Five other California stores will also shut down.
The 45,000-square-foot East Palo store, located at 1751 E. Bayshore Road, is part of the Ravenswood 101 Retail Center, which also includes IKEA. When Best Buy opened in November 2000, along with the now-departed EXPO Design Center, it was hailed for creating 150 jobs and boosting sales-tax revenue by $250,000 a year.
Now, it is expected to close permanently by May 12.
Officials said employees were notified about the closures Saturday morning, as were store customers.
East Palo Alto City Councilman Carlos Romero said the closure announcement doesn't come as a surprise. As the city's economic-development team ran its annual financial reviews over the past few years, "the handwriting was on the wall." He said Best Buy let the city know a couple of months ago the store would close.
Mayor Laura Martinez said staff has been seeking a replacement for Best Buy, and two options look possible.
"It is a loss for the city and has a negative impact on sales-tax revenue, but Best Buy is not one of our biggest sales-tax generators," she said.
Romero said the city took in $2.9 million in sales-tax revenue in 2010; Best Buy contributed about 8 to 9 percent. That figure computes to about $230,000 to $260,000.
Ravenswood 101 is one of the busiest shopping centers in the area, drawing shoppers regionally, Romero and Martinez said. In 2010, the center ranked as the third-largest revenue generator in the state for a regional center of its size, at about 900,000 square feet, Romero said.
City leaders think the center has a solid retail mix that will continue to attract shoppers. With IKEA as part of the draw, Ravenswood 101 is considered a regional power center, he said. The center has a Home Depot, Office Depot, Nordstrom Rack, Sports Authority, San Mateo Credit Union, Mi Pueblo Market and a variety of eateries.
Romero declined to discuss possible replacements, but one option looks "very, very promising," and with luck a deal could be struck in the next couple of months, he said.
Best Buy had 88 employees in early 2011. About 26 employees, or 30 to 31 percent, were East Palo Alto residents, he said.
Martinez said store officials are working with employees at soon-to-be shuttered locations to find positions within the Best Buy company or could offer severance packages.
Best Buy still operates a store in Mountain View, on Charleston Road, which opened in 2006.
The electronics store announced at the end of March its plans to close 50 stores nationwide by the end of 2012.
Two stores in Kansas City, Mo., and Scottsdale, Ariz., closed earlier this year and five other stores in Minnesota's Twin Cities and one in San Antonio, Texas, were notified of their impending closures in March.
Three additional locations are expected to permanently close later this summer.