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Skyrocketing Rents Be Damned, Here’s How 10 Local Shops Are Hanging On

When going out of business is the norm, why do the success stories survive?

 

When brunch hotspot Boogaloos announced in September that it was leaving its digs on Valencia and 22nd Streets, manager Peter Hood pointed the finger at a “whacked-out” rent hike: The space subsequently went on the rental market for a “Dear God!”–inducing $17,500 a month. That’s a 317 percent hike from the prior rent of $4,200. Harsh but legal: Commercial space is excluded by state law from rent control.

Given that a vast majority of city shops rent, it’s no surprise that, according to San Francisco political consultant Nate Allbee, 4,000 city businesses closed in 2014. “In 1992,” he says, “we had only about 500 closures a year.” Allbee is managing the campaign for Proposition J, a November ballot measure that would issue grants to landlords who refrain from gouging historic businesses. No doubt the city’s old-school entrepreneurs are pining for Prop. J. But even if it fails, many of them will continue to hold on. How do they do it? Here are a few tricks of the trade. 

MOVE UPSTAIRS
Patrick Batt, owner of Auto Erotica (4077 18th St.), sells vintage gay porn, a specialty that can be sourced in only a few cities in the world. “I can’t just move to Dallas,” says Batt. “There isn’t a supply of this material in Dallas.” While some retail spaces around 18th and Castro Streets command as much as $7.50 a square foot per month (that would be $4,500 for 600 square feet), Batt has hit upon a lofty solution: a rare second-story commercial space. How much less does he pay than down on terra firma? “Half.”

FUNDRAISE LIKE IT’S YOUR JOB
Last February, when Borderlands Books (866 Valencia St.) announced its impending closure, hundreds of loyal customers bought $100 annual sponsorships—enough to chip away at the bookseller’s $30,000 fundraising goal. Owner Alan Beatts would have to amass far more in donations, however, to fulfill his ultimate stay-in-business wish: “One of the things I’m pursuing is looking at what it would take for us to buy a building. If I’m trying to look at a 30-year term, we need a building.”

PRAY FOR J
The owners of Lone Star Saloon (1354 Harrison St.), which is in danger of losing its lease, have begun promoting Prop. J. “We have a good relationship with our landlord,” says co-owner Tony Huerta. “but there’s a lot of money hanging like a carrot in front of him.” To be eligible for Prop. J protection, businesses must be 30 years old. Lone Star is 26. Hang in there, guys.

MAKE IT IMPOSSIBLE TO GET KICKED OUT
Bruce Lyall, who has been slinging vinyl at Recycled Records (1377 Haight St.) for almost 40 years, is one of the few San Francisco entrepreneurs who own the walls. (Nearby Amoeba Music and Rasputin Music own too—perhaps it’s a Haight thing.) “I rented for a long time from a really good guy, but he was very sick. He had AIDS. He arranged for all his tenants to buy the properties they were in. It was a probate situation. I made an offer—nobody topped it.” He could never pay the kind of rent his neighbors are paying, he says, even at the “sleepy dead end” of Haight. “Business is good, but not as good as it was 20 years ago.”

HIT THE LANDLORD LOTTERY
Following a wave of closures, commercial landlords have been getting a lot of bad press. Many of them deserve it. But take Darts Central (5 Plymouth Ave.), a darts store on a block of Oceanview that nobody ever traverses. “In fact, if i did get a lot of foot traffic,” says owner Don Campos, “I probably wouldn’t like it.” How does he keep the lights on? The building is owned by the church next door, which mercifully charges him a fraction of market rate. (He thinks that a similar 500-square-foot space in the same neighborhood could run $2,500 a month.)

Susan and Hal Tauber have owned Glen Park Hardware (685 Chenery St.) for almost 40 years. “We had one landlord,” says Susan, “and then he died. His wife took over, and then she died. There was a fight between heirs, and we ended up with one of them. We still pay below-market rent. A place like this you’d imagine would go for $5,000—we pay $2,500.” Like the mom-and- pop hardware store, the stand-up landlord is rare but extant.

GET CREATIVE WITH YOUR SPACE
For years, Video Wave of Noe Valley survived the depredations of first Blockbuster and then Netflix, only to get bounced from its Castro Street digs by its landlord. A block away, Buttons Candy Bar (4027 24th St.) was having trouble making its $5,000 monthly rent. (“Candy,” says owner Dona Taylor, “is cheap.”) So the stores did what many beleaguered San Francisco renters do: They became roomies, splitting the 24th Street store, and its rent, down the middle.

Taylor also owns the vintage furniture store next door, When Modern Was (4037 24th St.), which she frankly admits is doomed. "In a few years the lease is up, and the landlord thinks he can get $12,000” (roughly double the current rent). On the other hand, her Gallery of Jewels (4089 24th St.) might live on simply because it occupies only 250 square feet. “Even if they charged me $20 a square foot,” Taylor says, “I could still afford to stay there.” Her prescription for anyone crazy-brave enough to start a business in San Francisco: the smaller, the better.

BE UNIQUE
In 2002, when Dan Zelinsky took over the Musée Mécanique (Pier 45) from his father, Ed Zelinsky, the job came with a complimentary bucket of cold water. “I said, ‘OK, Mr. Accountant, how are we doing?’ and he said, ‘Not too well.’” Dan hadn’t known that the elder Zelinsky had been operating at a loss for years, paying the difference out of his other ventures. Dan cut costs: “I eliminated all operations except for opening the door in the morning and turning on the power.”

It worked—but he had other aces in the hole. For one, his lease ties his rent to a percentage of his sales, insulating him from the ebb and flow of the market. Heavy foot traffic from his Fisherman’s Wharf location doesn’t hurt, nor does being basically the only arcade collection in Northern California that’s open to the public. Zelinsky’s trick is the hardest one, but also the simplest: Give people what they want, and maybe, just maybe, they’ll keep you going. Even in San Francisco.

 

Originally published in the November issue of San Francisco

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