(This is the first in a periodic series of short articles examining assumptions and realities about the Telegraph Avenue neighborhood.)
“Empty storefronts abound,” on Telegraph Avenue Carolyn Jones wrote in her February 28, front page, San Francisco Chronicle story publicizing the Mayor Bates community meeting on Telegraph on February 27.
“Abound” is not an exact term, but let’s take it to mean what seems to have been intended—empty storefronts are frequent, common, and highly visible, along Telegraph.
Is this so?
In a word, no.
Based on the number of businesses and commercial vacancies, Telegraph is far from being a destitute commercial district.
Commercial rents, highly visible investment in building remodels and upgrades, and new business openings also give an indication that the economy hasn’t abandoned the neighborhood, despite the conventional wisdom you hear and read all too often these days.
Let’s look at these factors one by one.
In the week before the Bates meeting I counted storefronts as I walked up and down Telegraph on my commute. A table of the results of my survey is on the left.
Between Parker Street and Bancroft, the traditional five block-long Telegraph commercial district, there are 102 separate commercial storefronts. I counted only those businesses that have a front door and display window space opening on Telegraph itself.
(There are, of course, many businesses on the cross streets, particularly Durant and Bancroft, and I may count them later for a more thorough analysis of the whole commercial district; but I doubt the results would be much different from Telegraph itself.)
As of the beginning of March 2013, 86 of the storefronts on Telegraph were occupied by functioning businesses. (In one storefront the business hasn’t yet opened, but the space is full of fixtures being unpacked, and there are permits posted in the window, so I counted it as rented). That’s an occupancy rate of 84%.
That leaves 16 storefronts that aren’t occupied, which may seem like a fairly high number. But five of those 16 are being renovated and/or have permits to extensively renovate. Those are storefronts where we wouldn’t reasonably expect to see an operating business right now because the space is being torn apart for repairs and improvements. And in at least three of those five instances, the building owner has said publicly what business they expect will go in there once the renovation is complete.
The remainder of the commercial spaces—nine—are indeed “vacant” and for lease. That’s nine out of 102 commercial spaces, or an actual vacant rate of 8.8% of the storefronts that are actively hosting, or looking for, commercial tenants along the Avenue.
(The rate may even be less than 8%, because at the Bates meeting a man spoke from the audience, talking about the business he is planning to open on Telegraph. After the meeting I asked, and he told me, which one of the nine vacant storefronts he had just signed a lease to occupy.) *[See Update at the end}
Another way to approach this issue is to examine whether commercial vacancies have changed in recent years. From my own daily observations I can tell you that several storefronts that were vacant a year ago are now occupied, including the whole, recently renovated, commercial building at the southwest corner of Telegraph and Channing where “The Melt” and Gordo’s are now located.
And, statistically, we can refer to a Telegraph Business Improvement District report from 2007 that mapped no less than 11 vacant storefronts along Telegraph itself—two or three more than the current vacancy level—as well as documenting an overall vacancy rate of more than 17% for the whole commercial district.
Yet another way to consider whether the business district is distressed is to examine the rents being asked by commercial property owners. If they’re extremely low by market standards, then that would be an indication that prospective businesses are shunning the neighborhood and / or commercial landlords are desperate to find anyone to occupy their spaces.
The rents being asked don’t support that notion. Not only are they substantial, but they come close to, or sometimes even exceed, commercial rents being asked for some vacant storefronts in supposedly more thriving parts of town like North Shattuck, Solano Avenue, and Downtown.
As of the beginning of the month, 2499 Telegraph where the old Tienda Ho clothing boutique was located for many years, was listed as available for rent for $4,000 / month, with 1,200 square feet. That’s $3.33 per square foot a month, or about $40 / square foot a year.
(This is also listed as an “IG” or “Industrial Gross” lease in which the tenant may also have to pay “utilities, common area maintenance, and often the increase in property taxes and insurance over the base year” in addition to the base rent. So the actual cost of renting this space will be higher than $3.33 / month).
This location is described on the Gordon Commercial real estate site as “high visibility location just 4 blocks to UC Berkeley campus with a 50,000 daily population. Part of an urban mall-like setting bursting with new and used clothing stores appealing to the college, teen and young adult market. Share a block flanked by legendary retailers Shakespeare and Co. and Amoeba Music. Across from Peet’s Coffee and Tea. Join American Apparel, Urban Outfitters, Adidas, Hot Topics, Volcom, Bows and Arrows, Moe’s and more on this adjacent-to-campus shopping strip. Tremendous foot traffic.”
Of course real estate brokers will want to put the best marketing gloss on what they’re offering but even allowing for hyperbole, does that sound like a retail district that’s failing?
And across the street from this storefront John Gordon owns two vacant commercial storefronts in the Fred Cody Building (2470 Telegraph) both listed for rent. This time the listing description invites the prospective tenant to “Join Peet’s Coffee, The Melt, Gordo’s Taqueria, Caffe Mediterraneum, Pappy’s Grill and Sports Bar and more…”. The larger of the two spaces is available for $3.25 / month per square foot.
A block and a half south, there’s another space available for rent in a very old building at 2556 Telegraph asking $2,000 a month for 1,088 square feet, with very little visible frontage on Telegraph itself.
A vacant storefront at 2383 Telegraph is listed as asking $4,800 a month, for 1,489 square feet. That’s $3.22 per square foot, per month. This location, the listing says, is “part of an outdoor mall-like shopping area bursting with stores appealing to the teen to young adult market.”
At 2531 Telegraph, a “move-in condition” storefront in a recently renovated building offers “good window frontage on busy Telegraph Avenue”. The rental rate isn’t listed. It is flanked by two recently arrived businesses.
How do those Telegraph asking rents compare to retail space rents elsewhere in Berkeley? Well, Gordon Commercial simultaneously has listed relatively newly built commercial space in the Gourmet Ghetto / North Shattuck for $3.50 square foot, renovated space (the old Radston’s office supply storefront) on Shattuck for $3.19 / square foot, and newly built, never occupied, ground floor Downtown retail space in the new Arpeggio Building at 2055 Shattuck for $3.50 square foot.
There’s also “prime upper Solano Avenue retail” at 1779 Solano asking just $2.00 a square foot per month, or only about 60% of the rents being asked for space on supposedly economic basket-case Telegraph.
A third indicator of whether the commercial district is being abandoned is whether there has been substantial investment in building renovations or construction, aside from improvements made by commercial tenants.
Again, the facts of the last few years indicate that building owners and investors are putting money into commercial Telegraph.
Walking down Telegraph I counted at least ten separate buildings where major investments have been made in recent years, or are currently underway. Keep in mind these are not limited interior storefront improvements by a retail tenant; they’re substantial, sometimes whole building, upgrades.
The Palazzo Building is getting a seismic retrofit, apparently, as well as new storefronts (it contains two of the five vacant spaces on the street, spaces currently filled with busy construction). Next door, a one story, two-storefront building was completely refurbished after the Sequoia Building fire, and one of the anchor tenants has returned and reopened.
On the same block, the venerable buff brick five story old Medico-Dental building at Channing and Telegraph got a complete storefront replacement / remodel a few years ago, and every commercial space is now rented.
The 2531 Telegraph storefront for lease is in the middle of a completely renovated three storefront, one story, building. The building next door that used to house the Blue Nile restaurant looks derelict, but has permits for a major renovation by the owner, who has also proposed a sort of entertainment club there.
Finally, if Telegraph were collapsing economically, another indicator would be that new businesses would be avoiding the area, even if older businesses were managing to hang on.
Telegraph does, in fact, have existing businesses that date back to the 1950s and 60s, as well as every decade since then. You can have your morning coffee in the Caffe Med (1950s), move on to shop at Annapurna, Bill’s Men’s shop, or Moe’s (1960s), have lunch at Kip’s (1970s) or snack at Café Milano or The Musical Offering (1980s) and continue your decade-by-decade shopping experience right up through the present, a Chinese-bakery that opened in February.
And in recent years—and during the Recession—a considerable number of new businesses have come to Telegraph. The Chinese bakery is part of just one recent, and entirely unsurprising, trend. Along with a Japanese bakery and the Daiso variety store, it’s marketing to the large numbers, and percentages, of Asian-American students at Cal.
And some much publicized business collapses on Telegraph, like the demise of Larry Blake’s a few years ago, have been superseded in the same spaces by apparently successful new businesses of the same type. The basement plus ground floor Larry Blake’s storefront, for example, now hosts Pappy’s Grill and Sports Bar.
Many of these new businesses seem to be doing OK, at least based on their visible customers. Well-to-do non-students in Berkeley may feel smug about the perpetual lines at newer businesses like Ici on College Avenue in the Elmwood, but surprise, surprise, there are similar niche food places such as CREAM (Telegraph and Channing) where lines of customers often block the sidewalk. Yes, there are lines on Telegraph to get into some busy businesses.
Telegraph is facing economic challenges, and I don’t doubt that some, perhaps many, of the businesses are suffering. But four core indicators of commercial district distress—high retail vacancies, low rents, lack of investment in the buildings themselves, and a lack of new businesses opening—just aren’t present, as far as I can document.
It’s a different story from the sort of casual, windshield survey stereotypical writing that seems to pass for journalism about Telegraph in some quarters these days.
One of the interesting memes about Telegraph Avenue is either that locals are terrified of chain stores taking over the Avenue or, conversely, the only way to save Telegraph is to open it wide to chains. Both these claims imply that chains are alien to Telegraph.
In fact, on my walks I count at least a dozen chain businesses among the 86 operating commercial storefronts on Telegraph. They range from heavy-weight Walgreen’s (with, interestingly, an independent convenience store operating right next door), to American Apparel, to Peet’s which we may not think of as a “chain”, but which has more than 150 locations in California alone, as well as stores in five other states.
At left is my block-by-block count of operating and “vacant” storefronts on Telegraph, done during the last week in February.
After I submitted this story, I walked down Telegraph again on my commute and passed a group of workers apparently starting to install a new business at a vacant storefront. The temporary signage they were putting up indicated a new bakery called "Sweet Leaf" is going into the old BayKing bakery in the Fred Cody Building, just north of Moe's. A bakery seems traditional at this spot. It's where the old Eclair Bakery was located before it was demolished for construction of the Fred Cody Building. Along with the businessman who said at the Bates meeting that he's planning a new enterprise in a vacant storefront on Telegraph, the new bakery would lower the number of vacant storefronts visibly "for rent" on the upper five blocks of Telegraph from nine—the number I used in my story, above—to seven. That's a vacancy rate of 6.8% for the 102 retail storefronts that open on Telegraph itself. See the full article above for the analysis.