The owner of a clock and watch shop says the proverbial clock is ticking for many downtown businesses.

"There aren't that many people that can pay the rent and just wonder if they'll survive," said Pat Espe, owner of A Step Back in Time. "The stores' turnover is pretty regular."

Espe's shop, at 332 Forest Ave., is more of a rarity these days, with spaces along Forest Avenue visibly empty. Just recently, the Laguna Dog Co. closed. Down the street, Green Cube, an offbeat gallery and retail store, shuttered after three years.

"The rent and overhead was just so high so we just couldn't really afford it," said Seijla Holland, a former co-owner of Green Cube.

Forest Avenue is losing its luster, said Holland's former partner and Art Cube co-owner Sanja Simidzija.

"You count on your fingers how many cool stores we have," she said. "It's looking old, from another age. It does not look 21st century."

She compared the city to artistic communities in L.A. like Venice's Abbott Kinney, and the meatpacking district in New York.

She said in order for Laguna to be competitive as an arts town, edgier stores need a way to survive.

The former Green Cube space at 264 Forest Ave., which is 1,400 square feet, is going for $11,000 month, according to loopnet.com. Two spaces are available in the Lumberyard — a 450-square-foot space for $2,227 a month and a 1,147-square-foot space for $3,383 a month.

High rent is the price you pay for being in Laguna, contends Envy boutique owner and real estate investor Chris Wood.

Even though the poor economy has affected stores, Wood doesn't think pointing fingers at landlords helps.

However, he admitted that Laguna Beach has changed.

With the attention on tourism and advent of resorts like the Montage Laguna Beach, the city has become a luxury destination for tourists, especially during festival months.

It's no longer the sleepy surfer town it was 25 years ago, he said.

Known for selling contemporary brands like Michael Stars and Ella Moss at moderate price points, Wood said he's learned to appreciate diversity, depending on locals and international clients to make a profit.

"Profit margin in retail is not that great," said Wood, who thinks that some shopkeepers might have unrealistic expectations.

Councilman Kelly Boyd knows the issue well. He recently handed over the iconic Marine Room Tavern to Chris Keller after he decided he couldn't do it financially.

During his time as mayor, he encouraged landlords to work with tenants.

"Some responded nicely and some didn't," he said. "These people have to get through a tough time and they need to work with them and readjust their rents."

Boyd said he's noticed properties empty for as long as nine months.

Espe, 60, agrees. For the first time in two years, he has seen shop spaces empty for long stretches. Shops have become dependent on the tourist season, when much of the sales go to the festivals. He wishes downtown shops would get more attention in the way of a new parking garage downtown and improved pedestrian areas.

Not a lot of people buy watches and clocks during a recession, Espe said, but his customer service and repair business have helped keep his store ticking along for nearly half a century.

He recalls a time when fellow shopkeepers would keep an eye out for each other and refer services. But now, competition has taken over, he said.

"I have seen the village change a lot in 40 years, unfortunately for the worse," he said. "It's not the warm, cozy Laguna it used to be."

Joanna.clay@latimes.com

Twitter: @joannaclay