A group of artists sip coffee near two businessmen in suits. Several teenagers browse new and used CDs at an adjoining store. A woman darts her Lexus sport utility vehicle into a parking spot and disappears into the adult novelties shop, Blue Boutique.

Sugar House's eclectic mix of residents - heavy on young, affluent families who can afford the area's increasingly higher-priced homes - translates into big sales at retailers' cash registers.

And it's those big sales and the escalating value of commercial property in the area that help explain why many of the small-shop owners along 2100 South and Highland Drive are being kicked out, very likely to be replaced by national chain stores, high-rise offices and condos.

The shop owners and those who frequent the epicenter of Sugar House are about to be caught up in a redevelopment that promises to change the look, feel and makeup of one of the Salt Lake Valley's most distinctive areas.

Sugar House's actual boundaries might be open for debate, but most agree the community is bordered roughly by 700 East, 1300 South, 2000 East and I-80, or perhaps down to 27th South.

The property poised for redevelopment is its downtownish center - an entire block of land from McClelland Street (1040 East) to Highland Drive (approximately 1100 East), and 2100 South to Sugarmont Drive (2225 South).

National chains have been infiltrating Sugar House for years, "but right now, there is a balance between the corporate businesses and the independents," said Sugar House resident Peter Dinsmore, who frequents the besieged block's patrons such as SugarHouse Coffee. "Seeing that balance start to shift in favor of corporate businesses is unfortunate."

Two developers

Development plans for the so-called Granite Block have rattled many longtime residents, including Phillip Carlson, who has lived in Sugar House since the early 1990s. He and wife Sarah often can be found shopping at both the chain stores and locally owned enterprises along Highland Drive south of 21st South.

The couple had planned to retire in Sugar House. But now they are looking into other communities such as Portland and Seattle that they believe strike more of a balance between mom-and-pop shops and national chains.

"If it all ends up being pretty bland, like everywhere else in America, we may end up moving," Carlson said.

Much of the concern stems from plans by landlord Craig Mecham, who over the course of 30 years has assembled most of the property fronting Highland Drive between 2100 South and Sugarmont. Mecham, who also has built some office buildings in the area, has decided to replace several aging buildings with new offices, condominiums and shops.

To the west of Mecham's holdings, California development company Red Mountain Retail is preparing to close on the purchase of the old Granite Furniture complex running along McClelland between 2100 South and Sugarmont.

Like Mecham, Red Mountain officials have yet to release drawings of their redevelopment or divulge any possible retail tenants. But Red Mountain has indicated it is planning on a primarily retail development, with some office space and condominiums.

Both Mecham and Red Mountain officials try to avoid saying their developments will be made up of mostly chain stores. But the comparatively high rents they probably will charge in essence could lead to a development made up mainly of those types of stores.

But at this point, Red Mountain isn't facing the criticism of those worried about the changing tide in Sugar House. That's probably because it is taking control of a mostly single-tenant operation - and a generally vacant one at that.

Mecham, on the other hand, owns the patchwork of buildings occupied by a host of beloved locally owned enterprises. In handing out the notices saying that the business owners have to be out by July, he has incurred the wrath of a community bent on preserving what remains of its quirky, small-town feel.

"There is no other place like Sugar House, anywhere," says Timm Paxton, who works at the Orion's Music shop, an independent store along Highland Drive near 2100 South. Next door, wife Kirsey works at SugarHouse Coffee. "That's what makes it so great. And that's what makes all of this so sad."

Building high-rises

Orion owner Andy Fletcher said his shop, which has been in Sugar House for nearly three years, probably will close next month because of the expense and uncertainty of moving, and his inability to find reasonably priced rent elsewhere. He had hoped to stay in the area.

What makes it especially tough for Mecham's tenants is the fact that they pay rents that average half the going rate of stores in the big-box development across the street to the east that includes Barnes & Noble, Ann Taylor, Old Navy and Famous Footwear. His buildings are old and in various stages of disrepair; the ones across the street are newer, with more modern touches.

But the cheap rents have helped create a haven for Utah entrepreneurs. There is not a big chain in sight on Mecham's side of Highland Drive - just a lot of Utahns trying to make it independently.

"That's why this redevelopment is not only uprooting businesses, it's uprooting entire families," said Fletcher, who has decided to move his family to Wyoming.

Mecham, who has developed two office buildings near 2100 South and 1300 East, bristles at being described as a "developer" and said he's angry at how he's perceived in the community and through the media.

"We're going to tear all this down and build something so much nicer," he said recently from his isolated, sparsely furnished office off Highland Drive that will be leveled as part of his redevelopment plans.

The first phase of Mecham's plans include demolishing the buildings along Highland Drive between 2100 South to about 2150 South and the frontage along 2100 South east of the Granite complex to Highland Drive.

Mecham said he wants to build a high-rise office building and underground parking garage on the southwest corner of 2100 South and Highland, and a condominium building just south of that, along Highland. He said there will be ground-level retail space throughout. Demolition is set to begin this summer, with construction expected to commence shortly thereafter.

Mecham said he's tired of people talking about his project like he's doing something wrong.

"This area is borderline blighted, in my opinion," he said, noting that all his buildings are in awful shape and calling into question their safety. "They are very old, dilapidated and run-down."

The second phase of Mecham's development would be south of the planned condos - along Highland Drive to the Zions Bank branch on the corner of Highland and Sugarmont. He is not sure what he will do with that property, saying that will be dictated by what happens in the first phase.

Will shops come back?

Mecham understandably is not too popular these days with his tenants, many of whom are going to pay significant amounts of money to move their businesses, that is, if they can find space they can afford.

Bob Evans, of SugarHouse Coffee, said it will cost him about $75,000 to move his enterprise elsewhere in Sugar House, and he'll certainly pay more in rent. But he'll move because he loves the area, he said, adding that he is close to finalizing a deal.

Herbs for Health owner Adam Tageldin said he's having trouble finding other places in Sugar House at rents he can afford. Like some others, he faces the decision of moving out of the area or closing.

Owner Martie Bond, of the iPaw boutique for dogs, is directly south of, but not included in, the first phase of development. Even though she isn't being forced to move, Bond thinks the loss of nearby stores and the coming construction will be devastating to her shop.

"People aren't going to come to a construction site," she said, adding that she's looking for another spot, which almost certainly will come at a higher rent than what she's paying to Mecham.

Mecham said he'd love to see many of his tenants come back after he's finished with his development. And he said he even would give some of them a slight break on rent just to help create a mix of tenants.

But even if he welcomes them back, he acknowledges many will not be able to afford the higher rents.

"I want them back, but it won't be at the same low rents," he said. "The rates will be substantially increased."

Eric Nelson, of Santa Ana, Calif.-based Red Mountain Retail, wouldn't venture to say whether his rents will be affordable to small, nonchain stores. "I can't answer that question," he said.

Mecham said the rent increases on his side of the block are a certainty because of the millions he will invest at the site, including the construction of costly underground parking.

Many who frequent the area say the higher rents in a tony new development, unaffordable to many small enterprises, are the most troubling aspect of the block's redevelopment.

Whitney Horrocks, a local artist and frequent patron of SugarHouse Coffee, says she will miss the locally owned coffee shop and its proximity to her home. She isn't sure how much interest there will be in new developments planned for the area.

"If you aren't into chain stores, this is going to be terrible."

lesley@sltrib.com