Business is Booming


Telegraph Avenue is going high tech.

Bluebeard's, a men's clothing store, is going out of business. Sultana, a woman's boutique, is closing. Kashi Printers and Tower Posters are shutting down. Armadillo Pizza is gone. Leopold's, originally formed as a student collective, is being bought out by The Record Factory.

And rumor has it that several small businesses on the Avenue, many of which are locally owned, are closing soon -- succumbing to the scourge of higher commercial rents.

Even with these high rents, the stores will not go vacant. If the present trend bears out, there will be no dearth of chain stores or trendy cafes eager to replace these businesses.

Cafe Bottega, The White Mountain Ice Creamery, Le Beignet cafe, Thomas Sweet Ice Cream, Yogi's frozen Yogurt, Mrs. Field's Cookies, Mediterraneum's "pizza by the slice," the Coffee Sourse, Cafe Sorrento, The Old Blue, Ribs 'R' Us -- are but a few of the cafes, sweet shops and chic eateries that have moved onto the heavily traversed Telegraph Avenue and its main commercial offshoot, Durant Avenue within the last few months.

At last count, there were 17 eateries on Telegraph, 28 on Durant, and 9 on Bancroft -- not to mention 5 on Dwight Way. Together, these avenues comprise the Sather Gate commercial district, which seems to have reached its satuaration point of cafes, cookie stores and frozen yogurt shops.

Three years ago, the owners of the Cafe Intermezzo did a study on the amount of foot traffic along Telegraph Avenue. The study's results were shocking: more people walk along Telegraph than pass through Manhattan's Times Square.

Because of such high pedestrian density, Telegraph is even more of a prime attraction for upscale boutiques and cafes than Union Street in San Francisco, according to local architect David Baker.

What's happening? Rent are escalating -- sometimes doubling and tripling -- along Telegraph, and landlords are loath to sign leases for longer than three years anymore. The upshot is many small locally-owned businesses have no leverage against the juggernaut of corporate greed -- be it that of the UC Regents or of the franchises springing up like neon mushrooms after an acid rain.

And adding to the instability on the Avenue

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ing to the vageries of the "free" market and the occasional rumblings of social conscience. Orange Julius, after a brief flirtation with a cookie counter, has given way to the White Mountain Ice Creamery. And Carl's Jr.'s almost moved in around the corner, but given Carl's corporate ties to apartheid South Africa. The Gap was considered more"socially responsible."

But while commercial rent control -- the most extreme form of regulation -- might seem to be an obvious remedy to the dilemma of high rents, for Telegraph merchants, it isn't the answer. At least not yet. It isn't even the point.

At the heart of the politically correct jargon heard around the city of neighborhood-serving, socially responsible business and democratic decision-making lies a simple matter of self-respect.

It's a question of taste.

How much sugar, how many cookies, how many gawdawful pre-broiled hamburgers can we consume? How much neon, plastic and chrome can we look at?

Once diverse, the Avenue is starting to look like your average schmaltzy fungible suburban mall -- the type that has been known to breed valley girls, Wurlitzer organs and red sports car displays.

The influx of new cafes, hair salons, high-tech boutiques and franchise food stores is welcomed of at least accepted by most commercial landlords, some merchants and many students, who see this trend as keeping up with the times and as signs of a thriving local economy.

It does seem like good business sense to market a food or fashion fad along Telegraph Avenue, which is the playground for the university students. The same types of stores can be seen in the Westwood area near UCLA.

New stores are putting electricians and carpenters to work overtime to open for the pre-Christmas shopping blitz. And long lines of people hankering for that quick sugar fix -- at 45 cents a pop -- have been forming outside of Mrs. Field's Cookies, blocking the nearby crosswalk, prompting one Berkeley board of adjustments member to joke that "chocolate and neon are the latest traffic hazard."

Two doors down from Mrs. Field's, Thomas Sweet Ice Cream promises to supply the next chic sweet craze. Hailing the success of their original Princeton store, two entrepreneurs -- Tom Grim and Tom Block -- have opened this shiny new ice cream parlor which features gizmos that grind cookies into ice cream -- the latest in ice cream high tech. It looks like Cal scooped Stanford in becoming the first West Coast university to have such a store in town, and the two Toms are hoping this Ivy League "lick off" will take off here, too.

But what many longtime residents, some merchants and some city planners and politicos view this trend grimly.

Besides destabilization of the Avenue, the loss of decades-old businesses ins the price the community pays for an absence of neighborhood planning, they say/

Joe Zahner, owner of Larry Blake's, says, "I certainly don't like all those chains stores and cafes coming up on the Avenue. There should definitely be neighborhood-serving businesses, as well as proper guidelines to attract those kinds of businesses."

But as rents continue to escalate, and commercial leases get shorter (the 20-year lease is going the way of the full service gas station), franchises and chain stores, which are able to spread costs among more outlets, are in a better position than most locally owned and operated businesses to afford the higher rents on Telegraph Avenue.

the proliferation of new franchises and chain stores is "the price you pay for free enterprise," says one Durant Avenue merchant, who has been in business in Berkeley for 45 years. He says he wouldn't want it any other way.

"I can remember when there were all houses around here. But I wouldn't want to go back to that era, and that's the truth. I don't believe in holding things to the same old thing. You don't get progress that way. You get stagnation."

Progress certainly has been made in fast food gourmet shops: choosing between a chocolate croissant of a cheese beignet, tofutti or frozen yogurt, gelato of chocolate chip cookie can take a whole day.

Telegraph Avenue has always been home to restaurants and ice cream parlours -- in the '50s, Jule Ice Cream had nickelodeons at every other counter stool. But gone today are two butcher shops, a shoe repair store, a laundry, a furniture ans gift store where Berkeley bought its wedding presents, a barber shop and the best hardware shop in Berkeley -- "where nothing came wrapped in plastic."

These were stores owned by people who lived in Berkeley, raised ther kids in Berkeley and rented space from landlords who did the same.

Profits went into the Berkeley economy and not to Walnut Creek, San Leandro, Chicago of Los Angeles. Stability meant a business stayed successive generations, and leases ran for 20 years or more.

While this may sound like small-town nostalgia, there was also something very valuable about the Avenue. It had to do with it being Telegraph, in Berkeley.

In the 1930s, Telegraph was a shopping district for residents of South Berkeley and the hills as well as the university students.

In the '40s, Telegraph went through the second world war and business was secondary.

Former city council member and founder of UC Berkeley's Department of City and Regional Planning T. J. "Jack" Kent says, "What people remember in the '20s, '30s and '40s was the strong human fabric in which you had some quality stores for clothing and books and a lot of local services -- all kinds of things that brought Berkeley hills ladies down to shop."

With the end of World War II, in the face of incredible and unrivaled populations growth, liberal city planners and civic leaders developed a long-range plan encompassing environmental protection, public transportation and taxation, realizing that basic city services needed to be designed.

But for a long while, the shopping district on the Avenue seemed stable and so no area plan was developed.

Telegraph in the mid-'60s

IN the complacent '50s, the area south of campus was small town -- mom and pop stores. Local merchants who remember that era say there was "great rapport among students, professors and merchants."

At that time Telegraph Avenue ran all the way up to Sather Gate. -- Sproul Hall, Eshelman, and the student union had not yet been built -- and swung left at what was then Allston Way.

In the '50s and up to the early '60s, a plethora of small shops and restaurants lined Telegraph above Bancroft, the block which is now Sproul Plaza and the student union.

But the ever-expanding university exercised its power of eminent domain and in the process, diverted Telegraph down Bancroft and wiped out a block of small shops.

Kent says, "I've seen Telegraph change so radically, basically because of what the university did, building the housing ands wiping out the boarding houses -- two, three, four-story heights with rooms, east and west of Telegraph and where People's Park is today. The Avenue used to be the student's outdoor living room."

Some Avenue stores have survived through several decades of turmoil and change, among them: Foley's Drugs, where owner Marshall Stoves still knows students by name; the Hotel Carlton, Layton's shoe store, Jim Davis Sport Shop, Sather Gate Jewelry, Whelan's Smoke Shop, Bill's Men's Shop and Vortman's Jewelry and Watch Repair.

One Bancroft merchant remembers a time in the '50s when students working in the stores around the area were waging a struggle for a decent wage -- what they called a "fair bear." Merchants hung signs in their windows proclaiming their's was a "Fair Bear store."

Starting in the '50s and taking hold in the '60s, the street culture of politics, protest and drugs found their niche there. The counter culture -- all forms of subculture and fringe culture, became an integral part of the identity and character of the Avenue.

The Rag Theater on Telegraph in the '60s

Fred Cody, deceased owner of Cody's Books, was actually the first to push for the widening of the sidewalks to accommodate street vendors and street life.

Larry Blake has been quoted as saying, "you bring the demonstration, I'll provide the hotdogs."

Most other merchants, though, were wary of the marches, protesters and drug dealing. After a while they didn't bother replacing broken windows because they couldn't get insurance on plate glass anymore.

Perhaps an indication of the changed times was the reinstallation of plat glass windows in the Bank of America on Telegraph and Channing. Mrs' Field's and Waldenbooks' huge glass storefronts will probably never see comparable strife.

Dave Lyons, owner of Dave's Smoke Shop, started business in Berkeley with a barber shop in '45. He remembers when he and his wife opened up Lyon's Casuals on the corner of Channing and Telegraph beck in 1960.

"Kids were shooting themselves up in the dressing rooms, and my wife just couldn't stand the drug scene," Lyon says, so they sold the dress shop to a Christian book store in '71.

But something happened on the Avenue in the last decade. As the era of protest and political conscience faded, a new ethic took over -- anarchism and idealism left the street and took more esoteric forms.

Redwood hot tubs became a big industry. Entrepreneurism was in again.

Telegraph Avenue was only a neighborhood away from Elmwood, the first district in the city and the entire nation to institute commercial rent control -- which is like revolution-ridden Central America being in the United States' backyard.

In 1982, 60 percent of Berkeley's voters approved Measure I, the Elmwood commercial rent stabilization ordinance, which stabilized commercial rents, saved locally-owned business and stopped speculation.

To date, no other city in the country hastaken Berkeley's lead, and the precedent-setting ordinance is generally ignored in the national media.

Since Measure I's passage, and fearing that Elmwood might export its commercial rent control revolution, some Telegraph commercial property owners increased rents as leases come up.

One merchant, whose family both owns a building and runs a cafe on the Avenue, says rent control actually hurts small merchants wanting to open businesses by discouraging the development of new commercial property and by prompting landlords to raise rents in anticipation of rent control.

"Since Elmwood's law passed," he says, "when we renew leases, we're purposely not going to negotiate more than a three-year lease, so we're not gonna get stuck with a twenty-year lease." He also says his family is more inclined now to buy out any businesses in the building, to consolidate family ownership there.

"There needs to be something to maintain interest in preserving stability there," says attorney Myron Moscovitz, co-author of the Elmwood ordinance.

One landlord who takes great interest in preserving the stability of the Avenue is Barbara Moskowitz, owner of a mixed residential and commercial building on the corner of Dwight Way and Telegraph Ave.

"I would never consider renting to a franchise... would never dream of raising rents to where businesses couldn't stay there," she says.

Moskowitz owns the Chandler Apartment, 27 units located above the seven stores in her building. "I think the idea of housing above and business below is wonderful... I think it's what makes it possible for me to charge reasonable rents for both apartments and the businesses."

Mary Schiffenbauer, the other co-author of the Elmowood Ordinancem says "the proliferation of cafes -- everything seems to be done in a haphazard way. I mean talk about basic health. Look at how many ice cream stores there are already. Sugar sugar sugar. That doesn't have the interests of the community in mind."

However, Moscovitz, who's lived in Berkeley for 25 years, says "the type of turnover you have on a place like Telegraph is tremendous. As people's taste change, (the stores) change. And that's good. It's good they have a dynamic changing area that changes with the times. If you lock in businesses, stick with the old, that can lead to stagnation. Certainly in places that's good. But on a place like Telegraph I'm not sure that's good."

A large majority of merchants -- and all requested they not be named (gotta protect their leases) -- said they don't think commercial rent control was the answer to the dilemma of escalating rents and short leases.

Many are "ideologically opposed to any form of rent control," have deep faith in free enterprise, the "invisible hand," and economic Darwinism.

It is a rare local merchant who feels he or she has sufficient economic and commercial stabilitiy to risk saying anything that cam be construed as even remotely sympathetic to rent control.

Telegraph Avenue must be kept safe for free enterprise; landlords appreciate tenants who do not upset the status quo.

On the southern reaches of Telegraph Avenue, a merchant whose rent just doubled, says, "My position is 'just accept it.' What can you do? Market pressure."

Once, monthly commercial rent used to be 75 cents to a dollar per square foot on the Avenue. Today, some merchants are paying rents upwards of $4 a square foot -- the highest in the city.

"The landlords' paranoia is making things worse. Escalating rents are very carefully liberating people of their life's savings. Y'know, this entreprenurial fever that Reagan's spreading. That's why we have such high turnover," says Tom Hunt, a neighborhood activist who works in the Reprint Mint.

One longtime merchant sums up the feelings of many other Avenue business owners: "Commercial rent control -- it just doesn't work. Because the people who get in control of rent control usually go too far. In the short run, sure, I can see how it would help the individual. But in the long run, it'll hurt. It'll kill Berkeley."

Then why did the Elmwood district merchants organize and ask for a ballot measure to be written calling for commercial rent stabilization?

"With Elmwood, it really took the catalyst of Ozzie's eviction (Ozzie Osborne, owner of the Elmwood Pharmacy), even though the problems were there for quite a while," Schiffenbauer says.

Moscovitz says, "There ware peculiar circumstances in (Elmwood), where local businesses were being driven out by higher rents and regional businesses were coming in. People in general were trying to keep the neighborhood intact."

Under the Elmwood Commercial Rent Control ordinance, merchants' rents whose leases were ending in November of '82 were stabilized at their October 1981 level, and evictions were made illegal except for non-payment of rent, breaking a lease or other "good cause." Rent increases were limited to cover landlord's expenses, necessary capital improvements and a fair rate of return on their investment.

Ozzie Osborne, whose Elmwood pharmacy and soda fountain has been a kibitzing spot for local politicos for years, says commercial rent control has kept "approximately eight businesses in place... businesses which would probably have left in June of '82 had the proposition (Measure I) failed... I'd say it's been successful."

But Moscovitz says he thinks commercial rent control is not always a good idea. "For instance, in downtown Berkeley, commercial rent control could keep in businesses that really weren't serving the community as well because they don't have as high a colume."

He adds that commercial rent control means the city collects lower sales tax, and conceivably a lower property tax. So there are disincentives for the city here, too.

A lot of people say commercial rent control would be unconstitutional.

But the Alameda County Superior Court upheld a 1978 Berkeley ordinance, requiring landlords to return savings gained as a result of Prop. 13 to tenants; and in 1983, the State Court of Appeals upheld the Superior Court's decision.

Measure I, or the renter Property Tax Relief ordinance, passed in November 1978, applied to all real property, both residential and commercial, and called for the reduction of a tenant's rent that year by 80 percent of a landlord's Prop. 13 savings and for a rent roll back to its June '78 level.

"So, in a sense, commercial rent control has been upheld in the courts," Schiffenbauer says, although Moscovitz, who argued the case for the defendants, says commercial rent control remains "the exception rather than the rule."

But the same year Elmwood's Measure I passed, voters also appproved the Neighborhood Commercial Preservation Ordinance, which basically calls for no new major commercial development in the city without a public hearing and the finding that such development would not be "detrimental" to the community.

Thus "All anyone has to use is the NCPO on (business applications) that come up. And the NCPO says if a business isn't going to be amenable to the area then it can't go in," says Eric Palfrey, Berkeley Citizens' Action planning commissioner.

"The whole point of the NCPO was to try to redirect the regional serving uses downtown. Telegraph is really peculiar. It's not downtown, but it is essentially an extension of downtown. It is not really serving so much a local neighborhood as a community of students... We need unique zoning for Telegraph Avenue. Clearly C-1 (general commercial) zoning is not appropriate for the area.

The NCPO also calls for the area plans to set guidelines and priorities for development and environmental protection in the neighborhood.

NOrth Shattuck recently passed area guidelines setting quotas on the number and types of businesses that could come into the area.

"The trouble with having quotas, you'll also keep out good people. You guarantee a position for bad businesses," says Dave Lyon, president of the Sather Gate Merchant's Association, and owner of Dave's Smoke Shop.

Well, the business of American may be business, but the newly elected Berkeley Citizens' Action council majorityhas the notion that their landslide November victory is proof enough of a mandate to redirect business to serve the community.

Berkeley elder statesperson T. J. Kent, says "It's to BCA's great interest to have a special warm concern for Telegraph. There could be all kinds of human things that can find expression and BCA could help nourish them."

What can and will Berkeley Citizens Action politicians do with respect to Telegraph Avenue?

A look at their campaign platform reveals they "believe large corporations based outside of Berkeley are using and attempting to use the city as a vehicle for generating substantial profit, which is subsequently taken out of Berkeley."

And they also believe there are a great many "community-based, locally owned... businesses which return money to the Berkeley economy (and) provide good jobs for Berkeleyans."

Further, the BCA believes "an integrated system of regulation" that is strongly enforced and not cumbersome for businesses is needed.

City Councilmember-elect Ann Chandler, who currently sits on the Board of Adjustments, says, "I don't think commercial rent control rent control is the kind of thing we can impose, My feeling is that we have to wait and see what the people there want. It has to come from a concensus process that the merchants originate.

"I think what we have to do as the city council majority is get people together to start dealing with the problems there -- Kids loitering, traffic, trash, noise...

"Downtown is not the center of Berkeley, Telegraph Avenue is. We have to start dealing with the whole issue of drugs and crime and loitering. I tend to the idea of closing Telegraph Avenue and making it all a mall. But there are also a lot of disadvantages to making it a mall, for instance, it increases loitering spaces... We can't wait four years to do something."

Another councilmember-elect, Nancy Skinner, who is a graduate student at UC Berkeley, says, "We're already seeing a huge number of chains coming into the Avenue. It would appear the only way to preserve some of the businesses is to have some kind of commercial rent control.

"Our position has always been if all the merchants got together and say they want it, we'll support them. Besides, just the merchants, if the people in the area desire certain businesses then that's important too," Skinner says.

About two years ago, a group of merchants and residents got together to devise an area plan for Telegraph. According to one merchant, "We wanted some kind of guidelines that would say what was beneficial to all the merchants. The riots of the '60s really sacred a lot of people away."

But while the city thought the planning effort was a great idea, the professional planners said it was much too big a job for a neighborhood group, and that it would take a lot of city planning staff time and effort to come up with effective guidelines.

This same merchant says he still believes there should be some kind of planning. "As it is now, it's wild -- a free for all. (The problem) is certainly not going to be solved in the Daily Cal or any other paper."

While rent control may be a pretty extreme solution to the destabilization and commercialization of the Avenue, some city politicos, planners, residents, and merchants say they can live with guidelines in the form of an area plan, as required under the Neighborhood Commercial Preservation Ordinance.

The intent of such guidelines would be to preserve locally owned, neighborhood-serving businesses.

"I think commercial rent control has some inherent problems in it. But with some sensible regulations maybe we can live up to basic standards," says Joe Zahner.

Among the basic guidelines Zahner wants are: a certain amount of parking spaces, bathrooms in restaurants or other food-serving establishments, and litter control. "You have to make it so only people who are responsible will open up businesses."

"Telegraph Avenue is absolutely a textbook example of an area that has to be planned," says Eric Palfrey. "But until we get together and encourage a really grassroots planning effort it's going to be planned in an incremental way. It's going to further this whole disastrous incremental planning effort -- planning by permit."

Parfrey, Skinner and Chandler say the "strong, agressive" area planning effort should involve students, residents, merchants, landlords, university administrators, city planners and everyone with a stake in the future of the South Campus neighborhood.

A project area committee would also be able to discuss problems of trtaffic and parking, police, control over People's Park -- all issues that tie into the quality of life and business on the Avenue.

A good area plan could be the best present Telegraph Avenue receives from the city.

-- by Ellen Nakashima. Business is Booming as Telegraph Avenue us Consumed by Our High-Tech, Disposable Society, The Daily Californian, December 3, 1984