Major SLO store threatens to leave downtown unless city lowers its rent
A San Luis Obispo real estate company is petitioning the city to drop the rent on the commercial space that houses Shoe Palace — or else the business might close and leave yet another major downtown spot vacant.
The San Luis Obispo City Council is expected to consider a Jamestown Premier Property request for a lease adjustment at its meeting Tuesday.
According to a city staff report, Jamestown leases the 15,000-square-foot city-owned retail unit attached to the Marsh Street parking structure for $14,353 per month. The company in turn subleases that space to Shoe Palace.
The city lease expires on Jan. 31, however, and ahead of that, Jamestown is pushing for the rent to be lowered.
According to the staff report, Jamestown representatives first reached out to the city in April to notify it that Shoe Palace was “not interested in renewing their lease with Jamestown at the current rate due to financial impacts of the pandemic and decreased sale volume.”
“Jamestown representatives indicated that they would not be interested in extending the lease ... because large commercial spaces in the downtown are challenging to fill,” read the staff report.
In August, the property management company once again contacted the city — this time with what it would take to keep Shoe Palace in the spot.
The proposed terms were for the rent to drop to $11,000 per month, with 3% increases at the start of each year beginning in 2025. The lease would be for five years with no option to renew, according to the staff report.
City staff recommended the council approve the rent decrease because “having the space occupied benefits downtown businesses through ongoing activation and foot traffic, and stimulation of the local economy.”
“Locally, the city has seen these types of spaces vacant for months if not years, while smaller spaces tend to fill rapidly,” the report read. “Given the size and structure of the Shoe Palace retail space, if it were to become vacant, it could remain that way for a significant period of time, and may need significant investments in tenant improvements in order for a new tenant to move in.”
Large retail spaces remain vacant in downtown SLO
The push comes at the tail end of a particularly rough couple of months for downtown San Luis Obispo businesses.
High-profile restaurants like Splash Cafe, Big Sky Cafe, Mint + Craft and Tortilla Town have all closed their downtown locations since October, and a number of retail outfits are following suit. Signs on Maison Marianne and SLO Swim warn of impending retirement closures at both stores.
At the same time, changes to parking — including rate increases and a less-than-smooth rollout of new technology — caused an uproar among business owners who said the city was driving customers away from the downtown core. To help quell some of the disquiet, the city voted to bring back a free first hour of parking at its structures and committed to conducting a parking rate study.
Meanwhile, several large retail spaces remained without tenants.
Those included Charles Shoes on Higuera Street, which has been vacant since closing in 2019; Beverly’s Fabrics and Crafts on Higuera and Monterey streets which closed in 2020, and Ross Dress 4 Less next door, which closed in 2022.
The corner spot at 1144 Chorro St. — former home of Sports Authority and Copelands Sports — has remained vacant after a plan to open an three-story entertainment venue, including a bowling alley, fell through.
In 2020, the city approved an application to develop a mixed-use project at the site that would consist of a 7-story building with approximately 30,000 square feet of commercial and office space and 50 residential units.
That project is in the building review stage, according to the city’s “Current Development Projects” website.
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