Amid mounting vacancies, downtown Santa Cruz needed a coach, and a matchmaker

Like any coach worth his contract, Charles Parker can see his players’ shortcomings and the restraining aspects of their game, but rather than suggesting an overhaul, he reframes their perceived pains as strengths. 

The game, in this case, is attracting and retaining retail businesses and restaurants. His current team is the city of Santa Cruz. The playing field? Downtown and its unusually high number of vacant storefronts. 

Parker, a project director with Texas-based The Retail Coach, was tapped by the Santa Cruz City Council last fall amid a particularly rough stretch for Pacific Avenue and its surrounding thoroughfares, which would see the departure of major anchor businesses such as Forever 21, New Leaf Community Markets, Rip Curl, O’Neill and Alderwood, among a number of others, in the span of only a few months.

The promise of The Retail Coach, which began in 2000, combines bespoke market analysis with a deep Rolodex of largely national brands that helps to supercharge the tenant recruitment process. The company often works with mid-to-small-sized cities, touting recent wins such as bringing Insomnia Cookies to Cedar Rapids, Iowa, Bass Pro Shops to Odessa, Texas, and inking a contract with Newark, New Jersey, to develop a retail strategy for that city’s downtown.

Yet, while Parker and The Retail Coach can generate leads, Santa Cruz officials were most interested in the firm’s matchmaking skills, said Rebecca Unitt, a manager with the city’s Economic Development department who focuses primarily on downtown. 

The city, and downtown’s coterie of commercial real estate brokers such as Cushman & Wakefield, Sheldon Wiseman and Anderson Christie, have hit a yearslong dry spell in finding the right tenants for long-term vacancies, especially when the square footage gets above 3,000 square feet — a trend that didn’t necessarily inspire confidence as several large-footprint tenants left downtown in recent months. 

So, the city turned to outside professionals. 

“The Retail Coach works nationwide, and they will do cold calling, outreach and try to make those connections for our local brokers,” Unitt said. “What triggered this for us is that those larger spaces that have sat vacant for longer have been harder to fill. We wanted to see if they could help us attract some different tenants that would be able to use those spaces.” 

Filling large retail spaces and meeting tenant demands, especially in downtowns where business-specific parking is limited, is not a Santa Cruz-specific problem but a national problem, which, according to the Urban Land Institute, began pre-pandemic — and “might endure well beyond it” — and is more complicated than simple narratives of the growing popularity of e-commerce, the visibility of homelessness or work-from-home trends. 

“Some brands are interested in Santa Cruz but finding the right-sized space is difficult,” Unitt told Lookout. “Our spaces are too large or aren’t quite large enough, or they don’t have a loading bay or some infrastructure needed to attract certain tenants.” 

In other words, size matters, and Parker admitted that could be a headwind for Santa Cruz in filling some of its long-vacant spaces. However, the industry is adapting. Parker pointed to the growing popularity of the mash-up model, in which two businesses, such a coffee shop and plant store, or restaurant and apparel shop, team up to occupy one space together. 

Yet, as Lookout has reported, there are specific challenges facing downtown Santa Cruz. The city has recently said a forthcoming increase in police presence is likely; the city council recently passed an ordinance that threatens non-compliant owners of long-vacant storefronts with fines and even jail time; rents are high, the building stock is old, which has only exacerbated anxiety over the rise of e-commerce and the demise of traditional shopping. 

Amid those hurdles, Parker’s success as a matchmaker/coach depends in part on developing data to help frame the answer to the first question potential tenants ask: Why Santa Cruz? 

For Parker, it’s an easy answer. The downtown market has a regional base of 160,000 people — a radius that stretches from Zayante to Rio Del Mar — with an average household income of $171,000. That’s to say nothing of the tourism that is the lifeblood of so much of Santa Cruz’s economy. In talking to larger brands, the city and The Retail Coach point to downtown spaces such as CVS, which sees twice as much foot traffic as the average CVS store, and Gap, which sees nearly 25% more shoppers than the average, as evidence of Santa Cruz’s strengths. 

“Santa Cruz really punches above its weight class,” Parker said. 

Parker is a former economist who speaks with a slight Texas drawl that particularly stands out when he throws around local idioms such as “over the hill.” He also has a penchant for inversion, contorting problems into positives. For instance, that Forever 21 closure? For Parker, it’s evidence of Santa Cruz’s strength.

“They were closing locations across the country,” Parker said. “I think the fact that it held on for so long and kept that downtown location open for so long is a testament to the strength of Santa Cruz’s market. That’s a positive rather than a negative.” 

For some, the ubiquity of jackhammers, cranes and construction crews in downtown Santa Cruz has diminished the neighborhood’s quality of life, but Parker promotes the long view. 

“There is an old industry adage that retail follows rooftops,” Parker told Lookout, referring to the commercial sector’s preference for housing density. Prospective business tenants, he said, often judge the quality of a possible location by how many people live within a mile radius. “The easiest path to creating a larger draw for retail and restaurant brands is having higher density.” 

And, in Santa Cruz, rooftops are a’comin’. Hundreds of apartments are under development within the downtown core as well as within that 1-mile radius of the city’s center. That’s not counting the zoning changes the Santa Cruz City Council approved last Tuesday that make room for 1,600 new apartments and a flashy entertainment district south of Laurel Street. 

In Santa Cruz, the city and the county, it’s difficult to not see the state and fate of the region as dictated by topography. The county and its cities are divided from San Jose and the greater Bay Area by the Santa Cruz Mountains and from the Monterey Peninsula by a 45-minute drive often elongated by traffic. The mountains have exacerbated the damage from natural disasters and also protected the community from being swallowed by Silicon Valley. 

Viewed one way, this geologic reality cuts off Santa Cruz’s economic potential, as it’s unable to pull much regular commerce from over the hill — aside from tourism. However, Parker said that degree of separation also works as an asset. Whereas a certain brand in San Jose might overlook a space in Morgan Hill because the markets bleed into one another, Santa Cruz represents something different.  

“We make the argument that a store in South San Jose needs to be in Santa Cruz because it’s an entirely different market,” Parker said. 

Retail as Parker defines it — which is all-encompassing, from apparel shops and small boutiques to movie theaters, restaurants and escape rooms — has in recent years become more of a quality of life and cultural amenity, rather something that simply helps cities earn sales tax revenue. The idea of a market — the regional kind, a place where employers and employees flock — has shifted, he said. 

“We hear people talk a lot about ‘markets’ anecdotally, and they most often describe them by what’s there in terms of shopping or dining,” Parker said. “People are more looking at living in places they are going to enjoy and retail options have become a deciding factor in quality of life.”

His market research has him confident in the future of bricks-and-mortar shopping. He pointed to Barnes & Noble’s plans to add 60 new locations this year, and Jeff Bezos’ plans to open more Amazon Fresh grocery locations — both e-commerce giants that are doubling down on the shopping experience. 

“It’s the experience part of it. It’s part of what we do as social creatures: We like to co-shop and eat and dine and do all those things,” Parker said.

Parker was hesitant to share much about what specific businesses and prospects he and the city are pursuing for downtown. He mentioned an “independent restaurant in the Bay Area that has one location … and we’ve reached out to talk to their executive chef,” as well as “a national chain that we’re trying to have come in and fill a larger type space.” 

Earlier this month, news broke that Anthropologie is slated to take over the space vacated by New Leaf last fall. However, Unitt said negotiation and recruitment for that address has not involved Parker and The Retail Coach.  

Parker did point to market data that the downtown loses the most local shoppers to outside “sporting goods, hobby, musical instruments and book stores,” and said a sports shop specifically could work well in the city’s center.  

“Most everyone we’ve talked to have realized that they need a location out here in Santa Cruz,” he said. “We’ve had a tremendous amount of positive interest – it just comes down to a real estate issue and where businesses can go.” 

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