As an independent retailer in Green Hills, Daniel Montgomery is challenged by the high prices of leasing commercial real estate in Nashville’s most expensive retail district.
The owner of the 44-year-old Nashville Music Company on Hillsboro Pike calls himself “a bit of a dinosaur,” working as a sole proprietor in a retail hot spot increasingly known for high-end national luxury stores such as Nordstrom, Tiffany & Co. and Louis Vuitton.
Green Hills-based independent and boutique retailers such as Montgomery may often feel overpowered by national stores. Within the past 18 months, many — including Betsy’s Boutique, The Cotton Mill and Two Elle — have closed, perhaps the victims of the Great Recession and cachet-packed chain competitors.
Surviving independent retailers stayed relevant by carving out distinctive service niches and by creating customer experiences that can’t be duplicated via online shopping, Montgomery said.
“Sure you can buy instruments online, but … how many places can you walk in and see a drum set, trumpet, marimba, guitar and mandolin all in one place?” he said.
“It’s a 24/7 marketplace now, but you still can’t get your guitar fixed online,” Montgomery added. “You can’t play a trumpet online.”
When asked about leasing rates in Green Hills — which in the 2012 fourth quarter averaged a Middle Tennessee high of $29.62 per square foot — Montgomery said, “One of the only ways to deal with it is by taking a smaller [store] footprint.”
Montgomery does not face challenges alone. In 2007, Roddy Story sold The Children’s Shop on Bandywood Drive after a 20-year run. He said independent retailers who survive in Green Hills learn to continually “set themselves apart” from mainstream shops.
“They have to become much more experiential,” Story said. “Think of retail as theater. You are in control of the lighting, the sound, the atmosphere — everything about the way your store’s looks, feels and works.”
Now, as executive vice president and manager of commercial banking at Green Hills-based Tennessee Bank & Trust, Story often advises independent businesses eager to stand out in Green Hills’ increasingly crowded retail landscape.
“It’s really hard on the little guys, but I think there’s also a real opportunity for them,” Story said. “They can show customers how shopping with them is different. Many customers are losing something [by shopping at national retailers] and have a desire to find it somewhere else.”
Tracey Davenport is attempting just that at The Painted Cupcake, a gourmet eatery located in the Glendale Shopping Center on Hillsboro Pike.
“I try to make it a unique experience from the minute a customer walks in,” Davenport said. “We have a very Parisian feel with pink-and-green striped wallpaper and large black chandeliers. We play music from the 1920s and 1930s.”
In 2011, Davenport moved from The Arcade in downtown Nashville to Green Hills. Although her expenses increased, she calls it the “best decision” possible.
“If you want to have a successful business, you have to spend a little more money to get the premium client,” Davenport said. “We needed to be in a visible, established location.”
Eric Viars bought upscale clothier The Oxford Shop in 1993 and has since ridden the tides of the Green Hills retail market.
Like other boutique retailers, Viars said providing meticulous customer service and hard-to-find merchandise are “a given.”
For example, The Oxford Shop employs Leo Alvarez, an onsite master tailor, and offers free alterations. The store carries exclusive luxury brands, including Samuelsohn’s 1923 Black Label, available only at a handful of stores nationwide.
“In Green Hills, a lot of the small retailers still work in their businesses,” Viars said. “They are able to run on principle rather than solely on policy. They have the flexibility to create an experience that’s unique to the individual customer.”
Case in point: Recently, Viars served a customer who needed his clothes altered immediately due to a business trip.
“A chain store just wouldn’t have done it,” Viars said.
Viars has a recommendation for Green Hills’ independent retailers: Save money.
During the recession, he dipped into a hard-earned rainy day fund, extracted himself from his lease at Grace’s Plaza on Hillsboro Pike and purchased an office condo space in Bedford Commons, a high-profile mixed-use development on Bedford Avenue.
“There’s so little square footage here, there’s always going to be a demand for it and the prices are only going to rise,” said Viars, adding that owning commercial property — and building equity — helped to stabilize The Oxford Shop after the recession. “Rental rates didn’t even change that much in Green Hills during the recession.”
Peggy Sells, senior vice president at Nashville commercial firm Cassidy Turley, expects multiple future projects for Green Hills.
“Green Hills is always evolving,” said Sells, who noted Green Hills leasing rates doubled during the past 10 years and will continue to rise. “We’ll continue to see redevelopment because there’s always a constant demand to get into the market. New developments will [create building density] because Green Hills is landlocked [by residential]. I think we’ll see more mixed-use projects like the Hill Center or Bedford Commons, especially along Hillsboro.
Sells sees the commercial boundaries of the district spreading to a few residential streets such as the rental-heavy Warfield and Kimbark drives.
Sean McGuire, the District 30 Metro councilman, agrees.
“Green Hills is growing so rapidly, [and] the infrastructure hasn’t been able to keep up,” McGuire said. “If you drive around the area, you’ll find some outdated models of retail. What the area needs is more developments like the Hill Center — where you can park, walk and not be so reliant on cars.”
But if such high-end development becomes the trend, would small retailers be priced out of the market?
Maguire thinks some would survive. He said the Hill Center is a mixture of national specialty stores, franchises and locally owned businesses such as E.J. Sain Jewelry, The Cosmetic Market and Posh Boutique.
In contrast, Montgomery, of Nashville Music Company, isn’t convinced.
“It’s not always easy for me to keep going in the current Green Hills environment,” Montgomery said. “Fewer people come into smaller stores these days, and it’s not just because of competition from the big stores. The biggest competition is what you hold in the palm of your hand — the smartphone.
“I do think there’s the making of a counter-revolution where large numbers of people return to traditional businesses,” Montgomery added. “But we aren’t there yet.”
Montgomery said he’s able to keep a bricks-and-mortar store in large part due to steady revenue from instrument rental contracts with local schools.
“I try to turn rentals into sales,” he said. “You do whatever you can to survive, and the best part is that you do end up finding people who care about what you do.”