With 20 properties firmly in his portfolio and a new joint partnership worth $50 million, Broughton Street developer Ben Carter is entering a phase he calls merchandising strategy. However, this strategy doesn’t sit well with some current tenants.
“As I bring retailers to the market, I’m trying to create what I call merchandising clusters, which means putting retailers of like-minded customers in areas together,” Carter said in an interview this week. “Gap and Banana Republic are a great example of that.”
Carter said he is in communication with some of his current tenants on relocating their businesses as he prepares to hand the keys over to a few national retailers. J. Crew will begin moving to its space, 201 W. Broughton, on May 15.
The developer said he’d like Tommy Bahama, a casual sportswear store, to take the space currently occupied by Goodwill, while also finding them another location.
“This is an area where I see lifestyle stores like Tommy Bahama that complement many of the lifestyle businesses already on Broughton Street,” said Carter. “One of the purposes of buying more buildings, in addition to expanding the national retailers, is to be able to find more places to relocate locals.”
The developer is buying 15 additional properties due to retailer interest in the street, bringing his total to 35. He said he has had a new wave of retailers who have signaled their commitment as he seeks to transform the street into a top shopping destination.
According to Karen Guinn of Collective Marketing, Carter’s public relations firm, they have four executed leases with retailers L’Occitane, J. Crew, Palm Avenue and The Ancient Olive, and an additional eight letters of intent with heads of real estate of other stores.
In legal speak, a letter of intent, or LOI, is a document outlining an agreement before a final lease is signed.
A handful of potential restaurants also are eyeing spaces.
At the onset of the Broughton project, some of the owners and occupants of these buildings — some were vacant already — took it as an opportunity to retire or relocate. Others, however, especially those with leases, are considering their options as rents increase.
Current tenants
Businesses that have already vacated their spaces include Casa de Moda and Atwell’s Art & Frame. Women’s apparel store Gaucho confirmed this week that it has sold its building to Carter and will be consolidating to its other location at Bull Street once a new retailer is ready to move in.
Some tenants, however, say they are happy where they are.
“We have no plans to move at this time,” said Lauren McCoy, manager at consignment boutique Civvies at 22 E. Broughton. “We have a lease to stay here at least a couple of more months.”
Jan Bass, marketing director of Goodwill of the Coastal Empire, said representatives had been in touch with Carter’s team but wouldn’t speculate on a possible move.
“We have a solid lease, and that will not cause any current conflicts with our new landlord,” she said.
Bon Kumsaicong, manager of Kate’s Clothing Company at 228 W. Broughton, said he’d discussed relocation but wants to stay put.
“We like our location,” said Kumsaicong. “We have a contract with them, actually with the previous owner, for two years.”
Carter said he is not forcing anyone to move against their consent nor is he the only one charging higher prices.
“This is a market trend, not a Ben trend,” said Carter.
Not all tenants agree, with some saying the higher rents are pressuring them to move.
The owner of handbag boutique Satchel, Elizabeth Seeger, said she had decided to relocate to a new location next month.
Nikki Edwards, owner of Colorboxx Salon at 18 E. Broughton, said Carter raised her rent by more than 300 percent with little notice or communication.
“It was so disorganized, it got to the point that they had the previous owner leave us Post-It notes with instructions on how to proceed,” said Edwards. “I was a really big supporter of all this at first because I thought it would help my business, but the way he has strong-armed other businesses, including ours, has had a negative effect.”
She said she’s moving to Congress Street in a few weeks.
“I have 18 employees that rely on me for paychecks,” said Edwards. “This is how I support my family.”
Edwards said she hopes all the changes that are occurring on Broughton will eventually have a positive impact on the city.
Cost of occupancy
Carter said a building not owned by him that will house a new Ann Taylor LOFT, at 15 W. Broughton, is going for $36 a square foot.
He said national retailers use an equation that projects what kind of annual sales they can do and compare that to their cost of occupancy, usually aiming to keep costs at around 10 percent of total sales.
“So what does that mean? It means, these folks would be paying $55 to $60 a square if foot if they feel like they can do $500 to $600 a square foot in sales,” he said.
The average price per square foot in the entire central business district of Savannah is about $20, though it can fluctuate depending on the type and condition of the space.
“I happen to believe this street has the potential capacity to do at least $500 a square foot in sales,” said Carter. “The ones I’m bringing in, I’m expecting can do that.”
He said that means finding locations that are suitable for the types of businesses he’s looking to attract and reconfiguring smaller, narrow spaces to accommodate retailers who want a larger footprint.
Ruel Joyner, president of the Savannah Downtown Business Association, an organization that represents 200 member businesses, said Carter has made no secret of his plans for Broughton.
“We encourage economic development. At the same time, we respect and honor what we have,” said Joyner. “We’re working with him and working with current businesses as well to strike a balance that everyone is comfortable with.”
Joyner said he supports private investment in the corridor and said his own building at 24 E. Broughton has been in his family since the early ‘80s and has witnessed the street’s ups and downs.
“We’re excited, as far the SDBA is concerned, with the proposed vision, but at the same time, we are not able to dictate anything that’s going on in this process,” said Joyner. “Mr. Carter is in the driver’s seat.”
Joyner said he believes most people are waiting to see what’s going to happen.
“We’ve heard speculation, but we’re really just waiting to see what comes about,” said Joyner.
This sort of cautious optimism is a common refrain among local leaders.
Daniel Carey, president of the Historic Savannah Foundation, asked Carter about his timeline during a Thursday night panel discussion on the economic benefits of historic preservation.
“So if Broughton Street 2014 is the before picture, when will we get to see the after?” asked Carey.
Carter leaned into the microphone and paused briefly.
“March 1, 2015,” he said, as some members of the audience broke into applause.
Earlier this week, Carter said he hopes to throw a gala by spring of next year to showcase the progress he’s made.
“My goal is within 18 months, I want to be in the top five places in the country to visit,” he said. “And in three years, I want Broughton to be in the top 25 of international destinations.”