Our series Squeezed Out has been examining how the area's housing market is being reshaped by a surge of new companies and outside investment. Nowhere in Reno is this effect more apparent than in Midtown, where some small business owners are facing tough choices. Reno Public Radio's Julia Ritchey brings us one shopkeeper's story.
Shop owner Lisa Rojas is giving a tour of her Midtown store, a small converted Victorian home shared by two other businesses.
“Mandala Massage Supply, part of the store is supplies for the massage therapists around town,” she says. “The Temple of Life is our house brand, and everything is blended fresh…”
Natural light floods through the store’s windows, filtering through the green and clear bottles lining the shelves, while soft, new-agey music plays in the background. She moved in three years ago because she was excited by the up and coming Midtown District, which has attracted an eclectic mix of smaller businesses, restaurants and bars.
“I wanted to be here because I wanted to spend more time here,” she says. “Moving over here things went well -- it was a good move -- not just because I moved, but because I was establishing my business.”
But that changed about a month ago when her landlord informed her that they were going to increase her rent.
“They came with my old lease saying my old lease had expired and ‘We’re going to give you a new lease and your rent is going to increase by .85 cents a square foot.’”
Rojas pulls out copies of her old and new lease, which is on a month-to-month basis. She’s being asked to go from $650 a month to $1,150 for the space. Her reaction?
“Unbelievable,” says Rojas. “They were just very cold and mean, even though I’d been here for three years. Nothing mattered what was said or done in the past, I was treated like I hadn't even been here for three years.”
Developer Bernie Carter is Rojas’ landlord, and a key player in Midtown’s transformation into a hip, urban neighborhood, where he owns several properties along the strip. He did not return messages seeking comment.
Rojas’ story, though, is just one part of a much larger conversation happening now that Reno’s residential and commercial real estate fortunes are on the rise again.
“Everybody’s rent is going up. It’s common, and it’s happening to the big boys as well as the little boys,” says Paul Doege, who runs Recycled Records just a block down the street from Mandala Massage, and who also serves as president of the Midtown District business association.
“Just the word Midtown alone actually adds a certain percentage to a property’s value,” says Doege. “I was fortunate enough to get a long enough lease to where I got a couple more years, but I’m not kidding myself, I know that when it’s done, my rates are going to go up.”
He said other Midtown businesses are facing similar situations, trying to renegotiate their leases and hoping to hang on as the neighborhood attracts more high-end development. Many of the newer builds are going for $2 or more per square foot.
“It was great when it was cheap, but part of the reason it was cheap was because this was a lousy area. And now that it’s a nice area, they don’t want to charge as if it’s a lousy area anymore,” says Doege.
The debate has even spilled over onto the Facebook feeds of some of the business owners, with commenters calling out greed while others blame a spillover effect from the Bay Area.
Andre Mailloux is a former broker for Coldwell Banker and helped ink some of the early leases for businesses in the district a few years ago. He says smaller businesses can protect themselves by locking down longer leases.
“You want a longer term lease regardless of the economy just because there’s, again, different ways of writing it,” he says. “Don’t go it alone, brokers can and do catch things that you normally wouldn’t, and a lot of little shop owners try to go it alone and get hit really hard.”
Mailloux says the district appears to be at turning point, where it can either retain its small, funky retail or head more in the direction of a restaurant and bar district.
Mandala’s Rojas says retail is what gives Midtown its flavor.
“It needs to grow slower, and these rental increases for home and businesses…it’s going to push the small businesses out, and this is going to affect the shopping and the feel [of Midtown],” she says.
Rojas has to be out by the end of this month and is looking at a place on Wells Avenue. She hopes her customers will follow.