Chestnut Hill business strives to survive downturn

Greg Welsh, the owner of a restaurant in affluent Chestnut Hill, needs only to look to his ledger for evidence of the economic slowdown.

Sales at the Chestnut Grill & Sidewalk Cafe were off 6 percent last year, the first decline since he opened 12 years ago. Sales are down 15 percent more this year. Diners are scrimping by ordering fewer desserts and appetizers, he said.

If Welsh needs further evidence of the recession in his Northwest Philadelphia neighborhood, he only has to walk outside his door on Germantown Avenue to see the vacant stores with "For Rent" notices posted in the windows. There are more empty storefronts in Chestnut Hill than at any tie in recent memory, he said.

Since fall's stock market crash, three national clothing outlets have abandoned coveted top-of-the-hill locations in Chestnut Hill's historic district - the latest casualty was Chico's, a women's apparel store that moved four miles west to Plymouth Meeting Mall. The Melting Pot fondue restaurant, which occupied a spot next to the Chestnut Hill Hotel for 15 years, shut down in April. Several retailers have also closed, including a car dealership, a grocer, and a family-owned pharmacy.

"It's troubling that the avenue has taken on an abandoned-Main-Street appearance," said Anne Dubuisson Anderson, a literary consultant and Chestnut Hill resident. She said a relative from New England visited recently and, for the first time, "I felt I wasn't as proud of Chestnut Hill as I had been."

But business leaders such as Welsh, who is also president of the Chestnut Hill Business Association, maintain that the neighborhood is weathering the downturn better than other shopping districts.

He said some businesses were demanding - and getting - lower rents. And the business association still strives to maintain the area's upscale ambiance, maintaining the planters of petunias that hang from lampposts and organizing a three-day Great Authors of Philadelphia book event starting July 10.

"The economy has clearly taken a bite of everything, not just in Chestnut Hill," he said.

Indeed, the decline in consumer spending has created vacancies across the region, said Rose Penny, market research director at commercial real estate brokerage Colliers, Lanard & Axilbund.

She said the only retail sectors that showed signs of strength were cell phone providers and fast-food restaurants - not the targets for landlords in affluent areas such as Chestnut Hill. Penny said that shopping centers increasingly were filling vacancies with nonretail outlets, such as medical diagnostic centers and day-care providers.

Chestnut Hill has seen some of the same shifts.

The Tree House play cafe, a supervised play space for children, has expanded. A fitness center replaced a photo studio, and a new children's hair salon appears to be thriving.

"We have openings for very unique specialty businesses," said Sanjiv Jain, the head of Legacy Real Estate, which specializes in Chestnut Hill. "The entrepreneurs will pull us out of this recession."

The most significant vacancies on Germantown Avenue were created by the closure last year of Caruso's Market, the district's only general grocer, and the shuttering of the Magarity Ford dealership at 8200 Germantown Ave. in November.

The Caruso's site in the 8400 block of Germantown Avenue was sold for $2.8 million to Weavers Way food co-op, which expects to open in the fall.

The 1.7-acre car dealership was sold this year for $4.8 million to Bowman Properties Ltd., already the largest commercial landlord in Chestnut Hill.

Bowman's purchase of a largely empty tract that ties together the upper portion of Germantown Avenue with the lower half of the district has generated excitement - and dread - in the community.

Bowman's principal partner, Richard W. Snowden, gets mixed reviews for his stewardship - he owns more than 15 percent of the 206 properties on Germantown Avenue.

Some of Snowden's properties are exquisitely refurbished and house some of the district's most successful businesses. But several are run-down and were vacant long before the economic crash.

One well-maintained building that formerly housed the Under the Blue Moon Restaurant has been empty since 1997.

But another Snowden property, at 7908 Germantown Ave., is unsightly and has been vacant since 2001.

"People come to Chestnut Hill and look at this are aghast, and they want to know what's going on," said Ron Recko, the former president of the Chestnut Hill Community Association and a long-standing Snowden critic.

Snowden's spokesman, Seth Shapiro, did not return a phone call Friday. But Shapiro told the Chestnut Hill Local newspaper in April that Bowman Properties planned to repair three properties soon that have generated the most complaints.

Snowden told the Local in 2001 that he maintained high standards for his properties. "If you put the wrong tenant in a block it's like tooth decay," he said. "I'm waiting for the right tenants."

There is no shortage of strong-willed residents in Chestnut Hill, and Snowden's feuds with rivals and community activists are legendary. In a 2006 move, Snowden posted garish red-and-white signs on his storefronts soliciting low-rent tenants, such as dollar stores.

Despite his reputation for imperiousness, Snowden has strong supporters in the business community. He has told his allies that he is nearing a deal to sign a high-end grocery store to occupy a 20,000-square-foot space that would anchor a mixed-use development on the Magarity site.

"By the end of the year, I think there's going to be a new buzz about our business district, primarily because of Richard," said Welsh, the restaurant owner.

One reason for the optimism is that Snowden's long-standing conflict with the community association appears to have ended after Snowden's allies won control of the association in elections this year. The business community campaigned on a "Positively Chestnut Hill" slate that promised to tone down the Local's news reporting, which they complained was disproportionately influenced by anti-Snowden activists.

Some such as Recko regard the shift as a coup and have moved to form a residents' association in opposition.

Despite the vitriol, both sides say they agree that the health of Chestnut Hill's businesses is critical to the vitality of the neighborhood.

"If you're sitting in an $800,000 house and the avenue starts to deteriorate, that's a concern," said Fran O'Donnell, owner of the O'Doodles toy store and the manager of the business association.

He said that the association was increasing pressure on shopkeepers to do business on Sundays and to stay open in the evenings - most retail outlets close by 6 p.m. The extended hours would generate more traffic, and more sales per square foot, making Chestnut Hill locations more competitive with malls.

But there is much concern that the few remaining national retail outlets - Jos. A. Bank Clothier, Talbot's boutique, and Border's bookstore - will abandon Chestnut Hill before the climate improves.

Long-term players, however, remain optimistic.

Patrick Gallagher, sales manager at Eichler & Moffly Real Estate, who grew up in Chestnut Hill and has been working in the community for three decades, says that even during the best of times "there were gloomers and doomers saying the sky was falling."

"The business model may change, but this community always seems to land on its feet," he said.