On a weekday night on Castro Street, it's hard to find a more popular spot than Bierhaus. After 4:30 p.m. or so, the downtown beer garden's patio is packed with patrons, and you can hear the sounds of clinking mugs and chatter echoing down the block.
It's surprising, given that Bierhaus' corner location at 383 Castro St. for years had the reputation of being the spot where restaurants go to die. It was once a Wienerschnitzel fast-food stand, but after that a series of eateries opened and closed in quick succession, including a sports bar, a seafood diner, a California-fusion cafe and a Turkish diner.
Despite having minimal restaurant experience, Bierhaus owner Mike Finley took over the location's lease in 2011 and managed to turn it around. It wasn't easy: his original idea for a fast-casual burger restaurant struggled to find its footing. After two years, Finley retooled his business at considerable expense with a new focus on the beer garden. Bierhaus was born, and it clicked.
Today anyone passing by, or waiting in the long line for a pint, might safely assume that business is going gangbusters.
Yes, sales are indeed good, Finley said with a bit of pride. Nevertheless, the pub owner is not optimistic about his future prospects. In less than a year, Bierhaus could be the latest small business in Mountain View to shut its doors for good, Finley said.
The Bierhaus lease expires in late 2018. In anticipation, the property owner has recently filed plans with the city to rebuild the corner site into a four-story office building. The plans call for a dense development built out to the edge of the sidewalk, with three stories of offices and a ground-floor restaurant space.
Sitting with his dog at one of pub's patio tables, Finley said the redevelopment would basically torpedo Bierhaus, ruining the spacious beer garden that his patrons love. For that matter, he expects his landlord to demand a much higher rent -- likely double what he currently pays -- to underwrite the costs of rebuilding the property. Bierhaus has an approximately 4-percent profit margin after all expenses are accounted for, Finley said. If he had to sacrifice more to earn less, it might not be worth it, he said.
"Am I going to make another 10-year investment here? At this point, I really don't know." he said. "I would love to stay here, but I don't want to be the one who shoulders all the risk."
Khoe Tran, the owner of the Bierhaus site, did not respond to the Voice's requests for comment.
By one measure, business in downtown Mountain View is great. Buoyed mainly by restaurants and bars, retail sales downtown have exploded -- jumping from $82 million in 2010 to more than $152 million in 2014, according to a new downtown economic report commissioned by city officials.
Yet only a fraction of that windfall is going into the pockets of restaurant owners. With the increase in business, the cost for leasing retail space has also ballooned, jumping more than 50 percent since 2010. Restaurant owners say they have also had to stomach other rising costs, such as utilities, food and a dwindling labor pool.
Meanwhile, over the same period, the value of office space has shot up into the stratosphere. Going rents for downtown office leases have more than doubled. This has led to a flurry of mixed-use proposals along downtown that mainly seek to maximize new office development while providing just enough retail space to provide political cover, an assurance that the city's downtown isn't becoming an office park.
In some cases, longtime business owners have warned city leaders that this rapid redevelopment will be a death sentence for their establishments. That's what happened in 2016 when city leaders approved a four-story project to replace Morocco's restaurant, despite concerns that the eatery wouldn't be provided a new location. Shortly after receiving city approvals, the landlord moved to effectively double the restaurant's monthly rent, and Morocco's owners terminated its lease and shut down.
At the time, Councilman Ken Rosenberg had opposed the Morocco's redevelopment over concerns that it would doom a popular business. It's a fine line for the government to walk, he said in an interview with the Voice. Popular businesses like Bierhaus deserve credit for building up a loyal customer following, but part of that success was surely tied to the pub's central location, he said.
"This is what a successful economy looks like: lease prices go up," Rosenberg said. "If you're the landowner, you're going to capitalize on that."
Other retail shops have also been teetering on the edge amid redevelopment plans. Last year, the City Council considered plans to transform the Cognition Cyclery storefront into a luxury hotel. Those plans were rejected by the council, but Cognition owner Taylor Kopf said his landlord could submit a different proposal to rebuild the site.
"At this point, we've been working on a backup plan if our lease doesn't get renewed," Kopf said. "In terms of of having any pull with the current building owners, I'd say I have zero. My concerns probably won't change their minds."
In recent weeks, a growing number of residents have been demanding more forceful action by city officials to preserve downtown Mountain View's charm and its array of popular shops and restaurants. These advocates have deep suspicions about developers' promises and the economic benefits of redevelopment. A grass-roots group, Livable Mountain View, has urged city leaders to oppose adding more tech offices that offer scant public appeal to downtown and create pedestrian "dead zones."
But having more tech offices centered downtown doesn't necessarily harm the city's retail shops and cafes, according to city officials. They emphasize that Castro Street's office workers have become the most loyal customers for the 264 retail businesses downtown, about half of which are bars or restaurants. Alex Andrade, the city's economic development director, points to a study published last month by the International Council of Shopping Centers that found that office workers spent $195 per week on average, mostly in the vicinity around their workplace.
"For those folks who argue that offices are causing restaurants to fail -- it's actually the opposite," Andrade said. "Our restaurants are not suffering; the offices complement our dining."
Other city officials echo similar thoughts, saying the spree of redevelopment has overall been great for downtown. Mountain View's Castro Street is the envy of other surrounding cities, and the problems it faces are largely due to its success, they say.
Finley doesn't disagree, and he counts the nearby tech workers as among his most loyal customers. But the Bierhaus owner is troubled by what he calls the "Silicon Valley mentality" that has taken hold at Mountain View's main street. Landlords downtown have been racing to squeeze as much value as possible from their properties without considering what it being jettisoned in the process, he says.
Bierhaus is downtown Mountain View's fourth highest sales-tax generator, he says. If his business is so successful, then why does he still feel pressured to close down?
"I've tried to structure Bierhaus as a community business, a social gathering place," Finley said. "But if allowed, the developers and landowners can cash out with little investment in the community."