Who owns downtown?

Survey shows most properties owned by local interests

Bob Schumm is the happy proprietor of two businesses on Massachusetts Street, but there was a time he felt some trepidation about owning downtown real estate.

"It's good now," he said. "I can't say it always felt good to own property downtown."


Mike Yoder/Journal-World Photo

The increasing number of national chains taking up residence on Massachusetts Street, with a corresponding decrease of mom-and-pop shops, is a matter of debate in Lawrence. Some worry about how the blend affects the culture of Lawrence; others say the city's economy benefits either way.

That was back in the early 1980s, when proposals for a retail mall � first of the "cornfield" variety in what is now south Lawrence, then another that would have swallowed much of downtown � seemed to threaten the survival of Massachusetts Street businesses.

Those attempts were eventually turned back, and downtown thrived in the 1990s, earning honors and envy from cities across the Midwest. That, and strong growth, attracted the interest of national retail chains who wanted a piece of the profitable action and helped send property values soaring; the combined valuations of Schumm's Massachusetts Street properties increased by more than $95,000 last year alone.

"Today they're good investments," Schumm said. "Ten years ago it was a risky investment."

Ownership debate

The increasing number of national chains on Massachusetts Street, though, has sparked debate on the proper mix of mom-and-pop to corporate-owned stores. Some worry about how that blend affects the culture of Lawrence, but others say the city's economy benefits either way.

"Even if the entire downtown was owned by The Gap, it would still be a profitable center for the city, because of sales tax receipts and the people employed down there," said Luke Middleton, a research analyst at Kansas University's Policy Research Institute.

There's a reason for that.

"It's unique," Schumm said. "Almost nowhere in the Midwest will you find an active, viable downtown that's not part of the tourist industry. The uniqueness is what will propel us to even higher levels of economic activity, in my opinion."

Much of the corporate movement into downtown has happened at the north end, in the 600 block. There, Starbucks, Abercrombie and Fitch, The Gap, Eddie Bauer and American Eagle Outfitters line the west side of the street.

The owner of those buildings, however, remains Lawrence-based GCB Holdings.

Tight turnover

The trend is similar throughout downtown. A Journal-World review of downtown property records shows much of the real estate has owners with Lawrence addresses � including roughly 80 percent of the owners along downtown Massachusetts streets � and has mostly stayed stable over the past five years, even though more of the tenants seem to be national corporations.

Not only is the ownership mostly local, but it's also in quite a few hands. On Massachusetts Street alone, the Journal-World counted 80 separate owners between Sixth and 11th streets.

Schumm keeps a close eye on property ownership between Sixth and 13th streets on the north and south; Rhode Island and Tennessee streets on the east and west.

"In the last three years in downtown Lawrence there's been only nine pieces of property sold and last year only one piece was sold," he said. "That's a pretty tight little turnover in the market."

That doesn't surprise Bill Sepic, executive director of the Lawrence Chamber of Commerce.

"I don't see any of the corporate giants owning their facilities," he said. "My assumption is its local ownership, with the chain stores owning or leasing. It would be an exception if they came in and bought up their land."

An exception to Lawrence ownership: Lenexa-based Jayhawk Equities LLC has purchased five Massachusetts Street properties in recent years. Pat Talbott, a partner in the company, declined comment to the Journal-World.

George Paley, one of downtown's biggest property owners, sold one of his buildings, at 727 Mass., to Jayhawk Equities. He said the company isn't a cover for corporations snatching up downtown property; the owners are Kansas University alumni.

"The reason they started buying things in Lawrence is because they love Lawrence and wanted more reasons to come here," Paley said.

Business or building?

Property values downtown have increased enough that some suggest it's more lucrative to own a building than to run a business there.

"That theory's probably played out some with people selling their businesses and becoming landlords," Schumm acknowledged.

But for business owners � like Schumm � who bought their properties early, business can be especially profitable. Low overhead plus high foot traffic combines for a healthy bottom line.

"I still think there's good value in the businesses, in addition to good value in the real estate," Schumm said.

And most observers agree those businesses are aided by the presence of the national chains.

"I think some people would probably be going out of town with some of their sales tax dollars if we didn't have the chains here," said Melodie Christal, owner of Savannah Lingerie and past president of Downtown Lawrence Inc. "It may bring people downtown that might not otherwise come. I think the hard thing to do is find out what the correct balance is."

Paley agreed.

"If they're downtown shopping here, there's a much better chance they'll shop at a downtown mom-and-pop store or eat at a mom-and-pop restaurant," he said.

"If they go to Kansas City, they're doing that stuff in Kansas City."

'Local flavor'

Sepic said Lawrence has a good mix.

"I still think we have more local entrepreneurship than corporate. It has much more local flavor and appeal than just about any town this size," he said.

"It's struck a great balance between the corporate retailers that, quite honestly, people expect and the local stores that give Lawrence its flavors."

Others worry about the unintended side effects of success, however.

"Should the rents rise a whole lot higher, it'll be problematic," said Pat Kehde, owner of The Raven Bookstore, 8 E. Seventh St.

Protecting downtown has become almost reflexive in Lawrence.

It's been given special status in the last two long-range comprehensive plans, Plan 95 and Horizon 2020, and few big retail projects elsewhere in the city are approved without its effects on downtown being examined.

"It's kind of the cultural and social center of the town," Middleton said. "If downtown went down the tubes, it'd be a sad reflection of the rest of the community. You couldn't have one decline without the other � you could in some communities, but not in Lawrence."

Middleton and others, however, expect downtown will continue to thrive.

Downtown is a jewel the community is recognized for, Sepic said.

"There's been growth all over the city in retail, and there's no reason to leave Lawrence as a result. But the downtown will always be special."


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