Struggling SFO retailers can barely afford rents
Retailers at San Francisco International Airport, struggling to survive the heightened security and reduced traffic in the wake of the terrorist attacks, won financial relief when airport officials announced yesterday they were giving them a break on their rents.
America's traveling public may be returning to the skies, but they aren't spending as much at airport merchants and restaurants, several small business owners told the San Francisco Airport Commission.
Tighter security has reduced traffic in the terminals to passengers only. A sushi restaurant at SFO has noticed a plunge in business since it had to switch to plastic knives.
A dozen vendors -- representing golf pro shops to newsstands and a San Francisco Museum of Modern Art store -- turned out in force for the Airport Commission meeting at City Hall to plead with airport management and commissioners.
"It's devastating and painful," said Irma Zigas, director of special projects for the San Francisco Museum of Modern Art, which has a museum store at the airport. "Everybody is in trouble."
Scott Roderick, owner of a golf pro shop at the airport, said even before the attacks the downturn in the economy had reduced revenues 50 percent. He said without airport management's help, businesses were faced with possible closure.
"We're not asking for a handout," Roderick said. "We just need you to help us get back to break even. We need to show the traveling public that business is back to normal. Boarded up storefronts would send the wrong message."
After hearing from the merchants, airport director John Martin said management had agreed to charge rent based on a percentage of sales, as opposed to higher amounts negotiated when they applied to open at the airport.
Martin would not commit, however, to special extensions of leases as merchants had requested. The 35 different retailers in the airport were expected to generate $43 million in prenegotiated rents.
"We recognize some form of relief is needed," Martin said. "It's going to be a slow recovery. We're going to go step by step and see how traffic recovers."
Martin said the change would result in a monthly $1.5 million loss in projected airport revenue, in addition to the projected $70 million to $90 million the airport is expecting to lose this year as a result of the attacks.
Nationwide, airport merchants have reported a drop in revenue since the terrorist attacks. Industry publication Airport Retail News recently reported that since the attacks, airport vendors had laid off thousands of employees, and revenue has been down as much as 40 percent.
But the merchants' problems at SFO began long before the terrorist attacks, vendors told the Airport Commission. Many bid on rental space during the dot- com boom, and their rents were set at levels based on their bids -- too high for today's economy.