Park Saratoga to lose retail tenants due to high rents

By Leigh Ann Maze

A few local small business owners are feeling the sting of the free market. Stanley Properties of San Jose is in the process of buying the Park Saratoga shopping center, and the soon-to-be new owner, Russ Stanley, said he plans to raise rents to match market values.

The center is on Saratoga-Sunnyvale Road near Prospect Avenue.

The current tenants pay from $1.50 to $2.25 per square foot, Stanley said. Stanley wants to raise rents to approximately $3.00 per square foot. The current tenants include a Chinese restaurant called Pot Sticker, Chicago Title Company, Lee's Tailoring, the real estate company, Remax, Holiday Cleaners, the restaurant, Crepe Daniel, Round Table Pizza and Square One Hair Salon.

"We are asking some underperforming tenants to pay market rents or leave the space," Stanley said. "There are a few tenants whose leases have expired and who are not willing to pay market rents. We'll be re-renting that space."

Some current tenants claim Stanley wants to convert the shopping center from the current mix of office and retail space into office space only.

Stanley, however, said it's just a matter of who can pay rent.

"We'd be willing to retain the tenant if they are willing to pay market rents, but some are not," Stanley said. "We plan to retain the character and nature of the project and lease it out at market rates to tenants who have the financial ability to pay the rent." Stanley adds that those who have so far expressed interest in leasing space in Park Saratoga are primarily office tenants.

Vijay Marathe, owner of Round Table Pizza in Park Saratoga thinks it would be shame to replace long-time retail businesses in the center with office tenants.

"The question is, does Saratoga want to lose Round Table and convert it into one of these dotcom office spaces?" Marathe said.

Marathe, a Saratoga resident, said his restaurant's 20-year lease expired this March, and the shopping center sold before he was able to negotiate a new lease. Marathe said he can't afford the increased rent and that Stanley will most likely not renew his lease.

Marathe said it is the new owner's right to do what he wants with the shopping center, but he feels it would have been appropriate to have had more notice that the center was being sold and rents were going up so he could have had more time to look for a new location.

Babak Kahrobaie, owner of Holiday Cleaners, just a few doors down from Marathe, said, "If Saratoga is looking to keep small business and mom-and-pop shops, this is not the way to go."

Kahrobaie, who has been in the Park Saratoga location for seven years, said he is also very concerned about the more than doubling of the rent.

Hector Chen, owner of Pot Sticker, who was dropping off some shirts at Holiday Dry Cleaners to be laundered, has been in business in Park Saratoga since Sept. 1998, and has two years and three months left on his lease. "If I renew my lease, can I afford the rent they ask for?" he asked. "I am very uncertain about the future."

Both Kahrobaie and Chen agree that foot traffic is virtually non-existent in Park Saratoga, and their businesses survive on a good reputation and loyal, returning customers. For Kahrobaie, it has taken seven years of 12-hour workdays and seven-day work weeks to create his successful business, with a little help from the economy.

But Stanley feels the center might be better suited for office tenants.

"I think it's just an evolution of the center, really," he said. "Office use is really what it was more designed for."

While raising rents and thus ending some retail businesses and beginning more office tenancy is legal, the Saratoga City Council is concerned. The council discussed the situation at its May 9 meeting, and the Saratoga Business Development Council discussed it at its meeting on May 2.

The Park Saratoga shopping center is zoned to allow for both office or retail tenants, according to interim city manager William Norton.

"There is nothing, administratively, the City Council can do about it without making policy or zoning changes," Norton said. "But the council is concerned about the shrinking local-serving retail."

Councilwoman Ann Waltonsmith said, "Saratoga citizens can't afford to lose another retail business, but we're not sure what we can do other than explain what we would like to see maintained, for the sake of the city."

Stanley said he feels that changes in the shopping center will not have a large impact on the city, the residents, or the business community.

"You're talking one, maybe two tenants moving out," Stanley said.

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