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Uploaded: Wednesday, November 18, 2009, 9:54 AM
Palo Alto fights downtown vacancies
Anxious for new tenants, city allows non-retail businesses to occupy ground floors downtown
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by Gennady Sheyner
Palo Alto Online Staff
Seeking to save downtown Palo Alto from a spreading rash of vacancy signs, city officials have tweaked the zoning rules to give property owners near University Avenue more flexibility in choosing their tenants.
Under the new regulations, which the City Council approved Monday night, several downtown stretches that were previously mandated to house retail businesses on the ground floor will now be able to attract offices and other types of tenants.
The idea is to drop the vacancy rate at peripheral downtown areas where retail has proven to be unsuccessful, Current Planning Manager Amy French said Monday.
Ironically, the city's loosening of the ground-floor rules is intended to support retail on University Avenue itself. Downtown property owners and city officials agree retail is a crucial component of a vibrant, economically sound downtown. But the City Council acknowledged Monday that some downtown areas, particularly certain stretches of Alma and High streets, just aren't well-suited for retail and should be allowed to pursue other tenants.
Having these properties sit vacant for years both hurts the city economically and deals a psychological blow to one of the city's most central neighborhoods, City Councilman Larry Klein said Monday.
"From the city's standpoint, retail is best, vacancy is worst," Klein said. "Having it occupied by offices is the middle."
The council voted to remove "ground floor protection" from downtown properties along Alma Street and High Street, just south of University Avenue. Properties around University Circle, which connects University Avenue to Alma Street, will also now be open to ground-floor office use, as will three parcels along Kipling and Cowper streets, north of University Avenue.
But while the peripheral downtown streets would get more flexibility, the heart of the district would remain dedicated to retail. In fact, property owners along University Avenue will now have less flexibility than before when it comes to switching from retail to other uses.
Before Monday's vote, property owners along and around the downtown stretch of University Avenue were required to house retail on the ground floors of their buildings. But the city's regulations had also allowed property owners to request ground-floor office use if the downtown vacancy rate climbs above 5 percent.
But as the downtown vacancy rate crept toward double digits this year, planning staff and downtown landlords have grown concerned about the prospect of offices gradually replacing retail downtown, turning the city's vital shopping area into more of a business district. Recent departures of two major University Avenue retailers -- Z Gallerie Home Furnishing and Magnolia Audio Video -- and scores of smaller shops further exacerbated these fears.
The City Council shared staff's concerns and voted Monday to eliminate the 5 percent rule, essentially guaranteeing that any future ground-floor tenants in the heart of the downtown district would be retailers.
The council also mandated that future downtown developments be designed in such a way as to be compatible with retail use -- a proposal supported by prominent downtown property owners Charles "Chop" Keenan and Jim Baer.
Keenan, Baer and fellow property owner Fred Thoits all attended the Monday meeting to express support for the staff-recommended changes.
"We all want to enrich the retail in the (downtown) core," said Keenan, whose many downtown properties include those that house the Aquarius Theater, Miyake Restaurant and Borders Bookstore. "Where we have properties that aren't good for retail, those can be offices and customers of the (downtown retail) core."
The council voted 8-1, with Yoriko Kishimoto dissenting, to adopt the new rules. Kishimoto and Councilman Greg Schmid both argued that properties on Alma Street, between Hamilton and University avenues, should be required to have retail tenants on the ground floor.
Schmid argued that the 500 block of Alma, which includes the clothing store Patagonia and the restaurant Pampas, is both too vibrant and too centrally located to have its retail designation revoked.
"It's so important as an entry point," Schmid said Monday. "This is where you turn in (to University Avenue). Having lights and action on the ground floor makes a big difference."
But the proposal to exempt these properties, as well as a handful of others, from the retail requirement was voted down by the rest of the council.
Baer and Keenan, who have developed much of downtown Palo Alto over the past three-plus decades, both said they were optimistic about the downtown's economic recovery. Baer said he's been encouraged by the resurgence of interest in downtown space in recent months.
The video-game store Gamespot is planning to move into 370 University Ave., former site of Golden Loom rug store. Another tenant has expressed interest in leasing the large space at 340 University Ave., formerly occupied by Z Gallerie (Baer said a new tenant could be announced next month). Meanwhile, Best Buy -- which owns Magnolia and which holds the lease to 180 University Ave. -- has fielded offers from several potential tenants but has not yet committed to any of them, Baer said.
Meanwhile, the cyber-security company Palantir Technologies has moved into the old Facebook headquarters at 156 University Ave. The company is now attracting the same type of young, brainy, casually dressed technologists that previously flocked to Facebook.
Both Baer and Keenan said they expect downtown Palo Alto to thrive again, the recent economic downturn notwithstanding. Keenan said the area's educated and affluent demographic will make it an exciting and lucrative environment for future businesses.
"I really believe in our community in downtown, and I've been investing in downtown Palo Alto for 35 years," Keenan said. "We may lose some, but we'll get others."
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Posted by Chris, a resident of the Old Palo Alto neighborhood, on Nov 18, 2009 at 10:43 am If our "city officials" were serious about trying to stem the rash of vacancy signs downtown, they would never have tried to foist a business tax on the businesses that remain. Thankfully Palo Alto residents had the good sense to vote that down.
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Posted by Sarah, a resident of the Midtown neighborhood, on Nov 18, 2009 at 10:48 am Why don't the landlords just reduce the rents to attract more tenants? What are they holding out for?
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Posted by Darwin, a resident of Another Palo Alto neighborhood, on Nov 18, 2009 at 11:11 am Sarah-
Because it's part of the game. They don't really want retail businesses. They'd rather keep the rent high to force the city's hand so that they can sign longer, more expensive, and more stable rents that they could get from office space.
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Posted by EJ, a resident of the Midtown neighborhood, on Nov 18, 2009 at 11:12 am Sarah - good point!
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Posted by rem, a resident of the Adobe-Meadows neighborhood, on Nov 18, 2009 at 12:49 pm Look at who we have lost in the past five years. Palermo amount others...
Why don’t we have a honest City/County Council that will honestly say “Developer (Contractors) Lobbyists , Developer (Contractors), “donate to us and we will approve”!!!!”
It would be great if the City Council and all the other “Councils” and “Work Shops” learned a new word – NO or new phase – DISAPPROVED….
There is no sane reason for this PROBLEM except MONEY, MONEY, MONEY and not caring about the people of Palo Alto or ANY of the other communities …..
Raise the rent - we'll find a sucker....
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Posted by c, a resident of Another Palo Alto neighborhood, on Nov 18, 2009 at 1:08 pm I hope Best Buy doesn't move in!!
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Posted by Russell, a resident of another community, on Nov 18, 2009 at 1:31 pm To reiterate what was written above, I know for a fact that some of these property owners are unwilling to lower rents that represent the reality of the current market.
There are storefronts that have been vacant for well over a year. If they are willing to forgo income, for that time, rather than negotiate a lease that's in line with supply and demand, shame on them, because they can obviously absorb this loss of income.
Ultimately, this drives up the vacancy rates and allows the property owners to manipulate the current laws. Again, shame on them!
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Posted by MV resident, a resident of Mountain View, on Nov 18, 2009 at 1:32 pm @c:
It is unlikely that Best Buy would move in, especially considering the failure of their high-end Magnolia Hi-Fi store. Big box retail doesn't seem to have much success in downtown Palo Alto. The Magnolia Hi-Fi location was home to a Ross Dress-For-Less before.
The dearth of parking is not particularly encouraging for big box retailers. Besides, there are two nearby Best Buy stores that have far better parking and freeway access (Mountain View and San Carlos). A downtown Palo Alto big box electronics retailer makes little sense.
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Posted by palo alto mom, a resident of the Duveneck/St. Francis neighborhood, on Nov 18, 2009 at 2:03 pm What if we took a looked at what works in cities with a similar shopping demographic, Los Gatos, Los Altos, Menlo Park, Burlingame. Check out their mix of stores and actively try to recruit a similar mix in Palo Alto. We should have a vibrant downtown, with interesting shops and galleries, not just restaurants.
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Posted by Sally, a resident of the Palo Verde neighborhood, on Nov 18, 2009 at 2:18 pm palo alto mom,
"What if we took a looked at what works in cities with a similar shopping demographic, Los Gatos, Los Altos, Menlo Park, Burlingame"
Those cities don't have the street hustlers and bums like we have. Downtown will never recover, as a retail center, until they are kicked out. Why would any woman, especially, want to shop Downtown, if she fears for her safety? Most men seem to be able to handle it, by ignoring it, but many of us women feel intimidated.
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Posted by anon, a resident of another community, on Nov 18, 2009 at 2:40 pm Please fix "Gamespot"...the store chain is called Gamestop
www.gamestop.com Video game store chain
www.gamespot.com Video game news and reviews site
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Posted by Jackie, a resident of the Barron Park neighborhood, on Nov 18, 2009 at 3:06 pm I still think it's the landlords not offering affordable rents in this hurting economy. Now all of the great stores and galleries are gone and Palo Alto has become a restaurant stop rather than a place to shop. The downtown is so shabby and run down with all of the beggars on every corner.
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Posted by George, a resident of the Old Palo Alto neighborhood, on Nov 18, 2009 at 4:04 pm [Post removed by Palo Alto Online staff.]
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Posted by Kate, a resident of the Duveneck/St. Francis neighborhood, on Nov 18, 2009 at 4:08 pm Is anyone listening at City Hall? No, I don't think so. Too many residents do NOT want to drive downtown when it's easier to go to nearby Los Altos, the Walmart area of Mt. View, Midtown, or even drive around it and go to Menlo Park rather than deal with panhandlers, parking problems, and uneasiness of parking in the large city garages. Rarely does one see a PAPD officer on foot patrolling the area. There are panhandlers seemingly everywhere. Also so many restaurants are VERY overpriced except for places like California Pizza Kitchen and a few ethnic 'fast foods'.
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Posted by pa resident, a resident of the Old Palo Alto neighborhood, on Nov 18, 2009 at 4:57 pm why not learn from PA Town & Country? They sure have done something right.
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Posted by Retail going going gone, a resident of the Community Center neighborhood, on Nov 18, 2009 at 5:11 pm Downtown Palo Alto has three main landlords, they work together in concert to keep the rents high. They'd rather have empty stores than jeopadize the high rent structure of University Avenue; so don't expect anything to change in the near future.
Best Buy will NOT move into any location in Palo Alto because they want more than 20,000 sq. ft. which is Palo Alto's maximum size for retail.
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Posted by c, a resident of Another Palo Alto neighborhood, on Nov 18, 2009 at 6:17 pm Hi George.
One possible reason for the heavy presence of "urban outdoorsmen" is the recent decision to close Casa Olga, the only intermediate-care facility on the Peninsula: Web Link
This was really a big deal, and it meant bad news for all of us. As the included article mentions, and as we all know, certain decisions were made during the Reagan administration that created a huge homeless population comprised of people who HAD been in assisted living facilities until funds were reallocated.
Luckily for us, Palo Alto used to house a privately owned & operated health care facility, but now that economic winds are shifting, we're faced with the same problem that many other diverse, prosperous communities in America have been trying to fix for years.
So, I mean, good, George, very good. You're right; those people shouldn't be on the street; the question is where do they go, and how are we going to help them, since a good number of them really are mentally incapable of caring for themselves, and it sounds like some of us have a little bit more money than they do?
You'd think with the resources we have available (and all the available space downtown!!) they would have a place to go, but I read that it costs $10 a night to stay at the homeless shelter. Go figure. This is Palo Alto so I'm sure it's one of the more upscale "opportunity centers" around.
I think it also bears mentioning, I do not feel remotely unsafe in downtown Palo Alto. And I'm a moderately attractive white girl! No, why bar holds. I'm very young and very cute and, I'm sorry, I don't feel threatened on University Avenue. Or even on Ramona Street! Or at city hall, where there are always police officers patrolling the area on foot for some strange reason.
If you think downtown Palo Alto is a "rough area," take a field trip across 101 and check out EAST Palo Alto (you know...where IKEA is). Close to 20% of its residents are below the poverty line. There IS NO public high school. Homicide there is so common it doesn't even make our papers. And THERE IS NO PUBLIC HIGH SCHOOL. Having grown up in Palo Alto, where education is simultaneously cherished and taken for granted, this is, for me, the saddest and hardest pill to swallow.
But I digress. Yes yes fill up the stores! But does it have to be an extension of Stanford Shopping Center? It's like six blocks from downtown. Just go there if you want to shop at Burberry.
Palo Alto has a rich, unique, WORLD-RENOWNED history. How bout a museum? But a cool one, not a boring one. Or an art project for the homeless people to do? Or a MUSIC VENUE? We aren't the heart of Silicon Valley because of retail. Or even because of delicious Thai food. We are innovators, and we (the human race?) have prospered because of it. We help the world, inadvertently or otherwise.
And, honestly, I don't want to be preachy, but with privilege comes responsibility. If you really have a concern about the community, do something about it. Talk to a city council member. Most of them are really nice, and each of them has a vested interest in the well-being of this community. Or write a letter to your representative (ours is Anna Eshoo).
Or, you know, why stop there? Start an NGO for crying out loud. You don't have to be a saint to make positive change. If you hate homeless people, invest in a solution. It's probably tax-deductible.
Just please don't insult them. It's futile and (sorry) it makes you smell almost as bad as you say they do. Your offense is rank! It smells to heaven!!
That's Shakespeare, not like...the Bible. For the record. Just something I picked up on these mean Palo Alto streets.
peace
and thanks MV Resident for your thoughts on Best Buy!! I hope you're right!!
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Posted by Sarah, a resident of the Midtown neighborhood, on Nov 18, 2009 at 6:34 pm How do store rents on University Ave. compare to downtown Los Altos, Menlo Park, and Mountain View?
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Posted by Downtown Retailer, a resident of the Downtown North neighborhood, on Nov 18, 2009 at 10:05 pm Wow,
Landlords should lower their lease rates. Downtown is a lost cause without rent reductions. Parking is a HUGE problem; the homeless/urban lost are not a help. Neither are the "new urban lost" youngsters. Lease rates must be much cheaper and more flexible.
Has anyone shopped on the internet recently? So why go downtown? And prohibit national chains,or encourage local retailers.(mostly with much cheaper lease rates.) Landlords do have a choice. You can see how committed they are to the community.
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Posted by zanon, a resident of the Esther Clark Park neighborhood, on Nov 18, 2009 at 10:07 pm I just opened an office close to down town palo alto.
it was hell. city hall (i swear I am not making this up) acted like they did not know what an "internet company" was. they wanted to zone us "light industrial" because we would have engineers.
total incompetents.
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Posted by George, a resident of the Old Palo Alto neighborhood, on Nov 19, 2009 at 8:06 am Censorship is flying high here. Apparently one can't comment on the overwhelming usage of benches by the homeless population. One also cannot comment on poor personal hygiene and the ability for other members of our community to use these benches without impact of the other's hygiene.
C: we already invest in a solution. It's called the Opportunity Center.
Hey all, want to know why the homeless hang around in Palo Alto. We provide them with great services: Web Link
Our citizens also give them money on the streets which they can use as they see fit. If they have a drug or alcohol problem, how do you think they spend that money?
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Posted by laura, a resident of the Midtown neighborhood, on Nov 19, 2009 at 9:16 am Downtown PA is disgusting. The sidewalks are filthy, beggers are everywhere and you can't park!! (Not that you would want to, anyway). It is embarrassing when we have company to take them downtown. Such a sophisticated, well educated city should have a better downtown. Now I just avoid it. Contact your city council!!!!
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Posted by LOL, ROTF, a resident of the University South neighborhood, on Nov 19, 2009 at 2:38 pm "and you can't park!! (Not that you would want to, anyway)"
Nobody wants to park Downtown anymore. Besides, all the parking spaces are taken.
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Posted by Going going gone, a resident of the Embarcadero Oaks/Leland neighborhood, on Nov 19, 2009 at 8:46 pm Someone mentioned missing Palermo above. I miss it, too. We used to talk to the owner whenever we went in and liked him a lot. His stories about how the city practically forced him to leave were maddening. I forget all the details but they were constantly ticketing trucks making deliveries to him both on University and in the city lot behind him. He kept making his delivery people come earlier and earlier to avoid the problem and then they complained about that.
Look at how Cafe Verona was kicked out even though it was much-loved and still is much missed. How long was that vacant?
But the good news is the city has reapproved the $250,000 tourism budget even with "no demonstrable results" from last year. What are they going to promote? Empty stores? Stupid stupid.
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Posted by Sarah, a resident of the Midtown neighborhood, on Nov 19, 2009 at 8:51 pm The Mercury-News has a different spin on this story. They make it sound like several businesses are interested in moving to University Ave. Web Link
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Posted by Giovanni, a resident of Menlo Park, on Nov 27, 2009 at 1:24 pm Kate, when's the last time you shopped in downtown Menlo? Santa Cruz Ave. is lined with thrift stores, empty banks, vacant buildings, and not many attractive places to shop. The sidewalks and benches are filthy and homeless abound. University Ave. is a far more attractive place to shop. Downtown Menlo needs a major overhaul.
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