Norfolk's aging, ailing Waterside confronts a shaky future

NORFOLK

Ken Kaufhold looked past his empty bar Thursday to the smattering of people sitting in Waterside’s food court.

This, he said, is typical for the downtown festival marketplace. There are fewer customers. Less business. Lower profits.

“It’s been painful,” said Kaufhold, who has owned Pastaria, a restaurant and bar inside Waterside, for nearly two years.

Waterside was once seen as the catalyst for downtown redevelopment, a riverfront magnet drawing tourists and locals to Norfolk.

But as redevelopment has swept through most of downtown – creating more upscale restaurants and entertainment spots – Waterside’s traffic has dwindled. City leaders say they need to examine the marketplace’s future, whether that be renovation, refocusing its purpose or tearing it down and doing something completely different.

“We kind of need to reinvent it,” City Councilman Barclay C. Winn said. “Downtown’s changed, and we need to adapt to that change.”

When Waterside was built in 1983, it was a haven for small shops and vendors. Boosted by the state’s blue laws that closed other stores on Sundays, the marketplace thrived in its early years.

But by the mid-1990s, it was no longer profitable, and the kiosk-and-storefront idea had become stale.

City leaders lured restaurants and nightclubs, reinventing Waterside as an entertainment and dining hot spot with national chains such as Jillian’s, Hooters and Outback Steakhouse.

The city’s housing authority bought the marketplace from its private owner in early 1999. At the time, Norfolk leaders said they planned to eventually find a private owner and get out of the landlord business.

Nearly 10 years later, the city still owns Waterside, which has become less of a boon to municipal coffers.

It brought in roughly $2.2 million in revenue from real estate, food, beverage and admission taxes last year. That’s a $300,000 drop in annual tax revenue since 2004.

Leases in recent years haven’t covered the marketplace’s operating costs and debt payments. The city has subsidized the facility with $850,000 annually. This year, Norfolk will have to find an additional $250,000 before the end of June to make up for additional lease shortfalls.

That, combined with what business owners and officials say has been a slowdown in business over the last few months, has sparked cries for studying the marketplace.

“Practically everything is on the table at the moment,” said Lane Brown, Waterside’s general manager. “It’s 25 years old and it looks like it’s 25 years old.”

Brown said the mall’s larger tenants – the chain restaurants and nightclubs – are still profitable. Because they fill much of Waterside’s space, only 3 percent of the retail square footage is vacant at the moment.

But to visitors earlier this week – conventioneers with their name tags flapping, families enjoying spring break, businesspeople stepping off the ferry – Waterside may not have looked as successful.

A few vacant stalls dotted the food court, and the carpeted stage just outside Kaufhold’s stand was empty. Upstairs, Sharon Hogan tended to a handful of customers at Erin’s Treasures, an Irish imports shop, but the two storefronts nearby were both bare.

Hogan has been at Waterside since its first Christmas in 1983. She bought the shop in 1985 and has watched Waterside’s fortunes wax and wane several times.

“Those of us who are here now have been here a long time,” she said. “It has slowed a little. There aren’t stores like myself still in here.”

With its questionable future, one of the biggest challenges is getting people to sign new leases, said John Kownack, an assistant executive director for Norfolk’s Redevelopment and Housing Authority. Some business owners shy away from leasing and making upgrades to spaces that they may have for only a couple of years, he said.

Brown said he lost several prospective tenants recently for that reason. “In at least a few of those cases, they would have been great additions,” he said.

To help tenants who are struggling, store owners often offer to reduce lease rates, Kownack said.

“We don’t want to see places go dark,” he said. “We’re doing everything we can to help those businesses to be successful, or be less unsuccessful.”

As he surveyed the scene inside Waterside’s food court Thursday, Kaufhold said he was looking to get out.

Not long ago, he was close to selling the business to a potential buyer who got skittish because of lease issues.

“It’s a shame at such a beautiful location that there’s not a lot of people patronizing this building,” he said.

Meghan Hoyer, (757) 446-2293, meghan.hoyer@pilotonline.com