Local, Commercial Real Estate Veteran Broker Looks Past The Storefront Windows
Many times, commercial real estate brokers/agents are asked about the retail scene in Alameda. It is my hope to answer that question here in this article. As a commercial broker that has worked in this wonderful community for over 30 years and served on the Downtown Alameda Business Association Board of Directors, it has always been a goal to find ways to help business owners and landlords succeed! Not always an easy thing to do and sometimes painful to watch businesses sign a lease for a new space and fail quickly. Maybe it was a great idea without proper execution, or maybe a poor idea that didn’t have a chance. Let’s take a spin around town and look at how retail is working or not working.
Let’s talk a little about restaurants. There are many, many choices for types of food and restaurants in the city. Park Street, Webster Street, the shopping centers and in between, have so many different worldly choices that I like to call these areas International Village American, Greek, Chinese, Thai, Japanese, German, Italian, Mediterranean, Vietnamese, French, Korean, Burmese, Mexican, Asian Fusion, Moroccan, Cambodian, etc………..maybe missing some, but I think you get my drift. It is truly amazing that a city of our size has all of these choices.
There are many, many issues that business owners face on a daily, weekly, monthly basis. Some of which are hiring good employees, online shopping competition, vandalism and theft, higher costs of goods, higher rents, and higher insurance premiums. How a business owner handles these issues can make them or break them.
To help understand some of the rents that these businesses need to pay and what landlords are charging we can look at the following chart to get a sense. It shows that the retail market rents are around $3.10/sf/month in 2023.
The highest rents are currently in leases that are in the major shopping centers and parts of the Park Street Business District. The shopping centers tend to have higher lease rates as they generally have one or more major “anchor tenants” along with onsite parking, landscaping, and sometimes security.
Take a look at South Shore Center with anchor tenants Safeway and Ross or Bridgeside Center with Nob Hill and others. Many of the anchor tenants, and larger space tenants do not pay the highest rents as they are sought by the centers to help bring in other smaller tenants.
Also, in the shopping centers there is something called Common Area Maintenance or CAM. The tenants are charged a rate (monthly $/sf) for the maintenance of the common areas such as landscaping, walkways, lighting, parking lots, security and many other items.
CAM rates can range from $.20/sf/month to over $1.00/sf/month, and these fees are charged in addition to the regular monthly rate. So, if a tenant is in 1,000 sf and pays $3.00/sf/month in rent plus $.50/sf/month CAM fee, they are paying $3,500/month for rent and CAM, plus they pay for any utilities they use. Any retail business needs to understand their rent structure. Not all rents are like this as many retail rents are the rent rate plus utilities and garbage.
But focusing on retail rent rates only tells us part of the story when it comes to the cost burdens our retail and restaurant business face. In future articles we can dig deeper and address them.
At the same time, there are many thriving businesses in town.
Let us look at how some of the retail businesses are performing in Alameda. Moving around town I was able to talk to various business owners and business associations about how they are doing………..
Barbara Mooney, owner of Daisy’s. Gift shop at 1347 Park Street:
“I certainly don’t want to speak for all businesses here but I am happy to report Daisy’s has had a great year. We are about to celebrate our 20th year of Daisy’s, which feels amazing. Alameda has been such a great community to run a business in, most people here really value community, and we really try and give back to Alameda as we love it here. Our new classroom has been well received so far and we think it will be the shining star of our 2024 year..”
Joann Guitarte, owner of Cafe Jolie, Restaurant at 1500 Webster St and 1501 Harbor Bay Parkway:
“The last eight months for our Restaurants are up, considering the inflation that is happening nationwide. The revenue stream is healthy and operation costs continue to go up. Next year we are set to make a decision to either raise prices or serve smaller portions to be able to keep the current prices where they are at. It will be interesting to see what next year brings with all the layoffs happening especially within the Tech sector.
While public safety in some cities has been the demise or closures of many businesses, our Alameda Police department is doing a good job in minimizing the occurrences that we face.”
Mike Jaber, Owner of the Encinal True Value Hardware Store
“We have had to adjust how we do business due to a variety of factors, but it has been a great year and we look forward to a big 2024. Our goal is to continue to serve all of Alameda as the locally and family run hardware store and pharmacy.”
Kathy Weber, Executive Director of The Downtown Alameda Business District (DABA) Park Street Business District:
“Downtown Alameda is fortunate to have a diverse mix of local businesses offering a delightful variety of goods and services. The essential component in sustaining this vitality is the intentional commitment of our community to continue to support our local businesses.”
Linda Asbury, Executive Director of the West Alameda Business Association (WABA)
“Our Webster Street merchants are amazing resilient business owners. They add and remove products for the current economic environment. They adjust their hours appropriately. It’s a thriving community that continues to take care of their existing customers while inviting new ones to enjoy Webster. It’s the passion of providing great customer service.”
Madlen Saddik, President & CEO of the Alameda Chamber & Economic Alliance
“Retail businesses and restaurants continue to have challenges after the pandemic; public safety and the workforce are the biggest challenges; we continue seeing some closing down as they can’t keep their doors open. I hope we as a community unite and support the small businesses as they are the backbone of our city.”
FINAL THOUGHTS FROM RICH
Across the country there are some cities having a lot of trouble with brick and mortar retail coming back in play. Alameda is definitely struggling to get retail up to speed here based on my many conversations with business owners and business associations.
Keeping the conversation in our little town puts the onus on the citizens of Alameda and our visiting neighbors to help make these small businesses successful.
It’s been said before many times, but “SHOP LOCAL” is not just a bumper sticker cliche’
It is truly a practice that helps community growth and vibrance. Dollars spent here go to work here as our local businesses are part of our community sinews and their health improves our quality of life overall. It’s like a healthy community circulatory system that keeps a lot of local hearts beating.
Hopefully, you have gained some helpful information from this article. We look forward to writing more about all things in commercial real estate locally, regionally, and nationally.
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Rich Krinks is a Broker Associate with Berkshire Hathaway Drysdale Properties, and a volunteer, Certified Content Contributor (CCC) for Alameda Neighborhoods News. You can reach him with thoughts, comments or content contributions and ideas at:
Rich.krinks@bhhsdrysdale.com 510-381-3434