, Newburyport, MA

December 17, 2007

Karp’s shadow looms over Nantucket

Stephen Tait

NANTUCKET — Michel and Joyce Berret were willing to pay the 12 percent jump in rent. They were willing to make required repairs on their rented retail space at their own cost. They even would have put up with a new rule that prohibited handwritten notes in the store’s front window.

But when Stephen Karp’s Nantucket Island Retail told the couple that the store they had operated for more than 11 years must stay open 10 hours a day, seven days a week, from Memorial Day to Columbus Day, it was more than they could take.

“We said, ‘that’s enough,’” Joyce Berret said.

The Berrets — along with other retail business owners in Nantucket’s plush downtown district and town officials — described in interviews the life of retail in a community that has been dominated by Karp for years.

Some say they lament the strict controls, continual rent increases and an attitude of disregard to long-standing businesses and those struggling with the high cost of business. Others say Karp is a shrewd businessman who understands how to make the downtown click.

It is, the retailers say, what Newburyport retail store owners could expect to happen in its downtown district.

Karp owns about 75 percent to 80 percent of the storefronts in the town’s downtown district, Nantucket Assessor Deborah Dilworth said. His two major retail property companies on the island — NIR Retail and NIR Retail III — are worth $137 million and $27 million, respectively, according to documents provided by Dilworth.

Each of those entities ranks in the top 10 of the most expensive property holdings on Nantucket.

NIR Retail is the top taxpayer on the island, bringing in more than $650,000 in taxes each year to the town’s coffers, the assessing documents show.

In Newburyport, Karp is also the largest taxpayer, owning about 20 percent of the downtown storefronts. He is mulling a major development along the Merrimack River in an area called Waterside West, the 8 acres between the Black Cow Restaurant and Michael’s Harborside.

Can’t pay? Too bad

Andrew Vorce, the town’s planning director, said his office often hears complaints about Karp’s company from Nantucket’s downtown retailers. They include demands for 10 hours a day, seven days a week of operation, rules about window displays and even the threat of fines being levied against retail owners who fail to comply.

“(It is) the kind of things you see in retail malls,” he said.

Whitey Wilauer, the chairman of the Board of Selectmen, said he often hears complaints from retailers, mostly regarding the ever-rising rents.

“He is very sophisticated in his approach,” he said. “He has a staff down here, and they are looking at each property and trying to determine if they are profitable or not profitable. He is trying to bring profitable outfits into the town. That’s what happens when you have investors to please; the actual cultural aspects aren’t paid much attention to.”

Kathleen Duncombe, 58, rented from Karp for 10 years a second-floor shop on Main Street, in the heart of the downtown retail district, an area two to three blocks from the harbor where streets are lined with cobblestones and traffic travels on mostly one-way streets.

Duncombe said she has lived on the island since the 1970s and visited it every year since she was 3 months old. She now works at the Golden Basket, a jewelry store directly beneath her old art shop, and also owns an art lesson studio called Shredder’s Studio.

“They were very good to me, I have no complaints,” she said of Nantucket Island Retail, Karp’s management group. “But it has gotten much more expensive. I could never afford to be downstairs.”

Butler Brownell, 44, the manager of the Golden Basket, has lived in Nantucket his entire life and has managed retail stores on the island for more than 25 years.

He said Karp raises the rents every year according to a certain formula, of which he did not know the intricacies. He said it is usually an increase of 7 percent to 8 percent.

Brownell, speaking outside his shop on Main Street, said leases include demands stating that once a shop owner’s bottom line hits a certain profit level, “they want a percentage of the take.” He said there is also very little in the way of reprieve for increasing rents.

“They just have that attitude that they don’t care: either pay it or they’ll find somebody else who can,” Brownell said.

Brownell said one would think that when NIR looked at the sales numbers of the stores, with sales continuing to decrease, that the retail managers wouldn’t raise the rents and would at least keep them the same. But no relief is given.

Duncombe asked Brownell if they’ve ever asked for that relief, and he said they had.

The response: “No. If you can’t pay, we’ll find someone else.”

‘I can understand’

Peter VanDingstee, whose lived on the island for 20 years, owns a small soda fountain counter that serves breakfast and lunch inside Nantucket Pharmacy, a store on Main Street. He said he’s met Karp on occasion since his wife once worked as the kitchen manager at the Karp-owned Jared Coffin House.

VanDingstee said Karp gets a bad rap from some retail store owners. Karp has helped restore many historic structures in the town and also does things like help raise money for Nantucket Carriage Hospital, he said.

“He is a good man, a good family man,” he said. “I think he has a plan which, of course, is to do the best for him and his family, which we all do but in our own way. And there are some people who suffer from (his plan.)”

VanDingstee describes Karp as “a businessman doing what he needs to do” and just another in a line of developers whom independent-minded Nantucketers will likely despise.

“If you look back in history, people have seen change here. It just happens to be right now, Steve Karp is on the front lines,” he said. “In another 50 years it will be somebody else people don’t like.

“Changes positive and negative have happened,” he added. “But still, there is no place like Nantucket.”

David Place, the owner of David Place’s Manor House Antiques on Centre Street, said he often stays open late at night and is often shocked at how many other retail store owners don’t do the same. He said many times residents and tourists will leave the restaurants after dinner, and the shops will be closed.

“(Karp’s) trying to influence a lot of the shop owners he rents to to have longer hours and stay open seven days a week,” he said. “I can understand from his point of view. There are a lot of people in the town late at night after dinner, and there is no place for them to go.”

Looking for space

The Berrets operate L’ile de France, a shop with items exclusively from France, Michel Berret’s home country. The items include bistro tables from the last of the original table-making companies in France, cutlery, copper kitchenware and fresh bread from France, shipped overnight by Fed-Ex every Wednesday.

For 11 years they operated the shop on Federal Street, one of the main streets for retail stores in Nantucket’s downtown district. The Berrets were under a three-year lease with Winthrop Properties when Karp bought out much of that company’s holdings.

Last year, when the lease came to an end, the Berrets were forced to deal with Nantucket Island Retail, one of Karp’s limited liability corporations.

The company’s retail manager, Henry Wyner — who, like Karp, did not grant a request for an interview with The Daily News — told the Berrets the rent was going up 12 percent, they would have to do repairs to the shop at their own cost and certain rules would be implemented such as being open 10 hours a day, seven days a week.

Joyce Berret said Wyner had worked for Winthrop before Karp and they had never had any problems, but under Karp, “he had different marching orders,” she said.

Years before, the Berrets said, they decided to run the store themselves and not hire employees since the nature of the products they sell demands that those working there have an excellent knowledge of French history and current events.

“We are a cultural center as much as a retail center,” Joyce Berret said. “We made a business decision not to have employees. It just makes sense for us.”

The couple, both 61 years old, said they wanted to have at least one day off to spend with each other, but NIR wouldn’t allow the store to be closed one day a week. Michel Berret, who sports a slightly unshaven face and speaks in a heavy French accent, said other Karp renters told him that it was easy to disregard the rules, to close early and take days off.

“But I am an old French guy and I respect my word,” Michel Berret said. “If I say I will do it, I will do it.”

So the couple started looking for new place, not owned by Karp, who Joyce says is “our sole reason for leaving.”

But it wasn’t easy, they said, since NIR owns most of the property. He said they even made a “sprint” to Newburyport to see if they could find a retail space. Eventually, in the fall, they found the space their store now occupies, on India Street, off the beaten path but still in the business district.

In that store, beneath the cash register, is a blue binder with about 100 pages that are filled with news clippings of their dilemma with NIR and Karp. The Berrets received media attention since they were one of — if not the only — store owners who took on Karp and NIR publicly.

“We didn’t care,” Michel Berret said. “We are the only ones to publicly fight.”

“Other people would not go on record,” Joyce Berret said. “It is putting your livelihood on the line.”