Palo Alto Weekly

News - March 8, 2013

City tries to hold on to retail on Emerson

Planning commission endorses requiring retail at street level on 600 block of Emerson

by Gennady Sheyner

For a glimpse of downtown Palo Alto's changing fortunes, one need look no further than the 600 block of Emerson Street, where zoning laws have been swaying with the economic winds in recent years.

When the economy was sagging in 2009 and spaces on the peripheral downtown block went vacant, the City Council removed a longstanding requirement that retailers occupy the ground floor, giving property owners the option of leasing to office tenants. These days, with empty spots nonexistent and offices displacing several shops on this block, the zoning pendulum is swinging in the other direction.

Several downtown businesses — Blue Chalk Café, Fraiche Yogurt and Jungle Copy — have been replaced by offices in recent years.

On Wednesday night, in a response to City Council concerns, the city's Planning and Transportation Commission voted 5-2, with Vice Chair Mark Michael and Commissioner Michael Alcheck dissenting, to restore the ground-floor requirement to the block between Hamilton and Forest Avenues.

Under the zone change the commission approved, existing offices on the block will be allowed to carry on as they are. But if a building remains vacant for 12 months, the ground-floor retail requirement kicks in.

"I think the issue is that if we don't do this, there is a significant chance that other properties will desire to take the higher rent and that we'll lose the connectivity to retail that is critically important," Commissioner Arthur Keller said, speaking in favor of the zone change.

Only two property owners voiced concerns about the action. Joyce Yamigawa, president of Hamilton Management (a subsidiary of Keenan Land Company), spoke against the proposal, calling it the "micromanagement of real estate." Her company owns the buildings from 624 to 640 Emerson St.

"When you start requiring certain uses that may be contrary to what the market is telling you, that can cause those vacancies," Yamigawa said.

David Kleiman, owner of 203 Forest Ave., on the corner of Forest and Emerson, said he doesn't oppose the concept in general but said it should not apply to his building because it has no windows and would not be viable as a retail site. The building, he said, is more than 50 years old and has been unsuccessful in the past when it had retail use.

"If you can think of a (retail) tenant who would take it, certainly let me know," Kleiman said. "I don't think one exists."

But the commission decided to go through with the change, noting that it would not impact the property unless it were vacant for a year. Alcheck was the only commissioner who spoke against the rezoning, saying he opposes having the city meddle in the real estate market. Alcheck said the change may force property owners to scramble in the "11th hour" to find tenants just to avoid losing the office option. The change, he said, will restrict the property owners' flexibility.

"It's not so much that they won't be able to rent to an office in 12 months, it's that they'll be forced to rent for less," Alcheck said.

Michael, the only other dissenter, had no problem with considering the policy change but argued that the zone change is premature. The city is about to embark on a major downtown study that would assess the area's potential for new development and recommend zoning adjustments.

But Chair Eduardo Martinez echoed the council's sentiment that if the city doesn't move with the changes, more retail establishments would be displaced with offices, which fetch higher rents.

Commissioner Carl King, making his debut on the board, said that if the new policy were to leads to vacancies, the city would have a chance to address the problem then.

Staff Writer Gennady Sheyner can be emailed at gsheyner@paweekly.com.

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