There is no single formula for how local companies can succeed amidst economic uncertainty, but many Los Gatos business owners point to a common theme that keeps their doors open: the niche, whether of business format, or product category.
Online shopping continues to reshape consumer habits as Americans compare prices digitally and order merchandise without leaving the house. And so, California retail businesses are facing some of the highest operating costs in the US without any statewide commercial rent control.
Though Los Gatos sits as an affluent pinnacle of Silicon Valley, business owners are not immune to the malaise that can cause the economic pressures of a dwindling downtown. While some storefronts struggle to survive rising rents and shifting market conditions, others have worked around these obstacles by pushing unique products and promoting made-to-order services.
“It’s just a really tough time to be in business,” said Mary Guercio, owner of Out of the Envelope embroidery shop. “It really is.”
Guercio told the Los Gatan she credits her success to the pride she takes in her work. “I’m doing this because I enjoy doing it,” she said. “I’m very fortunate that I don’t have to worry about putting food on the table. But, I’m the exception and not the rule.” Guercio worked as she spoke, using a heat press to customize an order.
The Butter Paddle, a gift shop on N. Santa Cruz Ave that raises money for children and families in Santa Clara County, has a unique style of operation that keeps its doors open. Marketing Chair Lora Knol explained that their entire staff are volunteers, lessening any labor-cost strains. Though rent is “challenging,” Knol expressed that Los Gatos still has a vibrant downtown, which she said allows them to “—kind of set ourselves apart from other retailers.”
Tariffs on goods resulted in restructured sourcing: they placed more importance on local products. “We try to bring in more local vendors and American-made brands and other things you won’t find in other retail establishments,” she said.
Not all businesses, however, have been able to keep the lights on.
Effective May 11, the Los Gatos location of See’s Candies permanently closed. That left an empty storefront in the Los Gatos Village Square. The Los Gatos Town Facebook announced the closure on May 7, sharing a quoted message, “‘The rent increased and headquarters is closing the location, and laying off the entire staff.’” The neighboring location in Capitola declined to talk. See’s Candies corporate office was contacted for comment, but did not respond by press time.
“The stores that are closing up, they can’t compete with online, because online doesn’t have any overhead, essentially,” Guercio said. With digital businesses not having to cough up rent money each month, the competition between in-person and digital ordering may be unsustainable for storefronts, particularly retail.
This sentiment was shared by the owner of JEN Statement Jewelry. Going on its third year with new ownership, the gallery-designed location in Los Gatos attributes its success to their unique made-to-order approach, as well as its elegant showroom (cutting out competition with “loss-leading corporations” online).
(Obadiah Casperson / Los Gatan)
The See’s Candies closure is one example of a theme mirrored by other Los Gatos business owners: rising rent prices. This local case is mirrored in regional data. According to a 2025 Cushman and Wakefield report, Silicon Valley retail vacancy rose to 5.2% while more space was vacated than leased. Average rent for commercial real estate in Los Gatos is $46.99 per square foot according to Commercial Cafe, which reflects an overall high-cost market. The real estate broker for the vacant C.B. Hannegan’s Irish Pub, Mark Millen, expressed the “Covid hangover” as a key factor for business struggles.
Hannegan’s doors closed in 2017 and has collected dust since. Millen explained that if it were not for Covid, there would not be “any doubt that that building would be occupied and operating today.” This “hangover,” as he described it, has lowered the “appetite for risk” for local business owners. His perspective is that statewide regulations and changing consumer habits—such as younger people drinking less and therefore not stimulating bar and restaurant revenue—have had bigger negative effects compared to difficulties from landlords or Town bureaucracy.
Millen expressed overall optimism for the health of Los Gatos businesses, citing the inclusion of different types of commerce and a gradual improvement over the past five years. “Things continue to improve every quarter and every year,” he said, adding he believes the community is “doing a pretty good job with its mix of different types of restaurants and retail.”
Whether from shifting markets or evolving consumer habits, the Los Gatos business landscape has changed significantly since 2020. Many business owners agree that standing out is becoming more important. Though closures and vacancies test the community’s economic mettle, in many ways, the local commercial sector continues to buck negative trends. “Los Gatos is still one of the most wonderful communities I’ve ever been to—and certainly one of the best I’ve ever lived in,” said Millen.
