By Victoria Hurley-Schubert
After a “decent” holiday season, businesses are hopeful that 2011 will be the start of a slow upward trend and a year of change.
”We think things are slowly beginning to improve, it’s been a tough couple of years,” said David Newton, vice president Palmer Square Management. “There were signs of life in the last quarter of 2010.”
The last quarter was even “OK,” said Peter Crowley, president and CEO of the Princeton Regional Chamber of Commerce. “Many had a good fourth quarter and that saved the year.”
Mr. Crowley also hopes that consumers will keep this trend going by spending locally and keeping in dollars in the local economy. “It maintains an environment where you can maintain business growth,” he said. “Because Princeton has a very strong shop-local initiatives, we didn’t go through some of the dramatic changes other areas went through. (Local residents) know how important it is to keep those dollars in the local community and with local merchants.”
Within Princeton’s retail industry, there will be some shifts, with tenants shuffling spaces, new merchants coming in and some even expanding.
There will be a number of stores leaving Palmer Square, including the recent departures of long-term tenants Coach and Nine West, which closed last week, said Mr. Newton. Lilly Pulitzer will fill the former Coach location in February.
”We should not be talking about them leaving, we should be talking about them being here for 25 years, it says a lot about the loyalty of Princeton customers,” said Mr. Newton. “I see a lot of transition where a lot of people will leave the square and new people will come. A good tenant mix reflects the market, and change is in the air.”
Management is in talks with a new tenant for the Nine West space. Someone is also in talks for the former Pawtisserie space.
Changes will also occur in 2012 and by 2013, development will be finished and things will calm down and stabilize.
”Princeton has always been on people’s radar and calls are coming in,” said Anita Fresolone, marketing director at Palmer Square.
Calls and inquiries are also coming in at the Princeton Shopping Center on Harrison Street.
”The phone is ringing off the hook with interest and it has been for a good nine months now,” said Chris Hannington, general manager of the Princeton Shopping Center. “We have tenants that are expanding and renewing leases. The interest has been really good and encouraging.”
Ace Hardware, which occupies 13,000 square feet, is expanding into another 5,000 square feet of adjacent space. Princeton Bath and Kitchen is also moving to a larger space within the shopping center, next to Jordan’s Card and Gift.
”I gave them a space to put a display in, and they decided to lease it,” she said. “They’re leaving 1,500 square feet and moving to 2,500 square feet.”
Other stores are also inquiring about expansion, she said. “We’ve had several tenants renovate and reaped some true benefits from that and we’ll see more of that 2011,” she said. “The customers seem to respond to that and they love it.”
In addition to the two expansions, a new Verizon store recently opened in the center.
No stores plan to leave the shopping center this year, said Ms. Harrington. A bookstore, Chicklet, and the postal facility inside the store, closed at the end of 2010 after the termination of its temporary lease. Management is in negotiations with a prospective tenant for the space.
Among the Princeton Merchants Association members no one is absolutely confident, said Mark Censits, president and owner of Cool Vines wine shop on Spring Street. Merchants are saying January sales are better than they were last year, he said.
”In Princeton there is a lot of good stuff happening,” he said. “On our street, Jane did really well; upscale consignment did well and stores that are supportive of the current economy do really well. The discount stores are doing really well. People are looking for value and everyone is trying to meet the consumer where they are.”
To meet consumer needs, some of the restaurateurs are offering discounts or different pricing strategies to attract customers. “If they have the right price point and the right stuff (they will get customers),” said Mr. Censits.
Businesses are now operating with more tactical strategies to meet consumer needs, rather than planning. “It’s a scrappy time, you need to see opportunities and go after them,” he said.
One example of this is the pop-up location. Mr. Censits mentioned a unique business in Hopewell he recently visited at Rose and Chubby’s diner, which is open six days a week. An outside restaurateur has a new brunch service on Sundays.
By using this pop-up concept, “a new team is building a new restaurant without the expense and testing the market,” said Mr. Censits.
Entrepreneurs are not going with the traditional route of going and building a store, they are looking for more ways to lower the capital investments and have fewer risks.
”The pop-up thing is interesting,” said Nick Hilton, president of Hometown Princeton and owner of Nick Hilton Clothiers on Witherspoon Street. “Some of our members have figured out how to showcase their inventory without a permanent expense.”
Pop-p stores, such as Merrick’s, an upscale clothing store that had a successful location at the Princeton Shopping Center last summer through the holiday season, has committed to a year contract with the shopping center.
Slow recovery trickles down throughout the market affecting how merchants conduct their business.
”My general sense is people feel that there is going to be a reasonably slow recovery,” Mr. Hilton said. This means businesses are not beefing up inventory too much or cautiously hiring, if hiring at all.
Mr. Hilton is the exception to his own feelings, having hired his first full-time employee in three years.
”In the long run over the course of the next 12 months, I’d say the Hometown Princeton people are optimistic, but people are cautious about prices and weather,” he said.
Besides businesses investing in Princeton by opening new stores and expanding, the commercial real estate market should have a busy year, especially on Witherspoon Street.
At least one person is a little worried about the impact of online shopping on Princeton’s mix of small, independent boutiques.
Retailers, especially the mom and pop shops, are hurting because of increased competition from online retailers who are cheaper and more convenient, said J. Robert Hillier, chairman of the board of the Princeton Regional Chamber of Commerce. Online sales were 5 percent in 2009 and 9.3 percent last year. “If it continues to double, what will happen to the mom and pop retailer?”
Although office space at Palmer Square is all occupied, and all tenants are looking to stay, office space in other sections of town is still struggling to reach capacity, said Mr. Hillier.
On the bright side, Princeton is suffering less than the rest of the state, Mr. Hillier said. Princeton has about 18 percent vacancy, when the levels should be 8 percent; some parts of the state have 24 percent vacancy.
The sweet spot in the Princeton housing market seems to be with homes priced about $600,000 to $700,000, with $1 million properties not selling, according to local Realtors, said Mr. Hillier.
Mr. Crowley also pointed out that Mr. Hillier has invested in downtown Princeton with his recent $3.9 million purchase of eight properties on Witherspoon Street. The redevelopment of the Witherspoon corridor is very uncertain right now, with lots of projects in infant stages, such as the hospital site, redevelopment of the old Valley Road school building and Mr. Hillier’s purchase.
”It will revolve around what happens to the old hospital space,” said Mr. Crowley. “I you develop Valley Road, that could help drive the hospital situation.”
With the University Medical Center at Princeton setting up to move to its new Plainsboro location in 2012, there will be a large hole in the Princeton fabric that will need to be filled. “It will continue to be a robust part of the Princeton community, just not as a hospital,” said Mr. Crowley.
Other area hospital projects will bring jobs and dollars to the region.
Mr. Crowley sees long-term benefits of healthcare sector growth in the next 12 to 18 months with the completion of Capital Health’s project off I-95 in Hopewell Township. Both projects in Hopewell Township and Plainsboro are expected to bring jobs and associated spending to those areas.
Healthcare and education are doing better in this economy, said Mr. Hillier. With people out of work, the school rosters are full with students sharpening their skills or changing professions. “People have the time and the incentive to learn something new,” he added.
Start-up businesses and small business, especially those fed from the area universities, will have the greatest growth, with the largest expansions coming in the high technology and biotech sectors, said Mr. Crowley. He doesn’t see manufacturing expanding, but more being done in the technology, research and development fields.
Everyone agreed finding funding is still difficult.
”I think people are feeling a little more confident and comfortable about things in general, but they are still guarded,” said Mr. Hillier. “You can see savings going up, but not spending,” he said. “The local banks have money, but they are being very guard and thorough about any loans they make.”
Venture capital markets are opening very slowly, as are angel funds, said Mr. Crowley.
Banking and finance in the region will be exciting, with Wells Fargo coming into the area next month, as Wachovia branches make the changeover to Wells Fargo.
”You’ll see a continued expansion of community banking in the region,” said Mr. Crowley. Hopewell Community Bank, The Bank of Princeton and First Choice Community Bank are expanding in the Princeton region, which means more jobs and consumer choice, he said.
Hotels and eateries should be hopeful in the new year as there has been an increase in interest and queries from companies looking to bring meetings and conventions to the area in 2011 and 2012, according to the Convention and Visitors Bureau, which is part of the PRCC.
”There was a slight increase in what corporations were spending on Christmas parties and in the restaurants, it’s all on a gradual trend upward,” said Mr. Crowley.Large companies with locations in the area, such as Bristol Myers Squibb, are attached to the world economy, and their business will pick up as the world economy picks up, said Mr. Hillier.
One industry that is hurting is construction and all the associated trades, which may not see any uptick or recovery for another two years, said Mr. Hillier.
Mr. Hillier said he has heard from a couple of people who told him the unions are beginning to call the non-union jobs to get their people work.
Besides the construction industry, Mr. Hillier also thinks the architects, such as himself, are two years away from recovery and seeing work like they used to. “Which means the contractors are two years away also,” he added.
Also two years away from recovery are municipalities, who need to increase their ratables. “It’s a chain reaction, you need to have a market that needs facilities, then you have to get them built, then the town can collect taxes,” said Mr. Hillier.
”When people start to see a future, things will get better and begin to spend money again, albeit cautiously,” he added.
Business leaders also see a continued recovery coming, one that will take longer than people anticipated, said Mr. Crowley. A second dip into recession is not expected. “The chamber members as a whole do not see a second dip into a recession,” he said. “They understand that housing is weak and people have adjusted to this and are spending more carefully.”

