The Square: Hardly Hit by the Recession

Economists, columnists and political pundits all agree that the nation is mired in a recession. New England in particular is on the bust end of a bom-bust cycle.

But Harvard Square businesses seem ignorant of be economic indicators. While bulldozer operators in other parts of the state are dozing off, construction goes on all around the Square.

Rental space is nabbed as soon as it becomes available, and precious little ever becomes available, Harvard Square businesses are doing well for recession times, and they are firmly entrenched in cubbyholes and mini-malls located on Brattle St., Mt. Auburn St., Church St., Massachusetts Ave., John F. Kennedy St., and all of the smaller side streets in between.

This year, three large retail outlet stores will enter the market-Tower Records on Mt. Auburn St., and HMV and The Express, a division of The Limited, at the newly-constructed One Brattle Square. And the Body Shop, an environmentally conscious beauty products store, joined the Square business community at the end of May.

While many local areas that have been expanding economically in recent years are now merely holding steady at best, the Square, while not exactly booming, is moving forward.

"We've been doing pretty well," says Edward P. Olson, manager of the Harvard Bookstore. "I certainly think people [in Harvard Square] are less affected than the general economy."

In fact, Olson says, his store is doing better this year than in recent years.

"I guess there's a certain quality of recession proof to people in the Square," Olson says.

Retailers and rental property managers around the Square agree that the area is somewhat insulated from national economic trends by the presence of universities like Harvard and MIT, which ensure that the Square is frequented by well-educated, well-employed consumers.

"It's a microeconomy," says Richard L. Friedman, managing general partner of the Charles Square complex, which includes the Charles Hotel.

Friedman, who has lived in Harvard Square all of his life, says that the evidence seems to support the perception that the place is "relatively recession-proof."

And while this year has been a "B" year for business at the hotel, Friedman says, it might have been much worse at a different location.

And the Square remains "One of the healtiest locations in the country," says Friedman, who is also involved in developing projects around the country.

The worst of the recession is behind Harvard Square businesses, Friedman says.

"Things are definitely picking up," says Friedman, "Bookings [at the Charles Hotel] are way ahead over last year at this time."

John P. DiGiovanni, vice president of Trinity Property Management, which operates The Garage on JFK St. and the Atrium on Church St., agrees that the future looks good for Harvard Square's economy.

"I do sense that it's picking up," DiGiovanni says, pointing to the end of last year and early this year as a low point for Square businesses. Especially with the new school year beginning, he says, there's a "good feeling" among businesses right now.

Richard Getz, who manages property rented by Urban Outfitters, The Lodge and The Greenhouse Restaurant, says that the businesses he works with have been doing well, due in large part to the Square's stable economy.

And it is that stability that makes the Square attractive to prospective retailers and office-renters. Once space is rented in Harvard Square, especially retail space, it is usually rented for a long time.

The construction era is nearly over in the Square, local developers say, simply because there is very little space left.

With partner John Hall, Friedman is planning to demolish the Harvard Manor House Hotel and replace it with a six-story building that will open up 100,000 square feet of new retail and office space. The demand for that space, Friedman says, is still high.

"There is tremendous demand in Harvard Square," Friedman says.

He and DiGiovanni say that prime retail space is renting at about $100 a square foot and the best office space at $25 a square foot, prices comparable to those of top locations in Boston.

The nearly-complete 113-room Inn at Harvard, on Massachusetts Ave. at Harvard St., will be booking its first guests for late October, and Robert Banker reportedly has plans to develop some of the last available space in the Square, an empty lot on Eliot St.

After that, there will be little room left.

"I think we're seeing the end of a 10 to 15 year cycle of construction," Friedman says. "There are no more available sites."

DiGiovanni says that he currently has no vacancies in his rental space, and that there is little turnover, especially in retail.

"It's sort of a private club," DiGiovanni says. "It's difficult to get into."

Some businesses have left the area, including Underground Camera, Bennetton, Ching Hua restaurant and Sam Goody's, but for the most part, retailers are eager to get into the Harvard Square market. Those already here remain upbeat about the area's future.

"We're lucky to be in Harvard Square," Friedman says.