Business landscape changing in Encinitas

Bety Gracida said she’s still coming to terms with the closure of her family’s restaurant.

With their rent set to double, the Gracida family shuttered Bety’s Tacos in January after 18 years at the Encinitas Village Square I plaza, just east of the bustling El Camino Real and Encinitas Boulevard intersection. In the meantime, they started Bety’s Catering while trying to secure a new brick-and-mortar location, which is proving difficult given rising commercial rents.

“Emotionally, it’s tough,” Gracida said. “You have to start all over.”

Bety’s Tacos isn’t alone. A spate of local businesses have closed their doors in recent months, including the vintage store Home: A Mercantile Company, Coastal Furniture and the long-time staple El Callejon. On the flip side, local economic development representatives say change isn’t easy, but Encinitas continues to attract innovative small businesses that fit the community’s character.

Much of the recent change in the city’s business scene has occurred at Encinitas Village Square I, which Festival Development Corporation of Los Angeles bought in 2013.

Gracida said Festival Development recently demanded a huge rent increase from Bety’s Tacos and the other tenants, essentially forcing them out to make way for high-end retail. A phone call to Festival Development Corporation inquiring about plans for the complex wasn’t returned by press time.

Along with Bety’s, the plaza once housed Figaro’s Pizza, 7-Eleven, Swami’s Café (it relocated a stone’s throw east) and Martin Fine Art Classes (it moved to 162 S. Rancho Santa Fe Road). One of the few remaining businesses there is Donna’s Tailor Shop, and it’s moving next month to 205 S. El Camino Real in Encinitas.

Storefronts have changed hands on Coast Highway 101, too, though spread out over the thoroughfare.

Encinitas 101 Main Street has stepped up its efforts to fill vacant or soon-to-be vacant commercial spaces with businesses that fit the community, according to Thora Guthrie, the group’s executive director.

“It’s up to the property owner to make that decision,” Guthrie said. “Still, we can play a role in that process. The idea is you don’t just want the first person willing to put up money. You want someone who will make money and fit in with the vibe of the area.”

Besides looking for businesses that match the community, Encinitas 101 is salvaging historic business signs, arguing they’re another important factor in the look and feel of the area.

Many locals last year were surprised when the iconic Surf Cleaners sign was unceremoniously removed, altering the face of downtown Encinitas. In response, the Encinitas City Council in the future will discuss relaxing city rules to let business owners take down and repair their vintage signs without fear of the signs losing their grandfathered status.

Guthrie said it can be jarring when new businesses move in, but given time, many come to realize that they bring unique products and energy. As an example, she pointed to neighboring businesses UNIV, an events and music space called The Studio Encinitas, and To The Stars, a comic book and retail store started by former Blink-182 member Tom DeLonge.

Also in that complex is GoodonYa Deli and Café, among the growing number of socially-conscious companies in Encinitas that have registered as b-corps or benefit corporations.

“Encinitas is a no-brainer for this kind of entrepreneurship,” said Kristen Buchanan, the owner of GoodonYa, which is a b-corp, a designation for companies that prove with paperwork they pay employees fairly, conserve on utilities or aid the planet in other ways.

Buchanan said socially-minded companies are opening in Encinitas because residents value the environment and transparency. She did, however, temper her enthusiasm by saying that permitting for new businesses is difficult and costly.

Agreeing on this point was Encinitas Chamber of Commerce CEO Bob Gattinella. He said the city needs to eliminate red tape — otherwise, it risks losing out on new mom and pops that have fewer resources compared to larger companies for navigating the lengthy permit process.

Gattinella said as with any city, Encinitas has seen its fair share of businesses leave or close their doors in the past few years. But, he added, new businesses often swoop in quickly to take their place.

On that note, he said the city has a pretty low vacancy rate — it was 7 percent on El Camino Real and 4.2 percent in Old Encinitas, which includes downtown Encinitas, according to a chamber tally last December.

“Encinitas is a very lucrative area, and businesses want to be here,” Gattinella said.

With so much competition among businesses and an improving economy, commercial rental rates have climbed over the last four years. Retail rates per square foot were $2.58 in 2012 and now stand at $4.25 in downtown Encinitas, according to data from the real estate company Cushman & Wakefield.

Higher rents have been cited among the reasons some local businesses shuttered, including restaurant El Callejon.

Surfy Surfy owner J.P. St. Pierre said another factor is increasingly playing a role in the business landscape: baby boomers retiring.

“If a business has been around for 30 years, there might be a son, daughter or someone else lined up to take it over, but that’s not always the case, and the business ends there,” he said.

St. Pierre said that while driving on Highway 101 he sometimes wonders what will happen to the long-time businesses on the thoroughfare, adding a “generational shift” is upon us.

Carris Rhodes, executive director of Leucadia 101 Main Street, said there have been quite a few new businesses along Highway 101 in Leucadia the past few years, drawing more foot traffic to the area.

Although change has been constant, what’s reassuring, she added, is that small businesses keep investing in Leucadia.

“If a small business goes out, 95 percent of the time it’s replaced with another small, independently-owned business,” Rhodes said.