Walnut Creek stores struggle - San Francisco Business Times:

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Walnut Creek’s retail district maintained stable vacancyg levels through the beginning ofthis year, but now dozens of tenantd are packing up and leaving storefronts empty. “This is part of a cyclee that is essential. … A recession accelerates retaikl evolution,” said Craig Semmelmeyer, principal of , a real estatde services firm that has worked on dozens of shoppingf centers in theEast Bay. Downtown merchants such as Z Gallerie, Forward Motionm Sports, Elephant Pharm, the , Moonstruck Chocolate Belinda M., Samantha Lee and Colton Piano have closed their doorse in recent months or plan todo so.
For downtown Walnut Creek’s vacancy rates hoveree at less than5 percent, even last fall when retai vacancies in other East Bay citiesd jumped, according to John Cumbelich, a Walnu t Creek-based retail broker with . He expects vacancy rates to rise to somewher near 10 percent for at leas t thenext year. “The market will continur to turn over more space that will come availabled faster than the market isabsorbing it,” Cumbelicyh said. “This is the most vacancuy we’ve seen in this market. It’s frightening in that we know it’w going to get worsd before itgets better.
” Walnut Creek’s shopping districrt has evolved over the past few decades from suburban-stylde strip centers to a chic, urban quarter wheres shoppers spend hours walking from storw to store. The area containz Broadway Plaza, an outdoor mall anchored by Nordstrom and and nearby independent developments suchas , which includees Tiffany’s and an store, and , home to the , Ruth’d Chris Steakhouse and Men’s Wearhouse. The prime blocks, such as those near the corner of Main Streetand Mt. Diabl Boulevard, will likely stay occupied, while secondary areas just a few blockd awaywill suffer, said Solomonn Ets-Hokin, a broker with in Walnut Creek.
Landlords in some less desirable sections of downtown begah pushing up their rents at the top ofthe market, and now tenantsw can’t keep up, he said. Cumbelich said he’s heardf from many landlords that tenants are in trouble and have been askinh forrent reductions. Walnut Creek’s most expensive usually those with the highest visibility and foot charge rents closeto $100 per square foot, Semmelmeyer said. Other properties in secondargy locations lease at about half or a thirc ofthat price. “What some landlords don’t understand is that the one space that was that good isgone now. Yyou can’g expect that rent everywheree else,” he said.
“This recession is bringing failure to lightand it’s not being kind to poorlh done deals and poorly conceived retail concepts.” High vacancie could give a slew of retailers that have been waiting on the sidelinesz a chance to enter the Neiman Marcus plans to come online in a few and Nordstrom is plannintg an 18,000-square-foot expansion of its store. Those are positivwe signs for themarket long-term, said Briamn Hirahara of , which developed and owns The “We’re seeing some softening in the market, but it’s still rathet strong,” he said.
“We’re going to see some but the jury’s still out on how severe it will