Business Trends

Who’s Coming to Town?
You may have noticed some activity going on in the old Albertson’s store at the southwest corner of Monterey Road and Dunne Avenue. Well, it appears that Ross Stores, Inc. has leased the site and is installing tenant improvements to convert the space to a “dd’s DISCOUNTS” store.

The store will be about 25,000 square feet. However, Ross is looking for a co-tenant of the remaining 8,000 square feet available for lease. I’ve never been to a “dd’s” before, but the Ross Stores Web site states “dd’s DISCOUNTS features a more moderately- priced assortment of first-quality, in-season, name brand apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20 to 70 percent off moderate department and discount store regular prices.” I assume this means “dd’s” will sell Ross merchandise except at deeper discounts. While this tenant will set a discount theme for the former Albertson’s Center or officially known as Morgan Hill Plaza, I’ve been told that you can never have too many apparel stores. That being said, this is probably a good time to discuss our role in the process of dd’s DISCOUNTS coming to town. For better or worse, the city’s role is only related to the issuance of permits for the improvements. When we heard that Albertson’s was being bought out and was closing the store, we contacted Albertson’s corporate offices and the property owner (Albertson’s leases its space) to find out the plans for the space. It turns out the property owner was unaware that Albertson’s was closing its store since Albertson’s just renewed the lease last year. The property owner indicated the lease is very one-sided in Albertson’s favor, as that was the practice in the 1970s, and he would have no say in the subletting of the space anyway. The only information we could obtain from Albertson’s during the store closure and sale of the company was from their broker who was leasing the space. The broker indicated they were considering two proposals for the space, but couldn’t tell us who until February. We found out from reading a news article that Ross was looking at old Albertson’s sites. The only reason we know about dd’s DISCOUNTS now is that it needed to obtain a permit for the work, but we recently confirmed with Ross Stores plans for the space. So what does this all mean? It means that even when the city is very interested in the re-use of a space, the existing circumstance may very much limit our involvement. In this case, a retail use is permitted within the old Albertson’s space as long as they obtain a building permit for the improvements. 

REMEMBER DOWNTOWN

I don’t know if people have noticed all the new shops which have opened in downtown over the past few months. It’s actually developing a niche for women’s clothing and specialty shops. There’s Magpie at Second Street and Monterey Road, which specializes in “soaps to sofas” (their slogan, not mine). Mon C’ specializing in leather garments for men and women in the downtown mall. Karma Couture Boutique is in the yellow house on Monterey Road and features clothing for men, women, children, and dogs. Violet women’s clothing store is located in the former BookSmart space on the corner of Second Street and Monterey Road. To keep this trend going, it’s important that we continue to shop local and visit these businesses.

HOLIDAY SEASON

I read that consumers were expected to spend $25 billion on gift cards this past holiday season. That’s a 30 percent increase from the previous year. However, did you know that it is estimated that about $5 billion of the gift cards will go unredeemed? Quite a boon to the retailers as they earn a 20 percent profit less the costs of administration and the price of a little plastic card. But this factoid made me think about the impact on the local economy as gift cards do not generate sales tax revenue. They do when they are used to purchase a taxable item, but many of the gift cards sold in town are for retailers located outside of town, at least for now. So, when the sales tax results are in for the fourth quarter of 2006 (October – December), it will be interesting to compare it to the fourth quarter of 2005 to see any trends. Stay tuned as that will be one of the topics I’ll cover in the spring when the sales tax data for the fourth quarter is in.

Quote of the Month

I am a Ford, not a Lincoln”

~ Gerald R. Ford, 38th President of the United States

Garrett Toy is the director of Business Assistance and Housing Services (BAHS) for the City of Morgan Hill. BAHS is responsible for the city’s economic development, redevelopment and affordable housing activities. Reach him at garrett.toy @morganhill.ca.gov.