Blogging Bayport Alameda

November 15, 2019

Vacancy galore

Filed under: Alameda — Lauren Do @ 6:05 am

There has been a rash of store closures lately, particularly on Park Street.  We can all lament the increase in on-line shopping as the culprit for the death of these retail stores, but there are stores that are making it work.  But it appears that there’s no incentive for landlords and property owners to actually lease these commercial spaces, choosing, instead to wait for the highest lease rates than can only be borne by chain corporations leaving small “mom n pop” operations unable to make a small business pencil out.

San Francisco passed, earlier this year, a bit of a stick to get property owners to actually rent out their vacant storefront spaces.  The ordinance requires

vacant or abandoned commercial storefront owners to pay annual registration fees […], require annual inspections of registered vacant or abandoned storefronts, and update the penalty for violations of the requirement to register.

According to the post linked to above 30 days without a tenant would classify a commercial space as vacant unless there is active construction going on.  The $711 annual vacant storefront fee would trigger immediately rather than after a 200 day waiting period.

The ordinance also removed the the exemption to the vacant property registration if the property is being actively promoted for sale and/or lease.   Naturally there needs to be some way to track vacant storefronts.  Alameda is not as large as San Francisco so I bet there would be a way to crowd source that information. I started a spreadsheet here if anyone wants to add to it.  I haven’t even started with the big retail centers either.

Anyway if Alameda doesn’t want its main business drags to get dragged down like it was before.  Does anyone remember what Park Street was like before the Alameda Theatre renovation?  It was definitely not cute.  Then we need to be seeking ways to encourage landlords to actually lease out the property rather than sitting on it.  Or, maybe discourage them from unnecessarily gouging existing tenants so those tenants can stay in their space.

Hand in hand with this is to help streamline the process of getting a small business approved and how we avoid the Spinning Bones patio situation which can cause delays to opening a business.  But that’s another post for another day.

Personally, I have, what I think, is a great business idea for a storefront but trying to make the numbers work to lease a storefront is the big set back.  Also, I’d have to find time between my regular job to figure this out as well so that’s also a bit of a setback as well.  I would probably be more apt to take a leap of faith to try my hand at the new business but it’s not worth the risk.

10 Comments »

  1. If split roll passes, what would be the effect of that?

    Is there any correlation between vacancies and assessed values? (If not, what effect is expected from SF’s $700 stick?)

    Comment by MP — November 15, 2019 @ 6:56 am

    • What I meant by this that was if that if split roll passes, won’t that create a significant incentive – at least as to those properties with assessments based on long-ago transfers – not to hold out so long for the dream tenant? And are we seeing greater vacancies in properties with very old assessments/lower taxes – or do property taxes (separate from the effect of how the properties are financed – or other carrying costs) not have a noticeable impact on how quickly vacancies are being filled?

      $700 seems like it would have a negligible effect.

      Comment by MP — November 15, 2019 @ 8:25 am

  2. Big conversation, one that we’ve asked to get started. Devils in the details of course, like how vacant is defined.
    30 days is pretty short … 90 seems more reasonable, and when zoning/ building permits are applied for should suspend things … it takes way to long to get a permit issued for small jobs. (~maybe commercial jobs under 2500 sq ft?)

    Would there be an increasing monthly fee/tax, for example.

    We already have an annual fire department inspection, we should probably just move that to building department

    Anyway, we should get into serious discussions.

    Comment by Ron Mooney — November 15, 2019 @ 7:33 am

    • Is it fair to say that first step is that property owners simply have to cut rental rates to adjust to new reality?

      Comment by dave — November 15, 2019 @ 7:40 am

      • Well yes, but some (apparently) don’t need to rent their spots … I find it very strange. A few spots have environmental issues that complicate things but really … drop the price a bit or offer TI bonuses and get it in use

        Comment by Ron Mooney — November 15, 2019 @ 8:33 am

  3. Half of all new businesses fail. Besides internet traffic, some factors affecting vacancies: Raising the minimum wage, limiting the size of stores to avoid chains and encourage Mom and pop stores, and local fees passed on to tenants through the lease. LL could get a loan on a vacant property based on comparable high rents in the area and use the loan money to pay down loans on other properties, but this is only financially feasible when you own multiple properties. Tax losses can also be valuable to shelter other profits. Keeping rents artificially high, even if vacant, keeps the property valuation high. Renting it out at a lower rent lowers the value. (Ex. The old Paganos on Lincoln)

    Comment by Nowyouknow — November 15, 2019 @ 8:14 am

  4. A store location that was previously renting out for $3,000/month and now wants to double the rent, can get the same 5-year ROI by keeping the property vacant for over 2 years. They don’t need the dozens of aspiring entrepreneurs that can afford the $3,000 rent – they only need to wait for the one that’s desperate or established enough to pay $6,000. Sometimes the market sets the price if the landlord cannot afford vacancy – but if they can afford to wait, then some landlords have been able to dictate the prices themselves.

    Comment by JRB — November 15, 2019 @ 8:54 am

  5. I have often thought the city council and the chamber should take a really serious look at the entire infrastructure that supports small and locally owned businesses. All the issues mentioned above should be studied from the economic and socially useful and viable standpoints, along with any other standpoint deemed applicable.

    I totally agree that the loss of small businesses is an extremely important issue to all Alamedans and cannot be only attributed to the Internet. That’s a cop-out. Small business serves our community in so many ways: boosting employment and offering essential services. It also supports the emotional and social needs of residents. I love to walk into businesses and speak with the owners and staff; I learn a lot and it’s very gratifying.

    I don’t know about “cute,” not everyone is into that but everyone wants to be able to buy what they need and relate to others, whether they actually realize this fact or not. If we truly want a small town atmosphere in Alameda, we can have it, despite population gains, if we support small business.

    Comment by Laura Thomas — November 15, 2019 @ 11:07 am

  6. A Vacancy Tax is a ‘one size fits all’ approach to a more complicated problem. I see Big O (Gary’s) Site that had a Tenant who wanted to move in but the Planning Board pulled the Use Permit. In the present condition it can’t be used for anything. Juanitas which has been vacant for many years is just an enormous space and too large for a single Tenant but could be divided. With some of the Parcels on Lauren’s spreadsheet you can see the current and past Prop Taxes directly here. https://www.acgov.org/ptax_pub_app/RealSearchInit.do?rsShowSeachParmsWithHistory=true
    With others they won’t come up with the address but you can search with the Parcel # here. https://www.acgov.org/assessor/resources/parcel_viewer.htm It takes a bit of clicking but eventually you get the number. This way you can get some sense of who are Paying pre-prop 13 and who isn’t. A lot of the older LL are currently selling their Properties. That is good for the City in Transfer Tax and bringing Prop Tax to current levels. You would have to consider if a Vacancy Tax would deter sales. Some of these Properties are just so outdated and I wonder if they will ever be Leased again. Something to consider as the CC reexamines Measure A is allowing some infill housing w/o Parking in these Business Districts.

    Comment by Frank — November 15, 2019 @ 6:00 pm

  7. They need more clothing stores. I refuse to buy clothes online anymore. They look good in the pictures but when they come they are too small or look cheap. I don’t mind chain stores. I buy most of my shopping at the Gap or Old Navy, TJ Maxx. Those are the only places to buy Men’s clothes in Alameda. Alameda Landing seems to be doing well, it is probably 70% full although Spin Pizza went out of business. It will be interesting now that they are building on the base to see what happens to retail on the West End. Webster Street not a lot of vacancies because it is mostly service type stores such as a ton on hair salons, some restaurants, coffee places, an Auto Parts store, Paganos. I go to Paganos sometimes but after they moved their prices went up so I go when it is a simple thing but if it is for something bigger I go to Home Depot. I think they actually found someone to rent out the old Paganos space the for lease sign is down and there is brown paper on the windows.

    Comment by joelsf — November 18, 2019 @ 9:23 am


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