Retailers ponder tough future
La Jolla retailers, their landlords and brokers acting as go-betweens are all hunkering down during these difficult recessionary times and wondering, what can be done to improve the situation.
Circumstances in the Jewel’s downtown Village for retailers are making the situation critical, some say.
“There are no tenants out there looking for a place,” said Bob Collins, a 40-plus year Village landlord. “There have always been tenants lined up. You couldn’t find a tenant to come in now for love or money.”
One block where the problem is evident is in the 7600 block of Girard Avenue where La Jolla Fiber Arts has closed as has S.R. Brennan Galleries. Corrine’s women’s apparel store is also closed, but a note in the window says they’re moving down the block.
Phil Wise, a commercial real estate broker with Colliers International in University Towne Center, said, “I used to be able to remember retail vacancies (in the Village) in my head. I can’t do that anymore: There are too many.”
Bird Rock’s OKThe retail situation in Bird Rock, which just endured several months of severe business disruption with roundabout construction that is now finished, is decidedly better than much of the rest of La Jolla.
“The climate has remained amazingly consistent,” said commercial/residential Realtor Trent Wagenseller. “What has changed is there are now key blocks, with Beaumonts, Bird Rock Coffee Roasters and Starbucks, that are turning into a little village core.”
Locals support Shores businessIsabelle “Izzy” Tihanyi, head of the La Jolla Shores Merchants Association, said business is down on their side of town. “We’re all feeling it down here too,” she said. “We’re really blessed that we’ve had some great weather and we’re getting support from our local clientele who are eating in our local restaurants and shopping in our boutiques. We need their continued support because tourist business, obviously, is not happening at this time.”
Tough all aroundBill Berkley, owner of Jack’s three-story restaurant at 7863 Girard Ave. who owns the building he’s in, said times are tough for him, both as a restaurateur and a landlord.
“For my tenants Go Boutique and Eurochild, Christmas season was a disaster,” he said. “You can imagine what January’s been like.”
But then again, pointed out Berkley, even in the best of times high-rent La Jolla is a struggle for retail tenants, partly because shoppers can’t browse the Village like they can the malls because of timed parking. “It does not make for a browsing shopping environment,” he added.
Parking isn’t much of a factor with Berkley’s restaurants, which do most of their business at night when parking is not a problem.
Ideas on parkingBerkley suggested one answer to making parking more user-friendly in La Jolla is to make all Village time limits two hours, rather than the current hodgepodge.
But what of the long-term solution to Village parking? “The real answer is a parking structure,” he said, adding, “Only there’s no money to build that.”
The realities of a major, and likely long-term, recession are causing a repositioning of the landlord-tenant relationship in more ways than one in La Jolla.
Concessions ahead?Collins is considering “concessions” to help his tenants through the tough times.
“We don’t want to lose any tenants, especially tenants who’ve been here for awhile,” he noted. “We don’t want vacant space, lost rents. My theory is you need to help tenants stay in business. Maybe landlords have to step back a little bit and cut the take.”
Collins is warming to the idea of finding ways to give breaks - no rent increases, lessening rents, deferring rents - to tenants
“There are a lot of ways to do it,” he said. “Landlords will probably have to do it on a case-by-case basis. There’s no one formula going to fit everyone.”
Silver lining?Wagenseller noted retail is seasonal, adding the post-holiday season at the start of every year is always the doldrums businesswise. But that, he pointed out, also offers opportunities from the leasing side.
“It allows us to either reposition tenants, or change their locations, if they’re not tied down,” he said. “One thing tenants can really try and do is renegotiate their leases, making sure they’re paying a market rent.”
Wise has a map showing commercial vacancies as of Jan. 1, 2009. But even that map is not quite current.
“It does not show those mom-and-pops that are going to vacate in January through March,” he noted. “People hang in there through Christmas and then kind of give it up in the first quarter. The first quarter is very soft, even in good times.”