Experts: Pasadena’s Economy Still Healthy Despite Businesses Closing at Rate Likened to Recession’s

A series of store closures in Pasadena over recent weeks in numbers that some local economic experts say are similar to what was seen when the recession hit the nation almost a decade ago, but the same experts maintain the city’s economic health remains resilient and stable.

The closures range from decades old retail and restaurant tenants like Radio Shack and Souplantation, to newer establishments like 800 Degrees Pizza, which each closed under different sets of circumstances.

“Whether it’s an anomaly or not is difficult to tell at this point,” said Pasadena Chamber of Commerce CEO Paul Little. “We saw a lot of closings like this when the recession hit around 2008 and it affected people that had been in business a long time and people that were new, because it was just a very difficult time. This isn’t that same situation.”

Traditional retailers are struggling and looking at how they can adapt to trends like online shopping and downsizing, according to Little.

“The mortality rate among new businesses is high and among restaurants it’s especially high,” said Little about the closure of restaurants in Pasadena.

“The turnover in restaurants is common, but ultimately it is a high turnover industry. If you point to a couple closures, you can point to openings as well. You’ve got national chains that tend to downsize in reaction to different consumer preferences or others that emerge as a response to a new trend,” said Pasadena’s Director of Economic Development Eric Duyshart. “I think in Pasadena we still have a very healthy restaurant sector that out performs most cities in the total amount of options and the employment that it generates.”

“On the retail side, it does reflect a broader conversation on storefront, retail and how different models are changing,” said Duyshart. “You continue to read that online sales are one big influence — with people looking online and comparing prices and either ordering online or going to certain speciality stores to find what they want.”

“There’s lots of things that are changing and I think that Pasadena’s retail sector is no different. We are going to see some of those changes over the next few years,” Duyshart added.

High lease costs makes it difficult for businesses, and particularly restaurants, to thrive and stay open in a brick and mortar fashion.

“It’s a challenge for these businesses, sometimes, to continue to operate with expensive leases,” said Duyshart.

Another trend occurring in the City is the downsizing of retailers.

“They don’t need as much space as they once used to have. Businesses have to make the tough decision to either stay and renew a lease or close,” said Duyshart.

Pasadena’s occupancy rate for storefront retail remains healthy.

Occupancy rate for ground floor retail is between two and six percent statewide, with Pasadena sitting in the middle around 4 percent, according to Duyshart.

Pasadena’s reputation as a destination city for shopping and leisure is a characteristic that works in the local economy’s favor during a time of frequent store closures.

“Pasadena has benefitted from having several types of independent retailers and businesses that provide a nice supplement to the national retailers that you might find in other cities. We’re always sad to see those go and we work hard to to at least attract ones that are looking for more dynamic cities to be located in,” said Duyshart.

According to a report issued earlier this year by the the Los Angeles County Economic Development Corp., job growth is on the rise and unemployment is at its lowest point since 2007 county-wide.

L.A. County’s unemployment shrunk to 5.1 percent last year, according to the report, with Pasadena’s unemployment rate even lower at a healthy 4.2 percent.

Buying trends show that shoppers, foodies and locals in Pasadena are more interested in investing in the social experience of what Pasadena has to offer rather than finding the cheapest options, according to Duyshart.

“The experience is becoming more important for shoppers. We align well with some of the trends in retail where it’s an experiential type of connection with the business district that future consumers and millennials want to have,” explained Duyshart.

“It’s a plus on the horizon. People don’t just want to buy on the internet — they want to go out and enjoy afternoon and weekend shopping and that’s where Pasadena has a leg up.”