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Scary season

By   /   Monday, December 8th, 2008  /   Comments Off on Scary season

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After 18 years in business, Diane Leone is ramping up efforts more than ever to attract customers.

Her State Street shop in Santa Barbara, Paper Star, is getting ready for the holiday season in the shadow of dismal third-quarter retail sales nationwide. “We’re being very aggressive with mailings,” said Leone, who sells fine stationary, personal invitations, business cards and gifts.

Like many other downtown business owners from Westlake Village to Paso Robles, the gloomy economy is staring Leone in the face. Undaunted, she looks optimistically to her company’s busier times – the holiday season – when area lawyers sometimes order 700 holiday greeting cards or soon-to-be brides start planning their weddings after a Yule-time proposal.

Leone has run her Paper Star shop for the past six years in the bustling 900 block of State Street. However, while walking down some parts of the South Coast’s main commercial district, passers-by can observe vacant storefronts that housed businesses not so long ago.

While that might seem to indicate more vacancies overall in the region, Brian Johnson of the Radius Group Commercial Real Estate said the commercial vacancy rate for the third quarter is 1.2 percent in the city of Santa Barbara. Rates are about $3.93 per square foot for modified leases, which include triple net. That is down from a high of about $4.50 at the beginning of the year, Johnson said.

“Things are tighter and there is less credit,” said Johnson, a sales agent on the South Coast. “But I don’t think it will be a killer … [we’ll] just see things being a little slower.” Johnson said he doesn’t expect lease prices to rise. “We had to see a plateau,” he said.

Some shop and restaurant owners in Santa Barbara are fretting in advance of this year’s traditionally busy shopping season because of dwindling credit availability, inflation and rising joblessness.

Despite all that, State Street is re-inventing itself again as it has over the past eight decades. While the lack of recent construction activity near the waterfront has raised some concerns, the not-so-secret plans to open an Apple computer store in the old Pier 1 Imports building in the spring has lifted some spirits.

Parker’s hostel rising
While Fess Parker’s hostel’s wooden frame has risen near the railroad tracks, little work has been seen at the adjacent site of a large parking structure since some concrete was poured in the early summer. While developers navigate around legal issues and seek more investors, Santa Barbara’s once-shining waterfront area along State Street remains derelict.

Moving up a few blocks northwest of the waterfront, little activity can be seen in the former Pep Boys store, where plans to open a new restaurant fizzled as a liquor license transfer was denied. So, the building remains vacant after almost a year since Pep Boys closed. Next door, signs tout the coming of an East Indian products shop.

Around the corner of Ortega and State streets, outdoor landscaping continues around the shut-down Zelo’s nightclub. Two doors down, work appears to be underway at what used to be the Italian and Greek delicatessen, which has its entryway encased in plywood.

In the ever-changing Paseo Nuevo shopping mall, the defunct Mel’s bar space is expected to be leased to a yogurt shop.

And, right around the corner, the former Piranha sushi bar has closed as plans are in the works to make it into a three-story building with an open-air deck on top.

At nearby Canon Perdido and State streets, Anthropologie clothing and accessories emporium may move soon to a site on the 1100 block of State, Johnson said.

One of the more unusual new stores opened this month: Del Sol, part of a national chain that sells clothing and accessories that change color in the sunlight. “It’s our seventh store in California,” said Scott Brady, spokesman for the Sandy, Utah-based chain.

Del Sol leased half of Morning Glory Music’s former space, about 2,000 square feet, on the 1100 block of State Street, Brady said.

On Upper State Street, Macerich officials didn’t appear too concerned about the area’s economy as they announced Oct. 1 a multi-million-dollar upgrade at the area’s oldest shopping center, La Cumbre Plaza.

The improvements around a remodeled Williams-Sonoma, Ruth’s Chris Steak House, Macy’s and new Loius Vuitton and BCBG Maxazria stores will include enhanced landscaping, trellises and a “tranquility garden.”

Macerich owns and operates La Cumbre Plaza as well as Ventura’s Pacific View Mall and 70 other regional malls.

Meanwhile, downtown Ventura continues to thrive in the face of Ventura County’s rising unemployment rate.

The opening of the Watermark on Main restaurant succeeded in the face of street resurfacing and other improvements, said Downtown Ventura Organization, or DVO, Executive Director Rob Edwards.

“The vacancy rate is about 1 percent,” Edwards said. “Nothing under 2,000 square feet is available to rent.”

In advance of the upcoming big shopping season, the DVO is involved in installing eight new iron benches, banners, recycling bins and $20,000 in tree lighting along Main Street to be completed by the week before Thanksgiving, Edwards said.

And, by Nov. 14, Edwards said, construction is expected to be completed, or will be temporarily halted, as the Christmas shopping season begins.

Economic optimism abounds in Westlake Village where several restaurants and shops will open this weekend and host live entertainment. The Promenade at Westlake, owned by the Caruso Affiliated, recently has been renovated and will introduce The Grill on the Alley, the boutique Madison and Trattoria Farfalla.

San Luis Obispo
In San Luis Obispo County, communities are somewhat insulated from some of the nation’s economic woes, said Michael Manchek, chief executive officer and president of the Economic Vitality Corp. “A soft economy is when things get tested,” he said.

Buoyed by the retail economy provided by the county’s college students and lifted by robust tourism and wine industries, San Luis Obispo County may only see some slight negative effects throughout the holiday season.

Manchek said he expected San Luis Obispo’s downtown area, centered around Higuera Street, to be challenged nonetheless with its densely packed variety of retail stores and restaurants.

“Everyone’s going to feel the pinch,” he said, adding that it would be difficult for retailers to lower prices to increase competition because they already have been battered by inflation.

Charles Senn, president of Lee & Associates, San Luis Obispo, said he could not remember any recent shop closures in the downtown area, except for those whose buildings were renovated or retrofitted for earthquake safety. “There is very little turnover,” he said.

Manchek pointed out that California Polytechnic State University, San Luis Obispo, generates some $1 billion in revenue each year while the county’s wine industry – the third-largest in the state – accounts for $1.8 billion a year. “Most of our grapes leave the county uncrushed,” said Manchek, referring to how other wine-producing regions are relying on the purchase of Central Coast fruit.

Manchek also touted the county’s successful tourism industry, which he said will continue to generate revenue in the fourth quarter because the area is considered a bargain for travelers who don’t want to fly or drive too far up the California coast. While optimistic about the area’s future economy, Manchek admitted “more diversity is needed” from other light industry such as technology companies.

“But we will have fewer highs and lows than other regional economies,” he said.

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