September 8, 2004     Campbell, California Since 1999
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Photograph by Jacqueline Ramseyer
Last Shot: Photo Master owner William Lin will close his business on Sept. 15. He has been in the Pruneyard Shopping Center for 16 years, but an exorbitant rent increase forced his hand. Lin's store was one of a few in the area that still developed black-and-white film on the premises.
Store's closure not a pretty picture
By Martin Nobida
It's a long way to the racetrack from Campbell, but local small-business man William Lin is facing nothing short of a photo finish. For about a month, signs reading "Close Out Sale" have been taped all over his storefront window, and the owner of the 16-year-old Pruneyard-based Photo Master has found himself ready to develop his last rolls of film.

After more than a decade and a half, Lin is calling it quits, citing what he calls an exorbitant jump in rental rates as the reason for his departure.

He says that last year during lease negotiations with Equity Office Properties, which manages the Pruneyard Shopping Center, the landlord wanted to increase his rent by about 62 percent for a new five-year-lease term.

It was a hike Lin couldn't afford.

Despite the economic doldrums and the beating that the photo-processing industry has taken as a result of the growing popularity of digital photography, he says, Photo Master was doing well. In fact, he says, it could indeed have afforded a rent increase, and even a substantial one at that.

"I know that rental rates go up," he says. "That's inevitable. I told Equity Office that I would be able to pay 30 percent more than the previous rate. The landlord considered the offer and then counter-offered to lower the increase, but not by much."

He pulls out a calculator, pushes some buttons and then shows what the revised proposal amounted to.

"They lowered their hike to a 58 percent increase," he says.

The refusal to make any meaningful concessions, he says, showed him that it never seemed Equity Office was interested in keeping him anyway.

"They had no heart. They had no feelings," he says.

His lease expired last year when the negotiations failed, and he's been paying rent on a month-by-month basis since then. But the uncertainty of the arrangement had become too much for him, he says. In August of this year he made the decision to close down for good. His last day of business is Sept. 15.

The closure will be a huge loss for the photography community, says Ron Ferrar, a regular customer and amateur photographer who's been coming to Lin for more than a year because he believed Lin had the only business he knew that did black-and-white film processing by hand.

"He served a real niche market," Ferrar says. "There's no other place in this neck of the woods that does that."

The Campbell Police Department was also one of Lin's corporate customers, Lin says, as was Valley Medical Center.

Although he has accepted that his struggle to keep his business afloat is over—he's considering studying for a real estate license—he's worried, he says, because nearby shop owners are going through the same grinder. Two of them are currently under lease negotiations, but they will not discuss the matter, as their negotiations are continuing.

Other small-business owners who aren't in negotiations at this time, however, corroborate Lin's stories of hardship when dealing with the property management.

Theresa Achkar, who with her husband, Gaby, owns 30-year-old Gaby's Jewelers, says her rent increased substantially three years before. She wouldn't give details, but simply described the hike as "huge."

"Equity Office is asking for a lot more than most of us can afford," she says. "It's hard for the merchants to make a living here now. And none of the merchants are comfortable."

"Life isn't easy when you're a small mom-and-pop business," she adds. "It's already hard to deal with the world, and the property owners are using an iron rod on us."

John Metzger, an owner of Terra Nova, a home- and garden-decorating store, which has been in the Pruneyard for nine years, says that since Equity Office took over, much more emphasis has been put on attracting and wooing restaurants and big-name retailers, and a lot less attention is being paid to smaller businesses.

"They don't listen to our needs anymore," he says. "They didn't listen very much when they were based in the Pruneyard Towers, and they're certainly not listening now that their operations have moved to Chicago."

Metzger says his lease is due in two years but that he is thinking twice about having it renewed because of the lack of attention the management is paying to his needs as a tenant.

Equity Office Properties is a publicly traded company based in Chicago.

Since it took over management of one of Campbell's most prominent shopping centers, it has transformed the once-underutilized mall into the vibrant, active retail and dining destination that the Pruneyard has become. Where once it was often referred to as a "ghost town" or "graveyard," its parking lots are now almost continually filled with visitors, and its many restaurants are bustling with activity.

It's a true property-management success story, many say. But some are asking at what cost.

On Aug. 31, the Campbell Coffee Roasting Company, a longtime fixture of the Pruneyard, closed down after Equity Office declined to renew its lease. Owner Chris Choi says he has never missed a payment and his business was active. Despite this, the landlord said the business was underperforming and "customer intercept" surveys it had taken suggested that Pruneyard visitors wanted a coffee shop of a higher quality. Although Equity Office has yet to name a tenant, the fear among many former customers is that a corporate entity like Starbucks Coffee or Peet's Coffee and Tea will move in. This demise of the small, local businesses within the center has residents concerned that the Pruneyard is rapidly losing its local identity.

As a former small-business owner, Campbell Planning Commissioner Tom Francois says he sympathizes with the shop owners in the Pruneyard and became incensed when he heard about Lin's rent hike.

He remarks that "the increase seems like an awful lot. But there's probably somebody out there who can pay it, and Equity Office will accept it. The only thing they think of is the bottom line."

And he adds, "It's all about the money, baby. That's it in a nutshell."

But the rent hikes and the small businesses closing don't mean that the Pruneyard is unfriendly to the smaller shops, says Kathy Tate, Equity Office property manager for the Pruneyard. The managers are paying attention to the laws of supply and demand.

"We are by no means anti-small business," she says. "We don't charge any more than what the other places are charging. We're simply charging the current market rate."

"Retail space has become tighter and tighter," Tate says. "And the Pruneyard is a very popular retail destination. Demand for space there is high."

Campbell Planning Commissioner Joseph Hernandez says he agrees that there may be many factors behind the recent changes in the shopping center, and he is cautious about jumping to conclusions.

"On the surface it looks like they're going for the quick buck," he says, "but I don't have all the facts and I haven't heard of these kinds of things happening before in the Pruneyard, so I'm willing to give Equity Office the benefit of the doubt."

He says the property managers are running a business, too, so they're entitled to do what makes sense for them, but he hopes it doesn't transform the center into just another mall with ubiquitous tenants.

"Campbell is a special place," he says. "But if everything goes to a corporate environment, it won't be special anymore."

The best thing for the community would be to have a balance between small, local businesses and corporate companies, Hernandez adds. "When you don't have the right mix, things get out of skew."

Tate says Equity Office is well aware that having a diversity of shops is important and is constantly re-evaluating its tenant list.

John Kirkorian, who owns and manages the Kirkwood Plaza Shopping Center on Campbell Avenue and San Tomas Aquino Road, agrees that all kinds of tenants are necessary to maintain a healthy shopping center.

Although small businesses are essential for diversity and creativity in the community, the realities of the industry don't lend themselves to keeping the corporate entities out, he says.

"It's really tough being a shopping-center owner," Kirkorian adds. "Owners have to get financing for their centers, and the lenders like to see big names and big pockets as tenants, which tend to keep their investments stable."

His company can afford to give breaks to longtime family businesses, he says. But people have to understand that that's a luxury property managers at Equity Office might not have.

"You can get attached to some of these tenants if they've been there for a long time," he says, adding that he can charge $1.50 a square foot to such a tenant, even when the going rate may be $2. "If they pay rent promptly, I'll be glad to work with them so I can sleep better at night. But Equity Office is under pressure from Wall Street, and I don't have anywhere near those kinds of pressures."

So, because of market forces far to the east, Lin's customers, like Fernanda Palmer, who's been getting her prints done at the Pruneyard for more than 10 years, will soon be facing some pressures of their own.

"I'm really sorry to see him go," she says. "He always had the best-quality work and he had a good price. I have no clue where I'll go when he's gone."

Photo Master will close its doors on Sept. 15. Any customer who needs to pick up pictures after that date should contact Foto Express in downtown San Jose at 408.971.3977.

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