Landlords often get blamed for the store and office vacancies in downtown Napa.

Why aren’t they lowering rents to prevent established businesses from shutting their doors? Why aren’t they working harder to sign up the stores that locals want?

And in the case of downtown’s largest property owner, the Altamura family, why the seeming willingness to sit on half-empty holdings year after year?

Landlords can give you an earful. They say no one is working harder to get through this slump than they.

And what a slump it is. Retail vacancies are up. Rents are down. Commercial buildings are losing value.

“I think landlords have been wondering if their phones have been disconnected,” said Rebecca Lee, who for the past 10 years has owned the half block on the east side of Main Street from Pearl Street to Napa Creek.

Lee has been trying to fill two vacancies, one of a year’s duration, in her landmark stone buildings with frustrating results. “It’s not that people don’t have ideas about what they want to do, but when they go to their banker, they have handcuffs put on,” she said.

Of necessity, she has lowered rents to keep existing tenants. “It’s share the pain, I guess. I’d rather have rates lowered than shut the door,” she said.

When it comes to attracting new retailers, the amount of the rent “doesn’t make any difference,” Lee said.

Despite offering creative ways to make her spaces more affordable, start-ups can’t get financing in today’s economy, she said.

Jeff Doran, owner of several downtown properties, is trying to lease 12,000 square feet on the first floor of the new Avia hotel, with only a few nibbles to show for his efforts.

He’s put out dozens of feelers to national retailers who would be a good fit for Napa. “Today they don’t even call you back,” Doran said.

When it comes to lowering asking rents and offering to help pay for tenant improvements, “let’s just say I’ve become more enlightened,” he said.

At the new Main Street West building at Main and Clinton streets, home to offices and two restaurants, flexibility is the new byword.

“When we see the right tenant, we do what we have to do to make our building the right choice for them,” Scot Hunter, managing partner, said. “We work with them on buildout and that sort of thing.”

In this renters’ market, the value of landlord inducements “depends on how important the tenant is to us,” said Harry Price, a partner in CDI, which built Napa Square on First Street.

This aggressive approach resulted in Napa Square landing two new restaurants — one a second venture by the owners of Azzurro Pizzeria, the other a start-up.

Cathy Holmes, a commercial agent with Coldwell Banker Brokers of the Valley, estimated that downtown rents have dropped an average of 20 percent.

Even so, regional and national retail chains aren’t biting.

Hit hard by the recession, name retailers are more commonly thinking about closing stores, not opening in new markets, she said.

Gary Van Dam, a commercial agent with Strong & Hayden, agreed that the retail recession had shaken up rents, making landlords willing to do deals. “You want to keep your tenants in place and keep them happy,” he said.

“The times we’re in are tough for everybody, everybody,” said Michael DeSimoni Sr., whose family company, Channel Properties, completed the $72 million Riverfront mixed-use development last spring.

Channel signed up three high-profile restaurants last summer, but finding stores for surrounding retail spaces has been a slog.

Given the elegance of his development, “We can’t just put anybody in there. We’re pretty particular,” he said.

The market for “formula retailing” has dried up, said Craig Semmelmeyer, the Riverfront’s leasing agent. The Riverfront is finishing off four store spaces with the hope that some creative independents can be found, he said.

A rock and a hard place

The deep recession in retailing and the drying up of development money is having an effect on the Altamura family, downtown’s largest owner of commercial property. Their holdings include Napa Town Center, the Merrill’s and Gordon buildings on First Street, a scattering of other properties and a new acquisition, the former Pacific National Bank building at 1300 First St.

During the boom years, the Altamuras had been waiting to sell property to developers willing to pay top dollar.

Not now.

The Altamuras announced last summer that they would try harder to lease their many vacancies, deferring redevelopment dreams until another time.

The family retained a new commercial real estate firm, Strong & Hayden, with the mission of filling 50,000 square feet.

The family will be more flexible in negotiating leases and may even invest in a new facade for Napa Town Center, which is nearly a quarter-century old, George Altamura Jr. said.

This is a terrible time to find retail tenants, Altamura said. “The moms and pops can’t lease a lot of square footage. The nationals — they’re shutting stores. I think we’re in a little bit of a rock and hard place.”

In these times, the asking rents downtown aren’t the stumbling block, Altamura said. “If tenants can’t get money to stock their store, does it really matter what we change in rent?”

Since the leasing effort began, Napa Town Center has gained an art gallery, but lost two restaurants, Piccolino’s and Christopher’s.

Altamura said he had made accommodations to keep them going, but they weren’t enough.

“Nine out of 10 people just don’t know the relationship between tenants and landlords and what led to that tenant going out of business,” Altamura said.

And that’s as much as he will say about the two restaurants. “We won’t burn a tenant,” he said.

Given the national depression in retailing, Altamura said he is skeptical that Napa Town Center will be able to attract any significant new stores for at least a year.

Applying a new “European” look to the center’s facade may pay long-term benefits, he said.

But in the short term, this upgrade may turn to be more of a “feel-good thing for the people of Napa,” he said.

Steve Carlin, owner of Oxbow Public Market, said the recession, combined with ongoing flood control project work, had forced him to be more flexible when shop leases come up for renewal.

“I’ve been creative about extensions,” he said. “Every lease is making sure every tenant can survive and thrive. I have to be as creative as I can be without giving away the space.”

Lending hands tied

Bankers agree that these are hard times for small operators to open a boutique or specialty store. Unless a loan applicant has a track record or enormous collateral, getting a loan can be impossible.

“We’re not seeing anybody coming through the door,” said Dennis Pedisich, president and CEO of the Napa Community Bank. “Maybe they know they wouldn’t qualify.”

The credit squeeze can bring down even established businesses if they run into trouble, Pedisich said. “If a business isn’t profitable, the banks’ hands are tied by regulators” when it comes to loaning more money, he said.

“Businesses that have been around for years and years are failing, again through no fault of their own. It’s a perfect storm,” said Pedisich, citing the stresses on banking and retailing.

“Financing is more difficult than we’ll ever read about,” Charlie Monahan, interim director of Napa Valley College’s Small Business Development Center, said.

Businesses were weakened when sales plunged in the last quarter of 2008, then recovered feebly in 2009, Monahan said. “Now they’re much more cash-strapped to make it to next season. We’re seeing it over and over again.”

Historically, start-up retailers borrowed on their homes, but the crisis in the housing market has eroded values, shrinking this source of financing, Brian Kelly, president and CEO of the Charter Oak Bank, said.

Rather than make new loans, banks are spending considerable time counseling existing businesses on how to avoid default, Kelly said.

To help businesses with cash flow, Charter Oak allows them to skip interest and principal payments in December.

Napa County Assessor John Tuteur is expecting owners of new downtown developments and recent buyers of older properties to seek lower assessments to reduce their property taxes, something Tuteur has granted to thousands of homeowners.

Property values downtown have dropped 10 percent to 40 percent since 2002, reflecting higher vacancies and lower rents, Tuteur said. “I’m sure we’re going to reduce values,” he said.

“I think the residential market has stopped its steep decline,” Tuteur said.

That’s not the case with the commercial and industrial sectors. “They’re still going down,” he said.