Now that the Tennant Station shopping center renovation is
mostly complete, the company that owns the center is raising rents,
clearing the way for franchises and chains, the owner says though
he denies chasing out smaller businesses.
Now that the Tennant Station shopping center renovation is mostly complete, the company that owns the center is raising rents, clearing the way for franchises and chains, the owner says though he denies chasing out smaller businesses.
Some tenants have already left; some are willing to shoulder the burden and go on; others are waiting for their month-to-month leases to be pulled with a 30-day notice of rent hikes. But the rumor that tenants were being evicted to make way for brand-name stores is false, according to Mike LaBarbera, of Terracommercial Real Estate, the center’s owners since 2001.
“We didn’t kick out any small tenants,” LaBarbera said recently. “We sent out a letter saying we could accommodate them if they could pay (the new rates).”
Rents will go up “dramatically,” he said, to market-rate levels, to $3.25 per square-foot from the current $1.65/square-foot. The going rate for commercial space in Morgan Hill is $2.20-2.50. Previous rents were contracted mostly before Terracommercial bought the center and certainly before the extensive renovation.
The center, located at Tennant Avenue and Monterey Road, underwent a substantial renovation during the past year, removing the old Long’s Drugstore building to make room for a parking lot, and replacing a string of smaller shops with the Safeway.
Garrett Toy, director of the city’s Business Assistance and Housing Services, said Terracommercial’s new rates are pushing the local limit.
“$3.25 is definitely higher than most other similar places in town but that doesn’t mean it is not justified,” Toy said. “That’s why he did all that (renovation) work in the first place.”
No store owner reported being offered a break for the seven months of serious disruption during construction. Much of the parking lot was fenced off, trucks and materials were far more visible from the street than were the stores and customers told store owners they thought they were closed, causing a serious reduction in business.
Business has picked up a bit for some, with the remaining stores often referring customers to their neighbors, though the overall view is that customers have not returned.
“It slowed down during construction,” said Britton Bonsall, an owner of Foot Solution. “We’ve had customers come in who said they were sent by Rosso’s (Furniture).”
But LaBarbera does prefer franchises and chains.
“If I have a call for a mom and pop store that does the same as a national,” LaBarbera said, “I would choose the national.”
The point, he said, is to use the limited amount of space in the center to recover the maximum rent.
“I’ll try to get as many credit tenants as possible, those with credit worthiness,” he said. “Tenants with a stronger credit record will boost the value of the center.”
Some businesses, he said, will stay and pay the new rates: Rainbow Cleaners, the Laundromat and Foot Solutions.
Kim of Kim’s Fashions and Alterations said she, too, would try to stay.
Legends of the Game (Sports Cards and Comics), French Cleaners, E Optometry have already moved out and the Break Time Café closed its doors on New Year’s Eve, leaving only a note behind thanking loyal customers:
“We wish to thank our valued customers for the loyalty and support. See you down the coffee road,” the note signed by Rick, Iris and Lisa said.
Customers could walk out the front door of Break Time and see the sign for Starbucks at Safeway just across the drive aisle, a closeness of competing businesses not usually seen in a one-owner center.
A group of local men who met at Break Time every morning for years to fix the world has moved across the parking lot to Friendly Fred’s, after owner Jon Thomas bought some of Break Times’s coffee-making equipment.
Yvette Fernandez, an administrator for E Optometrists, Randall Chung and Valerie Hamamoto, said their move to Gilroy was definitely related to the proposed rent rise.
“(Our rent) was going to just about triple,” Fernandez said.
While the move to Gilroy was eased by the chance to share an optometry office at 6815 Camino Arroyo, they intend to return to Morgan Hill one day, she said. They can still be reached at 779-2000.
Former mayor and current barber John Sorci has leased the former Carl’s Barber Shop at 135 W. Main Ave. and will be moving there from Tennant Station on Feb. 1.
Paul Gunsky, who bought the old Cinema Six movie theater and upgraded it into eight Cinelux Theatres, said he was satisfied with the business traffic.
“We’re quite happy with our attendance,” Gunsky said, brushing away fears that the complex was not doing well because fewer customers were seen entering the theater.
“The previous theatre operator had a very small lobby and box office, which caused long lines and ‘back up.’ With our new, expanded lobby and box office, we’re able to serve our guests quite efficiently and quickly,” he said.
Customers have returned after the theaters being closed for seven months and wading through more months of Safeway construction.
The 54,800-square-foot Safeway, on the other hand, is doing well, according to Jennifer Webber, the grocery’s director of public affairs for Northern California.
“That new store is surpassing our expectations,” Webber said. “Our customers really love it and we are so pleased.”
This is a return to Tennant Station for Safeway. The store moved to East Dunne Avenue and Highway 101 in the mid 1990s, after losing to competiton from the more upscale but smaller Nob Hill Foods across the street. It became a huge success for the company as one of the state’s highest earners.
Larger by 5,000-square-feet than the Tennant Station store, the East Dunne store is open 24 hours and has a staffed Wells-Fargo Bank, a deli and sushi bar as well as photo and pharmacy services. The Tennant Safeway has a U.S. Bank, its famed olive bar, a fully staffed butcher/fish counter, a wider selection of Artisan breads and is also open 24/7.
LaBarbera was not ready to disclose which brand name businesses could come to Morgan Hill but he did say he was trying to find someone to reopen the bowling alley.
“It would be expensive to do, since the (earlier alley was gutted),” he said. “It could cost $1 million to $1.5 million.”
Jesse Nazzal, the owner of the popular Betsy’s Restaurant, next to the former bowling alley facing Vineyard Avenue, said he has heard that discussions are going on about the alley.
“A bowling alley would be good for business,” Nazzal said.
Despite worries from some of his loyal customers, Betsy’s is staying too.
“They’re nice people,” he said of Terracommercial. “They’ll let me stay here. I’m happy.”
Anthony Rosso, a partner in Rosso’s Furniture store that took over the old Safeway space when it left for East Dunne Avenue, said the center’s renovation has worked for them.
“We’re just fine,” Rosso said, “and we’re planning to stay.”
His customers and staff feel good about the renovation and he is pleased with the improved visibility from Tennant Avenue. He would like to see the Rosso name on the center’s monument sign – which now only says ‘Safeway” but that is up to the city and the owners, he said.
Some other shop owners also mentioned that they would love having their stores’ names added to the signs.
Tennant Station, built in 1981, deteriorated after Safeway left. In order to make way for the new store’s parking lot, one entire building was demolished and another built against Tennant Avenue near SpeeDe TuneUp. Also new for the center is a Safeway gas station located on the corner of Tennant Avenue and Monterey Road, in front of Rosso’s Furniture.
Carol Holzgrafe covers City Hall for The Times. She can be reached by e-mail at ch********@*************es.com or phoning (408) 779-4106 Ext. 201.
