As retail trends shift, Palo Alto looks for new economic strategy | March 17, 2023 | Palo Alto Weekly | Palo Alto Online |

Palo Alto Weekly

News - March 17, 2023

As retail trends shift, Palo Alto looks for new economic strategy

City's consultants recommend loosening retail regulations, relaxing ban on big-box stores

by Gennady Sheyner

After taking a massive economic hit during the pandemic, Palo Alto is once again open for business, with parklets packed with diners, shoppers returning to stores and hotels bouncing back after a deep aCOVID-19 slump.

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Posted by neighbor1200
a resident of Professorville
on Mar 14, 2023 at 11:28 am

neighbor1200 is a registered user.

Palo Alto should simplify its system for giving restaurants and other street level businesses permits before it considers the slippery slope of big box stores, which bring massive parking needs and add nothing positive to the landscape. Restaurants get caught up in year+ permitting delays- why?

Posted by Sally-Ann Rudd
a resident of Downtown North
on Mar 14, 2023 at 12:35 pm

Sally-Ann Rudd is a registered user.

Great article Gennady! I agree with Council Member Julie about "third spaces". Yes! Absolutely. But the bowling alley was swept away for housing. I think that's partly why pickleball is so popular, it is a venue for interaction-starved residents to mingle and get to know new people. The sector that suffers most from a lack of "third space" venues are our teenagers who have nowhere to go except a parent's basement. No wonder they go bonkers at football games and egg wars. Ungoverned congregation is something they never experience.
Most of the reason for the empty spaces in Palo Alto and throughout the peninsula is property owners. There are many reasons why they are happy leaving their spaces empty instead of renting at cheaper rents. It is greedy but you probably can't compel them to rent out their spaces.
Allowing property owners to convert retail space to office (as happened in Palo Alto about a decade ago) also stripped retail areas of foot traffic. Malls are thriving, formerly retail hot spots in Palo Alto are deserted.
I spent a few summers visiting Burlington VT where they have a central retail area that is closed to traffic and it is a vibrant lively place to be any day of the week. Summer weekends they have an extensive street entertainment program.
I can't see big box stores wanting to rent space in downtown Palo Alto, the spaces are too small and there are too many traffic and parking constraints. Still these are ideas worth exploring before the expanding Stanford Shopping Center renders downtown Palo Alto completely irrelevant.

Posted by Carla
a resident of Mayfield
on Mar 14, 2023 at 1:17 pm

Carla is a registered user.


The big box retailers do not necessarily represent the needs of the local residents of Palo Alto. Sure there is some use of costcos and targets, but let them stay where they are. Why do they ALSO need to be in our downtown?

The City needs to do more research into what the retail needs of the existing residents need or desire before you make these decisions.

The super high rents in downtown (controlled by a handful of potentially colluding commercial real estate owners) are a high burden to entry for small niche outfits that are what the existing residents need and desire.

A mixed use of downtown for residential use is the best idea yet that could be copied from the European cities. Some preference should be given to the service employees to reduce the footprint to commute to work.

Posted by Carla
a resident of Mayfield
on Mar 14, 2023 at 1:52 pm

Carla is a registered user.


Many small cities seems to have a central planning commission (which is the manager idea that is noted) that not only encourages a mix of retail and solicits certain business to meet needs of the town; but also discourages the prolifertion of 10million bobba shops, or frozen yogurt shops of the past.

Posted by Evergreen Park Observer
a resident of Evergreen Park
on Mar 14, 2023 at 3:30 pm

Evergreen Park Observer is a registered user.

The article leaves the elephant in the room untouched. Downtown, like other downtowns around us are open to traffic. California Ave is not. Correlation is not causation, but just look at Cal Ave except at meal times. Dead as a doornail.

It has been 3 years, and still there is not a single sign in the Cal Ave that directs people to parking areas. All there is are those tacky "Detour" signs. The City has done absolutely nothing to make Cal Ave attractive. I recently noticed that the street finally looked like someone had cleaned it. At last.

The successful Farmer's Market that Council man Burt mentioned is slowly being choked off because of the massive parklets that have taken over much of the space for vendors.

Long before the massive office space build up, Cal Ave was a wonderful neighborhood shopping place. With the influx of Class A office space and well-heeled tech workers, prices skyrocketed as did rents. Not a neighborhood place any longer, so we drive elsewhere. The landlords are leaving their spaces open rather than rent at market rates because they are waiting for the Council to allow them to rent everything out to medical offices, etc. rather than rent to services the area would love -- like a bakery to replace Palo Alto Baking which has been closed and empty for well over a year. Instead we have multiple gyms and exercise places.

Meanwhile, Town & Country Shopping Center is packed, Menlo Park downtown and Los Altos downtown are packed and lively. Focus on making downtown the 'downtown' and make Cal Ave a neighborhood friendly place again. Replace those ridulous office buildings with residences (and make them provide parking so real people will actually want to live there).

Posted by YentaThe Renter
a resident of College Terrace
on Mar 14, 2023 at 5:12 pm

YentaThe Renter is a registered user.

Thanks for this article and hats off to Ed Lauing! And Julie Lythcott-Haimes. As I, er, speak, there is new construction on Cambridge Avenue between Birch and El Camino Real, and there is residential adjoining that huge crater. That crater, it seems, it is going to be for office businesses notwithstanding the fact that, at the corner of Cambridge in Birch, the commercial buildings are for lease! Then there is the failed SVB bank building that was about to take over the parking lot and more, which has served the farmers market! It would be creative if there could be retail and then affordable apart in that space, those spaces with residential on top as it stands in, for notable examples, Cannes, Nice, Milan… Thanks for hanging out places what we really need is the “dive bar” back— bring back Antonio’s nut house! The last thing a California Avenue area needs is yet another pricey restaurant and wine bar. And that parking lot there by Antonios would be a very nice park for playing chess…think Budapest? Come on Palo Alto, you can do better, build back, bring back, Better!

Posted by Bystander
a resident of Another Palo Alto neighborhood
on Mar 14, 2023 at 5:17 pm

Bystander is a registered user.

The Middlefield/Loma Verde area has lost community space due to a fire that destroyed or severely damaged 4 businesses. The neighborhood coffee shop, breakfast space, drycleaners/laundromat, and liquor store were a short walk away and a place to meet neighbors and sit for a while in a very pleasant patio. This space has been a community asset for decades even when prior businesses were there. The boarded up businesses are now an invitation for crime and rat infestation. There is no update on when the work may start to either repair or demolish. In the meantime, the outside seating area and two parking lots are not available for community use.

This is what is necessary for a community feel. Walking to a a pleasant destination in the neighborhood is supposed to be an asset.

If the City really values community space, values small businesses that are useful to residents, want residents to stay close to home, and foster a lively place for people to congregate, then they would be doing their utmost to get this reopened as quickly as possible.

Posted by Paly02
a resident of Crescent Park
on Mar 14, 2023 at 6:09 pm

Paly02 is a registered user.

Wholeheartedly agree that zoning and permitting need to be fixed before even thinking of big box stores. Those are self-made blockers that only we can get out of our way.

Question - does the city fine property owners for leaving areas vacant? I know some cities do that, but do we?

I love the 'third-space' concept, but I wonder if we can successfully do that without addressing the issues above first? My dream would be for a cottage industry co-op where we rented out an industrial kitchen and people who wanted to try their hand at making e.g. jams, baked goods, or whatever could rent out the kitchen for a few hours to see how that would work. And then there could be resources (including people who've done this before) in another part of the building to support anyone trying to decide if they want to turn their cottage industry business into a larger effort. (I hear getting all the needed permits and trainings to do a small business are tough to navigate as a beginner.)

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Mar 14, 2023 at 6:52 pm

Online Name is a registered user.

Big box stores are too big and would destroy part of a neighborhood. Plus they're boring and easiy accessible nearby.

Why not do something creative and useful. People have asked for Asian markets/ groceries for years. Why not have several ethnic markets so we don't have to drive to Grant Road for Japanese herbs or to San Francisco for a wok?

If we're the Peninsula For Everyone, showcase it with a market featuring our ethnic diversity. Lure people to it and then keep them around for browsing. drinks and dinner like they do at Santana Row, after the Los Altos Farmer's, etc. etc.

Posted by Resident 1-Adobe Meadows
a resident of Adobe-Meadow
on Mar 14, 2023 at 7:10 pm

Resident 1-Adobe Meadows is a registered user.

We used to have a Border's Books on University that was always full of people who came in to buy, browse, and get a coffee and sweet. Barnes and Noble is looking for new locations - get them into our city. The book store was one of the reasons I came downtown. Once you get downtown you stroll around and checkout the other businesses. We used to have a big stationary store - another place to first come then browse around to see what else was happening. Why do we keep losing these useful places that let us stop in? People come to first get something they need then stay to amuse themselves, a distraction, that may be another thing that they buy and take home.
We keep shooting ourselves in the foot in this city.

Posted by Paly02
a resident of Crescent Park
on Mar 14, 2023 at 8:43 pm

Paly02 is a registered user.

+1 on Asian grocery stores. Feels like a crime to have to travel so far for groceries.

And, yes, the Borders is like the 'third place' concept. It's one of the only places I could go as a teenager without spending money. Once I got a car, it was only ever Castro Street in Mtn View to hang out with friends because everything in Palo Alto was out of our price range.

Posted by scott
a resident of Fairmeadow
on Mar 15, 2023 at 2:56 pm

scott is a registered user.

I think you can tell a lot about what's going on if you've travelled enough. Like, stay at an apartment in Paris, in a residential neighborhood, and you'll find a story of ground floor services. That's not dependent on commuters or anything --it's (mixed) residential. These areas are all mid-rises, 5-6 stories, and scale out in all directions just fine at that level of residentially-driven demand. See also: Barcelona.

Go to London, and you have a lot of flats in 2-3 story buildings. You might be walking a block or even three to find any services.

Go to Tokyo, and you might be riding an elevator *up* to eat in a restaurant.

Go to Cal Ave --and of course there's almost no housing over the retail and lots of shops are vacant. Now that commuter demand is lower.

A lot of the ideas put forward are good. Many of them are very speculative. "Try to encourage X style of business to come" is a policy you can pass. But coaxing efforts are always contingent on a lot of factors that are difficult to control from the Council's chambers. The question of "why is this suddenly a good opportunity when it wasn't before?" isn't readily answered by the policy.

-"We can see why it's good for *you* if we come to Palo Alto, but why is it good for *us*? Have you seen how many vacancies there are?"

Compare that approach with making it really easy to merge lots in the downtowns and legalizing four new stories of residential apartments over the shops. Paris density, downtown. If Council does this, then it's really easy to see what the new opportunity is. You still should tout it, but you've also made it really easy for your "sales team" demonstrate the value.

Posted by mjh
a resident of College Terrace
on Mar 15, 2023 at 3:42 pm

mjh is a registered user.

About every five years city hall bemoans the whittling away of useful retail on Cal Avenue that actually serves residents. Many of us made a point of supporting our then useful retail on California Avenue while also contributing to Palo Alto's sales tax revenue. Just think, there was a time when I could do almost all my shopping on Cal Ave and nearby streets.

Responding to lobbying by commercial property owners of shops, council has continually increased their list of "retail-like" tenants allowed to replace traditional retail. Resulting in ever spiraling rents as property owners were encouraged to replace existing less profitable retail tenants with these so-called "retail-like" commercial enterprises.

A good example of this was during one council hand-ringing session about the demise of our retail, council member Liz Kniss pushed to add personal gyms and exercise studios to the ever growing list of allowable "retail like" uses to replace traditional retail. Shortly afterwards Cal Ave was awash with gyms replacing our already gutted retail on Cal Ave.

Another response to declining retail on Cal Ave a few years ago, city hall cut down all the trees on Cal Ave and spent close to $7 million all told (that's right, nearly $7 million) to shut down large chunks of Cal Ave over several years to re-landscape. A disaster for the existing retail city hall was purportedly trying to help, and resulting in even less traditional retail remaining by the time city hall had finished.

From my experience over the last three decades, council discussions about existing retail are ill informed. Decisions are made by a majority who don't seem to have any idea of what is needed to attract shoppers for a meaningful day-to-day useful retail experience.

Posted by Allen Akin
a resident of Professorville
on Mar 15, 2023 at 4:47 pm

Allen Akin is a registered user.

I'm not convinced by the "build denser housing and retail will flourish" argument. Retail was more profitable, and the business mix was more useful to residents, when population density around Downtown was lower.

What else has changed? MUCH higher lease rates for commercial space, primarily driven by office expansion Downtown, making many types of retail financially non-viable. Change in types of businesses due to targeting daytime employees rather than residents. Competition from online shopping.

Cushman & Wakefield did a useful study about the relationship between population density and retail space, which you can find here: Web Link As population density increases, the total amount of retail space does increase, but the amount of retail space per person decreases. If you think about it, this makes sense; the very definition of increasing density is to provide less space per person for *everything*. Is this really a compelling approach?

To be thorough, you'd also need to do some research about the effects of the vehicle traffic increases that inevitably come along with the extra people. I'd guess the effects on businesses located on a thoroughfare like University Ave aren't obvious.

As for comparisons with other cities, what's missing is history. Desirable neighborhoods can develop before prices have risen out of control. Once the prices are up, there might be no economically-viable way to convert back. I suspect a lot of what we're seeing around University Ave is due to this.

Posted by MyFeelz
a resident of another community
on Mar 15, 2023 at 8:24 pm

MyFeelz is a registered user.

@Bystander, you're not going to get a lot of sympathy for having a dry cleaner flame-out. Nor a liquor store. They are not essential businesses. I really really get your inconsolable sadness over losing a coffee shop and your favorite walk-to breakfast joint. But there's a lot more to re-building than just slapping some framework together and shooting nails into some drywall. First, all of the businesses likely had insurance, but only on the INTERIOR of the stores. The owner (who has not been announced to the public) should have insurance on the EXTERIOR of the property. Each entity has claims through private insurance. NONE of their insurance can get a Palo Alto building permit any sooner than "next in line". Palo Alto's infamous BP logjam has its perks for, let's say, people whose property goes up whether they can build on it or not. Capish? It behooves the City to start constructing the 6k promised housing units because those properties will not skyrocket like other (retail) property. Sad to say it but yes, that hole will be sitting there on Middlefield for years. Other permits and building and planning that has been already on hold for years and years need to be finished first. If anything, after the fire claims are all settled, the most the City will allow a permit for is demolition and pave over the spot until such time as permits can be secured to build something on it. I could be wrong, but I always keep in mind the corner at Stateline, on the CA side. A hole was dug to build mixed use convention center, retail and residential in 2007. After digging, the developer went bust. And here we are in 2023, and they are using all it ever became -- a parking lot -- to store removed snow. I suggest you get a permit to get a COW (Coffee on Wheels) Cart and start brewing your own and peddle it up and down the street. It will be faster and easier than rebuilding your favorite breakfast eatery/coffee house. Or, you could move closer to Cal Ave.

Posted by Native to the BAY
a resident of Old Palo Alto
on Mar 16, 2023 at 1:07 am

Native to the BAY is a registered user.

@Bystander and @MyFeelz put in a Winco PA (at Fry’s) or a FoodMax ... RWC, MP, EPA, PA, MT.V will flock.the Nearest Winco, East of Oakland. Or did Did I say? Believe you me, it behooves me to say the obvious. “Provide the solid affordable retail and the Real will come to play and to purchase.

Posted by MyFeelz
a resident of another community
on Mar 16, 2023 at 1:07 pm

MyFeelz is a registered user.

@Native To The Bay: aye aye, porch captain! I will see your Winco and raise you a Walmart Neighborhood Market, which is a scaled down version of the bigger box store. The Mini Walmart could work perfectly at the four burnouts on Middlefield, and Winco could go at the old Fry's spot, with room left over for ... dare I say it ... McDonald's with an indoor playground for kids and drive through open 24 hours!

Hate to break it to the PA Fiefdom, but it is now the 21st century and PA has lagged behind other communities in providing useful amenities. Once a bedroom community for the well-to-do with unlimited pockets, it has now become "diverse" economically with an equivalent need for affordable products and services.

Posted by Anonymous
a resident of Duveneck/St. Francis
on Mar 17, 2023 at 5:12 pm

Anonymous is a registered user.

Please don’t allow more gyms.
No excessive hair salons, nail salons, boba places.
Certainly not McDonald’s.

Consider what will (or not) happen with CalTrain. I currently see NO riders when a train goes by.

Trying to control landlords is not the way for our local government to proceed. Trying to dictate everything is wrong.
DO acknowledge what University, California Avenues have been: pretty much thriving downtowns - driving, walking, train-convenient locales, pretty upscale (but come on, certainly not Beverly Hills). Convenient to Stanford.

I oppose subsidized housing for select politically favored groups. Unfair and illogical. Exception: disabled persons.

And yes, I strongly agree with above posters who brought up the wonderful Borders Books that was so successful on University!! It was a real draw for us. I would like an attractive Barnes & Noble; heard the pleasant news on the radio today that their business is going well.

Posted by Bystander
a resident of Another Palo Alto neighborhood
on Mar 17, 2023 at 7:06 pm

Bystander is a registered user.

What retail brings us is instant gratification. For example, doing a repair job at home and discover we need a round widget to go into a round hole and we only have square, so we run down to hardware store to buy round widget and end up buying 3 or 4 items we didn't realise we needed. Or, suddenly invited to St. Patrick's Day party and no green shirt, so on way to party stop at Target or similar to buy green shirt and end up buying a few more shirts in various colors as well as stocking up on underwear.

When OSH closed, we found out just how much we missed it. Fortunately ACE knew this and was able to take over the same space with the same basic stock. From what I have observed, it is just as busy as it was when it was OSH.

Even with next day delivery, we are still unable to get the same type of instant gratification from Amazon. We do need useful retail. We need it in locally, we need it affordable and we need it because it is an amenity to make our lives easier.

We also need more recreational activities, partiularly for teens. But that is another conversation.

Posted by Laura Guevara
a resident of Menlo Park
on Mar 18, 2023 at 2:03 am

Laura Guevara is a registered user.

I took! Agree with the much need third spaces. The Bowling alley is a great idea. I think another would be a community Play House for the Arts ie: Drama, plays, Music Introduction, Collaboration/Jam Sessions. Those that are tech types and are into all the social networking could maybe create a YouTube video inviting some street musician's (those that say... put together an very entertaining drum session/jam by simply playing on some recycled 5 gallon plastic buckets to participate on occasion in the hopes that it spreads awareness to other communities, business owners and families that we ALL need to be more grateful and get back to appreciating the simpler things in life. And learn to LOVE THE NEIGHBOR!!!

Posted by Native to the BAY
a resident of Old Palo Alto
on Mar 19, 2023 at 2:48 am

Native to the BAY is a registered user.

I have to agree w @MyFeelz on the indoor McDonald's play area. My kids dad on really rainy days in another zip spent hours in such. Endless fun. A coffee a bag of fry’s and 3 hours later home. Our local MickyD’s revamped caters to a wall with a map of HWY 280. Not kid friendly.Tho the lovely woman, long time employee is dream at the counter, is not a structure to play. Sadly she’s been silenced by higher ups to hush her service. Crime!

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