Good news to share
I have some good news to share.
The City Council is often bombarded by people expressing concern about the challenges faced by Laguna brick and mortar businesses and expressed in terms of the number of vacant storefronts. And the general message is that “The City needs to do something about it.”
There was an excellent example of that at midnight two weeks ago when a parade of speakers, some of whom even live here, explained to us how Laguna, with 6,000,000 annual visitors and well over $700,000,000 of annual retail and hotel room sales, is blighted and comatose and is on the road to ruin – like La Jolla -- if the City Council doesn’t take extreme measures to reinvigorate the economy through massive injections of alcohol into visitors.
In an era of fake news, it’s important to do some occasional fact checking into just how critical the patient is.
And what better source of information could there be than the Chamber of Commerce website which lists commercial vacancies?
Checking that site, I found there are currently 36 retail, office, and industrial properties available. Some are vacant and some will become available in the future.
I checked with commercial property brokers for a Laguna Beach commercial vacancy factor, but being a small market, the larger providers of commercial data do not break out numbers for Laguna.
So, I checked to see how many businesses there are in Laguna. There are nearly 3,900 business licenses in Laguna. 36 vacancies for 3,900 businesses didn’t sound so bad.
But since not all businesses occupy a commercial address, I checked with the post office for business addresses, and there are 1,447 business addresses in Laguna (not counting Post Office Boxes) so, 36 vacancies out of 1,447 physical addresses is about two and a half percent commercial vacancy. That’s probably a good estimate of commercial vacancies.
For comparison, I then looked for vacancies in Orange County and nationally and found that while the national average for retail vacancy is 6.6 percent, Orange County does much better with only 3.6 percent. But at two and a half percent, Laguna is far more healthy than either Orange County or the nation as a whole.
I also looked at new business formations and failures and found that nationally about eight percent of all businesses either start up new or fail in any year.
And, in fact, only 50 percent of new businesses survive five years.
So, businesses turn over. For many reasons. Sometimes success. Sometimes failure. Sometimes due to growth. Or sale of the business. And turnover can cause vacancy, but turnover is normal. And that’s the point. And, in fact, Laguna is doing much better than most.
There is no question that this is a trying time for brick and mortar retail. And, while no one wants to see businesses falter, on the other hand, our City Council has no obligation to guarantee the profits of private businesses.
And if an investor pays too much, or promises his investors too much, the City has no duty to bail him out.
John Thomas
Laguna Beach