Economy not stopping new companies in Mid-Columbia

By Pratik Joshi, Herald staff writer

KENNEWICK — Brad Markquart soon plans to open his second furniture store in Kennewick.

It’s about taking a little calculated risk at a time when many retail businesses are wary of expanding, said Markquart, who has owned Complete Suite Furniture on Columbia Center Boulevard for the last three years. “We want to turn lemon into lemonade.”

Markquart said the retail market in Kennewick is doing better than Spokane, where he has two stores.

But Michael Thomas sees a different picture. He plans to close down his International Futon & Furniture Co. on Clearwater Avenue in Kennewick that he’s owned for 20 years with his wife.

People aren’t spending money on anything they don’t think is essential, he said. Though the Tri-Cities hasn’t been hit as hard as many other communities nationwide, consumers are being cautious, he said.

But the number of new business licenses issued from January through mid-May in Kennewick and Richland is marginally up this year, compared with last year. In Pasco, that number was slightly down, after a continued increase in the same period from 2006-08.

The area has seen its share of closures, however.

Recently, Sofa Gallery in Pasco, Richland’s Circuit City, and Kennewick’s Joe’s Sports and Sportsman’s Warehouse, and about a dozen Tri-City restaurants have closed down for lack of business in the last 12 months.

That doesn’t worry Craig Richards and Mark and Teresa Morasch, who opened last week their upscale discount women’s clothing store Twist in the strip mall near Costco and Olive Garden in Kennewick.

“We have great faith in the Tri-Cities. It’s a booming, happening economy,” Richards said.

There’s a need for high-end merchandise for women, from premium denims to dresses and tops, said Teresa, who along with her partners, runs Walla Walla Clothing Co. in Walla Walla. She said her Kennewick store will offer different merchandise and experience and provide value to the customer.

Predicting future retail business volume is complex, but it’s possible to identify retail trends in an area by combining sales data with econometric data, like the number of bankruptcies, the unemployment rate, housing starts, changes to relative home values and income levels, said Al Beery, director of client services at Pitney Bowes Business Insight, a global company offering a variety of services to help businesses make informed decisions about their priorities, including expansion and downsizing.

His company recently identified the top five U.S. metro areas, which includes Seattle, that are going to experience the best relative health in the retail sector through 2010. This analysis can be replicated to analyze even small market area using county level data, he said.

The Tri-Cities’ low unemployment rate, stable housing market and the availability of relatively high paying jobs at Hanford can make it attractive for businesses to start a new business or expand in the community.

There’s no doubt some communities have faced minimal impacts of the economic slowdown, Beery said. “Your community may be one of them.”

The Tri-Cities wasn’t hit by the recession in January, as measured by the Adversity Index developed by Moody’s Economy.com and msnbc.com.

Also, the recent federal stimulus package for Hanford has helped enhance optimism about the economic health of the area.

Rafael’s Taco House in downtown Kennewick has been open for almost two weeks and the business has exceeded the expectations of owners Brenda Tole and Cindy Meyer.

Their moderately priced menu and quality food is helping, said the sisters-in-law who describe the place as a Mexican restaurant with an American flavor. They were involved in child care and decided to switch tracks when they saw a lease sign at the former Taco Del Mar store several months ago.

It looked like a great business opportunity to revive Rafael’s, a taco joint in downtown Kennewick that their relative Donna Meyer owned from 1973-83, both said.

“We got a nice lease arrangement,” Tole said.

Commercial real estate owners are offering short term, flat-rate leases to prospective tenants, said Dirk Stricker, broker and owner of Dirk Stricker Commercial Real Estate in Kennewick. For many who are looking for a new career, an affordable lease is turning out to be a big incentive to get into small business, he said.

Recently, a lot of businesses that provide a variety of personal and professional services have opened in the Tri-Cities, he said. “The health care industry is pretty slush in the area,” said Stricker, who also has helped many businesses move to smaller locations and help them reduce overhead costs.

Since Jan. 1 through mid-May, Kennewick issued 165 licenses for business at commercial locations within the city, up from 150 in the same period last year, and 111 licenses to out of town businesses, mainly contractors in building, painting, landscaping, up from 84 in the same period, and 81 licenses to home-based businesses, a drop of four, said Evelyn Lusignan, city’s customer service manager.

Pasco issued 125 new business licenses from Jan. 1 to May 15, which is 11 fewer than in the same period last year.

Richland issued 318 new business licenses from Jan. 5 to May 5, one more than the same period last year, said Trish Herron, the city’s business and tourism development specialist.

Even in a slow economy, some businesses tend to do well, she said.

For example, furniture and home decor businesses are doing well because people are trying to add value to their homes instead of moving into new ones, she said.

The recent closure of Circuit City and Joe’s Sports and the proposed closure of Jo-Ann Fabric and Craft store in Richland has more to do with corporate decisions than local store performances, Herron said.

Joseph Antonowicz, former operations manager for Circuit City in Richland, agrees.

“Our store was profitable,” he said.

He now works at Digital ReStock, a consumer electronics store near Burlington Coat Factory in Kennewick that opened in April. The store, which also sells factory-refurbished items, is trying to attract those who shopped at Circuit City before it went bust, he said.

Antonowicz said the store has knowledgeable employees, and offers great quality at low prices with a 30-day return policy and six-months replacement policy.

He said his store can compete with big-box retailers because there’s enough business for all.

“The Tri-Cities’ economy is fairly stable,” he said.

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