Elk Avenue establishments closing amid increasing costs
Photo by: 
Kate Gienapp
A sign advertising a liquidation sale is seen outside of Pema Dawa on Elk Avenue. The shop will close its doors at the end of this month due to increasing rents.
A sign advertising a liquidation sale is seen outside of Pema Dawa on Elk Avenue. The shop will close its doors at the end of this month due to increasing rents.

Those who do business in Crested Butte are well aware of the challenges — whether in the availability of workforce housing, finding enough employees or the high cost of operations. However, another predicament for Elk Avenue establishments is the rising cost of rent for commercial properties.

“Our rent is really expensive now,” said Kay Peterson Cook, owner of Donita’s Cantina. “My husband always jokes we work for the landlord, basically.”

Donita’s is finally closing its doors after more than 30 years. The decision is the culmination of several factors, including the end of a 20-year lease at the end of next month. To renew the agreement, Donita’s lease would increase by 50 percent.

“For these kind of rents, the amount of business that we have, it doesn't match,” added Cook.

Like other nearby businesses, Donita’s currently pays what’s referred to as a “triple-net” lease — or a lease agreement whereby the tenant promises to pay all expenses, including property taxes, building insurance and general maintenance.

“So many of the buildings are doing the triple-net thing,” said owner Winnie Haver of Pema Dawa, a local craft and jewelry shop that’s been open on Elk Avenue for nearly two decades.

 

Closing up shop

At the end of this month, Haver will be closing her business, primarily because of a rent increase of approximately $500 each month and the additional costs of a triple-net lease.

“Rent was going to be difficult enough but if the property taxes go up, then all a sudden I have to pay that much more a month,” said Haver.

During snowy winters, the cost of removal for the shop increases as well, adding another unique strain to operations, said Haver.

These payments are in addition to the fees for rent and utilities, and those costs add up, said Cook.

For restaurants and other business owners in Crested Butte, there is also the element of the off-season which can present challenges. According to Cook, Donita’s has five solid months of business outside of the slower shoulder seasons.

“The offseason is getting shorter and shorter, but when you’re paying the kind of rent that we do here, you need to have people that want to come here and spend money,” explained Cook.

To understand the real estate market on Elk Avenue, Cook looks to Niky’s Mini Donuts. The business opened in recent years and is caddy-corner from Donita’s.

According to owner Kim Machemehl, the business is for sale — for an asking price of $2.9 million. The price includes the business as well as its commercial space and a living quarters.

“You really have to be on Elk to get the foot traffic,” explained Haver, noting other spots in Crested Butte off the beaten path don't see the same amount of people to make business feasible.

 

Situation different in city

The City of Gunnison, on the other hand, is working to entice business owners to rent commercial spaces available in city limits — in large part to encourage economic development while avoiding urban sprawl into the unincorporated county.

Some commercial properties in Gunnison remained on the market for extended periods of time in recent years, and rents don’t appear to be increasing like they are on Elk Avenue. However, commercial activity is afoot.

Most notable is a new office building being constructed on the corner of Denver and Main Street, Pie-Zan’s remodel of the former Pizza Hut at 11th Street and Tomichi, and the Colorado West Investments and NuVista Credit Union office construction along North Main.

But unlike the City of Gunnison where business can be found on Main Street, Tomichi Avenue and other areas, when it comes to Crested Butte, restaurant and retail business is largely concentrated on Elk Avenue.

“Obviously, it’s time for me to be done because all these roadblocks are being put up,” added Cook of troubles with finding employees and affordable housing.

Yet, the trends seen in Crested Butte also mirror other municipalities that have struggled with gentrification. Take San Francisco, for example. What used to be a quirky collection of all types of people has transformed into one of the largest tech hubs in America.

The Bay Area is home to more billionaires per capita than anywhere on Earth — one of every 11,600 residents, according to Vox.

And one of the biggest indicators of the city’s shifting character is the rising rents. It’s not uncommon these days to see a parking lot sell for more than $3 million in San Francisco.

According to the Washington Post, one restaurant in the city saw their rent spike 62 percent last year — and with the cost of living on the rise, local residents are slowly being pushed out.

While that kind of change may not be as widespread for Crested Butte, the closure of shops from similar rental hikes still hits close to home.

“I can’t imagine how somebody else can come in to start a business,” said Cook.

 

(Kate Gienapp can be reached at 970.641.1414 or kate@gunnisontimes.com.)