After owning Boston Pewter Co. for three decades, Jeff Allen closed up his gift shop for good a few weeks ago and handed his keys back to the landlord. Two years of anemic sales were enough.
“I didn’t see anything that was going to happen for a turnaround,” Allen said.
Add one more vacancy to the board at Faneuil Hall Marketplace.
The departure of tenants such as Allen has dampened the mood at the historic shopping center, despite the cheery glow of the holiday lights around every corner. A poll taken more than a year ago showed about one in four retail and restaurant spaces across the marketplace were empty. Merchants say the vacancy rate is higher now, with office life and international tourism in Boston still nowhere near prepandemic levels.
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The atmosphere hasn’t been improved by the loss of two key holiday traditions: The annual “Blink!” lighting and music extravaganza was canceled for a second year in a row, and the usual giant Christmas tree won’t be livening up a courtyard next to Quincy Market, on a neighboring property. Instead, the Faneuil Hall merchants look with envy at the Seaport, which landed a 54-foot Norway spruce.
Frustration with their landlord, Ashkenazy Acquisition Corp., boiled over in October, when the Faneuil Hall Marketplace Merchants’ Association sued the New York company over $2.5 million the merchants say they are owed for their now-depleted marketing budget.
“The bottom line is, Faneuil Hall is a mess,” said George McLaughlin, a lawyer representing the merchants in the litigation. “Ashkenazy is just grinding the tenants for every last dollar and not doing anything to promote the place. . . . The worst thing in the world is to have a wonderful asset and not to utilize it for its potential, and to let it sit and gather dust. That’s what is happening here.”
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The future of the complex, whose history dates back to the 1700s, presents a quandary for new Mayor Michelle Wu — a landmark she can see every day from the window of her new City Hall office. The roughly 350,000-square-foot office-and-retail complex is owned by the city, and managed by a private developer through a long-term lease arrangement established in the mid-1970s. Back then, the renovation that turned the property into a famed tourism destination was hailed as an urban renewal success story.
Faneuil Hall feels far from its glory days now, with some shuttered pushcarts in the Quincy Market food colonnade, and empty stalls at one entrance. A few former fixtures, such as the replica Cheers bar and the Durgin-Park restaurant, remain dark.
Nonetheless, the marketplace is still considered a quintessential Boston experience by some: On a relatively warm weekday afternoon in November, small groups of tourists strolled along the cobblestone pavers, examined knickknacks in the stands, and huddled over sandwiches and slices from Regina Pizzeria in the Quincy Market rotunda. One twentysomething smiled as she snapped a photo with a roaring animatronic dinosaur that swung its tail back and forth, a promotion for a new Dino Safari exhibit.
Ashkenazy acquired the ground lease for the marketplace in 2011 for $140 million, and tensions with tenants eventually began to simmer over rent, renovations, and the like. The economic toll exacted by the COVID-19 pandemic exacerbated the situation. Meanwhile, the terms of Ashkenazy’s $10-a-year lease with the city don’t give much leeway for the mayor to intercede.
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But the Boston Planning & Development Agency did step in about a year ago. That’s when it prodded Ashkenazy to reach rent deals with anxious local tenants who wanted a break to reflect the severe drop in sales they experienced — as much as 85 to 90 percent for many in 2020, in part because the marketplace was completely shut during the early part of the pandemic.
Boston officials were able to intervene last fall because Ashkenazy had fallen behind on quarterly payments that total more than $4 million a year — essentially the company’s property tax bill — and also violated its lease because a contractor had put a lien on the property. Ashkenazy quickly resolved both issues.
The landlord then met with the locally owned tenants, to reach settlements on the back rent they owed, by waiving some amounts, and setting up payment plans for the rest.
But the landlord still isn’t doing enough for Lindsay Rosado, co-owner of Boston Chowda and two other food stands in the marketplace. She said she is caught up on back rent, but has not signed on to a rent concession deal offered by the company.
Her business has survived this long through the pandemic primarily with the help of government-relief grants, Rosado said, and not from any concessions from Ashkenazy.
“As far as the direction of where I see things going, it’s really not looking all that great in my opinion,” Rosado said. “The overall feel and look of the property is just old and tired. . . . . They’re asking too much in rent. Honestly, Ashkenazy doesn’t understand the marketplace as a whole. . . . The small local merchants have been the lifeblood of Faneuil Hall. I don’t know if they truly recognize that.”
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The general manager of the marketplace, Joe O’Malley, said Ashkenazy made millions of dollars in rent concessions to help local operators. He said Ashkenazy did not make a profit on the Faneuil Hall mall this year, but hopes to do so again in 2022. Many merchants have seen significant improvements in sales this year compared to 2020. O’Malley said some pushcarts had their best October ever, thanks to fall foliage trips, warm weather, and a playoff run by the Red Sox. But some merchants, such as Allen, were not as fortunate.
“Last year, it was tough, but it was tough for everyone,” O’Malley said. “We shared in the pain. The tenants shared in it as well.”
Still, there are some hopeful signs.
Chris Santarelli, an Ashkenazy spokesman, said the shopping center “has turned a corner” with leasing, foot traffic, and sales all trending upward. The mall operator has installed holiday lights throughout the center, as well as a Christmas tree in the rotunda inside Quincy Market. And he pointed to the brisk sales of tickets to Dino Safari, which just opened in the former Uniqlo space in Quincy Market. He declined to comment about the marketing fund lawsuit.
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Linda DeMarco, president of the merchants association, said she couldn’t comment on the specifics of the lawsuit, either. But she did say that the depleted marketing fund had been used to help pay for holiday events, including Blink!, in the past, to help draw crowds to the center. She ran one food stand at Faneuil Hall, Boston Pretzel, during the warmer months this year, and sales showed a marked improvement from 2020 levels, though she is still off her 2019 revenue.
She’s pleased Ashkenazy installed a tree inside the market and holiday lights outside, albeit not as extravagant as before the pandemic. And she is encouraged by the apparent success of the dinosaur exhibit and its potential to draw families who wouldn’t otherwise visit.
“It’s the first exhibit we have had in many years,” DeMarco said. “We’re turning the corner now.”
There are other positives that the tenants mention, including long-awaited new businesses moving in. A Margaritaville outpost is slated to fill a restaurant space vacated by seafood chain McCormick & Schmick’s next summer, while another chain restaurant, Sugar Factory, will open in the two-story space where Anthem used to be, by Valentine’s Day.
George Maherakis, who runs the Fisherman’s Net food counter in Quincy Market, is also upbeat. He has settled up with Ashkenazy, which waived a few months of back rent and gave him a payment plan to make up the rest.
Maherakis, who has been working at the marketplace with his father since he was a teen in the 1990s, said he’s glad the landlord is helping to decorate the place, and making necessary repairs, even though vacancies are worse than they were a year ago. His sales are down by as much as 30 percent from 2019 levels. That counts as a rebound; during the first year of the pandemic, they were down by at least 85 percent.
Maherakis took a break from the action at his stand on a bench that happened to be next to that roaring dinosaur.
“It might help,” Maherakis said of the Dino Safari. “Anything’s better than a vacant place.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.