29 new businesses have opened in downtown Santa Cruz since 2025. Here’s why.

Lizi Barba never papered her windows while she prepared to open her gourmet market, Tomato Tomato, on Walnut Avenue. While the first-time business owner jokingly called the messy process a “performance art piece,” she liked that people constantly stopped in to ask questions as she stocked her shelves with specialty ingredients and high-end pantry staples. 

“I really want to be a place where the people downtown who live and work here have a place to come in every day,” said Barba. Drawing from a personal passion for fine foods, she aims to fill some of the void left by New Leaf Community Markets when it moved its downtown Pacific Avenue location to Gateway Plaza on River Street in 2024. 

Tomato Tomato opened in October with items for curious foodies, like ghee, soy sauce and Japanese mayo, and locally sourced groceries, including eggs from Corralitos’ Pajaro Pastures, chicken from Pescadero’s Fogline Farm and pies and cookies from Santa Cruz’s Companion Bakeshop. Ad Astra Bread Co. in Monterey delivers fresh bread and pastries three times a week, and Barba plans to offer organic produce in the coming weeks. 

Tomato Tomato is part of a wave of new businesses in the downtown area within the past two years. In early 2025, Pacific Avenue and the surrounding blocks were plagued with nearly 40 empty storefronts. While some longstanding vacancies in large retail spaces remain, 29 new businesses have opened since January 2025, with 11 more opening soon or in process. 

Downtown Santa Cruz is booming. Local business owners like Barba are the driving force. 

Aside from national chains Anthropologie and Insomnia Cookies, all of the new businesses are owned locally, said Rebecca Unitt, the city’s economic development manager. Three new franchises — UMe Tea, RockSalt Pilates and Palmetto Superfoods – are operated independently by local owners.  

These entrepreneurs are creating experiences that can’t easily be replicated online. “It drives people to come out and shop at that space,” said Unitt. 

In June, Tori Koneya moved Hand It Down, her children’s secondhand clothing boutique, from Pleasure Point to a larger storefront on Walnut Avenue that has room for her business to grow. She buys gently used clothing from name brands for cash or trade, and offers a curated selection to shoppers, from rain gear and winter jackets to play clothes and accessories with personality. 

“The property managers were really kind and worked with me to come up with a lease that worked for me,” said Koneya. That included leasing her a smaller space that better matched her needs, rather than requiring her to pay for extra space. “They were excited about the business model and that there was nothing similar downtown.” Since the move, she’s captured a mix of tourists and residents. 

Koneya said she feels supported by the Downtown Association of Santa Cruz through its marketing efforts on social media, with programs like the annual “Where’s Waldo?” scavenger hunt and downtown events. “That really helps bring people in,” she said. “It’s nice to be in a business district where you have that support.”

Several factors are converging behind the surge. 

Business owners see the opportunity that comes from 645 new homes built or planned in the downtown area, said Unitt. “Having that strong new customer base has definitely contributed to this increase in business activity,” she said. “We’ve also seen consistent increases in our visitor foot traffic downtown,” with some businesses reporting record sales during the spring and summer months.

The downtown corridor is also finally recovering from pandemic-era decline, said Unitt, helped by numerous revitalization efforts from the city, such as the Downtown Pops! Program, which subleases empty spaces to new businesses at a lower rate, and waives registry fees for property owners whose spaces have been vacant for longer than two years. 

A vibrancy ordinance targets long-term vacant storefronts by waiving up to $14,000 in building permit fees for up to 20 applicants. Of the 15 businesses that have taken advantage of the ordinance citywide, eight are in the downtown area, said Unitt. 

The city’s use-extension ordinance extends the lifespan of a business’ use permit approved in 2019 from six months through 2030. This saves new businesses from the application process, which can take three months and cost $4,000 in fees. The Hotel, which opened in the former Red Restaurant and Bar on Locust Street, and the forthcoming Breakfast Club at Midtown on Pacific Avenue in the space vacated by Alderwood Pacific in 2023 both took advantage of this ordinance. 

There are even signs of life in two of Pacific Avenue’s longest vacancies. Short-term markets briefly brought to life the former Palace Art & Office Supply and Logos Books & Records. For the second year in a row, Santa Cruz Mountains Makers Market will pop up every weekend during the holiday season in the former Palace space, following Spirit Halloween’s fall occupancy. In December 2025 and early 2026, Collective Santa Cruz hosted three art and food events in the Logos building, and the city is accepting applications for short-term rental ideas. Challenging layouts have made securing permanent tenants for these spaces difficult. 

Despite national economic uncertainty and the popularity of shopping online, sales tax revenue continues to increase, suggesting that more people are choosing to spend money downtown at restaurants and retail businesses. “We’re continuing to see quarterly increases, and year-over-year increases,” said Unitt. 

With the holidays on the horizon, Barba says she is preparing to bring in special ingredients for baking, such as quality dates and pecans from Georgia and treats like martini-brined olives and her favorite brands of chocolate. She also stocks an array of Marini’s Candies – which closed its downtown location in 2023 – giving customers an opportunity to buy fresh Santa Cruz-made candy. 

Just a few weeks after opening, Barba already feels at home downtown. “To me, the idea of being downtown is the coolest of all. This building is amazing, the people downtown are awesome, and the foot traffic during the farmers market [on Wednesday] is huge,” said Barba. “I have no regrets at all.”

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