Becoming the store next door

Emily and Blake Hamachek knew they wanted to relocate their coffee roasting company to their own community of Cahaba Heights.

“It was kind of the vibe we wanted,” Emily Hamachek said.

What she didn’t expect was a five-month search to find a place that fit their needs and their budget for Higher Ground Roasters.

“We could not find anything in Cahaba Heights. The real estate’s extremely expensive [in Vestavia Hills], and there wasn’t a lot to choose from,” Hamachek said.

Vestavia Hills has seen increasing sales tax revenue during the past several years as more businesses recognize the potential in the city.

John Hardin, vice president of office sales and leasing at J.H. Berry & Gilbert, said Vestavia has “great demographics” among residents and shoppers to attract new businesses.

“What drives tenants is demographics. People and money; people who spend money,” Hardin said.

But many of the new signs that pop up around the city display the names of regional or national brands rather than locally owned shops.

Local businesses’ challenges

For businesses like Higher Ground Roasters, several obstacles stand in the way of being open for business in Vestavia Hills. One of the biggest is that, particularly in new developments, commercial developers and real estate leasing companies prefer the security that a national chain brings.

“Typically, a big new development wants a chain because it has better credit and raises the value of the property,” Hardin said. “Locals [businesses] don’t tend to go in the big, shiny, new developments.”

With the expense of developing and maintaining a new property, City Manager Jeff Downes said “credit-worthy tenants” can look appealing to property owners who want to be sure rent is paid on time. 

One example is the recently opened Publix in Patchwork Farms. Blackwater Resources senior leasing representative Miller Terry said leasing companies frequently target companies such as Publix that they know will be a success in particular developments based on the surrounding communities’ needs and existing businesses. Some tenants, like hair and nail salons, tend to follow in the wake of anchor companies such as Walmart or Publix.

Downes pointed out the Sprouts supermarket on U.S. 31 as another example, which was joined by franchises such as Papa Murphy’s and Chipotle but no local businesses.

While Terry said Blackwater is working on a few more Patchwork leases, he said nationally known names tend to have an edge, particularly for high-value real estate such as the area near the U.S. 280 corridor.

“There’s a good, and there’s a bad thing with building new development,” Terry said.

And even if developers do want locally owned shops in their developments, most small business owners are priced out of new developments.

“In general, new construction spaces are a little higher rent than existing shopping spaces,” Terry said.

IronStone Pizza, another recent addition to the Vestavia Hills market, was able to secure a spot on U.S. 31 near the Carmike movie theater and other fast casual restaurants. Director of Operations Jim Walsh said the location is great from a visibility and demographics standpoint, and the rent there is reasonable for what they get. 

While IronStone is a new business, Walsh said the store’s owners have a background in successful convenience stores and fast food restaurants. That gives them starting capital to build on and a cushion to weather the initial slow months of starting a business, which other new businesses might not have.

“If you weren’t properly funded, you could be put in a bind,” Walsh said.

Hamachek said she looked at properties in the U.S. 31 area but found Cahaba Heights to be more affordable than the rest of Vestavia. Resident Lane Brown said she also has heard about cost being a limiting factor for local businesses.

“I do think that it is more challenging for small businesses to find a home in Vestavia than it is for larger chains. I’m not sure if it’s because big chain stores know how to request incentives from the city so they can build what they want, or if it is just harder for smaller businesses to find a storefront that they can afford,” Brown said. 

Older developments can be more accessible to small businesses since property owners don’t have to worry about paying off upfront costs. Downes pointed to businesses such as Mark’s Outdoors, Mia Moda, Diplomat Deli and Steed’s Jewelers in the south U.S. 31 area as examples of local entrepreneurs carving out a spot in Vestavia. 

But since older developments are, by definition, a limited resource, new business owners can hit a wall again as most of the leasable storefronts already are taken by established shops.

Hardin said since Vestavia is landlocked by surrounding cities, it also lacks the large stretches of vacant land that could draw manufacturing or other companies that require more room.

“In Vestavia, there’s not a lot of that. You can’t go find a raw piece of land on a corner that’s going to work for you,” Hardin said. “Thus, Hoover always has all these new retailers because they have a ton of people in Hoover and a bunch of land.”

Without the name recognition of national brands, local businesses also rely more heavily on walk-in traffic from interested passersby. This has worked successfully in places such as Homewood’s 18th Street South and Mountain Brook’s villages, both of which are dominated by local retailers. 

“When you think about the commercial areas of Homewood and Mountain Brook (like Edgewood, Crestline, Mountain Brook Village, etc.), you think of all the locally owned businesses,” Brown said.

But with Vestavia’s developments organized around commercial strips on major highways, Vestavia businesses are less likely to get the casual shopper.

“It’s going to be hard to create a village, pedestrian-oriented shopping center on a major highway,” Downes said.

Vestavia businesses have to work around hilly topography, major highways and a lack of sidewalks, Downes said, which complicates pedestrian and casual foot traffic in stores.

These problems have been thrown into sharper relief in recent years as business activity picks up. Katherine McRee, a Vestavia Hills resident who opened the Lili Pad with her sister in 2004, said when she opened the store they had no trouble finding a suitable location.

City Council member George Pierce, who is now in his third term on the council, said the push for new businesses really started about 2000, when council members realized their budget was too dependent on residential property tax revenue. Since then, sales tax revenue has increased and allowed the city to pay for more sidewalks, road repair and other quality-of-life projects.

“There’s some favorable projects looking at our city,” Pierce said. “They used to say we’re a diamond in the rough. I think that diamond is gleaming now.”

Plugging the leaks

The city’s efforts since 2000 are part of a concerted effort to stop “leakage,” when Vestavia Hills shoppers leave the city to do their shopping in neighboring municipalities. Downes said he believes Vestavia has the lowest per capita general fund revenue in the Birmingham area — about $1,000 per resident — so keeping sales tax dollars in the city is critical to the city’s budget.

In 2014, Vestavia Hills performed a gap analysis study to look at economic shortcomings in the city. The analysis showed a total estimated gap of $193.7 million being spent in other cities instead of Vestavia Hills. 

The study’s suggestion to fill in the gaps included the addition of four general merchandise or department stores, four clothing stores, five restaurants, two building materials stores, two sporting goods or hobby stores, two electronic appliance stores, two shoe stores, one home furnishing store, one office supply store and one jewelry store.

Downes said bringing Chick-fil-A to the city was one recent example of plugging a leak for the city, as is the Cahaba Heights Winn-Dixie, so neighborhood residents don’t have to shop in Mountain Brook for groceries. 

McRee and Vestavia Hills resident Katherine Manush agreed they feel the city could use a sporting goods store and more clothing and shoe options.

Terry said the Patchwork Farms Publix also made it more likely for residents to shop local now that they can avoid getting on the highway or going to Hoover to get groceries.

“There’s a lot of needs for people who live out here who don’t necessarily want to get out on 280, if they don’t have to get on 280,” Terry said.

With the gap study in hand, Downes said the city continues to encourage business growth and look for ways to plug its gaps. While the city can’t directly control which businesses enter the market, Downes said, they can offer incentives to businesses that would be good for the city but need help overcoming a hurdle between them and being open for business.

If a business owner can demonstrate their investment to the city and won’t cannibalize existing Vestavia shops’ sales, Downes said the city is prepared to provide land clearing, tax abatements, new sidewalks or other projects to help bring more business into the city.

That short-term investment by the city can lead to long-term payoffs.

“It’s amazing, when sales tax revenue is up, the things we can do,” Pierce said.

Buy local?

Once a local business does find a home in Vestavia, it then relies on steady business from local customers — and frequently has to compete against lower prices, wider selection and name recognition — to succeed.

“Shop local” movements have picked up in popularity across the country, encouraging shoppers to put their dollars in their neighbors’ cash registers rather than in nationwide companies. The Vestavia Hills Chamber of Commerce has its own “Shop, Dine, Play” initiative that encourages shopping within city limits, though it does not single out locally owned businesses.

It’s a complex topic for consumers. Cahaba Heights resident Abby Brady said she supports local restaurants and specialty stores but prefers chain stores for her groceries. 

Resident Celia Anthony agreed that she’s a regular shopper at Vestavia specialty stores and tends to frequent Western Supermarket for groceries, but national chains can be more cost effective and offer larger quantities of products.

More awareness of the impact of supporting local businesses has led to more support. Brown said in the recent Cahaba Heights community charrette, there was a strong desire from residents for local businesses and a shopping village similar to the Rocky Ridge area.

“I feel the culture is changing, and more residents see the need to eat and shop locally,” Anthony said.

At the Lili Pad, McRee said she’s not sure awareness of shopping local has reached the strength it needs. More of her shoppers come from Mountain Brook than from central Vestavia Hills. Part of the problem, McRee said, is a “lack of connectivity” between the different sections of the city.

“Keeping it local for many reasons is extremely important because the big chain stores don’t necessarily support their communities,” McRee said. “I think if people would [shop local], then Vestavia almost has everything that we need.”

Brown echoed McRee on the potential benefits that shopping local could provide to Vestavia business owners, residents and municipal government.

“I find that I often have to leave Vestavia in order to ‘shop local.’ I think it would be a huge asset to our community if we could find ways to pull more locally owned businesses inside our city limits,” Brown said.