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[whitespace] More chains may be on horizon as rising rents hit small shops

Los Gatos--After five years, Edith Mor is closing Silver Impressions, her small jewelry and gift shop on N. Santa Cruz Avenue.

"They wanted us to sign a lease that was 50 percent higher," Mor says. "When I asked why, they said, 'these are the prices in Los Gatos right now.' "

For her 2,000-square-foot store at 29 N. Santa Cruz Ave., Mor was paying $2.25 per square foot, but renewing at $3.40 per square foot was out of the question.

"I honestly don't believe that any individual retailer can pay that much," she says. "This is going to bring all the corporate and chain stores downtown. It's already happening."

Now, eight years after she opened her store (the first three were in Saratoga), Mor says she doesn't want to endure another move. "I just don't want to. You have to start all over again." So she'll be moving her sales operations to the Web, instead of trying to find another retail space.

Larry Arzie, who owns the Los Gatos Porch, directly across the street from Mor's shop, says he was shocked when saw the "store closing" signs in the windows. "I went over there and gave her a big hug and told her, 'This is just outrageous!'"

"That's one of the few shops that's opened in the last five years that offers a product of worth," he says. "It's not a T-shirt shop, and I think that's what we're going to get."

Now, Arzie--and many other downtown business owners--worries that other shops aren't going to survive.

"The landlords are pricing the independent businesses out of business," said one shop owner, who fears being forced out by a rent hike and wishes to remain anonymous. "The only people who can afford the rents now are the big-box retail stores.

"I understand that the landlords need to make money, but this is ridiculous. They have no concern how this is impacting our lives," he says.

Not only do small businesses have to contend with high rents, some also must pay "triple-net" costs--in short, everything. Triple-net charges include paying the bills for insurance, maintenance, utilities, tax, and everything else from paint to pest control.

In addition to rent hikes, which are almost guaranteed to increase as the new stores in Old Town open, downtown businesses now may have to face increased costs if a parking assessment district is formed. Businesses have been clamoring for increased parking, but to get the two garages many of them want may require the formation of an assessment district. While it would be property owners who would be assessed, they might pass on their increased costs to tenants.

Meanwhile, on the north edge of town, neighbors are furious at the prospect of seeing their neighborhood pharmacy displaced in favor of a Longs. Longs has already applied to take over the space leased by Rinconada Pharmacy, and the application comes to the Planning Commission later this year. The pharmacy is in litigation with the landlord in a dispute over the lease.

Faced with skyrocketing commercial rents downtown, and the increasing presence of chain-stores--which often tend to be the only retail outfits that can afford to pay exorbitant rents--the Town Chamber of Commerce has formed an Economic Development Subcommittee to figure out how the Chamber should approach the situation. The committee met for the first time April 16.

"We're very concerned about it, and we're starting to address it," says Chamber Executive Director Sheri Lewis. "We've had some members who have been forced to relocate to San Jose and either downsize their operations or leave altogether because they couldn't handle the rent increases." Lewis says she knows of three or four stores that are all threatened with losing their leases because of major rent increases.

The committee, which is looking to expand its ranks and include more business owners and landlords, plans to start by looking at how other communities--such as Los Altos, Palo Alto, Carmel, and Fourth Street in Berkeley--create and maintain their business mix.

The Chamber is also considering how it might be more active in recruiting unique kinds of businesses that aren't represented in the town and what the Chamber can do to keep the businesses that are already here from moving out of town.

But for some, like Mor, it's already too late. However, she plans to open her new store in cyberspace (www.silverimpressions.com) in early May.

"We're really sad to leave Los Gatos, but I really appreciate all the support I got from Los Gatos residents. A lot of people care, and they said that they don't like what's happening to this town and that they're going to miss me.

"And I'm going to miss them, too."
Jeff Kearns

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