Palo Alto seeks to shield retailers from office boom

Council to explore zoning changes to prevent departure of local shops

Seeking to protect neighborhood-serving retailers from the recent boom in office development, Palo Alto is considering a range of new zoning policies, including ones that would restrict commercial densities downtown and limit chain stores on California Avenue.

The new rules, which the City Council will consider Monday, seek to address what the council believes to be one of the most troubling trends to emerge during the city's recent economic recovery: the tendency of offices to replace mom-and-pop shops in the city's two primary commercial districts. With Palo Alto's rents among the highest in the country, numerous small businesses have been priced out of their longtime locations in recent years.

The list of departures is long. Zibibbo and Rudy's Pub both left town in the past year. Before them, there was Jungle Copy and Empire Tap Room. The old location for Fraiche Yogurt, which moved from Emerson Street to a more prominent location on Hamilton Avenue,was immediately repurposed as an office, a use that typically fetches higher rent. Zibibbo's old space on Kipling Street was similarly snapped up by a non-retailer.

That's the trend Palo Alto officials are now trying to curb. Council members agreed in September that the situation is so urgent, changes must be made now, without waiting for the city to update its official land-use bible, the Comprehensive Plan. Councilmen Pat Burt, Greg Scharff and Karen Holman were particularly adamant. Burt noted that it might take another two years to complete the Comprehensive Plan update and pointed out that last time the city updated the document, it took another five years for its policies to be turned into actual zoning laws.

"We're looking at a good number of years to get done what we and the community are hoping to accomplish a lot sooner than that," Burt said.

Burt and Scharff both argued that the longer the city waits to deal with the retail protection, the more difficult it will be to find a solution. Scharff advocated strengthening retail protections in downtown, California Avenue and other commercial areas. This could mean expanding the ground-floor-retail requirement that is already in place from downtown's commercial core to its more peripheral areas (the council already did this in 2012, when the boundary moved to include the block of Emerson Street between Hamilton and Forest Avenue). This could also mean amortizing big commercial buildings that don't have retail components and that "break the block," such as the Wells Fargo building on University Avenue.

"I'm thinking the longer we dither on this and not take the bull by the horns on retail, the harder it is to solve the problem down the road," Scharff said.

It's not just the departure of longtime establishments that's been troubling the council. It's also the new businesses that take their places, bringing more employees with them. Scharff, Burt and Holman all raised flags in September about offices taking over basements that were once used to support retail. This, they argued, further exacerbates downtown's parking and traffic problems.

A new report from the Department of Planning and Community Environment indicates that solving the retail problem will be one of the city's top land-use priorities. The report proposes consideration of the basement problem in the near-term, along with a look at regulating chain stores on California Avenue by setting a quota for "formula retail." Restricting chain stores has become a popular idea among the city's planning commissioners, council members and candidates for council. The goal, by and large, is to preserve California Avenue's status as a funky, arty and eclectic district filled with community-serving establishments.

To preserve retail variety, staff also proposes to consider limiting the number of restaurants downtown and on California Avenue. The idea was championed by Holman, who described University Avenue in September as a "restaurant grotto."

"What you want in a healthy thriving retail district is a mix of uses," Holman said.

While retail protection is one major theme of the proposed near-term changes, reducing commercial development is another. Burt said at the September meeting that he would be interested in looking at "reducing commercial zoning downtown and replacing it to some degree with residential."

That, however, promises to be a lengthier and possibly more contentious endeavor. In the coming months, staff plans to explore the idea and to consider both the best locations for new residential projects and the types of residential development that should be encouraged. Planners will also explore the idea of reducing the density of certain commercial zones on El Camino Real and near California Avenue. They will also consider shrinking a density bonus that the council approved several years ago for a hotel zone and ultimately adopting zoning-code changes that would slow down the pace of development.

Some council members, including Mayor Nancy Shepherd and Councilwoman Gail Price, advocated during the September meeting sticking with the more typical timeline: completing the Comprehensive Plan update and then going forward with the zoning changes. Price said the city should focus on its Our Palo Alto initiative and not try to do too many things at once.

"If we start going sideways on different approaches to zoning and start picking away on zoning issues ... it will just increase the scope of the effort required," Price said.

One of the things that the council will discuss on Nov. 3, in the first of two scheduled meetings on the Comprehensive Plan, is the city's next steps on updating the document. After the council rejected four "planning scenarios" that staff proposed exploring in August, city planners have returned with a revised list of scenarios. The list could include a "business as usual" scenario, in which no policies are changed; a "slow growth" scenario, in which the pace of job growth is slowed; and a third that focuses on adding more housing around downtown and California Avenue.

The plan is to hold a series of community meetings next spring to further explore these scenarios and to consider changes in goals, policies and programs that should be included in the new Comprehensive Plan.

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2 people like this
Posted by member
a resident of Crescent Park
on Oct 31, 2014 at 10:17 am

We've lost Congdon and Crome, let's not have the same thing happen to California Ave. It's time to tune to the emergency network and stop Palo Alto from becoming a shopping mall. I fear it is too late.

Like this comment
Posted by I am confused
a resident of Another Palo Alto neighborhood
on Oct 31, 2014 at 10:37 am

"To preserve retail variety, staff also proposes to consider limiting the number of restaurants downtown and on California Avenue. The idea was championed by Holman, who described University Avenue in September as a "restaurant grotto."
"What you want in a healthy thriving retail district is a mix of uses," Holman said."

whats wrong with having restaurants downtown. that is what makes the area lively at night. Retail closes early. More retail=less people on university in the evening.
And what everyday retail does Holman think will open downtown. If any retail opens, it will be expensive boutique stores--nothing that will deal with the everyday shopping needs of the public.
This is just an extension of holmans idea of a shuttle from barron park across town to an undefined shopping area.

Like this comment
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Oct 31, 2014 at 10:47 am

Dear Confused.

7-11 and Walgreen's stay open later than the boutiques you mention which usually close at 6PM -- just like they do at Town & Country and on Cal Ave.

4 people like this
Posted by jerry99
a resident of Barron Park
on Oct 31, 2014 at 11:00 am

[Portion removed.]
Save local businesses by not allowing construction for years at a time to clog the streets near University and delay traffic.
The residents of Palo Alto always say the same thing. No more businesses, no more hotels, no more condos and MORE parking.

5 people like this
Posted by Agreed
a resident of Embarcadero Oaks/Leland
on Oct 31, 2014 at 11:15 am

I agree: no more development for several years at least. But the city council never does more than lip service to this plea.

BTW: why don't the major employers who cause the most congestion move out to where their employees commute from: the East Bay, the Central Valley, Morgan Hill????? That would let them live in affordable housing, avoid a horrendous commute, and save the Peninsula from overcrowding, air pollution, and excess traffic.

1 person likes this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Oct 31, 2014 at 11:19 am

Retail is dead in downtown Palo Alto. The cost of real estate has escalated to the level that a simple mom-and-pop retail store can not survive. Add the total disruption of the Internet, which has yet to really invade the realm of brick-n-mortar retail stores, and the small area downtown can not be expected to hold its own.

While many people enjoy walking around and looking, but not necessarily buying, the cost to provide this environment has become too great in downtown Palo Alto. People’s time is too valuable for very many of us to spend more than a little of our day looking for “stuff”. These days, it’s much easier to “shop” on-line, buy on-line, and let one of the low-cost delivery services deliver to our doorstep.

Even if the City Council were to create “shopping districts” that have the same sort of government support as “historic preservation districts”—the economics of “shopping” has turned against downtown Palo Alto as being a “destination” for enough people to actually make most stores profitable.

It’s difficult to understand how to make a planning department understand this. While having good data about the number of people shopping, and the amount of property tax and sales tax generated by retail would help to perhaps make a case one way or another about what administrative, or legislative, support for retail might work—that data isn’t readily available. Nor will it likely be readily available until there is a complete turnover of personnel in the planning department.

Rising costs and the Internet have worked together to change the face of Palo Alto—and folks need to understand that key point.
Little can be done to “save” retail. Perhaps the retailers might be able to rethink how they operate—but the City will never be a source of that kind of vision.

3 people like this
Posted by Julian
a resident of Midtown
on Oct 31, 2014 at 11:21 am

To the City Council:

So is that barn door squeaking as you close it ?

Like this comment
Posted by Chris
a resident of University South
on Oct 31, 2014 at 11:40 am

What type of retail is missing from downtown Palo Alto that would be feasible? A Target like dowtown Sunnyvale?
I don't think so. The readon that stores close is that they are no longer viable. We live within walking distance of University and about the only time we have to drive to a store is to go to a big-box retailer.

4 people like this
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Oct 31, 2014 at 12:05 pm

I can't remember the last time I went shopping on University but please, keep telling us how you want to preserve retail every time you destroy something historic like University Art.

I'm too disgusted at what the city's done to our downtown. Like we need a $4.5 MILLION guide to the first floor of City Hall because they think the citizens are too stupid to find an office or that the we'll forget that it's taken them 9.5 years to PREPARE to issue an RFP to find a consultant to tell them how to synchronize a traffic light on one of the 3 busiest roads in the city.

Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Oct 31, 2014 at 12:05 pm

Strangely enough I think it is the employees of these offices that keep the retail that is in downtown viable. Local residents may go to a downtown drugstore, but in all honesty very few Palo Altans would dream of going to University area for anything other than City Hall business or to the restaurants.

2 people like this
Posted by Mr.Recycle
a resident of Duveneck/St. Francis
on Oct 31, 2014 at 12:20 pm

There are too many homeless panhandlers and drug addicts downtown. We were at Yogurtland the other day, wanted to sit down outside on a bench, but couldn't because some guy was sleeping there. Next time, we go to the Stanford Shopping Center.

2 people like this
Posted by Turkeys for Halloween
a resident of Community Center
on Oct 31, 2014 at 12:28 pm

Dry cleaners, florists are just a couple of examples. For those of us who live near "downtown", it is where we walk to get our neighborhood services and not just a place to cram in more offices and cars. And it isn't just University Ave, which has really just turned into a place where office workers eat. Its now all the side smaller retail streets too which were still serving the locals. Where has this Council been the last four years that they are only now noticing this. Lots of posturing going on before an election.

2 people like this
Posted by Neighbor
a resident of Community Center
on Oct 31, 2014 at 12:35 pm

I applaud "agreed." That was how 680 was developed and the surrounding towns, like Alamo, Danville, Dublin, etc. it would bring jobs and affordable housing and new schools, and employees living close to jobs, especially in areas where unemployment is high at the present time.
I do believe that if the jobs are there, people will go, just like they did when 680 developed. We need a City Council who understand the necessity of quality of life, not the needs and greed of developers. Enough already!

3 people like this
Posted by Citizen
a resident of Old Palo Alto
on Oct 31, 2014 at 1:17 pm

As usual, our incompetent Mayor Sheppard is out of touch with the needs of Palo Alto residents. She is responsible for much of what has gone wrong with downtown Palo Alto in the last couple of years. Let's hope she is voted out of office on November 4th.

3 people like this
Posted by YSK
a resident of Community Center
on Oct 31, 2014 at 1:22 pm

If we lose Shady Lane, that will take away my last reason to shop downtown Palo Alto. It is one of the last few stores left that are unique to Palo Alto. Disgusted with what the greedy landlords have done to our two downtown areas. We lost businesses that were doing well, but couldn't afford the exorbitant rents being charged in the name of pure greed. If I need something from a store downtown, I look to see if the same store is in another city, and will actually drive there to avoid the traffic and pretentiousness that is downtown PA today.

2 people like this
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Oct 31, 2014 at 2:06 pm

You can drive to Los Altos and Redwood City for all the retailers Palo Alto has lost.

And what do we get? More expensive studies on lost retailers which cost money and don't generate a cent in sales tax revenue but give our incumbents something appealing about which to wring their hands while doing nothing.

1 person likes this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Oct 31, 2014 at 2:30 pm

The Internet will continue to expand its disruptive role in the area of urban retailing, as this announcement by Starbucks demonstrates--

Starbucks to deliver to people's offices--

Web Link

Rolling out slowly in regions of the United States approximately nine months from now, you will be able to have your pumpkin spice latte delivered right to your desk if the plans of Starbucks CEO Howard Schultz come to fruition. Announced by Schultz during a fiscal fourth quarter earnings call earlier today, Starbucks will start making coffee and food deliveries in select cities during the second half of 2015. Likely heavily integrated into the mobile application, Starbucks customers will be able to place an order with their smartphone and simply wait for it to be delivered.


E-commerce is just in its infancy. With the growth of ever-faster broadband, and metro-wifi, there will be little that people can not purchase on-line. In some cases, 3-D printing will allow people to actually manufacture some items purchased on-line in their own home, or office.

There is simply no way to predict what will change in our current vision of a "robust down town retail environment". It's hard not to see that everything is a candidate for being sold/delivered quite differently in the not-too-distant future.

It's hard not to believe that dry cleaning will not be picked up/delivered at some point, and we know that flowers are already sold quite successfully on-line.

Really do need some forward-thinking going on at this point.

1 person likes this
Posted by Pat
a resident of Leland Manor/Garland Drive
on Oct 31, 2014 at 5:07 pm

I really miss University Art!

1 person likes this
Posted by resident
a resident of Another Palo Alto neighborhood
on Oct 31, 2014 at 8:33 pm

The City ignores causes, like over-zoning, which it has control over, and then pleads innocent to undesirable effects- loss of local business, traffic, congestion, destruction of city character in the ongoing
destruction of the City and Downtown. The impacts of projects already
approved will hit like a set of waves at the Mavericks. Another
4-story mixed use 33,000 sq ft project is proposed to take out Shady Lane.
In the neighborhoods it is the same thing- too high FAR, too narrow
setbacks, too little parking, no enforcement of neighborhood compatibility
for height, mass and scale of two-story houses and remodels under the
Single-Family Individual Review,dewatering allowed for basement construction.

1 person likes this
Posted by Annette
a resident of College Terrace
on Nov 1, 2014 at 10:34 am

The City has an Economic Development Manager, but his voice is not heard in this article or in the article about the impact of the Cal Ave improvement project on businesses in that area. That's odd. We should be hearing from him about this and his plan to address the negative $ impact on Cal Ave businesses. These news articles suggest that existing PA retail needs to be protected from City policies and that our Economic Development Manager needs to focus on existing retail and services.

1 person likes this
Posted by Stop
a resident of Downtown North
on Nov 1, 2014 at 11:11 am

Yes, please tell us how you want to preserve retail when you just converted Zibibbo and two clothing stores on Waverly between Lytton and University Avenue into office buildings. That small stretch of Waverly is now all office space between 7-11 and Michaela's Flower shop. The two clothing stores just couldn't make it here because of the increasing rents. The landlords should be ashamed of what they are doing to this town and the city council and manager aren't doing anything about it.

The current city council knows they are in deep water with many unhappy residents who may be voting them out and they are scrambling to show a side that favors residents before the election. In my opinion the damage is already done in downtown, but hopefully with a new council we can save the future of Cal Ave.

2 people like this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Nov 1, 2014 at 11:37 am

> The City has an Economic Development Manager, but his
> voice is not heard in this article or in the article about the
> impact of the Cal Ave improvement project on businesses
> in that area.

The Office of Economic Development has been around for a long time. There has never been any effort on the part of any City Manager to define the role of this office, or to provide the public with a work plan for the individual hired for this office, nor any evidence that this individual has actually produced any work that has led to economic development that justifies his/her salary.

This is one of the City Manager appointee positions that should be terminated immediately.

1 person likes this
Posted by Marianne
a resident of Downtown North
on Nov 2, 2014 at 1:49 am

They should start by preventing Keenan from converting that huge Varsity Arts first floor retail space on University Ave into an office space.

Like this comment
Posted by SteveU
a resident of Barron Park
on Nov 4, 2014 at 9:11 am

SteveU is a registered user.

Offices could be on the upper floors, leaving the ground level for Retail...But!
Palo Alto imposed limits on how many 'upper floors' can exist, thus limiting the tenant. Moving to larger quarters is expensive.

Want to preserve Mom and Pop shops? Impose 1st floor rent controls. You can't sell $5 items and pay $10sq rent

Like this comment
Posted by Really
a resident of Embarcadero Oaks/Leland
on Nov 4, 2014 at 11:39 am

Maybe if we change our city council members to members who don't see the Chamber of Commerce as a public benefit with low rents, we can head in abetter direction.

1 person likes this
Posted by PA Parent
a resident of Leland Manor/Garland Drive
on Nov 4, 2014 at 3:48 pm

Palo Alto kids need access to fun and leisure to blow off steam, release stress and stimulate endorphins. We have lost book stores, art stores, bowling alley, movie theatre, music shops. The city council has so much power to to look out for our youth. kids and families need their community to offer more than work space. We need play space. How about a indoor mini golf or movies or teen centers?

Like this comment
Posted by Jeff Selzer
a resident of University South
on Nov 4, 2014 at 4:06 pm

As a retailer on University I can tell you that retail is not dead in Palo Alto as some have said. Palo Alto Bicycles is entering its 85th year in business in the downtown area and I can tell you that retail while different than it was 10+ years ago is still viable. We are proud to be a part of this community. We are proud that we assist in contributing thousands of dollars to the city by way of the sales taxes we collect. Most folks want better streets, more police or better policing of the homeless etc for their cities. Many of those services will be further cut if retail leaves town. Also if a purchase is made online and IF tax is collected it is at a lower rate than my business is required to collect. Which means less if any revenue from those dollars make their way into our city. I am not sure how to fix the problem of small business leaving the downtown area like University Art (I too miss them) Diddams is another business like Congdon and Crome that have left the downtown. One of the contributors mentioned how the Internet has killed retail and indeed it is having an effect on local shops. But we are far from dead. A community is not a community without local merchants. We add the spice to a town, character. Even in this highly connected society a quite stroll through a nice downtown with interesting and varied merchants is a great way to spend an evening while you are waiting for that table at your local restaurant. Or better yet for post meal when, having eaten a bit too much a nice stroll is just what the Dr ordered. By the way this is my humble opinion not a certified fact.

Sorry, but further commenting on this topic has been closed.

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