moved in in 2008.

Another, newer big space for rent – the ground floor of the Cityscapes Plaza on First Avenue North – is still largely vacant after the five-story, mixed-use building opened last year. The building has a little more than 30,000 square feet of space available in a variety of suites, and reduced prices over the summer from $17 per square foot to $12 or $13, depending on the suite.

At various times, the $18 million complex has been cited as a potential landing spot for a high-end restaurant, a retail store, and a fitness center, among other things. Paul Johnson, senior commercial Realtor for Cityscapes Development, said showings have increased recently – a pair of restaurants and a retailer recently toured the property – but nothing is official yet.

Johnson said a lack of expansion by big national stores in the current economic environment, a desire for smaller parcels, a preference for on-Broadway locations, and a perceived lack of parking all have made it challenging to fill the space.

He said the location is still attractive (and a good deal more customizable than an older building on Broadway), and offers a built-in customer base in the attached apartments. Those units have gone from 35 percent full in the spring, when the building was only open to North Dakota State University students, to more than 60 percent full after opening to the public.

“We’re still very confident that once the economy turns around, that building will fill up,” Johnson said.

Hahn said the Cityscapes building may have another challenge: Its main entrance faces west, the same way traffic flows on one-way First Avenue, making it harder for passers-by to notice.

“All the traffic is driving away from it,” Hahn said, raising the traffic flow question that’s been a topic of discussion among downtown businesses and city planners for a number of years. Johnson, for his part, said he didn’t think traffic flow was an issue.

One of the biggest unoccupied pieces of property in downtown Fargo – the US Bank Plaza – is one of the least conspicuous vacancies, in part because it features benches and a pedestrian mall rather than an empty storefront or “for rent” sign. In July 2009, the Kilbourne Group secured an 18-month option (up for an 18-month renewal in January 2011) to purchase and develop the 48,000-square-foot parcel.

In October, the group announced a design contest to envision what could be developed in the space. Winners will be announced Friday, though the group has said the results will not necessarily lead to a project.

On the other end of the spectrum, the former site of the downtown Taco Bell at 1001 1st Ave. N. is among the more visibly vacant properties in town – in no small part because it is difficult to mistake the empty building for anything other than a former Taco Bell.

The restaurant closed in September 2009. A year ago, there was talk of demolishing the building to make way for a new project. The former owner indicated an apartment building or mixed-use development could be in the works, and members of the Fargo City Commission said they expected ground to be broken in spring 2010. To date, the gutted Taco Bell remains standing.

Terry Stroh, an architect who’s had a hand in a number of downtown projects, including the Fargoan Hotel renovation and the renovation of his own firm’s building on Seventh Street North, said spaces that remain vacant for too long can acquire “a negative connotation.”

Stroh’s latest project, an apartment building at 21 8th St. N., sits in an area beset by its fair share of long-term vacancies. The building itself is on the site of the old Interior Lumber building, which had been out of use since the company shut down in 2004. When the apartment project was announced in August, Stroh called it “a fun addition to a very blighted area.”

He said he hopes to see the vacancies along First Avenue clear up as downtown fills in and pushes development elsewhere. And when the empty storefronts disappear, he’ll be glad to see them go.

“It’s always kind of a downer in people’s mind when they walk by and see places that are empty,” he said.

Readers can reach Forum reporter Marino Eccher at (701) 241-5502