While some Winslow merchants are moving elsewhere, others are bracing for several months of street construction at a time when sales continue to drop due to the economy.

Still, some say it’s no time to abandon ship.

“You don’t have to go far to see what happens when a community abandons its downtown,” said Stuart Walton, an island businessman for several decades. “It is very difficult to bring it back.”

He believes reconstruction will make downtown a better place for business in the long run, and may provide an avenue for businesses to reinvent themselves.

Nevertheless, empty storefronts continue to crop up and several businesses are getting ready to head out of town. Though many merchants agree that the Winslow Way reconstruction project is a necessary step forward, some fear it will be the nail in the coffin for their businesses.

Vacancies for Bainbridge retail was up to 12.8 percent in the fourth quarter of 2010, and commercial sales have dropped from a peak of 31 transactions in 2007 to just six in 2010, according to a recent survey by Kelly Muldrow, of Windermere Commercial Real Estate.

The lagging economy downtown is now trying to brace for as many as eight months of construction on the streets to update Winslow Way’s aging utility infrastructure.

Katrina Ecklund, who has been doing business on Bainbridge for about 13 years with Embellish, said it was a hard decision to move her furniture store to Front Street in Poulsbo. Embellish will close at the end of February.

“The decision was really because of the economy, and we just didn’t think we could make it another year without seeing our numbers go up,” said Ecklund. “Things are getting a little better, but we are expecting to see a 30 or 40 percent drop in sales through construction and I don’t think we could have made it.”

Ecklund said she hopes her loyal Bainbridge shoppers will follow the store to Poulsbo, and she would like to return to the island. For Ecklund, this will be the fifth move for the store.

Downtown Winslow is often characterized for its frequent relocation of businesses. Victoria VanNocken has already moved her shop, Bath Junkie, once since it opened in 2008. Prior to her location on Winslow Way, VanNocken said the store was in a less-than-ideal location, but even then, she said, her sales were better.

“The holidays were lackluster at best,” said VanNocken. “Even regular customers who would spend $60 are now spending just $20 or $30. People are still cutting back.”

VanNocken is looking for a smaller space on the island, but is seriously considering Front Street in Poulsbo because the rents are cheaper and she is worried about how construction will impact her business.

Will Langemack, former president of the Bainbridge Island Downtown Association board of directors, said it’s hard to generalize the prices of renting commercial space downtown because it depends on where the vacancies are. Langemack estimated that it costs between $18 to $22 per square foot to rent, with some shops offering cheaper rents at smaller locations.

“I don’t think rents have increased that much on Bainbridge Island, but those numbers are hard to sustain with the economy slowing,” said Langemack. “I think when you look around the older buildings are still being rented and people are getting value. The newer buildings where owners haven’t been able to pay back their original investment is where you see the trouble.”

Muldrow sold a commercial condominium to a business owner at the Harbor Square complex downtown in January for $122 per square foot on a 25-year term with 10 percent down. Muldrow said the opportunity was a better economic decision for the owner, who will become his own landlord with stable payments, and has the opportunity to benefit from future sales of the space.

For many struggling in the economy, those kinds of purchases are not an option.

Netti Domenichelli, owner of Grace and Co. Paperie, closed her store on Madison Avenue South last week after eight years on the island. Domenichelli said she will continue to make personalized items, such as wedding invitations, from a 300-square-foot design studio on the island, but she’s moving her paper products and gifts store to Capitol Hill in Seattle.

She was struggling to cover the overhead costs of her location after a decrease in sales due to the recession.

“My personal opinion is that the recession hurt the island even more so than the other markets because we are so dependent on each other,” said Domenichelli.

The cost per square foot is about the same or a little more in Seattle, she said, but she hopes the foot traffic and bigger market will drive sales.

“My pie in the sky hope is that Seattle becomes profitable quickly and I can spend less time there at the store and more time in my design studio,” said Domenichelli. “When the island returns to what it was seven years ago I’ll come back to grow our store and expand as the opportunity presents itself.”

Domenichelli said the construction needs to happen, especially after seeing some of the structural problems in the downtown area when she was looking for a new location for her design studio.

“I think now is the time to start construction because people aren’t shopping anyway,” said Domenichelli. “Better now than wait until the recession is over and people decide to shop other places.”

Walton has lived on the island since 1976 and was the owner of Paper Products for more than a decade. He is currently the secretary-treasurer of the Winslow Way Property Owners Association. He also teaches entrepreneurship at Olympic College and he sees most Kitsap County communities struggling with slow main streets amidst the recession.

Walton said he remembers times at Paper Products when the sewer was backed up into the building, or he couldn’t drink the water because it was coming from a well near the shop. Although he said rent costs seemed to be relatively the same in Bainbridge compared with other locations, the amenities, such as a consistent power source, made business on Bainbridge difficult at times.

“It is better to go through gut-wrenching change than to stagnate,” said Walton. “Downtown is the living room and the heart of the island. Yes, we will probably lose some business, but we will also see other kinds of business that will move in and bring excitement.”