Downtown Rehoboth retailers struggle, cite COVID restrictions, high rent, parking

REHOBOTH BEACH — As the fate of the famous Dolle’s sign is being debated, it isn’t the only institution possibly leaving downtown Rehoboth Beach.

Several long-standing businesses are exiting Rehoboth Avenue for the highway or closing their doors altogether.

The shift is due in part to the decreased foot traffic and social-distancing restrictions brought on by the pandemic, but there are other issues driving some businesses away from the center of town.

“There is a lot of transitioning, a lot of moving and a lot of closing doors,” Carol Everhart, president and CEO of the Rehoboth Beach-Dewey Beach Chamber of Commerce, said of the greater Rehoboth Beach area in the midst of COVID-19.

Carol Everhart, president and CEO of the Rehoboth Beach – Dewey Beach Chamber of Commerce. Special to the Delaware State News/Chuck Snyder

“I hope I’m wrong, but my belief is that we’re going to lose 30% of our businesses,” she said.

Although she said those current and pending vacancies will be spread evenly between downtown and more outlying areas, many enterprises near the boardwalk are relocating to retail areas along Del. 1.

“I don’t think that’s totally (due to) the pandemic,” Ms. Everhart said. “There’s a multitude of reasons.”

Restaurants move to Coastal Highway

Tom Ibach, the owner of Dolle’s Candyland, is closing his boardwalk store and plans to move his candy-manufacturing facility out onto the highway, while Agave, a Mexican restaurant in Lewes which was supposed to open a second location in downtown Rehoboth Beach, has opted for a space on Del. 1 instead.

Furthermore, both Nicola Pizza, which has been on First Street since 1971 and on Rehoboth Avenue since 2010, and The Pond Bar and Grill, which has been downtown in some form since 1982, also will be leaving for Coastal Highway in the coming months.

“The understanding I have is that there’s a big exodus from Rehoboth Beach,” said Nick Caggiano Sr., the founder and owner of Nicola.

By fall 2021, Mr. Caggiano will have moved his restaurant out to a Lewes property near Ocean One Plaza, which he and his family owns. As he grows the business, he wants to consolidate his real estate holdings.

“We’re adding outside eating, which is really popular right now, and we’re building a nice sports bar out there and, of course, family dining,” in addition to more office space and an expanded takeout area, he said.

“Rehoboth has been a great place,” he said as he prepared to move out to Lewes. “I can’t say anything derogatory about the town.”

Peter Borsari, the owner of The Pond, said he also intends to refocus on takeout when his business moves out to the old TGI Friday’s location on the corner of Miller Road and Del. 1.

“I would venture to say within three months, we should be in the new location,” he said.

“Because of COVID,” Mr. Borsari said his customers “don’t want to drive downtown on a regular basis for takeout and carryout. The location on Coastal Highway is centrally located, and we believe we can really expand our takeout and delivery services.”

But he added that the demographics downtown have been changing for at least a decade.

Shifting demographics and rising rents

“You look at the demographic, the people who are buying small beach cottages and tearing them down and putting up little mini hotels,” Mr. Borsari said.

“A family of four who could come into Rehoboth in the summer and rent a beach house for $1,500 to $2,000, that property is gone, and it’s been replaced by a property that probably rents anywhere between $6,000 and $10,000 per week in the summer,” he said.

“We’re a middle price-range restaurant and bar,” he said. “If someone’s going to come in and rent a house for $8,000 a week, they probably can’t afford to do it on their own, so they’re going to grab their sister and their best friend and their families to pull all their resources into one house. Then, they’re going to go to Giant and buy food and cook at their house all week and go to the beach.”

At the same time, Mr. Borsari said, “the people who can afford an $8,000 house on their own are probably going to a much more expensive restaurant than a burger joint.”

Ms. Everhart said high rents are a problem for business owners, as well.

Rachel Webster, who has owned Rehoboth Toy & Kite Co. for 28 years, has no intentions of leaving downtown, but said that it’s gotten increasingly difficult for her to make it there over the course of the last few decades.

“I can’t believe that the landlords are raising rent at this time,” she said of the rent increase that forced Dolle’s from its nearly 100-year-old location.

While Ms. Webster said she’s lucky that her current landlord, Grotto Pizza, has been very lenient as she and other tenants have struggled financially through the pandemic, other local landlords are known to be ruthless.

“I’ve watched a lot of businesses go out because the landlords raise the rent,” she said. “There will be like a great little mom and pop restaurant or a little deli that comes in, then they get through their first three years, they’ve spent all their life savings and are finally getting established, and their landlord raises the rent.”

She went through this herself about 10 years ago when her longtime landlord at 67 Rehoboth Ave. raised her rent by 20%. Over the course of her 18-year tenure in that location, Ms. Webster said she has had 16 different neighbors occupy what’s now Mason’s Famous Lobster Rolls at various times.

She placed the blame squarely on the backs of some landlords.

“It’s just been my experience that the landlords just don’t seem to care,” Ms. Webster said. “I guess their property value continues to go up, but you never get that great downtown feel because there’s this constant overturn of businesses.”

City government

But Mr. Borsari said the city government deserves some blame, as well. He said “the current political environment” is part of what’s driving him out.

“The new City Council is not pro-business. The mayor is not pro-business. The actual city government doesn’t seem to be pro-business,” he said.

“We were shut down for three months,” Mr. Borsari said. “What did the city do to plan for reopening downtown Rehoboth?”

He said local business owners ended up having to get “together and put together different ideas for the city to implement. They tried a few. Most of them they didn’t.”

But otherwise, he saw the city do very little to blunt the impacts of the pandemic.

“I did not see the city come up with a plan that said, ‘You know what we’re going to do. We’re going to try to do this to help the downtown businesses, which have lost millions and millions of dollars between March 16 and our reopen date of June 1,’” Mr. Borsari said. “The only thing I saw the city do was put up parking meters.”

He said his distaste for the city government and indifference toward being located downtown are new.

“I tried really hard to support downtown Rehoboth for a very long time,” Mr. Borsari said. “I was on the board of Main Street (a downtown business support organization). I founded, with a couple of other restaurants, a group called Locals Season, which was meant to bring locals back into downtown Rehoboth once the summer season ended.”

But Rehoboth Beach Mayor Stan Mills said the city government has not been missing in action.

“The city and the mayor and commissioners have been very receptive to and understanding of the businesses that are suffering,” he said.

“The city manager has offered and is willing to work with anyone in our business community that might be short on money and in need of help and deferment in the payment of any bills,” Mayor Mills said.

He added that throughout the pandemic, the city has held weekly meetings where citizens and business owners could air their concerns.

These meetings, Mayor Mills said, are where the idea developed to allow shops and restaurants to operate retail and dining spaces on the sidewalk during the summer.

Traffic and parking

To further accommodate the downtown businesses on the sidewalk, the mayor said that over the summer, the city replaced many paid parking spots with pedestrian pathways.

“The city gave up parking revenue to the tune of $1.9 million, so we’re hurting a little bit ourselves, too,” he said.

This was in addition to meterless Mondays, an initiative which made all on-street parking downtown free between 4-10 p.m. on Mondays during the summer.

“I have to give the city credit,” Ms. Everhart said. “I think they’re looking for ways to assist, and they’ve definitely done that.”

Still, Mr. Borsari plans on moving his restaurant to a space closer to most of his customers, with much less traffic.

“I’m going to a space where it’s centrally located,” he said.

“Most of my customers live off of Route 1 in one of the many neighborhoods. We (will) have free parking. No one is going to have (to) circle around the restaurant for half an hour trying to find a parking place,” Mr. Borsari said. “It’s not going to take 25 minutes to get downtown.”

When asked about all the restaurants leaving downtown Rehoboth for the highway, Mayor Mills said, “there’s nothing I can put my finger on that the city’s doing wrong.”

He said downtown Rehoboth is an inherently challenging place to run and grow a restaurant.

“To grow in downtown Rehoboth is difficult. You have size constraints because of the building sizes,” Mayor Mills said.

“You’ve also got constraints on parking,” he said.

“If you have a restaurant move out onto (Del.) 1 outside the city, you might very well be able to find a restaurant location which affords parking right on the premises, whereas downtown, people might actually have to walk a few blocks to get to the restaurant,” Mayor Mills said.

Ms. Webster said the signature Rehoboth Beach traffic that made it challenging for Mr. Borsari to run The Pond is the lifeblood of her business.

“I love traffic in Rehoboth. I wish we had a better parking system or a parking garage, but we have a really hardworking Chamber of Commerce that works with the city, as far as doing the best we can with parking,” she said.

“I believe people are going to come to the beach if the ocean and the sand stay there, whether the meter is $2 an hour or $4 an hour,” she said. “Nobody is thinking about that. They just need to find a place to park.”