Recent closures and openings in downtown Davis reveal that landlords value tenants who will be best suited to the community, in addition to bringing in income and boosting business.
The southernmost block of F Street is now host to a variety of businesses, such as Massage Envy and the AT&T store, as well as C.R.E.A.M.
These are not the only new businesses to enter the area. According to their website, The Melt, an eatery specializing in “Grilled Cheese Happiness,” is expected to open soon in Davis Commons. It will be located in the spot previously occupied by Ben & Jerry’s.
The Melt is a small chain with locations in the Bay Area and Los Angeles, with the upcoming Davis branch as the 15th site. Menu items include egg-in-a-hole breakfast sandwiches, salads, soups and of course, grilled cheese.
However, their interpretation of the grilled cheese is different than the simple childhood snack. Diverse ingredients such as fontina, aged swiss, aged cheddar, sourdough and homemade garlic bread provide creative variations on a classic.
While a number of new businesses are due to open in downtown Davis, others are closing down. Among those that will close are Tutti Frutti and Café Méditerranée, which will be shutting their doors in Davis by the end of the year.
The frozen yogurt chain will be vacating a property next to The Nugget on Covell Boulevard in East Davis. Café Méditerranée is located in a free-standing converted house on D Street, between First and Second streets.
Measure R
Finding a new business to occupy the property takes a certain amount of consideration. Property owners and brokers in Davis are motivated by both local ordinances such as Measure R (previously Measure J) and good business sense to find a tenant who will improve upon the neighborhood.
Mayor Joe Krovoza agreed that Measure R is an important law. It slightly limits commercial development, leading to more scarcity of property and firmer boundaries on business activity.
“That was the law’s original purpose [to discourage sprawl],” Krovoza said. “It is a significant factor in downtown development.”
It requires that there be a citywide vote whenever developers want to convert previously designated agricultural land to urban use.
Two regions the measure currently affects are Covell Village, a parcel north of Covell bordered by F Street and Pole Line Road, and Nishi Properties, a 44-acre property in South Davis sandwiched between Olive Drive, downtown Davis and Interstate 80. For now, both remain largely undeveloped.
Property expenses, location
Sarah Worley, economic development coordinator for the City of Davis, stressed that it is important not to attribute the closure of a business to a single cause, such as high rent.
“For businesses, many variables come into play during their development. For instance, start-ups focusing on product development might not worry about location, about foot traffic or being on the first floor [where customers can easily reach them],” Worley said.
Property expenses are another factor which businesses must consider. On Loopnet.com, a commercial property website which includes current listings in Yolo and Sacramento counties, one can access prices for leases.
Downtown retail spaces in Woodland, Davis and Sacramento do vary slightly, with Woodland offering the lowest rental prices.
The Woodland Daily Democrat was housed in a building on Main Street which is now listed for lease — 1,200 square feet at $18 per square foot per year. In Davis, a 1,600 square foot retail space in the old Depot Building next to the Amtrak Station is going for $24/square foot/year. Midtown Sacramento rental prices are approximately the same as downtown Davis.
For especially well-located and attractive sites, the lease is often negotiable. Long term leases are generally less expensive, since property owners also value reliability in a tenant.
Landlords value community, income
Jim Gray and Nahz Anvary, senior brokers at Cassidy Turley Commercial Real Estate Services, are no strangers to the leasing process. They work with property owners, who usually fall into two categories: those who own the business located on the site and those who use the property to generate income through rent. The criteria property owners use when evaluating potential tenants vary.
“Landlords take a few things into consideration. One, is the business a good one for their property?” Gray said. “Two, will the business add to the qualities of the building and the surrounding neighborhood? Part of the landlord’s evaluation also takes previous business experience into account. After that, the landlords have to make a judgment about the potential success of the business.”
When asked, Worley, Gray and Anvary all agreed that downtown Davis is in good shape.
Data from the Third Quarter 2013 Office Market Snapshot, gathered by Cassidy & Turley, corroborates the statement. Vacancies are at nine percent, as compared to 15.2 percent for the greater Sacramento region.
“[Davis doesn’t] have a huge inventory of empty space, the market is quite competitive,” Worley said. “Most vacant properties are filled quickly.”
Money isn’t the sole motivator behind allowing tenants to lease property in downtown Davis. Synergy with the neighboring businesses is crucial, and in the right circumstances, complementary businesses bring in more customers than they would independently. Property owners of the Hallmark Inn building took such consideration when signing Massage Envy and C.R.E.A.M. to their lease.
“Running a hotel, you think about these things,” Anvary said. “What would possibly make [a hotel] a better place than a massage and a snack next door?”
