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SUBSCRIBER CONTENT: Mar 29, 2013, 4:00am MDT

Retail

Denver downtown: What lies beneath?Why retail gems, of course

Dennis HuspeniReporter- Denver Business JournalEmail | Facebook | Twitter | Real Deals blog

For a retailer, it’s about as close as you can get to being on Larimer Square.

Businesses located in the 4,000-square-foot, below-street-level walkway that connects a parkinggarage on Market Street to Larimer Square still get a Larimer Street address — but only afraction of the pedestrian traffic of the street-level stores.

For a photo slideshow and a map of the shopping district, click on "view slideshow" on thepicture at the right.

Attempts by Larimer Associates to activate the space with thriving retailers have drawn mixedresults in recent years. But using a formula of discounted rents and short-term leases, officialsare confident the walkway can realize its potential.

“We’re serious about wanting to foster an incubation space of retailers,” said Joe Vostrejs, chiefoperating officer of Larimer Associates, the company that handles the leasing for LarimerSquare.

So serious, in fact, Vostrejs said they’re willing to offer free rent, some capital support andmarketing assistance to a potential business owner with a great idea.

“We want to give people a reason to go down there, but also, hopefully, create over time ourown resource for our own homegrown tenants,” Vostrejs said.

Several retailers have come and gone from the walkway since it was created in its current formin 2010. The Larimer Square Cleaners has been a staple there for years, as it offers drycleaning services to the employees of the 40 retail tenants and 30 office tenants who park in

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the 315-space garage. Others, however, have moved out of the space (one of the original newtenants, Arabella Boutique, is moving to south Broadway in April) or simply gone out ofbusiness, such as Denim One.

The owner of Arabella declined comment, citing a confidentiality agreement she signed withLarimer Associates when negotiating an early lease termination.

Vostrejs acknowledged there were some problems along the way, especially when severalwalkway businesses suffered flood damage because of misplaced construction equipmentcausing sewer backups in a ground-floor restaurant.

But the area has its share of success stories, too.

TAG restaurant owner Troy Guard recently expanded his walkway TAG Raw Bar restaurantfrom 600 square feet to 1,100 following its successful launch two years ago. Larimer Associatesofficials had approached Guard then about opening the satellite restaurant in the walkway tohelp jump-start the repurposed space.

“We love it down there,” Guard said. “Of course we get better rent, but we also don’t get asmany people.”

Asked about some tenants complaints that there’s not enough clear signage to direct shoppersto the walkway, Guard had a different perspective.

“I kind of liken it to a New York- or Chicago-type vibe, where you’ve stumbled upon a cool littlespace that not many people know about,” Guard said. “That’s why I took the spot. Yes it’schallenging because it’s not street-level, but I like the feel of intimacy. There’s a cool, hip vibedown there.”

Recent additions to the walkway include the Whatever Pops Up! popcorn shop, Chocolatier Bluechocolate shop and Jewelry at the Square.

Moe Shawar, owner of Jewelry at the Square, said the first seven months have gone well andbusiness keeps improving.

“The main reason we liked it is because the people who own the business are actually there andon hand, like I am,” Shawar said.

Larimer Associates’ advertising efforts to draw people to the walkway have helped, Shawarsaid, especially when the holiday-season Santa operated there.

“There’s always different ads going throughout the year,” Shawar said.

He estimated his customers come from three main sources: tourists, parking lot clients walkingthrough and local shoppers.

Vostrejs said the space is intended for startup retailers, with rents that can be half as much asstreet-level spaces on Larimer Square and short-term leases.

“The idea was for an ever-changing collection of retailers that are new, startups and very

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entrepreneurial,” Vostrejs said, adding without the “huge capital investment” of an expensive,long-term lease. “The risk is very low to try an idea.”

Vostrejs said the risk for Larimer Associates with that plan is that if one of those ideas fallsshort and the retailer fails, his company could be blamed.

“That’s our biggest fear,” he said.

The biggest selling point of the walkway remains Larimer Square itself.

“The main thing is we love it at Larimer,” Guard said. “It’s like a little community neighborhoodwhile it’s still downtown.”

Dennis Huspeni covers real estate and retail for the Denver Business Journal andwrites for the "Real Deals" blog. Phone: 303-803-9232.