Can Small Businesses Afford Living in Tampa Bay

ST. PETERSBURG, Fla. (AP) — Delma’s, The Flower Booth has operated out of  the same 3,752-square-foot shop in St. Petersburg’s Kenwood neighborhood since 1953.

Stephanie Anderson – who took over the florist business started by her aunt Delma Nichols Booth – said they’ve served some of the same families for generations.

“If you do a really wonderful job for a bride on her wedding, that family will follow you through their kid’s birthdays, graduations, every special occasion,” she said.

But Anderson fears she’ll soon be forced to leave Kenwood and the loyal customer base her family worked so hard to build.

Over the summer her landlord sold the property to a developer who plans to demolish the building and put up townhomes. Anderson has until Sept. 30 to find a new storefront.

While little has changed at Delma’s through the years, the city around it has undergone a dramatic transformation. Since the shop opened, the population has exploded from 95,712 to 258,308, according to U.S. Census data.

Once hailed as “God’s waiting room,” St. Petersburg is now a popular destination for young professionals and empty nesters seeking a beachside community with a hip downtown.

But as the city and the rest of the Tampa Bay region have grown, small business owners like Anderson say it’s become more difficult to hold on to their current retail spaces and find new storefronts to set up shop. Some fear that rising rents and a lack of available properties could drive out the very businesses that make the region a place where people want to live.

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“We take the gamble of driving foot traffic and breathing life into neighborhoods with our businesses,” said Roberto Torres, owner of the Blind Tiger Cafe, which has several locations across Tampa including in Ybor City, Westchase, Seminole Heights and Soho. “Then we get forced out by developers once the neighborhood we helped build is seen as desirable.”

The COVID-19 pandemic delayed Torres’ plans to open more coffee shops. Since then, he said the real estate landscape has changed, making it much more expensive for him to grow his business.

“With supply chain issues and rising construction costs, the finances no longer worked,” he said. “We had to go back and renegotiate everything.”

According to a 2022 market report from real estate firm Colliers, asking rental rates for retail space in the Tampa Bay area increased 4.7% over last year and 14.4% over five years.

The vacancy rate for retail space in the region is around 5.8%. That’s down one percentage point from 2017.

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Paula Clair Smith, a managing director of commercial services for Colliers said what’s happening here is not uncommon for a growing region.

“This is a matter of typical real estate cycles,” Smith said. “There’s not enough product and there’s so much demand.”

In May, the beloved Central Avenue music venue, the Hideaway Cafe shuttered its doors. After 13 years the landlord there declined to renew owner John Kelly’s lease, according to Creative Loafing. Kelly did not respond to requests for comment.

Now, plans are underway to build a mixed use development at the same location where the Hideaway Cafe once stood. Dallas-based Trammell Crow Residential wants to raze the entire 1700 block of Central Avenue and replace it with a 7-story, 267-unit apartment complex with retail on the street level, according to documents submitted to the city.

The block is home to seven small businesses. Four of them – Fraze Design, FRSTeam by Rogers, Hamm Signs, and Avid Brew Company – own their respective properties. The rest – Lolita’s Wine Market, Dirty Laundry and The Burg Bar & Grill – rent.

Melissa Rutland, owner of Rutland Florida Gulf Group, brokered the redevelopment deal. She said all the businesses who own their storefronts will have the option to return as owners once the new development opens in spring 2025. She said she will help all the business owners find places to relocate to when the time comes.

Smith said multi-family housing or mixed use projects like these tend to generate a greater profit for developers compared to traditional retail.

“It used to be you had a sea of parking and a block of retail,” she said. “Now everything is about creating a main street community.”

In just the past three years, nearly 1,900 residential units have either been added to or proposed for the Grand Central District, according to David Foote, executive director of the Grand Central District Association.

Charles M. Hamm, whose family has run Hamm Signs from the 1700 block “for decades,” said he has witnessed first hand how much the neighborhood has changed for the better. Though Hamm signs will not return to the new building once construction is complete, he believes the redevelopment deal will give the 1700 block a much needed face lift.

“That space is way underutilized right now,” he said. “They’re going to bring in something that’s going to benefit the entire community,”

Stephen Schrutt, who owns the speakeasy bar Dirty Laundry, expressed concerns about being forced to relocate and what that would mean for his bottom line as well as the future of the neighborhood.

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“I think the scary thing is when developers come and change the landscape and uniqueness, what makes a place cool,” he said. “Eventually guys like myself won’t be able to afford to open businesses, it will all be big chains.”

If small businesses want to continue to operate in Tampa Bay, Smith said they’ll have to find creative ways to adapt.

“This may just be an opportunity to do things differently,” she said, whether that means moving away from the central business district, increasing prices or opening up an online store.

Lillian Baker who owns the medical uniform store Fashion Scrub Depot has changed locations three times since she first set up shop in St. Petersburg in 2005. She’s now preparing for what she hopes will be her last move.

She started off paying around $500 a month for a shop on 16th Street South before she eventually moved to Central Avenue. When her landlord sold that building, she moved further west down Central to a shop where rent was around $900. Rent tripled in the time she was there, she said, so she moved to another location in 2020.

Baker began offering more services like custom embroidering to try and diversify her income streams. She decided she couldn’t stay in her current lease because she was fearful of her rent going up again.

This year she closed on a building of her own, even further west down Central, away from the main business district.

“I was tired of people increasing my rent every time I turned around,” she said. “I never thought about going to the west end but this is where everyone is migrating. They’re all getting priced out of Grand Central.”

Anderson said she’s tried to be flexible in her property search, but every location her broker has shown her has been too small, too hard to find or too expensive.

She finally found what she thought was the perfect spot. Then she learned that the building was already occupied by two Black-owned small businesses with roots in the community.

“I just don’t know if I feel right about making them leave to make room for us,” she said. “I don’t want to put someone in the same situation I’m in.”

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