PALO ALTO — About a year ago, the exodus from Gryphon Stringed Instruments grew pronounced. Unable to rent affordable apartments, longtime employees quit or announced plans to leave the Bay Area.

The cost of making music here had become just too high.

“The money pressures ate them alive,” said Frank Ford, sitting with his partner, Richard Johnston, in the back of the legendary guitar shop they founded in 1969.

“We lost almost a third of our staff, in quick succession,” Johnston said, adding that the housing pressures are “killing us.”

It’s become a common refrain: Housing costs have reshaped the Bay Area. Public schools can’t hold onto teachers. Universities struggle to recruit. Even cash-drenched tech companies feel the pinch. But most commonly, it’s small businesses that get squeezed, and after 47 years — 40 at its current location — Gryphon Stringed Instruments is a prime example.

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Many of its employees are barely scraping by in the overheated housing market.

No wonder: The average rent in Santa Clara County was $2,654 in the first quarter of 2016, according to a new report from Novato-based RealFacts. Looking around the region, the average stood at $2,503 in San Jose, $2,959 in Oakland and $3,595 in San Francisco. Those rents are beyond many middle-class earners — and, in fact, studies indicate that Silicon Valley’s middle class is shrinking and that Bay Area workers increasingly move to far-flung parts of the region in search of affordable housing.

When the U.S. Census Bureau crunched the numbers in 2013, it found that about 115,000 commuters traveled 90 or more minutes to their jobs in the San Francisco-Oakland and San Jose metropolitan areas.

The situation is “not sustainable,” said Matt Regan, senior vice president of public policy at the Bay Area Council. “We’re starting to see companies leave the area, particularly those whose employees are in the middle-income space.” Those businesses “can’t afford to pay the salaries their employees need to make rent.”

Gryphon isn’t alone, either — small businesses like Kepler’s Books, Cheeky Monkey Toys and Galata Bistro in neighboring Menlo Park have reported similar struggles.

More than a neighborhood guitar and retail music store, Gryphon is a mecca, a destination for the amateur strummers, advanced pickers and vintage guitar collectors who lust after the acoustic instruments that line its walls. Ford is a master luthier, a builder and restorer of guitars, and lectures widely. Johnston appraises instruments for “Antiques Roadshow” and has co-authored authoritative volumes on vintage Martin guitars, which can command prices in the tens of thousands of dollars.

“As far as reputation within the luthiery world, they’re probably the best-known shop this side of the Mississippi,” said Steve Peterson, who used to work in Gryphon’s back shop, repairing guitars.

When Peterson, then living in Phoenix, was offered a job at Gryphon in 2012, he “jumped in the truck. I was super-stoked — it’s not one of those places where you just apply for a job and get it. The people who go there typically stay there.”

But he and his wife, Sunny, a part-time dance instructor, are returning to Phoenix, as parents of a 2-year-old son. The $1,600 monthly rent on their two-bedroom condo in San Jose was a comparative steal in the current market — the techies next door paid $2,800 to a different landlord for a similar unit. Nevertheless, rent ate up 50 percent of their income.

“We haven’t saved a dime these past four years,” he said, “and our credit cards are maxed out.”

Tom Culbertson, a salesman and guitar teacher at Gryphon for close to 30 years, rented an entire Craftsman home for $1,050 when he moved to the area in 1977. These days, he rents a 150-square-foot room from an elderly friend for $950 a month. He’s eyeing a move to southern Oregon, hoping to buy a modest house there for $200,000.

“I’m not poor,” said Culbertson, who plays classical guitar, old-time fiddle, clawhammer banjo, ukulele and mandolin. “I make $50,000 a year. But you can’t survive on that around here. I worry about the young guys at the shop — they earn a decent wage, $40,000 or so. But they’re living in tenement housing.

“You’re talking about motivated people who work hard and are highly skilled and yet are left in desperate situations.”

Gryphon sits in a sleepy but increasingly expensive corner of Palo Alto, about half a mile from Caltrain’s California Avenue station. With a power plant across the street, it’s not one of the city’s most chic neighborhoods. Yet real estate rules, from the flashy condos up the block to the eight-room house next door, whose college-age tenants are said to pay a combined $10,000 in monthly rent to their landlord.

With all its challenges, the shop remains a busy one, selling new and classic instruments along with myriad accessories. And just as it works assiduously for every sale — the online competition is stiff — Gryphon “tries like crazy,” Ford said, to hold onto its employees.

“Most people don’t realize how hard some of us in the business world work to make things manageable for our staff,” he said. “We want to keep them forever and make them happy, but it’s just really hard.”

The shop has 17 employees, including 13 full-timers who receive medical and dental insurance and are enrolled in a retirement plan. Every quarter, Gryphon divides its profits among the full-time staff. The shop provides free lunch, every day — “just like Google,” Ford joked — and pays a solid wage.

Yet it strains to hire from outside the area, said Johnston: “We can’t recruit people who know this business and want to work for us because as soon as they find out what it costs to live here, they’re no longer interested.”

Some employees live with their parents or rent a garage. One inherited a house from his grandmother. Several have spouses who work at Apple or other tech companies.

“It’s not like people are here because they’re high-paid,” said Brian Michael, who repairs and restores guitars. In 2011, with help from their families, he and his partner “scrounged everything we could” and bought a 960-square-foot bungalow in San Carlos for $535,000.

“At least you put your money into something. You’re not pissing it away,” said his friend James Hingston, also a repairman, who recently moved from a Menlo Park garage to a one-bedroom apartment in Millbrae with his girlfriend. They pay $1,800 a month, and, yes, she works in tech.

Hingston stays at Gryphon because “it’s a community,” he said.

“It’s a family,” Michael chimed in.

“It’s like Harry Potter — a school that’s run by these amazing wizards,” Hingston said. “They can do anything and play anything and fix anything, and they’ll teach you how to do it. That’s why I stay here.”

Contact Richard Scheinin at 408-920-5069, read his stories at www.mercurynews.com/richard-scheinin and follow him at Twitter.com/RealEstateRag.