For 20 years this was home of Alexander’s Pizza. It’s now under wraps until its new owner moves in
There is a sense among some in the community that the cost of doing business in Coronado may be getting too rich for many local businesses. In the past year there have been some substantial rent increases across the business district.
Last December, Charlie Wagner sold Central Drug because of a hefty rent increase, he said. And so far this year, two other popular homegrown businesses –Rhinoceros Café and Grill and Alexander’s Pizza – closed their doors after their rents were raised. Neither said they were closing because of the rent increase. Still some in the community are concerned that the trend toward higher and higher rents will take a toll on many shops.
“We don’t want to see local boutique businesses priced out of the market,” said Rita Sarich, of Coronado Main Street. “This isn’t the case now, but we are carefully monitoring the situation.”
For their part, landlords believe rents are reasonable given the location. “If rents were too high, you would see more vacancies,” said Paul Swerdlove, who owns the Spreckels Building, one of Coronado’s most iconic structures, a designation he can take credit for.
“He took a building that was down on its heels and made it one of the most desirable places to rent in Coronado,” Sarich said.
Indeed, Swerdlove said that he has “a list of people who want to rent there.” In fact, when Rhinoceros closed its kitchen, it took Swerdlove one phone call to find a new tenant. “I didn’t even advertise,” he said.
The Spreckels Building building isn’t the only sought after commercial property. Commercial property is booming here. Soon after Central Drug closed, the Bay Company moved in. And a fast turnaround pizzeria, not unlike Project Pie in Hillcrest, is moving into Alexander’s old space.
Swerdlove contends that despite the grousing emanating from some quarters, rent increases have been modest, 2% for most of his tenants. “You have charge a certain level of rent, or you can’t afford to keep up the property,” he said
Of course, the challenges for business owners aren’t limited to skyrocketing rents. Businesses, and especially restuarants, have other cost that they can’t control.
The Island has settled in where Rhinoceros used to be
“Minimum wage, insurance, fuel service charges, water rates, utility rates, and food cost are all rising, all are chipping away at an average bottom line of 8-12% in restaurants. The cost increase can’t be absorbed, as there are not enough margins for that to happen,” said David Spatafore, principal of Blue Bridge Hospitality, whose ventures include Leroy’s, MooTime, Village Pizzeria, Lil Piggy’s BBQ and Stake.
He blames high rents on “a lack of individual commercial property investment.”
“In the past, commercial real estate was owned by individuals, doctors, lawyers or business owners who made choices of who they leased their space to. This was almost a partnership between landlord and business in baking an idea that was thought to succeed. Now commercial landlords have less personal interaction, deals are brokered, and the idea of selling your concept to a landlord has been replaced by a ‘credit tenants’ status on paper.”
This relationship change will have a profound effect on who can afford to open a business here. “The higher the rents go the more likely it is that the spaces will be taken over by chains,” Sarich said. They’re the only ones with deep enough pockets.”
Spatafore agrees. “Small start-ups or local entrepreneurs may be excluded from the process due to lack of financial background or the ability to pay higher rents,” he said.
There is already a trend in that direction. Scaled-down versions of national chains are moving into neighborhoods and small communities. A mini-Target is slated for South Park, a neighborhood that has been gentrifying at a rapid rate thanks in large measure to the number of trendy restaurants, artisan shops and unique boutiques there.
Of course, chain retailers and restaurants have a more complicated path here. Coronado requires companies with more than 10 locations to apply for a minimum special use permit that has to be approved by the planning commission and can be appealed to the city council. This gives residents a voice, if not a veto.
The city is also somewhat shielded from the Wal-Marts of the world by its parking policy. Large stores and newly fashioned restaurants have to provide parking for patrons.
The intention was not to line the pockets of commercial property owners. It was to keep the business district diverse.
“We didn’t want downtown to be dominated by restaurants,” Sarich said. “We wanted a balance of retail and dining.” Making it tougher to open a pizzeria than dress shop helps ensure that Orange Avenue doesn’t evolve into a restaurant row.
Bay Company replaced a century old neighborhood pharmacy
But the cudgel designed to spur diversity amoung the business district maybe be having the unintended consequence of raising the value of established restaurant spaces. Existing restaurants were ‘grandfathered in’ to existing parking, so opening a new restaurant in an existing restaurant location does not require providing parking for patrons. As such, Nicky Rottens, which expanded into a former laundromat, had to provide parking when it opened in 2011. Saiko Sushi, which opened just a few doors down but in a location previously occupied by the Mexican Village Restaurant, did not need to provide parking.
By grandfathering in existing restaurants, “the city made those spaces golden,” Sarich pointed out.
That’s proving to be challenging to local restauranteurs. After closing Alexander’s, owners Carolyn and Ray De Lagrave said they wanted to move to a space where they could serve customers at tables and chairs – a real restaurant, not just a takeout. They are still looking for one they can afford.
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Gloria Tierney
Staff Writer
eCoronado.com
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