The mood inside GM's headquarters
Businesses housed in Detroit's iconic Renaissance Center are feeling the fallout from the auto maker's turmoil.
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| The Renaissance Center, GM's headquarters |
DETROIT (CNNMoney.com) -- Inside General Motors' iconic Detroit headquarters, scores of retail tenants are waiting to find out what happens to their own businesses in the wake of their landlord's bankruptcy.
"When people aren't sure of the company's status, it puts you not in the best of moods," said Frank Taylor, president and CEO of Seldom Blues restaurant in the Renaissance Center.
The Ren Cen, which sits on the Detroit River, houses 4,300 General Motors (GM, Fortune 500) employees, the Detroit Marriott hotel, various professional offices and several dozen small businesses that serve the tenants. GM moved its global headquarters into the Renaissance Center in 1996 and spent $500 million to revamp the 5.5-million square foot complex, which began construction in 1973.
Taylor said GM's troubles have made some people within the Ren Cen skittish about spending money for a meal at his sit-down restaurant, which features American cuisine and jazz music. "I've never had to work so hard in my life to fight for customers," said Taylor, who employs 65 workers at Seldom Blues.
Seldom Blues opened in 2004 and had no trouble attracting customers in its early years, Taylor says. Last year, it did $4 million in sales. But business has become more difficult as GM lurched toward bankruptcy.
"It's not like I saw it when we first moved in," Taylor said of GM's mounting woes. "We had a lot more people coming in for lunch on a daily basis. The mood has taken a total turnaround here."
To combat the downturn, Seldom Blues began offering "Southern Selections" specials last month to attract diners who are skittish about splurging for a meal. The specials, featuring $10 lunches and $19 dinners, have been popular, Taylor said.
GM's struggles also have also cut into business at Ashley's Flowers. Owner Ashley Alexander said sales at her floral shop are down about 30% from last year.
"The nature of our business puts us in proximity to people's personal lives," said Alexander, who has six employees at her two downtown stores. "People are nervous. They don't know what's about to happen to their jobs."
Alexander is waiting to see what GM does next before deciding on the future of Ashley's Flowers in the Renaissance Center. Everything is up in the air: While GM employees nervous about their jobs clamp down on their consumer spending in the Ren Center, GM CEO Fritz Henderson hasn't ruled out the possibility that GM could leave its sprawling headquarters.
"I think we have to wait to hear their decisions, and see the fallout from their decisions," Alexander said.
Not all small businesses at the Ren Cen are hurting. Pure Detroit, a clothing store that features Detroit-centric and GM-licensed products, has seen a 50% increase in sales since moving to a new site within the building a year ago.
Pure Detroit's new location is just down the hall from its previous spot, which opened in 2004. But co-owner Kevin Borsay said the new store has the benefit of being near escalators and the Marriott hotel, which has boosted foot traffic for the retailer.
"I think the move and the revamping of the store overcame the negatives of the economic climate," said Borsay, who has two employees at his Renaissance Center store.
Borsay said he's noticed that shoppers -- about 80% of them are GM workers, GM visitors or Marriott (MAR, Fortune 500) guests -- are buying lower-priced items. Still, the Renaissance Center continues to be the best performing store of Pure Detroit's three shops in the city.
"There's a lot of good points about doing retail in the Ren Cen," Borsay said.
Tony Bahu, president and owner of BonBons Candy and Godiva Chocolatier, agrees. Though he declined to discuss sales, he said last year was a record year for BonBons, and he expects to sales to grow in 2009 as well.
He attributes the store's growth to the crowds that come for festivals and outdoor events at GM Plaza & Promenade, a gathering place on Detroit's riverfront that sits across the street from BonBons' store. Business has been good enough at the Ren Cen that Bahu said he hopes to extend his lease.
Bahu believes GM will become a stronger company through its restructuring, and said many of his customers are also bullish about GM's future.
"It seems like there's still people who believe highly in GM and believe that, no matter what happens, they're going to pull through," Bahu said.
Each of the businesses said they believe GM is doing the best it can to survive, and so are they -- no matter what GM's fate at the Renaissance Center.
"We're hopeful," Alexander said. "The world doesn't revolve around GM." 
