By Emily Hamann
The Bellingham Business Journal

A block of downtown Bellingham that has been quiet for decades is suddenly very busy. New businesses going in could be the just the thing needed to jumpstart the block, and maybe even form the heart of downtown.

Kelly Andrews and Matt Howell, co-owners of Chuckanut Bay Distillery, hope to start distilling spirits at their new building at 1309/1311 Cornwall Ave. by the end of the year.

That entails a major restoration project, but by the time it’s complete, they plan to have not just a tasting room and production facility, but a bar, restaurant and event venue at the space.

Across the street and down on the corner, another restoration project at the Bellingham National Bank building is underway. Blue Koi Coffee and Bay City Coworking Company plan to move into that space by the end of September.

“I think it’s really, really great,” Alice Clark, executive director of the Downtown Bellingham Partnership, said. “I think it’s going to be the catalyst for some really cool things happening on the block.”

Since the distillery started full production in 2013, it has been located in a 4,900-square-foot space in the alley behind Boundary Bay Brewing Co, at 1115 Railroad Ave.

Not only is it hard for customers to find, the space is also way too small for their needs.

“We’ve outgrown the space so we have to get pretty creative,” Howell said. “It’s a big game of Tetris.”

The small space means they haven’t been able to scale up their production to keep up with demand.

“We’re perennially out of products,” Howell said.

Their spirits, which are all distilled entirely from scratch, mostly out of ingredients grown in Whatcom and Skagit counties, are distributed throughout Washington, but they also distribute to Arizona and Canada. Their bourbon is especially popular in Canada.

“They can’t make bourbon,” Howell said. “So they’ve got a big appetite for it.”

Legally anything labelled as bourbon has to be made in the U.S., among other requirements. When marketing their products in Canada, one of the selling points is that bourbon made in Whatcom County is essentially the closest thing to Canadian bourbon they’re ever going to get.

Their other popular products include Krampus, a heavily-spiced spirit sold during the holidays, and they also make potato vodkas, including one made with 100 percent Yukon gold potatoes.

They also use Woods Coffee to make a high-end coffee liquor.

They hope the new space will allow them to play around and produce even more specialty products

“Right now we have a lot of multi-use equipment,” Andrews said. In the bigger space they’ll be able to not only get larger capacity equipment, but also dedicated equipment.

“If you can dedicate a piece of equipment to a particular product, it really helps you scale up,” Andrews said. Their inability to grow so far has prevented them from making some deals with major distributors.

“They don’t really talk about cases,” Howell said. “They like to talk about pallets.”

The new space is 18,000-square feet over three floors. The basement and part of the ground floor will be dedicated to production. The ground floor will also have the bar and, eventually, the restaurant. The top floor will be the event venue.

Howell and Andrew got the idea to put an event venue upstairs when they heard that there’s a shortage of space in Bellingham where a few hundred people can gather. The space itself, with its high ceilings, inspired the idea as well.

“You can just see an old-time ball happening there,” Howell said. “It wants to be prettied up.”

Across the street, another historical building its own makeover.

Jamie Huff is working to open Blue Koi Coffee in the Bellingham National Bank Building, on the corner of Holly Street and Cornwall Avenue.

The shop will serve house-made pastries, coffee roasted in-house, and some small plate menu options.

The renovation will involve pulling up the carpet that was laid over the marble floors, cleaning the walls, restoring some historical elements, like a clock that used to hang on the wall, and updating the colors — out with the ’80s mauve, and in with new paint that highlights the elaborately molded ceilings.

The shop, at 4,000 square feet, will have plenty of seating, and room for small events like open mic nights. Huff even plans to put tables in one of the former bank vaults, which is still lined with safe-deposit boxes.

“You want it so that everyone can come in here and hang out,” Huff said. While there are plenty of quality coffee shops in Bellingham, Huff said, they don’t always have a lot seating space. That’s especially true at night. Blue Koi is going to be open late, until 10 p.m., so people can hang out downtown in the evening.

Originally, Huff balked at how big the space was — the landlord was looking to rent the basement, the ground floor, and second floor all at the same time. But then she got connected with Bay City Coworking Company, which will turn the upstairs area into a coworking space, with rent-able offices and the same late hours as the coffee shop.

“I’m really excited about the way downtown Bellingham is growing,” Huff said. “Making it a nicer place to hang out.”

That part of Cornwall Avenue used to be one of the main retail hubs downtown, but has been quiet for decades.

The Bellingham National Bank Building was built in 1912 and 1913, and is now listed in the national register of historic places.

After Bellingham National Bank left, Key Bank moved in, and stayed until about five years ago, when it moved to a new office. Most recently, the building was occupied by a stamp and coin store.

The building that will house Chuckanut Bay Distillery was originally built in 1910.

A cafe and other retail took up the ground floor, and the chamber of commerce was upstairs, Jeff Jewell, a researcher at the Whatcom Museum, said. It included conference rooms, pool tables and dedicated smoking rooms.

The JCPenney moved in in 1922, taking up both 1309 and 1311 Cornwall. It was there until it moved across the street to 1310 Cornwall Ave. in 1960.

“Cornwall historically was the main retail street,” Jewell said. The JCPenney was the main hub, but the street also featured a Woolworth’s drug store, and a number of other local and chain businesses.

“That block had kind of been department store row a little bit, and then around the corner on Holly as well,” Jewell said.

That all changed when Bellis Fair Mall was built. JCPenney moved to the mall, and much of the other retail moved or closed.

“It really got cleaned out big time by the mall coming in 1988,” Jewell said. All of downtown suffered.

But eventually, the stores came back.

More experience- and service-oriented businesses, like restaurants, came back to places like Railroad Avenue. Meanwhile businesses came and went through 1309/1311 Cornwall.

And the former JCPenney building across the street, at 1310 Cornwall Ave. has mostly been empty ever since. Currently, the Salish Sea Marine Sanctuary has some displays in the windows.

“The retail just never came back on Cornwall,” Jewell said. “It did on other streets.”

In 2000, when Dealer Information Systems bought the Montgomery Ward Building at 1315 Cornwall Ave. and fixed it up, Jewell hoped that was part of trend, but it didn’t bring any more activity to the block.

The key to activating the block is retail, Clark said, places like restaurants and coffee shops, that draw foot traffic during the day, on the weekends and in the evenings.

“There’s a lot of buying online, but what they can’t really buy online is the experience of going out and hanging out with people,” Clark said. “A lot of downtown restaurants and bars are seeing an increase in openings, and seeing better numbers than the rest of retail.”

Empty former department stores are a conundrum that plagues a lot of downtowns.

In fact, Clark said that at a downtown association conference she recently attended, the blight of the empty JCPenney was a running joke.

In Olympia, an empty JCPenney was converted into an indoor, open-market with restaurants and shops.

“They basically take the building and do some renovation to it and fill it with small businesses,” Clark said.

Another, more ambitious, idea for that block is to convert it into a town square.

“That block would be an incredibly good place to have more of a pedestrian zone,” she said. It’s an idea that has been kicked around for a while, around both the partnership and the city, Clark said, but she didn’t think there was any concrete plan to make that happen in the the works.

Although it’s quiet, the block is far from deserted. Further up Cornwall, toward where it intersects with Magnolia Street, Peoples Bank and Chase Bank sit on the corners, and there’s a number of businesses, including a flower shop, a sock store and a yoga studio.

But on either side of the street, the empty former JC Penny locations were a drain on the energy of the block.

“There’s a psychological effect that happens,” Clark said. “It just feels sort of sad when you walk down it.”

That’s especially true at night, when the offices on the street are closed, and so are many of the shops. It also gives a false impression, Clark said, that the downtown as a whole is struggling.

“It kind of conveys a bigger problem when that’s not really the case,” Clark said. “That block is in an otherwise thriving and growing downtown.”