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Business and Economy

What's At Stake For Maine's Downtowns As Pandemic Takes Toll On Small Businesses

Courtesy Cathy Rasco
Cathy Rasco, who owns Arabica Coffee, had to close one of her two locations.

COVID-19 has taken a huge toll on downtown retail and restaurant businesses all over the country. Some will not survive - and that has experts in Maine looking into the future of the state's downtowns five or 10 years down the road.In Maine's three biggest cities - Portland, Bangor, and Lewiston - planners and downtown organizations are getting ready for big changes.

We'll look at Lewiston and Bangor on Thursday. But in Portland, advocates say the pandemic recession is accelerating trends that were already pushing small businesses out of downtown, and raising questions about what happens to the empty retail space left behind.

Most summers, Portland's Old Port is flooded with tourists who come to enjoy the area's famous food, drink, and quirky seaside ambience.

But not this year. And for some  businesses, that's meant big changes.

Cathy Rasco owns Arabica Coffee, which until April had two locations downtown, including one on Commercial Street. And she was about to spend some serious money on the Commercial Street location.

"I was about to rebuild the whole thing. Like I had just gone through all the process, I had all my drawings,

Credit Courtesy James Ledue
Arabica Coffee owner Cathy Rasco has now moved from Portland to a less-expensive location in Scarborough and is thinking about focusing on roasting and distribution.

I had just gotten my building permit, and I was about to renovate that building, like the interior."

She says she's glad now that she didn't start that process, because when the pandemic hit, and her revenues began to drop precipitously, she decided to close that location. She's now moved her coffee roaster to a less expensive industrial area in Scarborough.

Rasco says she's hoping to keep her second Portland location open, but even that's not certain. And she says she's starting to rethink the nature of her whole business, and may become a roaster and distributor, rather than a coffee shop owner.

Arabica is far from the only business to close in the last few months. An informal count by the local business organization Portland Buy Local shows at least 25 public-facing businesses have closed downtown since the pandemic began. And when those businesses close, they leave behind space.  

It's Mary Alice Scott's job to try to keep that space in the hands of small business owners, many of whom were already struggling with high rents before the pandemic. Scott, the executive director of Portland Buy Local, says for business owners to be able to afford those rents now, "seems impossible."

Scott says when small businesses close, their space can get snapped up by larger chain retailers like Athleta, Ethan Allen, Lululemon and Anthropologie. Those stores tend to have big footprints, and they often combine and make major changes to retail spaces. When they close, they leave a space behind that's often too big, and too expensive, for local businesses to afford.

Jeff Levine, a lecturer in the Department of Urban Studies and Planning at the Massachusetts Institute of Technology, and a onetime director of planning and urban development for the city of Portland, says he's not specifically worried about chains per se, as long as they respect the feel of an area.

But he says big retail spaces can make downtowns less appealing places to spend time.

"I am worried about a different type of store coming downtown that absorbs more space and doesn't encourage the type of dynamic activity that people want to see in a downtown, and then it kind of feeds on itself," he says. "So, 'OK I'm just going downtown to get a couple things done, but I'm not going to hang around because it's not fun there anymore.' Part of what makes it fun is the small mix of businesses, and the other part of what makes it fun is feeling safe and comfortable walking around downtown."

Advocates of local development see it as a kind of a worst-case scenario: Small businesses go away because of the pandemic and the recession; but rents stay high, and that discourages other small businesses from opening downtown.

And when fewer businesses are local, the money spent there doesn't stay local, which can erode the tax base along with local institutions.

There's a general assumption that Portland will keep growing and changing, regardless of the effects of the pandemic, and for Mary Alice Scott of Portland Buy Local, this is a moment to think about ways to protect smaller businesses from the sometimes brutal realities of growth.

Scott says one relatively simple way to do this is with zoning restrictions that limit the sizes of downtown retail spaces to about 1,500 or 3,000 square feet.

"Those are the kind of spaces that are affordable, useful for local businesses," Scott says. "And that if a local business opens, they can easily move in, and if they move somewhere else or close, then it becomes easy for a different local business to take their place."

Portland's Director of Planning and Urban Development, Christine Grimando, says these kinds of ideas can be useful - but she says the pressures on downtown can also be beneficial for other parts of the city.

"The commercial areas or city are bigger than just our downtown...and not not every place in Maine has the luxury to say this. But we have these other places that are really hot because of that pressure."

Grimando is referring to areas like Washington Avenue, and Woodfords Corner, both of which have changed enormously in the last few years.

Grimando says the city's already using zoning to encourage businesses of all kinds in the city's outlying areas. And now, she says, the high cost of doing business downtown may just be the stronger catalyst that helps Portland's neighborhoods become more dynamic. "Neighborhoods can also have some experience of that sort of mixed use and common space areas, and...they all should."

Being a small business owner is always hard. But this is an especially challenging time, and depending on the fallout, it could alter the character of Portland for years to come.

Tomorrow we'll look at Maine's next-two largest cities, Lewiston and Bangor, and how they hope organic growth, local ownership and mixed development will help protect them.