By Clyde Noel

The conflict with Iraq is only about 3 weeks old, but retailers in downtown Los Altos report they are already feeling the fallout of the war.

“We had record sales in 2000 and 2001, and 2002 was good. This year January and February were the strongest we ever had, but then came March and sales dropped out of sight because of war jitters,” said Fred Sischka, owner of Fast Frame. “I don’t expect April to be any better, because it’s tax time.”

Ask most downtown Los Altos retailers how this year has been and they tell you business is good for them — but at the same time they tell you how bad it has been for others. The general feeling is you’re not hearing words that make somebody’s day feel good.

Ron Labetich, commercial real estate broker, said the market is soft and most retailers are off 20 percent from this time last year.

“As a location becomes vacant, there is considerable interest in the vacancy,” Labetich said. “People are looking, and we have venture capitalists interested in some of the larger spaces available. Prices have dropped 20 to 25 cents per square foot, and deals are being made on vacant buildings.”

The latest edition of Space Station Los Altos, a quarterly list of both office and retail properties available in Los Altos, was released April 1. The list is twice as long as last year’s. Properties listed at downtown locations average $2.50 to $3.95 per square foot depending on full service or net, net, net. Many of the lower prices do not include an additional maintenance fee of a variable $1.50 per square foot. Including the service fee, many retailers on Main Street are paying over $100,000 a year to rent their storefront.

One Los Altos property manager who lives out of town said he has received numerous requests to lower the square footage rate on his buildings and he has acceded to several requests, to keep his tenants during this hard time.

“If the requests are warranted we take them under consideration and lower the rent. However, just asking doesn’t get any help. If I lower the rent for a tenant, I want to see him improve his business. I want to see that retailer promote the business and help the business grow in return for my lowering the rent,” the landlord said.

There are some changes in downtown that will take effect this month.

Preston’s Candy & Ice Cream, at 235 First St., will close around Easter. Irene Preston said the store is stocked with Easter candy and will close the day before Easter. Togo’s, which does fast lunches and sandwiches, will ask the planning commission for a use permit to operate a store in the same location.

A Place for Flowers, at 208 Main St., is closed. Quizno’s, with their toasted subs, garden-fresh salads and home-style desserts, will apply for a use permit to operate in the same location.

Danny Brooke and David Stine, owners of A Place For Flowers, are moving into the back of Patt’s Greenhouse, at 366 State St., and merging their business into the latter’s.

Sassy, the variety store located at the corner of Main and Third streets, is moving to Vallco shopping mall, where it has another branch. Store employee Kim Eunja said the rent was too high for the type of merchandise they carried.

Traditional Accents, at 151 Main St., will close around the end of the month. Chris Butcher, manager and buyer, said everything would go on sale.

“We have two other warehouses that we will be closing at the same time and bring that merchandise here to sell,” Butcher said. “Business is nil for the past three months, and we feel we have reached an impasse after 12 years in Los Altos.”

Butcher said they hate to leave because “We have never had a bad check in the 12 years we have been in Los Altos.”

One sector that is benefiting from tough times is the residential real estate business. Most real estate agents in the area are pleased with the number of homes available for sale. Rob Holden, vice president and manager of Bank of Los Altos, said the year has been busy with mortgages.

“We do a lot of real estate transactions, and although it is slow for the upper price level of homes, we do a remarkably large amount of business at the lower end,” Holden said. “As an observation, when we go for lunch I notice some restaurants are only half full — so not all businesses are doing well.”

Abby Veeser, economic coordinator for Los Altos, has maintained statistics of business activity, and the figures offer a different perspective. She is impressed with the number of inquiries about business locations. People looking for retail space usually go to a real estate agent, but they come to the city for information on demographics and business conditions.

“The city is concerned with the city sales tax, and although business has been slow, compared with five years ago the downtown area is ahead by 10 percent,” Veeser said. “Business licenses in 2002 totaled 493 for the downtown area, and as of March 1, 2003, we have issued 477 licenses. The year is not over, and many current businesses have not renewed yet.”

Comparing all seven Los Altos business districts with prior years, sales taxes are down, but the Marriott Hotel’s occupancy rate is holding up and the two new hotels have offset any slowdown in business taxes.

Labetich remarked that when times are tough the Los Altos Village Association and the chamber of commerce should come forward and provide some activity to boost business.

As of April 1, Ted Garrett has assumed leadership of the village association.

“I like to jazz things up,” Garrett said. “I came here from Oceanside, where I was the cheerleader for the city. This is a perfect place for the baby boomers.”

Understanding current business conditions, the Los Altos Chamber of Commerce Economic Development Committee met last Monday at the Washington Mutual Bank. The topic of discussion was Los Altos business retention and attraction, with Veeser as moderator.

Not all business establishments are doing poorly. Dennis Ronberg of Linden Tree said business was slow but steady.

“We have a strong following with parents and students for schoolbooks, and we carry a large inventory for the assigned reading projects,” Ronberg said.

When Soph Vitakis of Rancho Bottle Shop put his liquor store up for sale, Lawrence Hawthorne Jones Jr., a former Hewlett-Packard employee, immediately acquired it. “After 25 years in the bottle shop, it’s time to do something else,” Vitakis said.

There may be a war and a tough business climate, but when L’Amourette, at 322 Main St., was ready to close, Chadwick’s of London grabbed the spot and displayed their styles in women’s clothing of meager content in the store display window.