"BUSINESS IS SLOW," says Thupten Nepali from behind the counter of his tiny Tibetan imports store on SW 3rd and Stark, surrounded by silver rings, thick rugs, and dark, colorful scarves—none of which are selling very well. Making matters worse, Nepali's landlord just raised his rent 25 percent. After five years in business, Nepali is closing his doors and spending the winter in Tibet figuring out what to do next. "I don't know. Maybe I will try to find a new space."
More so than in other cities, Portland's cultural and economic strength is built on small businesses like Nepali's. According to Mayor-elect Sam Adams' office, the Portland metro area is home to 49,896 small businesses, which employ 274,704 people. Over 45 percent of people in the private sector are employed in small businesses. That's much higher than other cities, according to Adams' Small Business Project Manager Clay Neal. These corner stores, coffee shops, dive bars, and postage stamp-size art spaces are not only Portland's economic bedrock, but they make the city interesting and livable.
But small businesses often operate with a thin cushion of profit, and when tough times hit, they don't get a federal bailout. In a recession, losing several hundred dollars a month to diminished sales or higher rent can be enough to cause a local entrepreneur to bite the dust.
Like many small businesses, Nepali's was on a month-to-month lease. In July, a new landlord took over his shop's building. In November, via form letter, the landlord announced that Nepali's monthly rent would jump $500.
"If it had stayed the same or even if the rent had been up $100, $200, I could have stayed," says Nepali.
Portland's neighborhoods may begin to look a lot different soon if other small stores and cafés that previously operated on a shoestring find themselves pulled even tighter.
"I've noticed a lot of entrepreneurial spirit in recent years, but I've also noticed a lot of those entrepreneurs are going out of business," says John Cosgrove, owner of Decades Vintage next door to Nepali's import store. While his rent has gone up nearly 20 percent under the new owner, Cosgrove is going to try to ride out the hard times. The woman who ran a dress boutique on the corner opted out—a space that once boasted a sign for "Artemisia" now says "for lease."
Meanwhile—at least downtown—small business space is in demand, creating an odd set of circumstances for small business owners like Nepali and Cosgrove.
While the owner of the SW 3rd and Stark building did not return calls, commercial vacancy rates downtown and in the Pearl District are low, putting the power in landlords' hands. Only 6.5 percent of retail spaces are vacant, according to the Portland Business Alliance (PBA), and new businesses are usually waiting to take a spot if someone else goes out of business. Spaces with less than 1,500 square feet—ideal for a local, independent business on a tight budget—are still hot.
Five small spaces that recently opened in the bottom of the Gregory, a mixed-use building in the Pearl, got "snapped up right away" by local businesses, according to real estate agent Caryl Brown.
That strong demand and high-occupancy rate is a sign that small businesses are doing just fine downtown, according to Megan Doern of the PBA. "We're seeing a lot of traffic," says Doern. "Portland has a great way of shopping local." Doern believes that big national stores may actually be faring worse than little local stores, pointing to the shuttering of national franchise Shoe Pavilion as the most notable closure in recent months.
On the other hand, the health of Portland's small businesses all seems to depend on who is taking the pulse. Jean Baker of the Alliance of Portland Neighborhood Business Associations spends her days walking streets like Hawthorne and Division, checking in on small businesses. She says many are close to collapse.
"Small businesses tend to have a really small cushion. You pay yourself whatever's left over after all the expenses are paid," says Baker. "A lot of them won't survive past January or February.... It's not good. There's lots of neighbors wandering around but they're not buying anything."
Back behind the counter at Decades Vintage, Cosgrove is skeptical that the city's cheerleading about small businesses will actually result in policies—or simply more local spending—that will help him stay afloat.
"We're all rah rah for small business," he says. "But show me the money, you know?"