High commercial rents, second-home buyers, online shopping, outdated zoning ordinances, and a reputation for being unfriendly to business are all to blame for sluggish sales in St. Helena’s downtown retail sector, according to a new market study.
The city hired Kosmont Companies to analyze the downtown retail scene and make recommendations based on a review of national and local trends and interviews with merchants and landlords. The consultant’s study was presented to the City Council on Tuesday.
The council encouraged staff to keep working with Kosmont and start working through its recommendations, including a less restrictive zoning ordinance.
“We all have a sense of urgency here,” City Manager Mark Prestwich said.
The downtown retail vacancy rate of 8 percent exceeds the county average of 2.6 percent, although it was even higher following the 2008 recession.
By the time business recovered from the recession in 2013, Caltrans began major Highway 29 road work that took its toll on local merchants, the report found.
Meanwhile, commercial rents are the highest in the county and have hit a historic high even by St. Helena standards. Average “triple net” lease rates (which include utilities, property taxes, insurance, maintenance and other costs) are over $40 per square foot, requiring store owners to generate sales of $600 per square foot to make a profit.
That sales volume can’t be achieved by local customers alone. The replacement of full-time residents with second-home buyers has reduced the number of local shoppers and cut down on local sales, Kosmont found.
To make matters worse, merchants are having a hard time finding quality employees due to high housing costs.
Those factors are exacerbated by broader market forces as consumers have turned to websites like Amazon to buy commodities, clothes and other goods, the report states. Successful brick-and-mortar businesses are finding ways to offer customers “experiences” they can’t get online.
“Today’s economic forces demand approaches to land use that explore diversification in uses and densities, and concepts for public amenities and private attractions that help cities capture trips and thus ‘sales’ sufficient to retain vibrant commercial districts,” consultants wrote.
Younger consumers who rely the most on social media and digital communication tend to seek “gathering places with restaurants, entertainment venues and experiential retail, rather than simply a collection of traditional store fronts,” according to the report.
The report also highlights St. Helena’s reputation for being inhospitable to business. John Anderson of Woodhouse Chocolate told the council that he and his wife Tracy continually talk about where they could move to be more successful.
“I’m not saying that to be nasty. I’m not saying that to be mean,” Anderson said. “But I have to tell you, as a business owner in this town I don’t feel like we’re getting a lot of help.”
Kosmont made the following recommendations:
- Consider resolving the city’s “anti-business” reputation and image through marketing/branding
- Establish tie-ins with downtown merchants, Culinary Institute of America and wineries
- Consider regular community events downtown
- Consider high-image or “formula” retail, or “Market Hall” concepts for vacant Masonic Lodge and other prime locations
- Create more experiences for shoppers with “pop-ups,” entertainment, breweries, etc.
- Work with landlords on economic market realities and more aggressive leasing campaigns
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- Educate landlords, businesses and City Council on experiential, destination and other retail trends
- Improve image with infrastructure improvements
- Capitalize on upcoming sidewalk improvements by encouraging improved facades and new landscaping and street art
- Focus sidewalk construction during morning hours in the off-season to minimize disruption
- Activate Money Way
- Provide more parking and wayfinding signs
- Provide some 20-30 minute parking spaces on Main Street to facilitate in-and-out customers
- Provide valet parking or shuttles on weekends
- Revamp zoning and permitting process to be more flexible and accommodate changing retail and market dynamics
- Identify beneficial retail categories and streamline permit process
- Provide permits for temporary “pop-up” users
- Allow high-end hotel development to increase evening business and tax revenue
- Consider allowing infill housing or blended use in vacant buildings near Main Street
- Allow ancillary and accessory uses in existing businesses without requiring new use permits
- Allow live music and amplified sound to attract customers in the evening
- Permit some limited high-end “formula” retail stores
- Consider allowing the Napa Valley Wine Train to drop off passengers to increase business, reduce traffic, and reduce the demand for parking spaces
- Expand community outreach efforts to get broad feedback on land use issues
- Consider a Specific Plan for zoning strategy/higher density on targeted sites.