- An upturn in economic activity over the past year has led to increased demand for commercial space in the Wood River Valley and in many cases a rise in lease rates.
A more expensive lease forced the Cornerstone Bar & Grill restaurant to close in its historic building on Main Street in Ketchum in April, while businesses moving into other spaces are shaking up the commercial core downtown.
The MESH Gallery, owned by Jeff Lubeck and his son, Kyle, will move into the historic church that once housed PK’s Ski and Sports, on Fourth Street across from Giacobbi Square.
PK’s is expanding its space around the corner on Leadville Avenue, which hosted its rental and service businesses, to accommodate the retail store.
Jeff Lubeck said they are in the process of renovating the church building, including redoing the floors, altering the outside landscaping and improving the building’s exterior. The building was constructed in 1884 and was the first Catholic church in Ketchum, called St. Mary’s.
He and a partner, Jack Dies, bought the building in 2014 with the purpose of renovating it and converting it into an art gallery. Lubeck said they intend to have the newly renovated space ready to open June 30.
The MESH Gallery features fine art photography from Jeff Lubeck, Ed Cannady, Tory Taglio and Tessa Sheehan. Each artist will have new work featured at the opening, intended to kick off the weekend before the Fourth of July holiday, and the Gallery Walk on July 7. The MESH Gallery opened in 2013 and has been in three locations since then, Kyle Lubeck said.
Jeff Lubeck moved to the valley in the early 1980s with his wife, Linda, and said he’s been interested in the church building on Fourth Street for years. He said PK’s was a great tenant, and waited until the sports shop’s lease expired to make the move. PK’s occupied the space for about 10 years.
“We purchased the building in 2014 with the purpose of trying to restore it back, effectively, to the feel of the church,” he said. “I’ve had my eyes on that building for a long, long, long, long time. It just gets even further exposure. We’ve built a following. We’ll keep that audience, but expose our works to people that would otherwise have not have seen it.”
Jeff Lubeck and Dies own the building next door, which houses Willow Papery. That business is in the process of moving out and the space is for lease, Lubeck said.
On Main Street, Cornerstone owner Meg Vorm and her husband, Erik, ran the restaurant for seven years. They purchased the historic building that the Cornerstone occupied at 211 Main St., which was built in 1897.
But to finance a retrofit of the building, they had to sell it. It’s owned by a company based in Bradenton, Fla., called West Corner Realty Ventures.
Meg Vorm said they could not find a bank to lend them the money needed to pay for the retrofit. Eventually, they planned to purchase the building back. That didn’t happen, and over the years since then, they were pressed by increases in the lease rate. While the restaurant’s business increased, Vorm said, the increased lease payments meant they would lose money this year.
“They were going to raise the rents again next year,” she said. “This year, it’s just going to cost us money to stay open. We worked really hard and I am really proud of what we created.”
Vorm said they decided to shutter the business. She was recently hired as managing editor of Sun Valley Property News magazine.
“We’re not the first people that this has happened to,” she said of the increased lease rates. “Ours was already double what the market standard is. Our real intention was for the building to be made stronger and last for another 150 years. We wanted to make a place where everybody could go and celebrate that history.”
West Corner Realty Venture’s principal agent, Jana Paley, did not return a phone call seeking comment Tuesday.
Commercial real estate agent Matt Bogue said rates have in some cases been increasing dramatically in recent months, causing “a shock” to some tenants. However, he said lease rates have still not yet returned to 2008 pre-recession levels.
Bogue said that during the Great Recession, commercial property owners in Hailey dropped lease rates by 30 percent, generally, to keep tenants in their buildings and to save some businesses from closing.
“Rates dropped 40 percent in Ketchum in some places,” he said.
Bogue said the economic upturn in recent years has led to absorption by new tenants of office, retail and industrial spaces in the Wood River Valley.
“Absorption is high for the past 24 months,” he said. “Vacancies are low as a result. We are starting to see more activity in Hailey in both sales and rental leases.”
Bogue said commercial retail space goes for $1 to $2 per square foot, depending on a property’s characteristics and location. He said Main Street in Hailey has seen numerous commercial properties change hands in the past few years, several of which have been redeveloped, or are in the process of doing so.
Bogue said he approached the owners of King’s Variety Store on behalf of a client recently.
“We made an offer and they said they didn’t want to sell,” he said. “They want to lease it. Now that’s someone who thinks they have a good asset and wants to capitalize on it. It may also say they believe in Hailey.”
“Things have even started heating up in Bellevue,” he added, including the recent sale of the old “bank building” on Main Street, which recently reopened as 7 Fuego restaurant. The Silver Creek Hotel is in the process of being built in Bellevue and management plans to be open this summer.
“All in all, I think the valley’s commercial sector is healthy,” Bogue said.
Bogue said Sun Valley Road retail space in Ketchum has low vacancy rates, compared to a few years ago when there were numerous vacancies along this major commercial thoroughfare.
“While we don’t formally track vacancy, the inventory has been reduced substantially,” he said.
- By Peter Jensen and Tony Evans of the Idaho Mt Express
- See article online at the Idaho Mt Express
