WOODBURY, Minn. — Woodbury isn’t known for its small businesses. It’s not Stillwater or Hudson — no centralized, historic downtown. It’s a young, sprawling suburb that attracts big box stores, chain restaurants and numerous medical offices.
But within the city, often part of older strip malls, is a core of small businesses with a loyal customer base. One example is Travel by Nelson, a full-service travel agency owned by Sheree Powers, which has been in the same strip mall since 1986.
There are new small businesses, too. After years of selling ice cream wholesale and through small grocery stores and delis, Crystal Bakker of Bridgeman’s Ice Cream and her co-owners decided to open an ice cream parlor. They were handed the keys to their future Woodbury storefront in late February.
“If we didn’t have (an established business), I don't think we could’ve opened in Woodbury,” Bakker said. “If we were starting from scratch and it was going to be, you know, you’re opening your store and you’re hoping it works, it’s so expensive that I don’t know we could have taken that risk.”
Bakker has co-owned Bridgeman’s since 2015 with her siblings, Brian Appeldoorn and Brittany Grove, and their cousin, Meggan Kerkenbush. The brand has been in Minnesota since 1936. Once boasting hundreds of physical locations, the single remaining Bridgeman’s in Duluth is holding steady with a loyal customer base, Bakker said. After establishing the Woodbury location, which will focus just on ice cream, she and her co-owners hope to begin licensing franchises throughout Minnesota.
After nearly two months of negotiation, Bridgeman’s ended up in an older strip mall area near Angelina’s Kitchen and Pino’s Pizza. If they hadn’t found that spot, they would have had to look outside of Woodbury for a location, Bakker said, calling the cost of rent in newer commercial spaces a “huge risk and unreachable for most people.”
Bakker described a 1,400-square-foot suite they looked at within CityPlace, near Radio Drive, where rent is just over $7,000 per month with a 2.5% increase each year and, at minimum, a 10-year contract. The surrounding businesses are Caribou Coffee/Einstein Bros. Bagels, a Bank of America branch, Qdoba, and Piada Italian Street Food and Cafe Zupas, both fast-casual restaurants with dozens of locations across several states. The location is the only CityPlace vacancy and has never been occupied, retail broker Tom Palmquist said.
Although every community will pose unique challenges for small business startups, one of those challenges in Woodbury is the average rate of commercial rent, Tyler Hilsabeck said. Hilsabeck is the Washington County representative for Open to Business, a free business counseling program that is a collaboration between the Washington County Community Development Agency and the Metropolitan Consortium of Community Developers.
Hilsabeck said growth in Woodbury’s business community creates more competitive rent for retail start-ups.
“It’s doing well — that’s why (the rent is high),” Hilsabeck said.
But what drives commercial rent higher is also what makes Woodbury an attractive place to open a business. The median household income in Woodbury ($105,393 for 2014-2018) is higher than Washington County as a whole ($92,376 for 2014-2018), which offers the opportunity to spend that extra income on restaurants, travel or shopping.
Woodbury also has the most people — with an estimated 71,309 residents in 2018 according to the U.S. Census Bureau, a 15% increase from 2010, it’s the most populous city in Washington County. This means a potentially larger customer base for the city’s businesses.
When choosing Woodbury for their ice cream parlor, several elements went into the decision, Bakker said. She and her family are part of the Woodbury community and they wanted to be close to the store. And with Bridgeman’s ice cream being hard-scoop and more of a “premium” product, Bakker and her co-owners knew they should be located in a “more affluent area.”
High commercial rent can also drive away potential businesses. Hilsabeck’s job is to counsel prospective small business owners on what it takes to start a company. There have been instances, he said, where someone has looked to start a business in Woodbury but hasn’t had the financial resources or ultimately decided to open in another city. Some of these businesses end up in other parts of Washington County where rental rates tend to be lower, he said.
“I would say that the highest barrier to entry here in Woodbury is that cost of business here,” Hilsabeck said. “You go up to another community like Hugo or Forest Lake or something like that, it’s just easier from a rental rate standpoint and a space standpoint.”
Moody Arafa owns Ze’s Diner with his wife, Zeze. After buying Cahill Diner in Inver Grove Heights and later opening the first Ze’s location in Eagan, they expanded to Woodbury in 2014.
Arafa said the diner’s current 3,500-square-foot location at 2190 Eagle Creek Lane was the only location in Woodbury they could afford. The only way they were able to get the rate they did, he said, is because the location had been vacant for a while and the landlord was having trouble finding a tenant.
“I got some discounts on rent, but I’m still paying nearly $40 per square foot,” Arafa said. “It’s not a cheap rent: I mean, my bill here is like $10,000 a month, just rent.
What Arafa pays is considered “reasonable for Woodbury,” he said. At his 3,000-square-foot Eagan restaurant, located in a dense retail area in the center of town, he pays about $7,000 per month for rent. At the 1,700-square-foot Cahill Diner in Inver Grove Heights, rent is about $3,000 per month.
More hoops to jump through?
Regulations and permits necessary to open and run a small business often vary depending on the city, county or state. Some small business owners in Woodbury said that, compared to other places they’ve opened businesses, the city seems to have more hoops to jump through.
“If you can find the right person, they seem to be very helpful,” Bakker said.
But when she reached out to the city to see if they would approve what Bakker called a “beautiful” front entrance, she said she received a 16-page document of the city’s rules and regulations in response.
“It’s just different because some places, basically, you own the land, get your permits, do whatever you want,” Bakker said. “And then there’s places like Woodbury where you have to meet certain standards of uniformity, and they just have so much more control over that and they want it to look a certain way — which is great for Woodbury, it’s helped it prosper, but it also, I think, prevents there from being as much character. Certainly less small, family-owned businesses and that type of stuff.”
Arafa and Angelina’s Kitchen owner Angela Verrastro echoed Bakker’s sentiment, with Verrastro saying the city is “very strict” about aesthetics — things like signage and facade design.
“I think that other municipalities might be more favorable to small business than Woodbury, and I’m hoping that that will change so we can attract more small businesses, because I think really that’s what adds flavor to any city, to any municipality: having things other than the chain restaurants and the chain businesses for people to choose from,” Verrastro said.
When asked for a response to general frustrations about aesthetics rules, Woodbury city planner Eric Searles seemed surprised by small business owners’ comments.
“We really haven’t heard this from our business community,” Searles said. “What we have heard when we’ve engaged the business community is to keep our architectural standards high, as our existing commercial property owners have invested in the community, and their concern is that that continued investment occur at the same level that they made.”
Searles added that he and other city staff would be happy to talk with small business owners about their specific concerns related to city regulations.
Verrastro also believes there may be some outdated rules the city should re-examine, such as requirements about odor suppression systems: not only can they be prohibitively expensive for restaurant owners, but industry experts are split on whether or not they actually work, she said. In Woodbury, odor suppression systems are required in restaurants close to residential housing, Searles said.
But for Verrastro and other small business owners, maintaining community is a business consideration that is weighed against things like rent costs.
“Yes, the rent here is very high — I could probably lease more space for less in the city of St. Paul,” she said. “But I’ve found that Woodbury was my community, still is my community — it’s where I raised my family and this is where I wanted to be. I know my customers, Angelina’s is a part of the community. That’s really important to me. I decided that it was worth it.”
“A lot of people told me — other business owners — that it’s really tough to make it in Woodbury, that’s why it’s all chain restaurants. And yes, I think it does come with a set of challenges. But I think if you can stick it out and really work, and work with the city and the community, and work at really being part of the community, it’s worth it.”