2 landmark businesses look to move over high rents — just as the city plans to revive downtown

Landmark downtown Windsor businesses are considering relocating as they say they're struggling to keep up with significant rent hikes. 

But as the city forges ahead on a multi-million dollar downtown revival plan, the area's city councillor says he's pushing to find solutions that protect local business owners while encouraging investment into the area. 

Phog Lounge and Craft Heads Brewing Company— long-standing bars that have hosted countless comedy nights and musical performances — could be moving out of the downtown as they say their shared out-of-town landlord has made their rent unaffordable. 

And one other business owner, who didn't want to speak on the record with CBC News, also said they recently faced a high rent increase that forced them to move a few storefronts down from their original spot.

The news of rent spikes impacting local businesses comes about a month after the City of Windsor approved a $3.2 million downtown plan that aims to boost foot traffic, attract new investors, revitalize local businesses and better support people struggling with mental health and addictions issues. 

But business owners say that negligent, out-of-town investors threaten local entrepreneurs who have spent years putting their own resources into trying to make the downtown a more vibrant place. 

New Craft Heads landlords asked for over $10K a month

Having been at the corner of University Avenue and Pelissier Street for about 10 years, Craft Heads says it could soon be pouring its last cold one at the location. 

In recent years, the local brewery has rented out three units at the property. One is a taproom where people can enjoy a drink and live entertainment. The other two were renovated for on-site brewing. 

The business says it has invested tens of thousands of dollars into the brewing spaces. 

Craft Heads co-owner Jason Barsotta says the building was recently sold to an out-of-town landlord, who wanted to triple their rent from $3,500 to more than $10,500 a month when their lease was up in January. 

Rent increases are not regulated under Ontario's Commercial Tenancies Act. If there is no tenancy agreement, landlords "can increase the rent by any amount at any time," the province says on its website. 

And while Barsotta says they expected a rent increase, they didn't anticipate it would be that high. They don't think it's a fair rate, he says, considering downtown is currently in "one of the slowest slumps."

"It's unfortunate that through COVID and everything, we've gotten through it. We've tried to put our best foot forward and then we just get kicked in the ribs with something like this," he said. 

"We're just really disappointed that we probably won't be able to see what downtown Windsor can really turn into."

Barsotta says they decided to stop renting out the two on-site brewery units and bring their brew equipment into the taproom. But he says they were told by the landlord that they could no longer brew on site. 

CBC News wasn't able to get in touch with the landlord. 

As much as Barsotta says they want to stay, he's not entirely sure it will be possible. 

They're currently renting out the taproom for about $5,500 a month and are moving the brewery part of the business to a spot on Erie Street. 

He says they've signed a two-year lease as they can't afford to move the entire business elsewhere right now. 

But it's unclear how much longer they'll stick around at their current spot and whether they'll move the entire business to Erie Street.

Rent, non-local landlords pushing businesses out: Bar owner

"What I foresee happening is situations similar to us where developers come in, maybe they're developing residential, whatever it may be, you're pushing out these businesses that kind of hold the glue of the community together and price [them] out," said Barsotta. 

He added that that would mean only chain establishments, like Starbucks or Taco Bell, will survive. This, he worries, will take away the unique culture of the downtown. 

Meanwhile Phog Lounge owner Tom Lucier, who has been at his location on University Avenue for about 20 years, says that he started paying a 13 per cent rent increase as of September. 

Lucier says the landlords wanted a 21 per cent increase, but he negotiated it down. 

He wouldn't confirm with CBC News how much he is actually paying per month. 

Come January 2025, Lucier expects a lease renewal and worries that he will face a similar rent increase to Craft Heads. To prepare for that, Lucier says, he's already secured a spot on Erie Street that he plans to open in the coming months as a second Phog Lounge.

"I don't want to leave," he said. 

"I love downtown. I've been championing it for a long time. I've been standing up for it." 

If his downtown rent doesn't skyrocket, Lucier says, he plans to run two Phog Lounge locations in the city. 

Lucier says he believes that the reason downtown doesn't have any businesses is because of a challenging rent situation — where rents are climbing higher and businesses can't secure long-term leases. 

He also says having non-local landlords is a problem, because then there's "a lack of connection to the community." As a result, he believes investors only consider themselves and will take down local businesses, if needed.

But he argues that is discouraging for businesses, because it means there's no stability or promise of longevity in the core.

He said it doesn't make sense to triple the rents store owners are paying right now. The downtown isn't bustling with people, events or opportunities, he said.

"[Rents] don't triple overnight when [downtown's] at its slowest and deadest and rats are running off the ship. That's not when rent is supposed to skyrocket." 

What can the city do? 

Downtown councillor Renaldo Agostino says he's doing what he can to be there for businesses in difficult positions. 

When it comes to rent negotiations, Agostino says the city can't do much as that's a contract between the landlord and tenant. But he hopes the city's new downtown plan, Strengthen the Core, will give them more power to tackle key issues.

"We've really started looking at making it more difficult to leave your venue empty," he said. 

For example, he says, they'll be enforcing property standards and will also require landlords to keep utilities on. He hopes this will encourage owners to fill their buildings with businesses. 

If landlords don't abide by the property standards, Agostino says, the city will do the work for them and charge the owners for the service. 

Agostino says he's also looking at proposing a vacant storefront tax, which would force owners to pay if their spots are empty. 

He says the city is also reviewing the downtown Community Improvement Plan (CIP), which offers money to "encourage projects that will enhance downtown," according to the city's website. 

BIA can't do much about the situation

These grants can be awarded, for example, to people who are creating new residential units or improving the facade of their buildings. 

Agostino says he would like to see an "enhanced CIP" that includes requirements so that if someone were putting in residential units, they can only get the funding if they ensure their current tenants stay at a reasonable rent until building permits are acquired. 

Downtown Windsor Business Improvement Association (DWBIA) chair Chris MacLeod says he loves what Phog and Craft Heads do for the downtown, but says that the BIA can't do much in this situation. 

"It is deeply saddening when you know the situation comes to this where a business feels that they can't survive downtown," he said. 

While he says the rent being asked of Craft Heads was a bit high, it's also not too far off from market rent. 

Some business owners feel defeated

When asked about rent subsidies, MacLeod says they currently don't have one as they found it wasn't too helpful in ensuring businesses would survive. 

Instead, he says he'd like to work with the city to create a business incubator program that can better support local shops in surviving long-term. 

But with change likely months or years away, some business owners are feeling defeated. They're questioning how the city will protect the places that make up the fabric of downtown Windsor, while also attracting investors who will positively contribute to the area. 

"We need to have these places that develop and nurture culture in our city," said Barsotta. 

"Without places like Phog and Meteor and Craft Heads ourselves, putting on these things and allowing people to kind of share their craft, we think it's just going to fall to the wayside."