Just before it went belly up, the Fairfield Book ShopB次元官网网址檚 former owners passed the keys over to Glen and Donna Ashmore.

Though the store has been in business for 18 years, things just got too tough about nine months ago, when it changed hands.

The Ashmores have since turned things around at the little Cook Street Village store, where a steady stream of browsers check the rows of used titles, and hunt through the display on the table outside the big front window.

B次元官网网址淚tB次元官网网址檚 a tough town B次元官网网址� youB次元官网网址檙e getting it from all directions,B次元官网网址� said Donna, referring to the many struggles Victoria businesses face.

It started with a general downturn in the economy, where consumers watched their wallets more than in the cityB次元官网网址檚 boom days. Then, the HST took hold and spending was scaled back yet again. Now, many businesses say despite the cooling economic climate, rental rates are still hot and theyB次元官网网址檙e biting into the bottom line.

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Fairfield Book Shop naturally isnB次元官网网址檛 the only business struggling to keep its foothold in what many still call a shaky economic climate.

In an informal survey of Government Street businesses, most said times are tough B次元官网网址� though they declined to be quoted for this article. Some businesses owners said they were hanging on by a thread. The most common reasons: low consumer confidence and high rent.

Paul Dragan, owner of Reckless Bike Store, packed up both his Victoria locations recently and moved to what he sees as greener pastures in Vancouver. In December 2009, he closed his store at Government and Chatham streets, then his Yates Street location last August.

B次元官网网址淚 love the city, I just couldnB次元官网网址檛 make any money there,B次元官网网址� Dragan said from Vancouver.

B次元官网网址淵ou can eke out a living, but itB次元官网网址檚 a tough way to live. I couldnB次元官网网址檛 see it getting any better anytime soon. (Victoria has) got all the right stuff B次元官网网址� but it doesnB次元官网网址檛 have that pro-retail aura youB次元官网网址檙e looking for.B次元官网网址�

Though DraganB次元官网网址檚 paying higher rent in his two downtown Vancouver stores, he said business is better there.

Rent, however, is the issue for many local businesses.

B次元官网网址淭he rents keep going up,B次元官网网址� Donna Ashmore said.

ItB次元官网网址檚 not an easy pill to swallow when a poor economy is at play, and consumers are increasingly turning to e-readers and online shopping for books. Still, she said, Fairfield Book Shop, which sells used books, gets by just fine.

Next door, at home furnishings retailer, Surroundings, business has hardly been on a downswing at all. Owner Kristiane Baskerville also credits a good working relationship with the landlord.

B次元官网网址�(If) you have a bad lease, youB次元官网网址檙e screwed and you wonB次元官网网址檛 survive,B次元官网网址� Baskerville said.

She added, B次元官网网址淭he day of the triple-net lease is going by the wayside.B次元官网网址�

Triple-net leases can hurt tenants during times of increasing operating costs, because those costs are passed on to the tenant, said commercial landlord David Hamilton.

So, like Baskerville, business owners are increasingly opting for a gross net lease, where costs are fixed for the tenant. In such a case, the landlord eats any increase in operating costs.

The biggest and fastest-increasing operating cost faced by landlords is property taxes, said David Brumby, financial consultant and broker for NAI Commercial in Victoria.

B次元官网网址淐ommercial businesses are taxed at a significantly higher rate, and it keeps going up,B次元官网网址� he said. B次元官网网址淭hat impact is really heavily felt B次元官网网址� the landlords just pass it on to the businesses.B次元官网网址�

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Higher than normal vacancy rates arenB次元官网网址檛 pushing rents down, either.

According to a Colliers International report forecasting the Greater Victoria retail market this year, the vacancy rate for downtown streetfront properties was slightly above average.

B次元官网网址淎t the end of the day, youB次元官网网址檝e got to be rational and reasonable, and look at supply and demand,B次元官网网址� Hamilton said of landlords.

B次元官网网址淚f your occupancy has gone from 95 per cent to 70 in the last couple years B次元官网网址� your strategy is not working out. A good building full of tenants shows a landlord is doing (his or her) best to provide the best service.B次元官网网址�

Hamilton said desirable storefronts, such as Lower Johnson and Government Street, have seen increasing base rents for the past 10 to 15 years, while non-prime locations havenB次元官网网址檛 gone up as much.

But reducing base rent for tenants to ease the burden isnB次元官网网址檛 necessarily the answer either, said Sasha Angus, economic development officer with the Greater Victoria Economic Development Agency.

B次元官网网址淚tB次元官网网址檚 really up to the individual landlord what they can afford to do,B次元官网网址� Angus said. B次元官网网址淭heyB次元官网网址檙e a business like any other business and need make sure theyB次元官网网址檙e not losing money. If businesses have increased operating costs, they have to pass that on to the consumerB次元官网网址� which, in this case, is the tenant business.

Vacancy rates and rent prices are forecast to remain steady through 2011, according to Colliers.

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WhatB次元官网网址檚 the solution to the cost of doing business in Victoria? It depends who answers the question.

Baskerville, at Surroundings, saw her operating costs shoot up 20 per cent in just five years. Negotiating a gross net lease helped ease the pain, but she said becoming a one-of-a-kind business in the city did the trick.

B次元官网网址淭hatB次元官网网址檚 probably why IB次元官网网址檓 doing quite well in a tough economy,B次元官网网址� she said.

Baskerville and Ashmore agreed eliminating the HST might make consumers more amenable to spending.

Expanding the number of walk-to, highly attractive retail destinations is key to keeping rents reasonable, Hamilton added.

He pointed to development of lower Pandora Avenue as a sign the city is moving in that direction, however B次元官网网址渢he city of Victoria is not very development-minded, so when thereB次元官网网址檚 not a lot of new supply on the marketB次元官网网址� rents remain high.

From the Greater Victoria Chamber of CommerceB次元官网网址檚 perspective, taxes are rising faster than the regionB次元官网网址檚 growth, a trend theyB次元官网网址檝e called unsustainable.

B次元官网网址淚tB次元官网网址檚 obviously something the chamberB次元官网网址檚 been concerned about,B次元官网网址� Angus said.

B次元官网网址淚t makes it a very challenging environment. You need to make sure through good times and bad, you stay disciplined B次元官网网址� and reduce the cost of doing business as much as possible so we can be competitive on a global level.B次元官网网址�

The property tax issue was also tackled by the Canadian Federation of Independent Business this month, which called on municipalities to freeze business tax increases until they were twice the residential rate. The current ratio is closer to 3:1.

Meanwhile, Brumby said hard times are part of life for any business owner.

B次元官网网址淭hatB次元官网网址檚 the economy. At any point in time during the business cycle, youB次元官网网址檒l see different things happening.

B次元官网网址淚 think there is room for optimism. It is a challenge, but weB次元官网网址檙e managing through very well.B次元官网网址�

ecardone@vicnews.com

Paying the taxman

Greater Victoria business tax ratios in 2009:

B次元官网网址� N. Saanich: 6.00

B次元官网网址� Victoria: 3.59

B次元官网网址� Saanich: 3.58

B次元官网网址� Langford: 3.16

B次元官网网址� Esquimalt: 2.98

B次元官网网址� Oak Bay: 1.79

Vacancy rates

Retail vacancy rates in Greater Victoria:

B次元官网网址� 2010: 5.9 %

B次元官网网址� 2009: 3.5 %

B次元官网网址� 2008: 2.7 %

B次元官网网址� 2007: 2.9 %

B次元官网网址� 2006: 7.0 %

B次元官网网址� 2005: 7.8 %

B次元官网网址� 10-year avg.: 5.5 %

B次元官网网址� Shopping centre vacancy, 2010: 3.5%

Source: Colliers International

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