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The Brooklyn Paper / Allyse Pulliam

Baked out: Margaret Palca’s bakeshop on Court Street is slated to close next month, a victim, she says, of the economic downturn. Customer Anthony Reviera is not pleased.

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A much-loved, but short-lived, Court Street bakery will close at the end of the month because the ingredients for success just never came together — and its famous rugalach-baking owner is left with a bitter taste in her mouth over the “has-been” quality of Cobble Hill’s Main Street.

The store, Margaret Palca Bakes, opened in August 2007 to great expectations. Palca, owner of the eponymous bakery, imagined that the corner of Court and Warren streets would become an even hotter spot than her Columbia Street kitchen.

“I had such a wrong impression [about Court Street],” said Palca. “It’s just such a ‘has-been’ kind of street. I hoped it would be more popular and more busy [than the Columbia Street store], but it just hasn’t been.

“At first, business was adequate, but it dropped dramatically in late November,” she said.

Yes, the economy is faltering, but even in better times, this delicate soufflé was always on the verge of collapsing, she said.

“Everything kept breaking down,” Said Palca. “People didn’t show up to work, and we were dealing with mounting debt. After these last two dreadful weekends, there was just no point [in staying open any longer].”

The eatery sells baked goodies like white chocolate chip brownies and Palca’s beloved rugalach, but, unlike Palca’s other store, the Cobble Hill location also catered to professionals on their lunch breaks, with a salad bar and paninis.

Palca’s business might have softened in the last few months, but her rent hasn’t. Retail prices in the area haven’t really changed in the past year, according to one real estate broker. But by shutting down, Palca herself might be helping to drive down prices for her neighbors.

“Areas like Montague Street [in Brooklyn Heights] have no vacancies right now,” said Stephen Palmese, a Brooklyn Heights-based commercial real estate broker. “But if one store closes, if there’s a crack in the ice, other businesses will begin to ask themselves, ‘What happens now? Will [the vacancy] be easy to refill?’”

Those jitters could end up driving prices down by up to one-third, from about $150 to $100 per square foot, said Palmese. Prices are much lower on Columbia Street, where retail rents start at $16 to $30 per square foot.

In the meantime, Palca’s Court Street landlord isn’t happy to see her go, but he already has a few prospective tenants to replace her.

“I haven’t really been aggressive about looking for a new tenant,” said Carmine Cincotta, who has owned the building at 210 Court St. for 25 years. “I have gotten a few [inquiries], but I want to make sure I get a tenant who will be successful.”

In the meantime, Palca’s customers aren’t happy to see her go, but some were philosophical about her departure.

“I’m really sad that [the store] is closing,” said Rebecca Farella, who lives around the corner. “But I know everybody is kind of strapped right now.”

For some, the place had become a staple of their daily routines.

“This is the best place to get a good sandwich to go,” said Corina Lopez, a teacher’s assistant. “I come here all the time, because most of the other places around here are restaurants, and I don’t have enough time during my lunch break.”

©2008 The Brooklyn Paper