Has commercial real estate hit bottom in Santa Cruz County?

by JONDI GUMZ

SC Sentinel 05/03/2010

SANTA CRUZ — The county’s once hot commercial real estate market has cooled considerably, with nearly a million square feet of office space empty at the start of the year and asking rates dropping compared to a year ago.

The market hasn’t hit the 1 million mark since 2004, according to Cassidy Turley BT Commercial, which reviews the data for Santa Cruz County quarterly.

Last week, Wells Fargo closed three bank branches as it completed its acquisition of Wachovia, putting new office space on the market in Capitola, Aptos and Scotts Valley. Sue Lewis, community president at Wells Fargo, said it didn’t make sense to keep them open because all three had bank branches nearby.

Leasing agent Matt Shelton of J.R. Parrish said activity picked up in the first quarter in Scotts Valley, which has the most commercial space in the county.

“We’ve leased more this year than in the last 18 months,” Shelton said.

The deals included: Embarcadero Technology, which leased 20,000 square feet in the Granite Creek Business Center, moving from the former Borland campus; helmet-maker Easton-Bell, which took another 11,000 square feet on Scotts Valley Drive and brought people here from Los Angeles; and Roku Networks, which expanded from 3,000 to 10,000 square feet on El Pueblo Drive.

University of the Pacific economist Jeffrey Michael predicts a slow five-year recovery for the state, with Silicon Valley showing early signs of growth. His forecast says sustained business investment is needed to sustain the recovery against forces such as state and local government cuts, foreclosures and tight credit conditions.

In Scotts Valley, office vacancy had risen to 18.9 percent at the end of 2009 compared to 17.7 percent a year before. Asking rates averaged $1.80 per square foot, down from $1.97.

Industrial vacancies rose to 7.3 percent from 3.3 percent in the same time frame, with the asking rate dropping 11 cents to 85 cents per square foot triple net.

In Mid-County, which includes Capitola, Aptos and Soquel, office vacancies rose from 4.4 percent to 7.9 percent while asking rates dropped 8 cents to $2.12 per square foot. Industrial vacancies grew from 3.5 percent to 4.8 percent, with asking rates falling 15 cents to 86 cents per square foot triple net.

Kohl’s took 11,000 square feet at the Capitola Mall and LED Green Power leased 7,350 square feet on Chanticleer Avenue in Santa Cruz but the Gottschalks space in the mall remains vacant.

Watsonville’s office vacancies rose from 5.4 percent to 8.2 percent; asking rates plummeted from $1.95 per square foot to $1.63. Driscoll Strawberry leased 8,600 square feet at the Westridge Business Park but Cassidy Turley called leasing “anemic.”

The normally stable industrial market eased with vacancies rising from 1 percent to 3.2 percent due in part to a large warehouse listed for sublease; asking rates dropped from 78 cents per square foot to 55 cents.

In the city of Santa Cruz, office vacancies edged up from 14.7 percent to 15.2 percent. Asking rates were $1.88 per square foot, off by just 4 cents.

The industrial market vacancy remained 8.7 percent. Staff of Life purchased the empty 18,000 square foot Pacific Coast car dealership on Soquel for its expansion project, but Cassidy Turley said leasing was sluggish.

Other major developments are on hold, including the Skypark Town Center in Scotts Valley, the Delaware Avenue mixed use project in Santa Cruz, and Sutter’s medical office planned on Chanticleer Avenue in Santa Cruz.

Shelton said a bigger Scotts Valley transaction, for 44,000 square feet, is “an inch away” from getting city approval.

It’s not already in the county and it’s not high-tech, he said, declining to name the firm until the deal is finalized.

“It gets better every day,” Shelton said. “The more people believe they’ve hit bottom, they’re more willing to make a move.”

Michael Schoeder of Cassidy Turley is representing Wells Fargo for the property available in Capitola and Scotts Valley.

The bank is asking $1.4 million for the former Wachovia building comprising 3,886 square feet at 1830 41st Ave. in Capitola near Whole Foods and the Capitola Mall. Already four offers have come in, according to Cassidy Turley managing broker Carol Canaris.

Wells Fargo has 3,420 square feet at 203 Mount Hermon Road in Scotts Valley is available for sublease; the lease expires March 31, 2012.

“If there’s a tenant we’ll take it,” said Jared Bogaard, whose family owns the building.

The vacant bank branch in Aptos was developed by Joe Appenrodt, who was unavailable to comment.

“Since the Aptos Village Plan passed it should become a very desirable space,” said Karen Hibble of the Aptos Chamber of Commerce. “It is a large space and parking is good as are the views from some of the windows. We certainly hope it does not remain vacant too long.”

At least 18 Santa Cruz businesses suffered damage during May Day riot

by Shanna McCord
SC Sentinel 05/02/2010

SANTA CRUZ — Downtown business owners spent Sunday repairing shattered windows and doors after a May Day rally Saturday night turned into a riot with approximately 250 people marching along Pacific Avenue, some carrying makeshift torches, throwing large rocks and paint bombs, and spray-painting walls with graffiti.

At least 18 businesses suffered damage during the rally in honor of international workers that began at 9 p.m. and escalated into mayhem around 10:30 p.m., police said. Investigators estimated damage at $100,000, though some business owners said it could be more. No injuries were reported.

On Sunday, sea green-colored glass littered sidewalks where windows and glass doors had been smashed. Maintenance workers, many getting called in the middle of the night, boarded up windows with plywood until new sheets of glass could be installed.

The vandalized businesses included Urban Outfitters, Peet’s Coffee, Noah’s Bagels, Jamba Juice, Velvet Underground and Dell Williams Jewelers. The unoccupied Rittenhouse building also was damaged. A police car was vandalized with rocks and paint, department spokesman Zach Friend said.

Roxie Jones, a resident at Palomar Apartments, spent Sunday morning cleaning yellow paint blobs off of her white Pontiac Grand Prix, which was parked on Pacific Avenue during the riot.

Velvet Underground owner Diane Towns said she was sickened by the smashing of a large window at her north Pacific Avenue clothing store, which has been downtown since 1994. Vandals also dragged a mannequin out of the store and tore off the dress and jewelry, she said.

“We’ve been up all night. I’m just devastated,” Towns said Sunday morning. “We’ve had a hard enough time staying open with the economy, now this. It’s going to cost me at least $1,000 to replace the window.”

Kevin Melrose, manager of the Rittenhouse building, estimated it would cost more than $30,000 to replace the three windows and two doors that were smashed in the riot. There was also damage to some artwork being stored inside the vacant building at Pacific Avenue and Church Street, he said.

“This is just stupidity,” Melrose said. “This is a violent protest to me, and it diminishes their cause.”

The only person arrested in connection to the downtown destruction was Jimi Haynes, a 24-year-old transient from Fresno County. Police said Haynes was seen breaking two large display windows at Dell Williams Jewelers, a longtime family-owned local business. He was booked into County Jail on suspicion of felony vandalism and a parole hold.

Police said Haynes told them he learned about the May Day rally from a flier posted at the Santa Cruz anarchist cafe, Sub Rosa, which is at Spruce Street and Pacific Avenue. Several fliers had circulated around town and on the Internet advertising a May Day street party in Santa Cruz.

The fliers didn’t contain names or groups responsible for the event.

“Take back this day. Kick it with us for a truly sick night of mayhem,” a flier said.

Another flier billed the event as a chance to “celebrate, eat, drink, dance and take over,” while another predicted a “massive” street party.

Police said they knew the May Day event was being planned, but felt there was no need to monitor it closely because there was no indication it would turn destructive.

The city event coordinator Kathy Agnone had reached out to the group to encourage them to obtain a permit, but they refused, Friend said.

“There were fliers, but there wasn’t any indication it would be this kind of event,” Friend said. “The fliers we had didn’t give any indication like that.”

Scenes from the downtown riot were caught on video and posted online to YouTube. The short clips show a mass of people marching down Pacific Avenue. Three or four individuals dressed all in black, their faces covered, darted out of the crowd to storefronts, swinging what appeared to be tire irons at windows and in some cases throwing rocks the size of bowling balls.

In some cases, the rocks remained Sunday morning on the sidewalks where they fell.

No police were seen in the video while the destruction was under way. Later, the video showed the street mostly empty as police cars and officers on foot moved through the area.

Friend said there were eight officers on duty in the city, including two downtown, when the 911 call came about 10:30 p.m.

Instead of facing an unruly crowd in which police were outnumbered 20 to 1, Friend said, the officers requested mutual aid from every law enforcement agency in the county, including Watsonville, Capitola, UC Santa Cruz, California Highway Patrol, harbor police and sheriff’s deputies.

“Every available resource responded. Obviously it takes time to get all of the county’s resources assembled,” Friend said. “Once we were there, it was contained in less than 20 minutes and the crowd dispersed and the vandalism stopped.”

Police said they expect to make more arrests. They hope surveillance video taken at various businesses will help them identify those involved.

Councilman Ryan Coonerty, whose family owns a downtown bookstore that was not damaged in the riot, described the vandalism as “childish, asinine, pseudo-revolutionary acts” that take police away from other critical public safety needs such as those connected to gangs.

“The fact is between the gang violence and the acts of violence downtown, we need more police,” Coonerty said Sunday. “We’ve authorized a lot of overtime to deal with the gang problems and that costs a lot of money. We’re going into the red for overtime because we think it’s important to have extra police on duty right now. But going into the red is not sustainable.”

Coonerty said he planned to talk to police today about how city officials can better support the department’s efforts to curtail crime.

Chip, the head of the Downtown Association who goes by only one name, said the business owners he talked to on Sunday were frustrated by Saturday’s “senseless” violence.

“The victims in this are our community, the businesses and families trying to make a go of it,” Chip said. “These are selfish idiots. It doesn’t make sense.”

The owners of Zocolli’s Italian deli on Pacific Avenue received phone calls at home at 1:30 a.m. Sunday alerting them to the uprising. The fact that their business escaped damage didn’t diminish their anger over the vandalism downtown.

“It’s disgusting,” Caitlin Zocolli said. “They’re just making themselves look terrible. It just makes them look like animals. For all they know, we’re all on their side.”

Katy Hope of Newport Beach was shocked to see the destruction while shopping downtown with her daughter Rosie on Sunday.

“This isn’t a protest. This is violence,” Hope said. “This is really wrong.”

Georgeta Cole, a Sacramento resident visiting Santa Cruz for the day with her fiance, said the vandalism was inexcusable.

“It’s irritating that people destroy property to get their point across,” Cole said. “It’s horrible.”

DIY parade participant headed back to court

by J.M. BROWN
SC Sentinel 04/29/2010

SANTA CRUZ — The man who founded the Last Night DIY parade five years ago could face consequences bigger than a $204 fine for participating in the unsanctioned event again last December.

Wesley Modes, 43, of Felton is scheduled to appear in court May 14 to determine whether his participation in the largely impromptu New Year’s Eve parade constituted a violation of a plea agreement he entered with prosecutors to settle unrelated charges stemming from a 2008 row with police at the downtown drum circle.

Modes, who works at the McHenry Library at UC Santa Cruz, says he believes the city is seeking retaliation against him and is using the citation to send a warning to others who might participate in future DIY events. DIY, which stands for do-it-yourself, is based on an anarchist philosophy. Modes and other participants have refused to obtain city permits.

Assistant District Attorney Shannon Wyllie said she hasn’t decided whether to ask a judge to set aside the plea agreement and resentence Modes on battery and obstruction charges involving the drum circle case, which could result in jail time. She said she hasn’t reviewed the complaint filed against Modes by City Attorney John Barisone in February.

“Depending on the quality of the violation, it could violate terms of the existing agreement,” Wyllie said. “If that’s the case, he could be additionally punished.”

Barisone’s report refers to Modes as a “participant” in the Dec. 31 parade, which drew about 100 people, including children, riding on bicycles and homemade floats. Modes and Santa Cruz residents Whitney Wilde and Curtis Reliford were also cited as participants in the 2009 event.

“I’m not singling him out,” Barisone said. “He is the one we’ve had contact with in prior years.”

Wilde said she never received her citation and has called the city attorney to ask for it. Barisone said the citations were issued Feb. 16.

The officer who wrote the citations, Sgt. Michael Harms, explained in a report that he saw Modes, Wilde and Reliford at the parade but couldn’t identify anyone else when reviewing video footage shot by police that night.

Harms said Modes had been quoted in the Sentinel days before discussing the parade and posted a comment on the event’s website afterward saying the event was “bigger and better than ever.” The posting also said it was his “recurring dream to have a big celebration after the parade for the rest of the night at our town center at Cooper and Pacific,” according to the police report.

Modes said he didn’t organize the this year’s event and doesn’t believe simply participating should land him in hot water with prosecutors.

“They are singling me out although they have no evidence I organized it this time,” Modes said. “It’s hard to imagine that it’s not connected to the drum circle case that was recently settled.”

In September 2008, Modes and another man were involved in a confrontation with police officers who were investigating the drum circle, where there have been numerous complaints of drug dealing and loud music. In December 2009, just weeks before the parade, Modes entered guilty pleas to charges of obstruction and battering a police officer.

That hasn’t been his only dust-up with police. In 2006, he exposed the fact that undercover police had attended planning meetings for the parade under fake names. An internal investigation cleared police of wrongdoing, but council members and other citizens raised questions about police tactics.

Santa Cruz Mayor Mike Rotkin said city officials have since tried to work with Modes and others to figure out how to do the parade legally, including negotiating a cheaper or even free permit.

“They’ve been on warning every year,” Rotkin said. “The issue is we’ve asked people to apply for permits. It’s not a huge expense.”

Modes said he has not sought a permit for the parade in years past because the whole point of the event is to be free of government constraints.

“It’s the administration versus the people,” Modes said. “The administration feels like they’re losing control. But the people are like, These are our streets to control.'”

The DIY parade does not represent the first time people have been ticketed for non-permitted parades in Santa Cruz. Bicycle advocate Micah Posner was fined $110 for organizing a bike parade after he and more than 100 other cyclists flooded King Street in November 2008 to show their support for proposed bicycle improvements.

GOLDEN GATE PARK SWEEP – CAN CITY MAKE IT STICK? / HOMELESS ROUSTED: 4:30 a.m. wakeup for the park campers

Heather Knight
SF Chronicle, August 2, 2007

For 19-year-old Brandon Krigbaum, who goes by the name Repo Violence, the wake-up call came at 4:30 a.m.

Police officers and homeless outreach workers rousted him and his friends from their sleeping bags Wednesday morning in an encampment on Chicken Hill, near Golden Gate Park’s popular tennis courts.

Similar awakenings happened throughout the park, as well as Buena Vista Park, Corona Heights and other outdoor expanses as Mayor Gavin Newsom‘s pledge to clear the city’s parks of homeless encampments once and for all continued to take shape.

Teams of police officers and city outreach workers took Krigbaum and 58 other bleary-eyed homeless people in vans to a huge, off-white canvas tent set up for one morning in Sharon Meadows. An additional 25 homeless people came to the tent on their own – perhaps drawn by the coffee, bagels, orange wedges and blueberries provided by the city.

The tent was erected eight days after The Chronicle reported that the park was riddled with homeless encampments and hypodermic needles – despite Newsom’s well-publicized efforts to clear the parks of encampments last fall.

Inside the tent, workers sat at rows of desks with signs reading “Housing Information,” “Shelter Reservations” and “County Benefits” and met one-on-one with homeless people. After eight hours’ work, 44 people accepted the offer of a roof over their heads, and 40 turned it down.

“That’s actually very good on the first swing,” said Dr. Rajesh Parekh, who runs the city’s Homeless Outreach Team.

But the question on the minds of families who use the park and the homeless people themselves was whether the outreach efforts would be permanent or whether, as in past efforts, city officials would eventually move on to something else.

“The mayor, because it’s an election year, they’re calling him out on his claim of fixing Golden Gate Park,” said Krigbaum, one of those who rejected the offer of a shelter bed. “They think they’re moving everybody out of the park, but they’re just moving them downtown for a while, and then they’ll be back.”

Parents of children playing at the newly redesigned playground just yards away also were doubtful the park would ever be cleared of homeless encampments. Over the sounds of organ music coming from the carousel, Chris Pratt, a 33-year-old father of two daughters, said he was skeptical Newsom would make a permanent change.

“I know he’s tried before, but I think it’s a long battle,” said the Sunset District resident. He added that the one-day tent probably wouldn’t do much. “To me, this is just a Band-Aid. They’re just looking for some good press.”

Ruth Ekhaus, a mother from the Outer Sunset, said it’s still worth trying again.

“It’s San Francisco – people have been talking about this for so many years,” she said. “These people need services, and they shouldn’t be living in the park – for their own safety and health and for the safety and health of people who live near the park and use it.”

Trent Rhorer, director of the San Francisco Human Services Agency, said that unlike last fall’s 90-day push, the new effort will last for at least the duration of the fiscal budget.

The new budget contains $2.8 million for the park, including seven outreach workers, who will work full-time trying to get homeless people living in the park and surrounding neighborhoods into housing. The Department of Recreation and Parks also has more gardeners and custodians, many of whom will concentrate on the park.

“I don’t know that there’s every going to be a time when we say, ‘We’re done with our work,’ ” Rhorer said. “The park has long been a destination for homeless individuals, as has the Haight, so it requires an ongoing presence in perpetuity.”

Rhorer said the city – which schedules Project Homeless Connect in the Civic Center every other month – might start bringing the tent and its services to the park on a quarterly basis.

There’s a rule on the books that nobody but joggers and drivers can use Golden Gate Park between 10 p.m. and 6 a.m., but it hasn’t been enforced. Newsom is considering closing all city parks from midnight to 6 a.m.

“A mother told me that nothing good ever happens after midnight, and I think she was on to something. And it’s suggestive. Why do you keep the park open after midnight?” Newsom said Wednesday.

Newsom said he has turned to staffers for feedback on the issue of closing the park but has not yet made up his mind on whether he wants to go through with it.

“We’re going to do it the right way,” he said. “I’m not going to go in with a bulldozer. I’m not going to go in and knock people out.”

Newsom also is considering raising all park violations to misdemeanors; now, some of them are infractions and are usually thrown out in traffic court. On Wednesday, some homeless people were issued citations for camping before being taken to the tent.

Twenty-three people were placed in shelters Wednesday, and 17 were placed in transitional housing, which is rent-free and is intended to last for a few months until permanent housing can be arranged.

Four people were driven to the Transbay Terminal and given free bus tickets home through the city’s Homeward Bound program – to mothers in San Luis Obispo and Athens, Ga., a daughter in Santa Fe and an uncle in Phoenix.

Brian Austin, 29, said he’d been living in the park for 11 years and was finally ready to move on.

“I’m just physically drained – it’s time to get my life back together,” he said.

Malcom Pearman, a 55-year-old military veteran with a yellow jacket reading “Honk to Stop the War,” also got a spot at a shelter.

“I think it’s wonderful,” he said of the effort to clear the park. “It’s the best thing I’ve heard yet.”

A 25-year-old named Josh, who wouldn’t disclose his last name, also found success at the tent. He and his dog, Rosco, were moved into transitional housing. The Homeless Outreach Team last year started working with building managers to get dogs accepted into some SRO hotels.

Krigbaum sat for hours outside the tent, chatting with friends and eating breakfast. The Sacramento native has been camping on the park off and on since first arriving in the city a year ago.

“I really enjoy myself – hanging out, being free, saying in the morning, ‘I can do whatever I want,’ ” he said.

He panhandles in the Haight and plays the guitar and harmonica at Pier 39. His dyed orange mohawk and multiple piercings make him a popular photograph subject for tourists, who often give him a few dollars in return.

He refused to stay in a shelter because he thinks they’re too dangerous. He said he’d consider moving into transitional housing at some point. But as for his accommodations in the short term?

“I’ll probably sleep in the park,” he said.

GOLDEN GATE PARK SWEEP – CAN CITY MAKE IT STICK? / ‘MARCH OF JUNKIES’: Haight’s residents fume over needles

C.W. Nevius
SF Chronicle, August 2, 2007

Finding the needle exchange in the Haight isn’t easy. Walk west on Haight Street, take a right at Cole, and turn in the first doorway. There’s no identification, just a blue sign that says, “entrance.”

Walk up the hall, which smells of urine, and then knock on the scratched and battered wooden door. After two or three tries, someone might open the door a crack to see what you want.

Welcome to a city drug needle exchange and HIV prevention facility.

When then-Mayor Frank Jordan signed legislation endorsing needle exchanges in 1992, it was a high-minded, civically progressive program to slow the spread of HIV and hepatitis C. Drug users would get a needle, use it, then return it for a clean one. That’s still the idea – and it is a good one – but somewhere along the line the concept went low-rent.

Today the Haight facility looks more like a hole in the wall. The neighbors, many of whom say they have never been told what’s going on up the street, find syringes in their gardens. And the original idea – a one-for-one exchange – is largely ignored.

The exchange is run by the Homeless Youth Alliance, which gets a yearly budget of $275,000 from the city Department of Public Health. As the alliance’s program director, Mary Howe, admits, they make no more than a rough count of the incoming needles. If someone says he returned 40, they hand over 40 new ones. And, if he doesn’t have any, they give him 20 as a startup stash.

“The point for a needle exchange is not to get every needle back,” says Howe. “The majority of users dispose of needles in a respectful manner.”

And those who don’t?

“That’s not my responsibility,” Howe said. “I can’t hold everyone’s hand and make everyone put them in a bio bucket. If someone has a liquor store, and they sell liquor to someone who gets into an accident, is it the store’s fault?”

But this is a little different. Even Tracey Packer, interim director of the Health Department‘s HIV Prevention Program, thinks that’s too strong.

“It is our responsibility,” she says. “We all have to participate to make sure everyone is safe.”

The public health danger posed by used syringes got my attention during a visit to nearby Golden Gate Park last month to check out homeless campsites. I found so many discarded and new needles it raised the question of where they all came from. To the neighbors on Cole, it is obvious – they are being given out by the double-handful at the needle exchange.

Howe, a true believer who is a recovering addict herself, feels the debris is an unfortunate byproduct of a necessary initiative. To her, the single, most-important issue is stopping the spread of infectious disease. If that means giving out a double-handful of needles to someone who might leave them scattered in Golden Gate Park, so be it.

But Les Silverman, who has lived on Cole Street since 1973, feels the fact that there are plenty of needles available increases his chances of finding used needles in his garden. He doesn’t think that’s a coincidence.

“Why, especially, would our block have needles in our gardens?” he says. “Like my neighbors, we believe in the concept of needle exchange. What we take issue with is location, transparency and oversight.”

Silverman and other Cole Street residents have become familiar with “The March of the Junkies.” In the early afternoon they trudge up the street to the corner, then turn and hike back down to the Panhandle portion of Golden Gate Park. Somewhere along the line, needles and condoms can be tossed in the bushes, and the homeless people turn their gardens into rest rooms.

“To me,” says Grace Hersh, who lives across the street from Silverman, “it is just this stream of (a) dreadful element. It’s disturbing.”

Howe admits that there hasn’t been much outreach to the neighbors. Newcomers like Jeff Goldsmith, who has two children – Ariane, 6, and Simon, 9 – says he just recently learned about the needle exchange up the street. He’s found only a few needles in the last few months, and when your kids are involved, that’s too many.

“I’m actually in favor of needle exchange,” he says. “But if you are finding needles, they are not being exchanged.”

Packer, at the city Health Department, strongly disagrees that the availability of needles is what is contributing to dirty discards in nearby Golden Gate Park. But doesn’t that seem logical? If needles can be acquired by the handful, why bother to keep track of the one you just used?

A lot of people say this is a homelessness problem or an addiction problem. But for those who are trying to make a life for their families in San Francisco homes, it is simpler than that.

Consider the case of Ken Stevens, a lifelong resident of the city. Three years ago he took his 5-year-old son, Michael, to the playground at Corona Heights – a park we visited earlier this week.

Michael climbed up on the play structure, then turned to his dad and said, “Ouch.” He’d been poked by a needle left on the slide.

“You talk about a parent’s worst nightmare,” Stevens says today. “I think I went out of my mind for a couple of hours.”

Michael turned out to be fine, but it took three months of blood panels to establish that. By then, Stevens had reached a decision.

“As soon as that happened, it was pretty much an instant disconnect,” he says.

In a matter of months, Stevens had moved his family to Los Altos.