Higher rent rates put stress on businesses in Blue Hill District

It’s too early to tell whether Blue Hill District, formerly known as the Ephesus-Fordham District, will live up to its full potential as the area evolves with new development. Mixed reactions to the changes occurring have overwhelmed the 180-acre district. 

Blue Hill District covers the northeastern edge of Chapel Hill from South Elliott Road, East Franklin Street, Fordham Boulevard to Ephesus Church Road. The newly named district models to be a place where people can live, shop, dine and work. Many new businesses have arrived in the district including Chop't, Zoe’s Kitchen, Babalu Tapas and Tacos and others. 

But former member of the Chapel Hill Town Council Julie McClintock believes the area is losing its mom and pop shops to corporate chains.

“So if you rezone, what happens to the land?” McClintock said. “The land value goes up. So when the property value goes up, the property owner raises his rents and this is the problem. But the question is who is filling it and what has happened to the businesses that people like me depend on.”

Since the district was rezoned with a form-based code in 2014, the area has attracted more than $125 million in new development. A form-based code is a regulation that streamlines development proposals to the town manager to help incentivize developers to invest in a particular area. 

The Chapel Hill Town Council does not vote on or review any projects in the district due to the regulation.

“Why do you have a shopping center anyway?,” McClintock said. “You have a shopping center to go get your clothes dry cleaned, so you can get your haircut, so you can get your car maintained. Those are the business that we need. They’re leaving.”

A yarn craft store called Yarns Etc...was one of the small businesses that left Regency Center's Village Plaza because rent increased too much for owner Mary Stowe. Stowe was told by the property manager that she would not be able to renew her lease at the end of 2015 because the plaza would undergo renovations. Yarns Etc... relocated to an independently owned plaza off Fordham Boulevard.

“That store has been sitting empty ever since,” Stowe said. “VIP Printing has left. The Hair For You salon has left. There’s a men’s barber shop over there. I’m not sure if they’ve left yet but all the shops up and down have left.”

A few of the smaller businesses that remain in Village Plaza shopping center are Twig and PTA Thrift Shop. Owner of Twig, Shawn Slome, said he has his eye on other potential spaces to relocate Twig but that he’s still in conversation with Regency Centers about his tentative lease. Slome said Twig has been at its location in Village Plaza for more than 10 years.

John Quinterno, social and economic policy researcher at South by North Strategies, said the small businesses leaving is likely not a market force in play but rather the town working with private capital to pick who the winners and losers are. 

“It really is essentially monopolistic in that you’re driving up the price of an input that they have no real control over,” Quinterno said. “So by doing that, you take businesses that may be viable and handicap them. That’s in part because we have decided we don’t like those businesses and that we would rather have other businesses come in even if they’re non-local that can afford to pay the premium for the inflated price of land that has been pushed through redevelopment. To me, this is not a market force.”

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