Sandwich shop Electric Hero, which opened in August, is one of more than 40 small businesses that have made a connection with downtown in 2015. Courtesy DGRI
If you are or want to be a small business owner in the downtown Grand Rapids area, or if you just care about the city in general, the following numbers will interest you.
About 27 new businesses opened in downtown in the 2014 fiscal year, according to Downtown Grand Rapids Inc. In 2015, that number almost doubled.
About 40 new businesses in downtown opened, are in development or were announced in just the last six months, according to an audit of new businesses conducted by DGRI.
The businesses vary in their enterprises, but many are locally owned and focus on art, food, clothing or other retail services.
Because of them, the landscape of downtown is starting to form a new identity.
“Think about five years ago — not much of this existed,” said Adam Fox, startup mentor at business incubator GR Current. He gestured to the names of all the GR Current startups written on his office whiteboard.
“This is all new. I think our community and old culture is trying to catch up to the new buzz. I don’t really know how to explain it, but we’re trying to figure out what this new identity is.”
When Kris Larson, president and CEO of DGRI, was asked why so many small businesses were popping up in the downtown area, he said, “It’s a combination of things.”
“Each one of those instances represents a vote of confidence by a family, lending institution, investors or others. Each one is backed by its individual levels of confidence in the downtown as a market for small businesses,” he said.
“There’s so much development happening downtown and in growing the downtown neighborhood. Every resident you have is adding to downtown spending with services. You see this great wave of confidence in downtown.”
Marketing downtown for small businesses is important to Larson. The GR Forward plan, which city commissioners will vote on next week and is supported by DGRI, contains a section called “Brand Rapids,” which looks to “position the downtown as a strategic asset for Greater Grand Rapids in the global competition for talent and innovation investment.”
A major part of that is reserving space in downtown for small businesses, Larson said.
“Simply put, land is expensive, and the development of facilities to house small manufacturers and growing companies in need of larger, industrial spaces is not nearly as financially attractive as redeveloping the land for housing or other uses.
“The private market will not step in to provide the range of buildings necessary to support job growth as there is not financial incentive to do so. Grand Rapids cannot afford to do nothing,” reads the GR Forward plan.
It continues: “A production development and space modernization entity would serve to fill the gap that the private market will not fill. As a nonprofit, it would have more flexibility in how to finance the development of spaces for work and serve as a strong advocate for local economic growth. As experienced in other cities, a nonprofit of this kind creates opportunities for private sector investment. As such, the entity should be led by both public and private sector leaders that have already helped to guide improvements in and around downtown.”
But why downtown? In an area notable for its high real estate prices and increasing lack of space, why should a small business be interested in paying higher rent to plant roots in the heart of Grand Rapids rather than, say, a stable retail corridor like 28th Street or in the suburbs near East Paris Avenue, or even by the Gerald R. Ford International Airport where land is still available?
According to Larson and others, there are actually many reasons, and the first is about identity.
“For many communities, downtown is the civic heart and identity of the city. It’s where you go for parades and big occasions,” Larson said. “It plays an important role as an icon of the city, in general. And so for small business to be a part of that civic icon, that’s a huge opportunity. That goes back to the American Dream and the idea of job creation.”
Downtown is also a good place for attracting a more diverse client base.
“The diversity of the consumer is different than a corridor. In the downtown you have huge bases … visitors, residents, and you’ve got employees, and you’ve got multiple markets that are overlapping at all times,” he said. “A small business owner that’s trying to sell a trinket to a particular visitor — that’s worth exploring.”
Another part of what’s drawing so many businesses is the idea of clustering, Larson said. Small businesses recognize there are other similar small businesses around which they want to be located to drive customer traffic. This is especially true in the retail sector, particularly with food and beverage businesses, he noted, adding that food is one of the growing small business themes of downtown.
The draw of downtown could also be explained when looking at who is creating the startups.
GR Current’s Fox said he finds many local entrepreneurs are talented professionals who have moved from larger metropolises following a spouse or partner’s transfer to the area or because they have a family connection here, and it’s natural for them to be attracted to downtown.
The downtown area also often works best for making connections, he said.
One key aspect Fox thinks is vital is the culture. Although the proximity of resources available to startups is vital, it’s not what makes a small business want to stay. The community’s assets get people into the city, but what keeps them here is the “really fun culture and vibe,” he said.
“When you’re an entrepreneur, one of the benefits — and sometimes, downfalls — is you’re creating your own environment, and so when you have that blank slate, you want that to be as cool as possible. The foundation of that needs to be really strong.”