As two iconic Santa Cruz Avenue spots attain remaining chapter, others open | Los Gatan

Margaret Smith, a Los Gatos resident who recently ran for Town Council and helped establish the Silicon Valley Chapter of the National Association of Women Business Owners (NAWBO), was sad to hear that Rural Supply, the Los Gatos’ Ace Hardware location on Santa Cruz Avenue, will be closing.

She can’t count how many times she’s shopped there—including taking her grandchildren to see the live baby chickens during the Easter season.

“Those are memories that we’re building for our children and our grandchildren,” she said, characterizing this as a unique experience of the town’s retail environment. “There’s something very special about Los Gatos.”

Santa Cruz Avenue is undergoing a bit of a shuffle, as iconic businesses shutter and others open.

While Rural Supply knocks prices down by 25%—nearly across the board—in preparation for their end-of-November finale, and the Palms Restaurant has suddenly closed, new shops are trying their luck along the critical corridor.

Smith, who once owned a key anchor store—Domus, a popular home goods retailer in Old Town—is reviving the concept in the former location of the old Pharmaca space at 54 N. Santa Cruz Ave.

It all started with outreach from the property owner, Ed Stahl, the globetrotting Travel Advisors businessman.

“I had like no thought whatsoever of reopening Domus,” Smith said. “My very wonderful landlord, Ed Stahl, who owns Travel Advisors sent me an email asking me to have coffee with him.”

They’re both in Rotary together, so she was prepared to field a request to participate in a service project.

Instead, he told her he’d surveyed a number of people about what they’d like to see in his empty storefront.

“A hundred percent of the people mentioned Domus,” he told her.

“Really?” she replied. “Ed, it’s not even on my wavelength to even think about Domus again.”

Margaret SmithMargaret Smith
Margaret Smith. (File photo by Drew Penner)

After all, Domus hadn’t had the happiest of endings.

She was forced out of the business when her landlord effectively wanted to double rents and she couldn’t find a large enough retail space anywhere in Los Gatos—even with all the people who tried to help her sort something out.

“I’d really like it to be on your wavelength,” Stahl pressed. “I’d really like you to be the business in that space.”

Smith wasn’t so sure.

Over the years she’s served on Planning Commission and as the national president of NAWBO, which involved trade missions to various states and foreign locales.

And in her run for Council her passion for preserving the classic look and feel of Los Gatos rang through.

But reopening a business that she’d put out of her mind so many years ago?

Was this really the right time and place for such a major life move?

It’s something she thought about upon multiple tours of her potential new business home.

Then, one day, she was walking downtown late at night, and she headed toward the location.

“It was very empty down here,” she said, recalling the thought that just kept nagging at her. “How will I feel if some other retailer goes into this space?”

Ethos Los GatosEthos Los Gatos
Meredith Keet, founder of Ethos, which opened a Los Gatos location earlier this year. (Drew Penner / Los Gatan)

She didn’t want to see something pop up that didn’t feel right for Los Gatos.

“That was the deciding factor,” she said. “I just wanted to provide a really good retail store in the downtown that people wanted.”

There’s been some positive news emerging from Los Gatos in the wake of the pandemic—from the completion of parklets that are the envy of the entire Bay Area, to the March expansion of Capitola business Ethos to North Santa Cruz Avenue, and “Elvis” serenading the launch of Drywalk Salon, just a little farther down the street.

But there’s been plenty of unwelcome news, too.

It began with the mixed-use project pre-application for the US Post Office site. While pro-housing advocates were excited to see a proposal for 72 condos, of which 20% would be affordably-priced, it sent a contingent of others into an uproar about the drawings featuring a five-story building for 101 S. Santa Cruz Ave.

Then, the Los Gatan reported that Rural Supply—directly across the street—was considering closing, after the property owner had elected to sell, after seeking higher rents that the hardware store felt was unmanageable.

On Tuesday, an owner confirmed it was the end of the road for the longstanding mom-and-pop operation.

“We’re shutting it down and we’ve got a close-out sale going on,” said co-owner Ken Nelson. “End of November we’ll be out of here.”

Rumors of a possible sale have begun swirling, but Nelson but a damper on the possibility that they’d continue on under new ownership of the property.

“We’re definitely done,” he said.

J.J. Taughinbaugh, a senior vice president with Marcus & Millichap handling the listing, said Tuesday morning no deal had “closed escrow.”

And this week, The Palms Restaurant announced it would be closing.

“After many discussions and efforts to secure the future of our beloved restaurant, it is with a heavy heart that we announce the closure of The Palms Restaurant,” read a message posted to Instagram and sent out via email. “We have engaged in extensive negotiations with our landlord in an attempt to renew our lease. Regrettably, we have been unable to come to an agreement that would allow us to continue our operations at the current location. These discussions have been exhaustive and have ultimately left us with no other viable option but to close our doors.”

The restaurant prepared around 36,000 meals during the coronavirus invasion for workers on the front lines of the pandemic.

Tony Loeffler, who was general manager at the time, helped negotiate a lease extension prior to his departure to work at the Campbell location of Flights Restaurant, his wife, Irmina Loeffler noted.

Joe Nigos Jr., chief investment officer at Sridhar Equities, Inc. said their company, which purchased Lyndon Plaza in 2021, said it wasn’t in contract to buy the building housing Rural Supply.

One of the owners of Rural Supply confirmed the store is in its last days. (Drew Penner / Los Gatan)

“We are not interested in the Palms Restaurant building either,” he said in an email Tuesday.

The Palms management thanked its patrons in its message to customers.

“The Palms has been a part of our community for many years, and we are incredibly grateful for the loyalty and patronage we have received from all of you,” read the note, which had racked-up dozens of comments on Instagram as of press time. “Your enthusiasm, your smiles, and your love for our food and service have been a constant source of inspiration for our entire team.”

Jennifer Lin, the executive director of the Los Gatos Chamber of Commerce, said demand for retail and restaurant space remains strong and vacancy levels are still pretty low.

Parkside’s opening is just around the corner, notes Chamber of Commerce Exec. Dir. Jennifer Lin. (Drew Penner / Los Gatan)

“We understand that Rural Supply and Palms each had leases with below-market rent,” she said. “With the end of their lease terms, there was the opportunity for their respective landlords to exercise their right to pursue new tenants and improve the performance of their investments. Property owners don’t usually give up long-term tenants unless demand for space is robust.”

It was the death of a spouse that spurred the sale of the Rural Supply building, she noted.

“The public doesn’t see the whole story, so it’s all too easy to jump to conclusions,” she said. “We are tremendously excited for the return of Domus, a much-beloved and locally-owned kitchen gadgets, cookware and lifestyle/gifts store. The Domus grand opening, along with that of the much-anticipated Parkside restaurant [145 W. Main St.], really demonstrate that it’s a bright time for Los Gatos.”

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