Silicon Valley curbs e-tail invasion

San Mateo: E-tailers and retailers battle it out

By Maggie Shiels in Silicon Valley

A growing number of towns and cities in Silicon Valley in California are shunning dot.com companies that want to set up shop in their downtown areas.

Planning officials say they are concerned that the characters of their town centres are being harmed by an influx of such businesses.

As a result, up to a half a dozen councils have introduced moratoriums limiting their growth.

Several others, including San Francisco, are on the verge of giving the green light to similar ordinances.

Silicon valley office space is in short supply

It is a situation that is likely to have parallels in the UK as the internet sector takes off.

San Mateo is a city with a population of just over 90,000 which makes up part of the extremely successful Silicon Valley corridor that stretches from San Jose to San Francisco.

There, the battle being played out between internet companies and traditional retailers led the council to introduce a temporary moratorium.

Limited office space

The local business association claims the invasion of dot.com businesses into places previously occupied by retail stores was slowly killing their downtown.

The city's senior planner Ron Munekawa agrees.

"Having a healthy downtown is essential to having a vibrant community and we are committed to enhancing that activity," he said.

@TheMoment is spending thousands on its new offices

Cold hard economics is driving the dot.commers into the retail sector.

In Silicon Valley, office space is in limited supply and goes for a premium.

And in San Mateo, retail property rents for $2.50 a square foot compared to $6 a square foot for office space.

Peter Pau of Sand Hill Properties recently leased a 17,000 sq ft store to @TheMoment.com.

He is critical of the moratorium banning any internet company occupying a retail unit, believing it is against the free market and the spirit that has made Silicon Valley what it is today.

'Adding to vibrancy'

@TheMoment, a business-to-business e-commerce software company, is spending thousands refurbishing the former clothing store.

And the company's CEO, Larry Frye maintains that with 70 employees on site, it is adding to the vibrancy of the downtown area, not detracting from it.

On the other side of the equation is Shellie Kazan who fully supports the moratorium, and wishes it had been introduced earlier.

In October her landlord reneged on extending a lease for her shop, Shellie's Miniature Mania, which she had held for 25 years.

"I asked him if he got a dot.commer to move in and he said 'yeah'," she said.

"And I also asked him if he was getting more money from them than from me and he said 'yeah'."

San Mateo's moratorium will be reviewed in April.

And many in Silicon Valley say it is just a question of time before planners in the UK face the same dilemma.