Downtown San Luis Obispo businesses are facing difficult times in this economy. Sale signs and empty stores are located on every street as businesses try to bolster their revenue and attract more customers.
Businesses in the downtown area have always come and gone; however, the city’s single biggest source of revenue — sales tax — remains down. Compounding the issue, businesses are unable to get loans easily.
David Garth, president of the San Luis Obispo Chamber of Commerce, said that it is difficult to tell whether it is solely the economy or other aspects that are hindering business.
“Due to seismic retrofitting, some businesses have been forced out of town because of higher rent prices,” Garth said. “These businesses normally would have stayed around.”
Garth also said that the holiday period was not profitable enough for several businesses, many of which still remain in a state of limbo between open and permanently closed.
In spite of the tough times, the number of business licenses in the city has increased.
Claire Clark, the Economic Development Manager, said there are more new businesses in smaller locations as many people have lost jobs and decided to start their own endeavors. Downtown, there are plenty of spaces available in units larger than 2,000 square feet because companies are downsizing due to the economy. She said every business goes through a life cycle and the economy is bringing those cycles to an end for some stores.
In the downtown area, office space availabilities have increased to between 6 and 7 percent when space availability has normally been around 3 percent Clark said.
The redevelopment projects that occurred downtown, including the Downtown Centre and the Court Street project, have helped the most to bolster success in the area. These improvements led to an influx of national retailers, which have made the city more of a tourist draw. Clark said that the pedestrian feel of downtown encourages shopping and dining in the area.
“Downtown has really benefited from the influx of corporate stores along with locally owned stores,” Clark said. “I hope to continue to see these smaller businesses staying because they give a nice breath to downtown.”
Despite some successes, the economy has forced businesses to head out of town. Deborah Cash, executive director of the San Luis Obispo Downtown Association, said two dozen businesses had to close or move for various reasons during the past year. Some of those businesses include Taste, Therapy and San Luis Surf Company. Cash said the economy and the fact that more people are shopping on-line now have affected downtown businesses.
Restaurants, salons, women’s apparel, and specialty stores are doing the best in the downtown area, says Cash. She said their association is trying to revitalize the downtown areas through design, promotions, economic restructuring, organization, and by constantly searching for new ways to bring more people downtown.
The heart of downtown sees the most productivity in good times and bad among businesses, Clark said, adding that businesses further away from the four-block area on Higuera Street between Nipomo and Osos are struggling to attract customers. She said the most affected area right now is on Monterey Street from the mission to Morro where several storefronts are vacant due to seismic concerns and decisions of businesses to move to other locations downtown.
For the 2009-2011 financial plan, which was effective July 1, 2009, the city’s budget was cut by $10 million per year. Clark said the city’s largest revenue sectors, sales, and transient occupancy taxes were projected to decrease. At this time, she said revenues are on the decline but are still within the projected budgetary constraints. However, the city is cautiously guarding against further downturn in revenues.
“The economy needs to improve and it is key that the downtown area remains attractive, safe and clean so people continually want to come to the city,” Clark said.