If Downtown Lawrence is the city’s economic engine, it has been losing horsepower this decade, a new report from City Hall indicates.
An analysis of sales tax collections shows that Downtown Lawrence is accounting for a smaller percentage of the city’s overall retail, restaurant and bar sales.
It’s a trend that is starting to create some worry among traditional downtown retailers.
“Look at Arensberg’s going out of business,” said Galen Tarman, owner of the downtown furniture store Blue Heron. “I don’t know what is going to happen in the future, but I know there are a lot of retailers who are suffering right now.”
According to the new report, Downtown Lawrence generated about 8 percent of the city’s total sales tax collections in 2001. In 2008, that figure had fallen to about 6.5 percent.
In essence, Downtown Lawrence is losing market share.
“I think part of that has been the kinds of businesses that have left downtown,” said Mayor Mike Dever, who said he has concerns that downtown has lost several retailers of larger ticket items over the years. “We need to do what we can to embrace the idea of people shopping downtown for goods other than just boutique items.”
Downtown has been losing market share even though other parts of Lawrence haven’t been growing rapidly either — despite what sales tax collections have shown.
For much of the decade, Lawrence has posted increases in sales tax collections, but the city’s new analysis indicates much of that growth has come as a result of inflation rather than a growth in the quantity of goods purchased.
The new report adjusted retail sales in Lawrence to account for inflation, and found that from 2002 through 2008 retail sales grew only by 1.8 percent. Not adjusted for inflation, retail sales grew by 19 percent — from $1.08 billion to $1.29 billion.
Lawrence retailers said the decline in the downtown’s market share is running counter to property values. Tarman said real estate taxes on his Massachusetts Street property have nearly tripled over the last 10 years. Other retailers said they believe similar property tax increases have caused other businesses to close in downtown.
“I still think we have an exceptional downtown,” said Joe Flannery, president of Weavers Department Store. “But the biggest concerns I think we all have are the vacancies and the amount real estate taxes have gone up.”
Other news from the city’s Economic Barometer Report — which will be produced quarterly — included:
• Shoppers in Douglas County slowed their holiday spending. Sales tax totals for Douglas County in the fourth quarter of 2008 totaled $17.5 million. That was down 0.7 percent from $17.7 million in the fourth quarter of 2007. Douglas County’s decline was slightly more than the 0.4 percent decline posted statewide. But Douglas County’s performance was better than Johnson, Wyandotte, Shawnee, and Sedgwick counties.
• Tourism spending continues to do well in Lawrence. Even adjusted for inflation, 2008 was the best year this decade for transient guest tax collections. The city collected about $940,000 in guest taxes. The report also noted that the city’s hotel occupancy rate has held steady — at about 57 percent — despite new hotels being built in western Wyandotte County.