Downtown Mountain View struggles with high vacancy rates as businesses adjust to post

Oct 15, 2023

At the corner of Castro and West Dana streets in downtown Mountain View, a storefront sits empty on a quiet spring weekday, its windows boarded up with brown paper.

Those windows used to belong to Rocket Fizz, and were once filled with colorful candy and neon signs, inviting passersby to come try a sweet treat.

The soda and candy shop closed more than four years ago and has been vacant ever since, the Rocket Fizz logo still mounted above a fading red awning. But soon, the space will finally become home to a new Castro Street eatery, Nick the Greek.

As the COVID-19 pandemic ravaged the economy, retail vacancy rates in downtown Mountain View hit 13.6% in 2021 – a peak significantly higher than anything the city has witnessed in recent history.

Since then, things have improved: Per the most recent data, the percentage of empty retail storefronts downtown has fallen to 9.4%, and new additions to Castro Street, like Nick the Greek, are eventually filling spots that have sat empty for years.

But the number of vacant properties is still higher than pre-pandemic, indicating that downtown has a longer road to recovery.

Meanwhile, business owners must find ways to adapt to a post-pandemic shift in buying behavior that's not going away any time soon, the city's Economic Vitality Manager John Lang said in an interview.

"We’re seeing a lot of vacancy in the downtown office market," Lang added, "so we’re losing headcount in the downtown that supports some of these operations."

For some small business owners, this perfect storm forced them to close their doors for good. Others moved away from Castro Street to parts of the city where the cost of doing business is more manageable. And others continue to hang on by finding creative ways to stay afloat downtown.

"Retail is changing," Lang said. "And it has to re-prove itself in Mountain View."

Staying afloat

Small business owner Juan Origel felt the changes in consumers’ buying patterns almost instantly when the world shut down in March 2020. Origel owns Ava's Downtown Market, a grocery store located right in the heart of the pedestrian mall on Castro Street.

When the stay-at-home order first came into effect, people across the nation started downloading apps like Instacart and DoorDash so they could access groceries from the safety of home. But for small, independent grocery stores like Ava's, that shift was immensely challenging to compete with.

Though stay-at-home orders are now a thing of the past, Origel said people are still opting for the convenience of app-based grocery delivery over shopping in person. He said his customers ask if he could start offering these types of services at Ava's, but the cost to join popular delivery platforms is too high a barrier for a small, brick-and-mortar shop.

"To be on a platform is costly," Origel said. "It takes money. And for a small business like me, it actually adds more manpower needed. You’ve got to take special inventory to let these companies know – they require that you have 90% inventory accuracy in order to fulfill the orders."

According to a report released earlier this year by PYMNTS, which produces data and research on the platforms that power the economy, "the pandemic upended how consumers shop for everyday items."

"Traditional grocery stores no longer dominate the market, and most shoppers now buy at least some of their groceries online," the study found.

Origel said he's also felt the impact of neighboring businesses going under or moving away from Castro Street.

"Something that I also hear from my patrons is the lack of other destination retail businesses," Origel said. "An example I can share with you was the music store, West Valley Music. We feel their absence. I remember a few customers coming into my business after visiting the music store, and I am sure some restaurant owners share the same sentiments."

West Valley Music moved away from Castro Street about a year ago to a new location on El Camino Real. Diana Tucker, West Valley's owner, said she decided to move her store because the overhead costs of doing business on Castro Street became too high.

"The rent is tremendously less," Tucker said of her new location. "I wouldn't have done this had the rent not been less, because that's what I need to pay down all the expenses from the loans to get through the pandemic."

Like Origel at Ava's Market, Tucker said West Valley Music also faces significant challenges in trying to compete with the rise of online retail.

"It's taken most of the music stores in the area out," Tucker said of online retail. "It's just a shift in the way people do business. … People are getting more and more comfortable, especially over the pandemic, with doing all their transactions online."

One way that West Valley Music distinguishes itself from online retailers is by providing services alongside the retail shopping experience: Things like music lessons, hosting events or simply allowing customers to come see what they’re buying in person before making a decision. Especially when it comes to an expensive purchase like a musical instrument, Tucker said, "coming into the store really helps."

East West Bookshop on Castro Street takes a similar approach, owner David Gamow told the Voice. While scores of other locally owned bookstores have shuttered in the wake of Amazon's rise, East West is still going strong by offering more than just books.

"I mean, on a Friday night, nobody says, ‘What do you want to do tonight? I know, let's click on Amazon.’ That's not a pass time," Gamow said with a laugh.

When people come to East West, Gamow said it's not just to shop, but to experience the store. It's a destination.

"The energy of the place is terrific," he said. "We play gorgeous music, everything you see is beautiful."

"So I think that stores need to differentiate themselves from online," he continued. "If all you’re doing is selling merchandise, why would someone go to your brick-and-mortar place?"

Origel said that's exactly why it's important for spaces like Ava's Market to exist in downtown Mountain View. It's more than just a grocery store, but also a gathering spot for community.

"Back in the day, you had your grocer, you had your butcher, you had your produce stand," Origel said.

Today, those types of businesses have been largely swapped for the supermarket: The one-stop shop to buy groceries or just about anything else you might need. Supermarkets may be convenient, but they don't capture that locally made feeling that places like Ava's do, Origel said.

"Here, my idea was to have a meat department, a little sandwich joint, high-quality, local produce," he said. "Small grocery stores, we are truly the incubator for anybody that's a small food start-up. If you want to go pitch to Whole Foods, they’re going to tell you to go away."

But despite all the benefits that local shops bring to the community, Origel said he's still struggling to keep his business afloat.

"Of course I worry about the future, as it is uncertain," Origel said. "However, one way to assure the wellbeing and success of any business (is) for its neighbors and patrons to recognize the added values that a local shop brings to their community, and to make sure they support it."

"Bottom line, if people don't want to see boarded up storefronts, they need to make a conscientious effort to visit, shop and support these businesses."

Supporting small businesses

Business owners aren't in it alone as they adapt to a post-pandemic world. Both the city and the Mountain View Chamber of Commerce are doing work behind the scenes trying to get new tenants into empty storefronts, as well as ensure that the businesses that already call downtown home continue to thrive.

One way the city is mitigating the high number of vacancies is offering more exposure for property owners, as well as connecting with potential new businesses to share what downtown has to offer.

"For instance, some property owners don't do a tremendous amount of marketing about their property. They may have a sign up that basically says, ‘Call,’" Economic Vitality Manager Lang said.

To help bridge the gap between property and business owners, city staff created an online list of vacant properties to show what's available. The city also hosts meetings with local brokers to show what's open, both in downtown and elsewhere in Mountain View.

"We are trying to market the properties and give greater notice to people who are looking for those sites," Lang said, "to give an amplified lift to some of the property owners who may not be making an investment in a broker, but we’re trying to put it out to the broker community, ‘Hey, there's opportunities here.’"

There's also been talk at the city level of potentially implementing a vacant property registry, similar to what cities like San Francisco have created. When a storefront becomes vacant in San Francisco, its owners must register it within 30 days, and re-register it for every year it remains vacant – and each time it's registered, the property owners must pay a hefty fee.

"Some people are referring to it as a vacancy tax," Lang said. "But really (we’re) trying to understand, what are the opportunities to motivate some private property owners to be more proactive in how they market their property and present those opportunities."

The city is also looking at ways to make empty storefronts more attractive while they’re vacant. The Mountain View City Council recently adopted a facade improvement program, which will give out grants to local owners that want to improve the look of their storefront.

"That will actually allow a property owner, if they’re trying to attract a new opportunity, to do a storefront improvement – specifically a storefront activation," Lang said. "Meaning, maybe putting something up in the windows that catches more interest in their property."

The city and the chamber of commerce have also partnered with property owners downtown to add visual interest to their windows while a store is empty.

"Last year we were able to get one property owner that was willing to open up their doors and activate their storefront window with Theater Works costumes," Lang said. "It was a way to say, ‘Hey, there's an upcoming performance happening.’"

Keeping businesses alive

On the other side of the equation, both the city and the chamber are doing what they can to make sure current businesses don't become downtown's next vacant storefront.

"How do you keep the businesses alive on Castro, and how do you get them to survive?" said Peter Katz, chamber president and CEO. "The first thing we need to do downtown is to make sure our downtown businesses that exist today are happy, and healthy, and thriving."

On the consumer-facing side, the chamber puts on events year-round to promote what local businesses have to offer.

"At Christmas time we did the Santathon, and we did the Elf on a Shelf hunt. We did one for St. Patrick's Day, a ‘find the shamrock,’" Katz said. "The whole purpose of what we’re trying to do downtown with our events is to actually get people to go into the storefronts."

The chamber also works directly with owners on their business practices, helping them launch successful social media support, sell their products online, or navigate the city's permitting process.

But more than anything, Katz said, what small businesses need to stay alive is the support of their patrons.

"Come downtown, that's the real message," Katz said. "It's coming back, and it needs people more than ever. It's one of those self fulfilling prophecies: The more people we get, the more vibrant it is."