A better year for business? Fingers crossed as Sonoma County leaders offer ‘22 insights

Welcome 2022, and here’s praying for an economic reboot.

That’s the general sense from local business leaders, merchants and entrepreneurs who are hopeful their growth plans for the new year are able to relaunch after almost 24 months of being bridled by COVID-19.

There remains optimism despite the lingering challenges of a tight labor market, which is compounded by a lack of affordable housing, along with the effects of climate change that have contributed to wildfires of past years.

But many front-line business owners also see opportunities with more residents and visitors coming to the region and the continued popularity of the products made here.

To gauge local sentiment, The Press Democrat asked a few Sonoma County business and economic development leaders for their outlook for 2022. Their answers have been edited for brevity and clarity.

Mercedes Hernandez, owner of the popular Bow N Arrow Clothing in Cotati and the recently opened Holee Vintage in Santa Rosa.

Q: What is the biggest obstacle that limits the growth of your small business?

A: A challenge that can affect the growth of the business would be marketing, specifically digital marketing. Digital marketing, such as social media, is constantly evolving, which makes it hard to keep up with the latest features and algorithms.

Q: What more should be done to make downtown Santa Rosa more of a visitor destination?

A: The downtown area seemed to experience a decline in visitors when parking was no longer free and when the square was developed. The city has started to utilize the square for special community events, which has drawn traffic to the area and the surrounding businesses. As long as that continues, it will continue to draw visitors to the downtown area.

Q: What more types of brick-and-mortar businesses would you like to see open in the county?

A: It would be amazing to see more creative, social bars in the downtown area that stay open late. A place that provides an experience where you can grab a drink with friends.

Rick Tigner, chief executive officer of Jackson Family Wines of Santa Rosa.

Q: What are you keeping you eye on in the new year?

A: I'm actually very excited that the restaurant community is coming back. The amount of growth we've had in the last six months with restaurants as they've reopened… it gives me hope. It just reinforces how strong I think the wine market is. I think demand is high for people to have a good time with family and friends, and wine consumption in restaurants is going to continue to grow.

Q: Growth in digital wine ordering continued through 2021. What are you doing at Jackson Family Wines to position the company for more of those purchases?

A: The consumer is buying wine online. That is exciting. We’re investing in consumer-facing activities. We have a whole team of folks that just call on people like Instacart and Drizzly, those people who have a retail web business. We have our own website yourwinestore.com that we didn’t have 20 months ago, and you can go to one site and buy wine from all of our wineries. We’re using that platform to find new consumers. Digital wine sales are probably 1% of our sales. It’s probably 25% of our profit, give or take.

Q: That lucrative?

A: The investment you see in companies in the next few years or several years will be to improve their position in the digital space.

David Rendino, a broker with RE/MAX Marketplace in Cotati.

Q: Will housing inventory remain low next year? What factors could bring more homes to market, or keep supply constrained?

A: The secret is out in that Sonoma County offers some of the best quality of life in the greater Bay Area. There also continues to be a significant lack of new construction to sustain the migration from the South and East Bay. Skyrocketing building supply costs, coupled with labor shortages, all but guarantee that demand will remain high on existing inventory in 2022. Many of the more than 6,000 homes lost during the recent fires were never rebuilt, while some wealthy homeowners have opted to build mega homes on two or three lots. These factors provide a perfect storm of low inventory. In my view, only an unlikely significant market change event will increase the supply above the demand.

Q: Will the market for vacation and second homes continue to stay hot?

Many mom-and-pop investors continue to sell their (small) unit properties because of the inability to navigate state and local rent-control and eviction ordinances. Many small investors have lost rental income during the pandemic and have instead opted to exchange into vacation rentals, which are not subject to the same types of restrictions. I expect to see this trend continue in 2022.

Ethan Brown, interim executive director for the Sonoma County Economic Development Board.

Q: What are the biggest obstacles remaining for a full economic recovery from COVID-19? Are there certain sectors that are still lagging?

A: In a word, uncertainty. With another new COVID-19 variant emerging, businesses may see varied effects as consumers shift behavior once again. This is especially true in the heavily impacted hospitality sector and is compounded by the onset of winter. Another concern is continued hiring difficulties. Businesses cannot get back to 100% if they can only staff to 50% or less of what they need. In some cases we are definitely seeing that consumer demand is strong, but the capacity just is not there.

Q: Do you foresee any improvement in affordable housing so more workers will be able to live in Sonoma County?

A: We are seeing great strides in efforts among local cities to spur infill housing projects where they are needed most ―close to jobs, transportation and services. The county is also very fortunate to have several collaborative approaches; the Renewal Enterprise District, Generation H, Burbank Housing that are collectively working to leverage innovative financing methods, streamlining permitting, and educating the public on the critical need for all types of housing. Taken together, these are all positive developments on the housing front, and there is definitely reason to be optimistic.

Q: What industries do you think are poised for good growth in 2022?

A: The hotel tax growth from 2020 to 2021 was nearly 300%, so I would definitely say we can expect to see continued growth in the tourism and hospitality sector, though workforce constraints may continue to play a role there. Durable and nondurable goods manufacturing is always a great opportunity for economic growth in this county because it brings economic activity from outside the county, and in many cases, the jobs are generally well-paid with above-average benefits.

Skip Brand, owner of the Healdsburg Running Co. store.

Q: Are you more optimistic heading into 2022?

A: We're definitely more optimistic. Many people who were probably inside and not doing a lot early during the pandemic are a little bit tired of it. They are at least out walking and running. That definitely helps. People have a lot more puppies. I think we're very optimistic. We obviously have to make sure we get product.

Q: Will supply chain issues linger in the new year?

A: We were more challenged in the fourth quarter as we had to sell what we could get. You can’t special order a lot. That’s pretty hurtful for us as we make up our sales for selling new (hard-to-get and specialty) brands. We have done a lot more selling of local goods and local clothing. The supply chain is holding me up, so I have to pivot.

Q: Healdsburg suffered a decline in tourism in 2020 because of COVID-19, though visitors have returned over this past year. How has the town grappled with all the changes, and what has been the effect?

A: It’s changed. A local business used to be open seven days a week. If you were open four or five days a week, you were a tourist business. And now many of those local businesses are closed on a Monday and Tuesday. We think sadly that it may get worse in January and February. We just learned as locals to go down to Windsor or Santa Rosa on our Monday and Tuesdays. There’s also not a lot of staff. So, a lot of those restaurants are choosing to close on a Monday or Tuesday because they don’t have enough staff.

Q: What are the other ramifications of a lack of workers?

A: I think you are going to have to go a lot farther to find staff. It’s workforce housing. We haven’t decided if we want apartment housing for up to 500 people. I don’t know why we haven’t done it. There are people who want to build it. But we just haven’t done it. If you have demand and you can’t capitalize on it, that’s terrible.

Peter Rumble, chief executive officer of the Santa Rosa Metro Chamber of Commerce.

Q: What do you envision for the future of downtown redevelopment in 2022?

A: I think 2022 has great potential for the community to see real progress on promises made for redevelopment and revitalization. Housing projects are in construction now on Fourth Street across from Cancer Survivors Park and in Railroad Square, which should open in the coming year. Additional housing projects, like the project at 1 Santa Rosa Avenue and the Cornerstone project on Mendocino Avenue, continue to move forward in the planning process and could break ground in 2022. There are some interesting retailers starting to open on Fourth Street and around downtown that will bring a new demographic to shop and play.

Q: How crucial is housing in the effort?

A: Without housing downtown, it is simply foolish to hope for any kind of redevelopment or revitalization. All the critiques that people may have of downtown currently would be addressed in significant ways with more housing. Issues arising from homelessness would reduce as more positive use pushes out negative activity. Retail, restaurants, music, arts and other businesses have a baseline stream of regular customers since people tend to shop in their neighborhoods. This kind of activity makes it more attractive for additional investment and for businesses to locate in downtown.

Q: What types of businesses would you like to see more of in the downtown corridor to bring diversity?

A: We have some new and interesting retailers coming in to downtown now, and I hope that trend continues. More arts, music, and entertainment options are starting to pop up that I hope will continue to grow and thrive. More than the type of business, what we want to see at the Chamber is that our store fronts are filled, interesting and active.

Staff Writer Ethan Varian contributed to this story. You can reach Staff Writer Bill Swindell at 707-521-5233 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.