As recently as two years ago, Skid Row businesses and that area’s homeless population existed within their own worlds, side by side but separately. It was tolerable, considering the circumstances.

But since then, the situation for business owners has worsened greatly. Theft, intimidation, drug use and prostitution appear to have risen sharply, according to several local business operators.

Owners say threatening activities now happen outside their businesses all the time – on the streets, the sidewalks and inside the tents that now stay up all day, leaning against the sides of their buildings. Increasingly, they say, incidents have happened in parking lots and even in offices, too, throughout much of Skid Row, a 50-block area just east of downtown L.A.’s central business district.

“It’s definitely more dangerous than ever before,” said Yaron Tarashandegan, owner of Advanced Knitting Mills in Skid Row. “There are tents – you can’t walk on the sidewalk, you have to walk on the street. There is a lot of trash and it smells really bad. There are needles on the sidewalks. We pour bleach on the sidewalk around the perimeters at least every other day.”

Tarashandegan had to deal with an incident two years ago when a homeless man intending to steal wooden pallets from his parking lot sued him after cutting himself climbing over the barbed wire atop Tarashandegan’s 12-foot-high fence.

Tarashandegan’s insurance company paid the man and his lawyer about $13,000 to avoid heftier legal bills.

As a result of the worsening conditions, entrepreneurs such as Tarashandegan complain that they can’t get employees to stay. Then they can’t hire new ones.

Particularly frustrating to the business owners is seeing nearby areas that were once nearly as gritty in the full throes of revitalization. Rents in parts of the Arts District and South Park are now as high as some of the glitzier Westside ZIP codes.

In fact, Tarashandegan’s fear of missing out on downtown’s boom is what motivated him to buy property and build a warehouse in 2010 – in what happened to be Skid Row. Now he can’t attract tenants – while landlords just blocks away keep raising rents.

Many owners have histories in Skid Row and now run the businesses their parents started in better times. While the neighborhood has been the epicenter of L.A.’s homeless community for decades, they say its population historically tended to respect the laws and not interfere as much with local businesses.

Stuck in place

Many owners including Tarashandegan say they are trapped, unable to move to safer locations. Moving would mean a big additional expense that would have to be covered by renting or selling those properties, but the situation makes it difficult to get tenants who could pay enough rent that would justify such a move.

Video-game distributor Game Source Inc. faced that problem about five years ago. Its location at Towne Avenue and Fifth Street, where drug use and sex occurred frequently in tents flanking the building, began to make it hard for the company to retain its 90 employees, said Vice President Eleanor Ahdoot. Just before it moved, there was a shooting right outside the building while employees were working. A Google Maps photo taken in March shows the nearly windowless triangular structure with tents pitched on both sides of the building.

Game Source decided to move to L.A.’s Pico-Robertson area because it needed to expand but was unable to hire an accountant, sales people and administrative assistant it needed. Qualified candidates would simply not come in for interviews, she said, and the company even began to discourage customers from coming to pick up their merchandise in person.

“We would place ads and get calls, and people would drive up and see the situation and no one showed up for interviews,” she said. “The business needed to grow. It was imperative.”

The family that owns the building rents it out, but it has trouble finding and then keeping tenants as the neighborhood continues to deteriorate.

Tarashandegan can relate. He’s losing a tenant in February in a building he owns at Towne near Fifth. The property, built in 2010, is now also surrounded by tent encampments. His broker told him he’ll probably get only 50 cents a square foot – if it rents at all, he said. Meanwhile, average rents for industrial properties in adjacent tracts of downtown were 62 cents a square foot in the third quarter, according to research from Chicago brokerage Jones Lang LaSalle Inc.

“I’ve put it on the market and people just pass by it and see what’s going on and keep driving,” he said. “My real estate broker makes calls and people say thanks but no thanks.”

New stresses

Downtown Commissary, which houses food vending carts when they are off-duty, has been at its location on Crocker Street between Sixth and San Pedro streets since 1998. Mona Alamezadeh, the general manager, said the situation outside her building has worsened over the past two years as younger, bolder and more aggressive people are confronting business owners.

Every day now, she said that homeless people enter her warehouse to take water or items from canisters that they plan to sell, or they steal equipment. One person has begun using the interior as a bathroom. About one month ago, a homeless man pushed her father down after he asked the man to get up from lying in the street.

“It’s a different category of people now – a much younger crowd, people who appear to be released out of jail; and there’s prostitution and psychiatric issues,” Alamezadeh said. “We have to go to work with our eyes closed and pray that we’re not going to get hurt.”

In Los Angeles County, the homeless population has swelled 12 percent since 2013 to about 44,350, according to the Los Angeles Homeless Services Authority, and the number of tents, makeshift shelters, and vehicles has increased 85 percent.

Citywide, the population has climbed 16 percent. And In Skid Row, the homeless community is about 2,000, according to Raquel Beard, executive director of the Central City East Association, which administers two business improvement districts covering most of Skid Row. About 600 businesses and 489 property owners belong to the association.

Beard said criminal incidents and drug activity have escalated and blames new laws, including Proposition 47 that passed in November of last year,  that have lessened certain drug possession crimes to misdemeanors so users in Skid Row care less about being arrested. The reversal of another law allows tents to stay up all day, creating more or less permanent encampments.

“There’s a constant inflow of younger people coming into the area who are drug addicted and there’s no way to stop it,” she said. “They’re homeless as a result of their addiction.”

Employees and business owners are feeling the impact of these legal changes. Those inside the tents feel emboldened, Beard said, and they now confront and, in some cases, attack her staff, business owners and anyone who tries to disturb them. Her own employees have been punched, choked and even bitten asking people to move tents off of private property. After homeless people regularly entered the office of a toy company and threatened employees, the business moved.

“She was terrified and her employees were terrified,” Beard said. “Skid Row has its own set of laws and rules and regulations – which means none. Anything goes.”

Some of Tarashandegan’s night-shift employees who take the bus have been beaten and robbed, he said, and then don’t return to work.

“They come here, work for a month and say it’s not for me – that the area’s really bad,” he said. “When workers don’t come to work, I don’t produce enough and that really hurts my pocket.”

He had once planned to reduce the roughly $5,500 he pays monthly in electric bills with a $45,000 solar panel system for his factory roof. It would have saved him money in the long run and made the city a greener place. But with the increasingly squalid state of the neighborhood, he doesn’t think it’s worth it.

“When the situation is like that, why do I want to invest into my building here?” he said. “Why do I want to move forward here where I can’t get the return?”