For years, Kirkland’s downtown merchants have tried hard to make the area a shopping destination, filled with unique art galleries and boutique fashion shops. But after 17 years, Gunnar Nordstrom has had enough.

In an announcement from his newsletter Nov. 10, he said the Lake Street art gallery he owns would be closing after 17 years of business. Following the Rovzar Gallery — which closed this month after 16 years in Kirkland — the number of commercial art businesses in and around downtown has dwindled from over a dozen in the 1990s to five: Howard-Mandeville, Lakeshore, Parklane, Manglesen and the Kirkland Arts Center on Seventh Avenue.

After hosting a crowded artist’s reception Nov. 12 featuring fall landscapes by Eugene, Ore. painter Rich Klopfer and Chinese artist Liang Wei, Nordstrom said the next big opening for his gallery would be the debut of their new location Dec. 10 in Bellevue. He’s trying to open the new Bellevue Square location as early as Nov. 28.

He said the gallery has “done okay” in the past, but said the downtown retail environment has been in decline since 2000 and never recovered. Nordstrom blamed the declining foot traffic of customers, the lack of accessible parking, pending construction projects and a rent increase of 25 percent for leaving, saying he was sad to depart.

“I love Kirkland,” he said. “But I just don’t have the bank account to stay here.”

The relationships of commercial landlords and tenants are often tested as property values increase but retail sales decline. According to Doug Davis, a local commercial real estate broker with Hallmark Realty, the average rent in downtown Kirkland ranges between $38 to $42 per square-foot.

Property-owner Joe Castleberry, who owns several properties in the downtown area — including the Nordstrom Gallery’s building at 127 Lake Street South — said the rent increases were based on the market-rate.

“I think the world of Gunnar, he’s been a really good tenant for all these years,” he said.

Castleberry, however, also said he thought the gallery’s previous lease was nearly 40 percent underpriced.

Other gallery owners said the current economic downturn is accelerating the change in retail mix downtown and keeping away potential customers. Pat Howard of Howard/Mandville Gallery said she planned on staying in Kirkland for the foreseeable future, but knew several other businesses that were struggling to stay afloat. She hoped the city could reach a consensus with citizen’s groups, property owners and developers on how to make the shopping area near her gallery more inviting.

“We’ll have to see what comes out of it,” she said.

Watching anxiously as they deal with budgeting problems of their own, Kirkland City Council has been wrestling with keeping economic development on track while trying to respect city regulations on development. After handling a number of building issues over the summer, the Council has moved to rework city zoning and avoid slowing down the city’s economic engine in the future. Like an ant caught in amber, Councilman Dave Asher said Council is working “as fast as we can on parts of the downtown that have given us so much grief.

“We’re working on keeping that area as vibrant as we can,” he said.

Zoka Coffee grabs prime space at Central and Lake

Meanwhile, the revolving door of restaurant retail on Lake Street has swapped restaurants Sentosa Chinese and Oriel for Harlequin and another Seattle-based coffee shop. Zoka Coffee, a specialty coffee roaster, has targeted the corner of Central Way and Lake Street for their fourth location, according to marketing manager Wes Buckwalter. They operate locations in Seattle’s U-District and Green Lake neighborhoods and Snoqualmie, focusing on serving their Fair-Trade coffee along with casual cafe dining.

“We source the coffee ourselves,” said Buckwalter. “It leads to better coffee, better lifestyles for our growers and is a better ethical business model.”

Their coffee from Asia, Central America and Africa are currently served by Kahili Coffee Shop.

Work to renovate the store, complete with a european-style cafe-bar and small kitchen, is set to begin in January for a spring 2009 opening. While an agreement was reached for leasing the space, the coffee shop has yet to receive permits from the city to begin operations.

Besides a number of ice-cream parlors and cafes serving coffee, Zoka will join the ranks of six downtown coffee shops and Coffee Crossing, an espresso drive-thru stand near the Chevron Gas Station on Central Way. Some residents and business owners have voiced concern that too many cafes and restaurants, which tend to be more transient than other retailers, are contributing to the unstable environment downtown.

Responding to those grievances, Chamber of Commerce Chairman Bill Vadino disagreed, saying Lake Street restaurants attract people, and people means customers.

“A coffee shop is a gathering place. That brings people downtown,” he said. “We haven’t reached the limit (there).”

He said the Chamber has been working for years to bring more customers there and slow-down turnover, but permitting delays and zoning challenges are hampering their efforts.

“We don’t have that critical mass (of customers), that ensures retailers will be sustained,” he said. “We’re not as much ‘the place to go’ that we once were.”