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a few bad property owners
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I think that has much to do with it. Plus, the Theatre, as I understand has fire regulation issues. Last time I was by, I noticed the inside was being used for storage.
Let's not forget though, that new businesses are coming to downtown Laconia. Burrito ME just opened in the Train Station, and an antique mall just opened in the former O' Shea's building in the last couple of weeks! The Pink Door Boutique is another that's relatively new to downtown.