An empty shell occupies 9,500 addresses across the Sacramento region – one closed business for every six still open, according to a Bee analysis of U.S. Postal Service data.

That's more dormant businesses than in 17 entire states, including Utah, Arkansas and New Mexico.

You can see it on Madison Avenue in Fair Oaks, where Mike Castagnola is liquidating his party supply store, counting down the final days on a business with a 30-year run.

It's just as apparent on Lake Tahoe Boulevard, the main strip cutting through South Lake Tahoe, where James Dalton counts five vacant businesses within sight of his antiques shop – and plans to add his store to that number.

And it's vivid along Main Street in Woodland, where Jill Caunedo happily ran a bagel and coffee shop – until about two weeks ago.

"Thirty percent of all the businesses (on Main Street) are vacant," Caunedo said, adding that she is left to sell her former cafe's equipment for a quarter on the dollar.

A glut of empty businesses means less sales tax revenue for the four-county region, fewer jobs, fewer shopping options, less commercial construction, plenty of thwarted dreams.

It also makes for depressing scenes during the morning commute: the empty Hollywood Video, for instance, near Folsom Boulevard and Howe Avenue, with its large red sign fruitlessly offering "New DVDs for Sale"; the health store just down the road surrounded by vacant storefronts and halfheartedly removed gang graffiti.

No California county has a higher proportion of shuttered businesses than Sacramento, according to the data. Placer County ranks third.

As of September, the number of dormant addresses in Sacramento, Yolo, Placer and El Dorado counties had jumped more than 50 percent during the recession, according to the postal service data, which logs formerly occupied commercial addresses – office and retail – where mail has not been picked up for more than 90 days.

There is some hope. Besides a nebulous optimism that the economy may have bottomed out, commercial rents have fallen sharply as supply exceeds demand. Entrepreneurs with cash can get a deal and jump-start a new business.

But cautious and troubled banks aren't granting many loans to launch enterprises. Many businesses and offices are stuck with rents they can't afford, while relocation costs keep them from moving. And consumers and companies have changed their spending patterns, growing accustomed to smaller offices and brown-bag lunches.

"Retail's pretty much been the hardest hit," said Garrick Brown, research director for the Sacramento office of real estate firm Colliers International. "The pool of new businesses is gone … and small business lending has fallen off the cliff."

Collateral damage

Behind all of these vacant businesses are thousands of small, personal decisions, most of them justifiable – even necessary – in a sour economy.

In Woodland, for instance, "People just gave up their once-a-week coffee," said Caunedo, the entrepreneur who ran Bagel City until its recent closing.

Besides selling coffee and bagels from her Main Street shop, Caunedo relied heavily on catering. Her biggest customers were the city of Woodland, the local school district and nearby University of California, Davis.

Each of those public institutions shut the spigot amid budget woes. Caunedo doesn't blame them: How can you justify serving quality bagels, for instance, at a meeting about whether to lay off teachers?

"In January 2008, all the catering just came to a screeching halt," Caunedo said.

So Caunedo started laying off workers herself, going from seven to two. Many of her neighbors succumbed alongside her.

Just down the street from Caunedo's cafe is the center of downtown Woodland, a quaint jewel of the Sacramento region, walkable and charming. But the shops there tend to sell art and antiques, not diapers and medicine, so the recession hit them hard. On just a half block of Main Street, for example, the body count of empty addresses is daunting – Nos. 503, 505, 507, 509, 511, 514, 516, 517, 518, 519, 535, all vacant.

"The mom-and-pop sector has just been decimated," said Brown, the research director.

Looking for aid

As it became increasingly difficult for Caunedo to pay her bills, she wondered if a loan or some other financial assistance could bridge the gap.

The folks at her local small business development center helped her search, she said, but these days, "small business loans are nearly impossible to get."

The credit crunch is the main culprit. Banks dealing with a wave of commercial foreclosures are hesitant to push new cash – and risk – into the market.

Mike Castagnola is a victim of the phenomenon, too. A former firefighter who runs Party Station – a party supply and rental operation in Fair Oaks – Castagnola wants to retire and sell his shop.

Castagnola got two offers from serious buyers – and both were turned down by banks when they sought a loan to take over the business.

"It's very viable," he said of his shop. "But there is no money to lend. It's a shame."

As a result, there are deals a-plenty at Party Station. Castagnola is selling everything and laying off his three full-time employees. Party Station will close for good March 1.

A volatile market

With loans hard to come by and business still lagging, many entrepreneurs are hoping the disease is also a cure.

The market is so flooded with vacant space, it's become far easier to find a good deal. That means a lot of businesses can stay afloat by moving into cheaper space – assuming they can get out of their leases.

It's a trend that has touched off a strange game of musical chairs, said Rod Meskell, who runs a medical supply shop on Folsom Boulevard. Landlords are struggling, so they try to keep rents stable – or even raise them – for businesses already located in their shopping centers. That pushes businesses into the open arms of hungry landlords offering cheap rent in a bid to fill vacant space across the street.

Meskell's neighbor just moved his motorcycle shop to different digs, and now a fitness center is about to open its doors in the vacated space.

"The landlords need money, too," explains Meskell.

Taking advantage of the situation are entrepreneurs like Jua Moore, who is helping start a soul food restaurant called Holy Chicken and Waffles at a Folsom Boulevard shopping center. Because vacancies abound, Moore said his landlord offered his operation half a year in free rent.

"It's a really good opportunity, a really good deal," said Moore, who will cook at the restaurant.

All of which is great for those with seed money to get set up at a new location. But struggling businesses lack such capital and so are tied to their current space, already customized for their business.

That was another of Caunedo's problems: She found more affordable rent at a vacant spot near her store, but it would have cost more than $50,000 to set up a new retail space.

Left behind

Vacancies breed vacancies. James Dalton sees it every day at his South Lake Tahoe Antique and Thrift Company. Nearby shuttered stores depress business for those like him who are left behind.

About 100 people once came into Dalton's shop daily; now, he might see a dozen.

"I have a family to support," he said. "I've been biting my fingernails so long that they're bloody."

Dalton has been working seven days a week, he said, because he can't afford help. But, even though he wants to hang on, he will close his shop soon and try his luck in Oregon.

Ninety miles down Highway 50, Steve Nguyen is running a fish supply store in a half-abandoned strip center off Folsom Boulevard. He's right next to a vacant storefront, and there's another one two doors down.

Nguyen's been in charge of Marvel Aquarium for three months, helping others learn about the hobby he loves – though he wasn't helping anyone on a recent Friday afternoon. Customers were scarce.

Asked if the nearby vacancies affect his business, Nguyen said he wasn't sure. Since he took over, he said, this has been the status quo.

Looking ahead

Empty stores and offices will plague Sacramento for years, said Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific.

The region overbuilt commercial space during the housing boom – a trend Michael largely blames on urban planners eager to collect sales tax revenue, given the way California government is financed.

The glut could attract new businesses taking advantage of low rents. Woodland commercial real estate broker Wally Sheffield, for example, said he's placed five tenants in downtown Woodland spaces during the last few months, and thinks the tide is turning.

But there's not enough cash available to launch enough businesses to make more than a dent in vacant properties, Michael said. Nor, in an era of scaling back, do local residents and companies feel flush enough to sustain a low commercial vacancy rate.

"The region is not going to spend its way out of the recession," Michael said. "We're anticipating very slow growth."

In fact, he said, the commercial real estate market in Sacramento isn't even as healthy as the housing market, which has been ailing for years.

Caunedo, the former cafe owner, tries to remain upbeat, but she also sees little reason for optimism. This recession, she said, changed people, made them realize they could do without things like professionally prepared lox slices and mocha lattes.

"Everyone," she said, "is perfectly content with getting by with less."

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