I am very disturbed by the City Council’s consideration of a commercial vacancy ordinance as a remedy for so many vacant storefronts, and the lack of vibrancy in the central business district. I am a commercial real estate professional specializing in retail leasing for 42 years, starting my career on State Street downtown in 1981.
As Ernie Solomon has said — and is exactly right — the market, and only market demand, determines whether tenants occupancy these empty spaces. In a natural economic setting, there is some basis for landlords lowering their rental pricing to attract new or national retailers, only provided the numbers make economic sense. I am sure the Santa Barbara landlords would follow what is often done, concessions if there is tenant interest from a strong retailer or a small businessman.
Being forced to lower rents with your approach would only devalue the buildings multiple times, and a tenant may still not be able to operate due to startup costs they must pay the city for their entitlements. You can’t simply — and only — calculate the monthly rates, but rather first the cost to both landlords and their prospective tenants of permitting their spaces for occupancy.
Blaming only the landlord is a facile way to consider the greater problem. If your suggestion is that they should consider short-term leases, this too is a non-starter since it never economically smart to make substantial investments in such leases.
This has been a constant Santa Barbara complaint: City planning and development departments killing deals via entitlement fees, and wasting thousands and thousands and thousands of dollars for the time to takes to obtain the entitlements. Hence the cost, say, for a startup business, even if the rent is lowered, can’t be justified by smaller business operators.
Have you ever considered a far more collaborative effort, sharing the blame, rather than jury-rigging convenient and simplistic legislation to, in a sense, force the marketplace to bend to your will? It will never work. This will also serve to further alienate possible retailers and investors in our city.
You need to support landlords, not punish them. Allow them to repurpose their buildings without costing a fortune or taking five years. Do meaningful public works improvements that could help reduce costs for startups, new tenants, and remodels; and then perhaps the interest in empty storefronts buildings will improve.
Everyone must be part of the solution. It can be done. Other communities world-wide are doing it.
Pamela Scott is president of GPS Commercial Real Estate Services Inc.