"they'd like to see a "quality, affordable" grocery store, along with a post office, an ATM, a coffee shop, a dry cleaner, a bakery and a sewing service."
I hope that these people realize that while they may want these kind of stores, the people running them will have to see those stores as economically viable.
Anyway, notice a pattern in this story--first the complaints were that there was too much retail. Now the complaints are that there is not enough retail. Could it actually be that neighbors do not want Alma Plaza developed at all so that there will not be an increase in the "dreaded traffic"?
Will the City Council actually make a decision regarding Alma Plaza in our lifetime?
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 7, 2007 at 12:10 pm
This is a perfect example of the congenital defect that Palo Alto suffers from when it comes to retail: the disease of optimal inclusion. Now we have neighborhood residents making projections about what will oro will not work in a retail development.
Not one of those residents will have to plunk down the construction, or retail space buildout costs that a retailer is responsible for. Not one of them will have to make payroll. Not one of them will have to be concerned about lease renewal that can oftenn sweep away 3-5 years of steadily increasing, sustainable profits that gives a small shop owner a chance at a real life, working only 6 days a week, instead of seven.
What I'm proposing is that the day of the hard-working small retail shop owner is just about over here. With rents at current levels, and projected to go higher as Palo Alto becomes more and more a desirable address, how does any retailer stand a chance over the long term?
btw, it would be interesting to know how many Palo Alto developers go into retails businesses, in a significant way. I'll bet the answer is "zero". The reality in Palo Alto is that a retailer needs every variable s/he can get, including more space,, etc. - if that's what the retailer - THE PERSON MAKING THE INVESTMENT - needs for current and future operations.
My hope is that the Planning Commission will see through this consultant's report for what it really is, an attempt by well-meaning people to have their way with someone else's money.
Posted by ToldUSo, a resident of Another Palo Alto neighborhood, on Mar 7, 2007 at 12:22 pm
Do the Alma Plaza residents realise that an affordable quality grocery store can offer ATMs, Bakery, Coffee Shop (even Starbucks) and dry cleaning services. I am not sure about sewing store, but since there was once there and I believe they have successfully moved elsewhere, it is unlikely. A nice Plaza outside a grocery store is achievable. We could also do with a gas station in the area since the one in midtown is closed. But, to be realistic, we must be able to pull in others than local residents if we want anyone to function in this site successfully. Therefore things must be offered that are not offered closeby to become a magnet. Only then will people from all over come to Alma Plaza rather than go to Mountain View or elsewhere to spend sales tax dollars. Remember, grocery stores do not pull in much sales tax.
Posted by ToldUSo, a resident of Another Palo Alto neighborhood, on Mar 7, 2007 at 12:26 pm
Sorry, I meant a Starbucks type coffee shop inside a grocery store. I don't think Starbucks itself would be operating inside a grocery store, but it could happen that they might be interested right beside a well thought out store.
Posted by curious, a resident of the Downtown North neighborhood, on Mar 7, 2007 at 12:45 pm
Where were the "Friends of Alma Plaza" when Albertsons wanted to enlarge to a 25,000 sq ft store? I recall there was alot of opposition. When Albertsons sold the property, they put in a deed restriction, if I remember correctly, that will prevent a grocery store larger than 18,000 sq ft...
To me, this back and forth of "Too much Retail", "Not enough Retail" is a very sad situation for the developer.
By the way, a grocery store doesn't provide as much revenue as other retailers, because many food items are not taxable!
If the neighbors feel that strongly, they should raise the money themselves to develop the site they way they want it.
Posted by CalPolyStudent, a resident of the Midtown neighborhood, on Mar 7, 2007 at 12:59 pm
Being from Palo Alto, but currently in San Luis Obispo, there are many instances here in town of a Starbucks inside a grocery store and then another one right outside within the same plaza. Funny business.
Posted by Anonymous, a resident of the Crescent Park neighborhood, on Mar 7, 2007 at 1:02 pm
How about something which improves the tax base, like another car dealership or a store like FRY's? Aren't the other forum participants complaining that there is too much housing (and therefore school kids)?
Posted by Bill, a resident of the Palo Verde neighborhood, on Mar 7, 2007 at 1:29 pm
Barb, you say the day of the small retail shop is about over here. Then why do Developers indicatea great willingness to build mixed-use housing with 1st-story retail?
And note that Mr. McNellis in his Council presentation of Alma Plaza last year featured a
consultant of his own.. Why then does his team opine that if their opposition hires consultants, then what they say is meaningless because consultants are not believable ? They can even get inappropriate people on magazine covers, they say.
Charleston Plaza across from Costco (not Charleston Center) has the same geography
as Alma Plaza: U-shaped acreage with awkward entry. Yes, CP is bigger, but both sit
on a major road. A stop-light is prominent at CP. Do people who say AP can't prosper
Posted by Jean, a resident of the Community Center neighborhood, on Mar 7, 2007 at 2:34 pm
Starbucks does indeed operate in grocery stores and other niche places - like Stanford Hospital Cafeteria, train stations, and airports These are often franchised out, usually. There is a big Starbucks in the Safeway Store at Sequoia Station shopping center in Redwood City and on many college campuses.
Posted by Move on, a resident of the Green Acres neighborhood, on Mar 7, 2007 at 4:36 pm
Times change. We had a shortage of housing. Now we have housing going up everywhere (I'm not claiming affordable, but housing) and we're losing unique retail so significantly, it's affecting the character of the city and the quality of life here. Not surprising that people would try to protect retail areas.
We live in a world where fortunately people don't get to do whatever they want wherever they want, though certainly money does talk. Cancer death rates have been declining, and tobacco control is considered the top reason -- though it sure was a tough fight with the pro-smoking lobby and all the angry smokers complaining about restrictions on their right to fill everyone else's lungs with tobacco particulates whenever and wherever they wanted.
Palo Alto is a community. One of the things that makes Palo Alto desirable is the relative ease of getting around the city and (is/was?) the locality of basic retail -- which we have been losing since the dot com boom. Try living in Sunnyvale or Santa Clara for awhile and clock how long it takes you to grocery shop, for example, and how much more time you spend in traffic. This impacts quality of life and in the long-term, the investment that all of those neighbors have already made in property that in totality costs more than the plaza at issue. And they were there first. A developer would have to be pretty naive to not have some idea of what s/he was getting into in this town.
Whatever happened in the past is past. To those who are wallowing in past failures, swallow your bile and move on -- things can move more smoothly in this city if YOU, too, are are willing to let them. Today, now (and in fact for quite awhile now), given new knowledge about communities, global warming, pedestrian-friendly urban planning, etc., neighbors want to preserve neighborhood retail. They do not wish to sink retail, make it unviable, or be unrealistic, they clearly want to see it thrive at that location. They have a legitimate economic and community concern that retail property remain retail property, since it is easier to convert retail property into housing than vice versa.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 7, 2007 at 4:46 pm
Bill, there is a BIG difference between the Chaleston Plaza and Alma Plaza sites. Costco and neighboring stores are is a massive anchor for Charleston PLaza. It also has Rt. 101 visibility.
Sure, developers want to profit, but there is too much talk about "evil developers" in our city. There are ways that we can extract advantage from retailers, other than current strategies.
Developers have been conditioned to come to Palo Alto in a *defensive* frame of mind; thus, they save concessions for when they're needed, instead of offering perks up front.
This is a real problem, and won't go away until we can prove that we're not out to make sure that only as little profit as possible will come from commercial developments.
As for "mom and pop" retail, it's all but over here. $4.00 per sq. ft. and up is not sustainable for almost any small business, especially in a community where the forword commercial rent profile is even higher than that.
Developers will continue to build small retail venues because there are a LOT of entrepreneurs out there that want to take the risk, or have the means to open something up and afford long-term losses until a profit shows. The latter is far from the "mom and pop" mentality that used to prevaiil in small retail.
Posted by Bob Gardiner, a resident of the Midtown neighborhood, on Mar 7, 2007 at 5:56 pm
You say: "This is a perfect example of the congenital defect that Palo Alto suffers from when it comes to retail: the disease of optimal inclusion."
I am not sure what that is. Actually, I may have it.
I don't follow your argument. On the one hand, you seem to argue that the price per sqft. is too high to enable retail. On the other hand, you argue that developers are staying away, because it is too difficult (i.e., expensive) to do business here. If we were to make development more user friendly, then more developers would come here and bid up the value of the land to even higher levels. How would driving up the value of the land, and $/sqft encourage more retail?
Can we make sure we are on the same page with respect to real estate economics?
Zoning controls a property's value. For a given property, more restrictive zoning leads to lower value for that property.
Lower property values lead to lower rent.
Also, with respect to future rent, for a 20,000 sqft facility, most businesses, if they choose to lease, are going to lock in a long term lease with defined rent increases. So can we take that out of the discussion?
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 7, 2007 at 11:00 pm
Bob, I said: "Developers will continue to build small retail venues because there are a LOT of entrepreneurs out there that want to take the risk, or have the means to open something up and afford long-term losses until a profit shows. The latter is far from the "mom and pop" mentality that used to prevail in small retail."
In other words, retail happens here in spite of mostly unsustainable fixed costs (for most retailers). Ask some retailers, at random, and see what they say.
Zoning is not the only variable that controls land value - far from it. Zoning rules are manipulated all the time, for advantage.
Lease renewals are rendered at "average surrounding value". Maybe if yuo were in Kansas you might get a deal like the one you describe - not here, not now. I know from local experience.
Posted by Anna, a resident of the South of Midtown neighborhood, on Mar 8, 2007 at 1:51 pm
It's Mr. McNellis land. So, here we have another argument, this time from Bill, to help someone who has made an investment, figure out the best way to make that investment work. This is what's at the bottom of our poor relationship with developers (who are not angels, btw). There has been no sense of balance on debate over development here. Rather, it's been more about too much listening to the same small group of people who, in the end, really don't know what they want, or keep searching for some golden mean that leads to interminable delay, paralysis, and ultimately, local stagnation.
Posted by Move on, a resident of the Green Acres neighborhood, on Mar 8, 2007 at 5:12 pm
Um, Anna, I think what Bill is saying is that the Alma Plaza is CURRENTLY zoned for commercial/retail. It was NOT zoned for housing when the developer bought it. The neighbors apparently just want it to stay zoned for retail, they are NOT trying to CHANGE the zoning, the developer is.
Please read my comment above and maybe even understand the actual situation a little better before injecting your own baggage -- Do you not see that YOU create unnecessary contention when you do? (and you wonder why we end up with stagnation!).
Posted by Bob Gardiner, a resident of the Midtown neighborhood, on Mar 8, 2007 at 6:20 pm
Couple of things:
You say "Zoning rules are manipulated all the time, for advantage."
That is exactly the argument against re-zoning the Alma property. It should not be re-zoned for the developer's advantage. It should be zoned to encourage what is best for the local neighborhood, and was originally planned for that property when the neighbors bought their adjacent property. No one should be able to re-zone their property without compensating their neighbors for losses, if applicable.
Sounds like we have different experience in real estate. When working in a sunnyvale co. real estate group, we always negotiated leases with renewal options tied to the CPI or other related index. I find it hard to believe that safeway, piazzas, and whole foods do not have long term renewal options on their property.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 8, 2007 at 10:24 pm
Bob, Certainly, as stated prior, Piazzas, whole Foods, fry's, etc. DO have renewal options. But what do those options state? 100-1 they state first right of renewal at "average" market rates.
Translate that to smaller retail, where smart proprietors also try for long-term, multi-option renewal. What small business that's not a chain can come in to rent 2500 sq. ft at $4 per sq ft - with, say, a 5-year, option-renewal lease that includes small incremental increases per annum, also including triple net (utility, maintenance) increases that often increase faster than inflation, and in toto often add 25% to base rent)? What small business can sustain that over 5 years, and then watch it's rent increase by 50% at renewal, to meet the street average?
C'mon Bob, if you've been in real estate, you must know that score. Walk through downtown Palo Alto, or California Ave., Los Altos, Los Gatos, etc. where commercial rents are on the aggressive upswing. What's the turnover, per 5 year segment? It's high. How many retailers make it past the first 5 years?
As far as rezoning, of _course_ the developer is going to try for advantage. Why shouldn't s/he? Why shouldn't the residents? We all know that happens. My point was that "zoning" is OFTEN manipulated by one group or the other for advantage. That's just a simple reality.
That said, what's happened here is that small groups of residents have used _their_ power to affect zoning in a way that has created, through a kind of weird commercial eveolution, developers who have become far more savvy than they used to be, so that they can gain advantage. That's what happens when there are dangerous preconceptions about any one group by another - like the preconceptions that you appear to have about developers.
What has happened as a result is a "fight to the death" mentality where almost everything goes, delay persists, people become upset, but something ultimately gets done, and usually - in spite of sky is falling" warnings to the contrary - that something turns out to be a delightful addition to our community.
I would be in agreemen with you if the stuff that a core naysaying group in Palo Alto had opposed turned out to be abominable, but just the opposite has been the case. Thus, I support the McNellis plan. It's time to let Alma get built out, let people grumble while that's happening, and then happily shop there once it's finished.
Once it's done, we'll see how "faithful" the naysaying group is to their "shop local" arguments. Let's see if they walk the walk, instead of being closet Safeway shoppers.
AS I expected, a vocal crowd wants more retail now. They do not propose to actually own and manage the retail--they just want more retail. Maybe they should go out and get commitments from retailers that will be willing to be in their version of Alma Plaza.
You know what happens next--if they make the developer come back with more retail, they will complain that it is too much retail. Anyway, any grocery store that will eventually go in Alma Plaza, will be a higher priced specialized one, that will be out of range for most local shoppers that want to stock up on essentials.
remember a few years back they could have had a shopping center with a 25,000 square foot grocer and other retail--they did not want that.
Posted by reader, a resident of Another Palo Alto neighborhood, on Mar 9, 2007 at 8:50 am
McNellis did go on and on about the “troubled history of Alma Plaza,” and the three iterations of the plan he had already presented, each time reducing the amount of housing and increasing the amount of retail. At this last iteration, commercial space has been increased to 10% of the total built area. However, the current standard for Mixed Use Zoning is 15% commercial. The project is still more heavily weighted to residential than required.
Who has been holding things up - the neighbors trying to hold the city to its own standards, or the developer who refuses to abide by them?
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 9, 2007 at 10:23 am
The neighbors don't own the land, and don't have to live with reducing their ROI - nor do they have to risk investing in retail stores that may prove to be marginal.
Not every neighborhood can have a comprehensive commercial center. The delays that these residents have caused have picked away at McNellis ROI because of the construction and other inflation that his project now faces. The residents who are moaning about htis plan have brought tthis entire problem on themselves.
McNellis has compromised enough. I hope he's able to build as currently planned. Once he's finished, the neighborhood will love it. Like I said above, let's see if the people coming out for these hearings walk the walk and do the bulk their food shopping at Alma. 100-1, that won't be the case. So, what is this really about?
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Mar 9, 2007 at 11:20 am
Well, I think that finally after 10+ years, the Planning Commission and City Council need to decide if they will grant the re-zoning for mixed housing/retail or not. This has been going on too long--if they decide to keep it all retail then the developer will have to decide if he thinks it is worthwhile to try to build all retail or not (maybe the people who are pushing for all retail can pool their money and buy the property and then build and open the kind of stores they want).
The way I see it--this will go back and forth forever with the place becoming even more of an eyesore than it is now.
Posted by reader, a resident of Another Palo Alto neighborhood, on Mar 9, 2007 at 11:39 am
The mixed-use zoning the developer is asking for has a requirement that at least 15% of the built area be ground floor commercial use, which would be $27,500 square feet. The Planning Commission asked for 30,000 square feet of commercial at their last review. The developer has come back with 10% ground floor commercial or 18, 250 square feet. He has always had the choice to comply with the requirement and speed up his approval.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 9, 2007 at 12:24 pm
Does it occur to anyone that meeting those requirements might not make the project financially viable for the developer? Has enyone asked McNellis why he keeps coming back with less than the required amount of retail? Has anyone penciled this out?
Posted by reader, a resident of Another Palo Alto neighborhood, on Mar 9, 2007 at 12:50 pm
To a certain extent zoning exists to insulate land development from market forces. Right now, single family housing is hugely profitable, and the payback is instantaneous - no worries about leases or how well retail succeeds. In the future, commercial development may be more profitable than housing, but this site will no longer be available for commercial development - it will have been subdivided and will be owned by 40 separate individuals. I think it's prudent to take time to make such a radical decision.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 9, 2007 at 2:12 pm
Radical decision? the only thing radical about Alma Plaza is the fact that a viable piece of real estate has been held in limo for years by people who don't own it. Yes, they have a vested interest in it, as citizens, but 10 years? C'mon folks!
Does anyone think that as Alma moves through the usual gauntlet that the developer will not compute his construction inflation and other losses and pass them on in residential construction quality? What's that going to cost the new residents there?
How about the retail spaces? What kind of retail ammenities - in terms of quality of retail infrastructure - will be left out of the built retail space, to make up for olosses caused by delay?
There seems a blatant ignorance about these things, from the resident's point of view. It's as if retail space isi all the same, and that retailers themselves don't pay the costs ofo development delays caused by all the process they have to endure in Palo Alto.
Let's be clear, I am in no way associated with any developer, nor am I a developer, but I have been downstream as a business owner more than once, having to pay the piper for costs incurred by the person who developed my retail space. I, me, the retailer ended up having to pay for residential obfuscation and forced delay.
We talk of making business environments better in Palo Alto, but some who shout the loudest seem to be doing their best to cause the creation of downstream costs that _hurt_ retail. The developer is going to make his money one way or another.
Think about the total value lost by the developer for the changes that are being compelled; it's by that amount that future retailers (in higher rents and lack of buiult in infrastructure) or residents (in lower quality construction) will pay. Delay costs money! And it's not the developer who loses. When will we get this financial reality through our Palo Alto Processing skulls?
We need to figure out a way to work more effectively with developers here, bec ause all we've done is hurt ourselves - with additional cost, and community dissent.
Posted by Bob Gardiner, a resident of the Midtown neighborhood, on Mar 9, 2007 at 5:47 pm
On the one hand, you argue that Palo Alto is too tough on commercial and office property owners. We overburden them with red-tape and unrealistic zoning requirements. If this is the case, then their property values should be lower than others on the peninsula. Lower property values directly translate into lower rents.
Yet, on the other hand, you complain about property owners ability to charge high rents and negotiate FMV renewal rates, which indicate the property has a relatively high value, and the owner has a relatively strong negotating position.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 9, 2007 at 10:15 pm
You're creating a straw man.
Where did I say that zoning regulations are too burdensome? I *said* that zoning regs are up for manipulation by all parties. You're making yuor ownn straw man conclusions to prove your imagined assumptions about my arguments.
Many variables are responsible for the value of Palo Alto real estate; zoning is simply one modulator of those variables. Anyone who really understands real estate finance will tell you that.
Where did I complain about property owner's ability to charge high rents? I simply stated that they charge high rents to make ROI. It's a market reality, Bob; that's simply stating reality, not complaining.
What comes out of your arguments is a shifting ecology of value that appears to depend on what argument yuo're attempting to win.
The bottom line, Bob, is that delay has _cost_ developers and residents here. *Residents* and *retailers* will bear the burden of those costs, going forward. In sum, residents and retailers will bear the brunt of the burden for the delays that some small group of residents have caused at Alma Plaza, and other places (a similar fiasco is developing at Edgewood Plaza).
Deny that at your peril, and at the risk of revealing a lack of the basics of real estate economics. Palo Alto real estate is a seriously price inelastic commodity; those who try to make bifurcated arguments against that reality - as you and some others appear to - are skating on pretty thin ice.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 10, 2007 at 12:33 pm
Walter, this is an interesting idea. The indiginous Asian population is large here, and growing. Also, Asian markets have great produce (at far more reasonable prices than most markets), seafood, meats, and other more specific Asian comestibles. What they don't carry are other staples that most people need - like dmoestic cleaning agents, paper products, frozen goods, etc. Something like this might work if it was a "fusion" grocery store - something that had the convenience items we all want, in addition to the Asian specialties.
Posted by Bob Gardiner, a resident of the Midtown neighborhood, on Mar 10, 2007 at 4:57 pm
you say: "Palo Alto real estate is a seriously price inelastic commodity; those who try to make bifurcated arguments against that reality - as you and some others appear to - are skating on pretty thin ice."
So, if PA real estate is seriously price inelastic, then I can sell my house for 20% over the market (local comparables) tomorrow.
Is that your reality that I and some others don't appear to understand?
Posted by Walter_E_Wallis, a resident of the Midtown neighborhood, on Mar 10, 2007 at 5:26 pm
Has anyone experimenting with a multi-story supermarket? If we can navigate between floors to buy clothing, why not for groceries? The other alternative, walk around for merchandise like meat and vegetables where you want to pick and chose and sitting at a terminal, either at the store or before leaving home to make your selection to be boxed for pickup. Alma is a site now that will never compete with the big box conventional supermarket sites. Supermarkets have experimented with home delivery from computer orders, but the cost busts them. The same picking software to put an order at a drive up window would be a piece of cake. Just think - no more disease ridden shopping cart handles, pick up groceries in 5 minutes on the way home, bypass the cookie peddlers [delete that, they are the bright spot of my shopping trips] and finally show some thought. Palo Alto delayed cable for a decade and wound up with plain old cable. Let's this time give points for innovation. Like we used to say in the old Army, do something even if it is wrong, just do something.
Posted by Shopper, a resident of Another Palo Alto neighborhood, on Mar 10, 2007 at 7:45 pm
This time last year I broke my ankle and was unable to drive for many weeks. During this time I used Safeway.com for grocery shopping. Yes, it suited my purposes with a disability, but it could not take the place of my visiting the store. The main problem was that in the time it took me to place my order, I could have gone to midtown and bought the groceries. The first occasion was the longest as every item required a long search through their virtual shelves. After that, because the system remembered my list, I could click through that very quickly, but every time I wanted an item for the first time it took too much time. Coupled with that, I know what I want by sight - the size, the brand and where I normally pick it up en route through the store, made the experience very time consuming.
As a result, I do not think the solution lies in Walter's ingenuous idea. However, multi storey grocery stores will happen, just got to think of a good way of getting those carts up and down the escalators.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 10, 2007 at 8:10 pm
Gee, Bob, I'm falttered that you would take the time to parse my posts so carefully. ;)
As to your question about the price inelasticity of land in Palo Alto: Price inelastic in real estate means that property s resistant to downward demand, even if the price of that property rises. Any real estate economist will tell you that price inelastic property will continue to be in demand, as it increases in price.
As to your query about why suddenly placing your property at 20% over market might not work - - that's easy. THere would be lots of properties still priced below yours, becxause your substantial increase exceeds the marginal value beyond which most consumer would be willing to pay, today. If, however, all prices rise in the next year by 20%, you might witness and even stronger demand than prior, or similar demand compred to when prices are lower.
What I mean by a "shifting ecology of value", applied to this forum, is when certain individuals cleverly change the subject, or refuse to answer well put questions that might challenge their position, and as a diversion try to make their point by suddenly "valuing" another part of their argument, to keep their debate opponent off balance.
For instance, I can start to answer a question about the proposed police station, and suddenly the person I'm answering will say "that doessn't matter, because we're $28M in the hole on road mantenance". Essentially, it's a debate tactic that wears thin after a while.
"Also, what is a "bifurcated arguments"?"
A bifurcated argument is n argument that is made by someone who places an argument in such a way that the argument can't be lost.
Hope that helps; there will be a test on Monday :)
you say: "Palo Alto real estate is a seriously price inelastic commodity; those who try to make bifurcated arguments against that reality - as you and some others appear to - are skating on pretty thin ice."
So, if PA real estate is seriously price inelastic, then I can sell my house for 20% over the market (local comparables) tomorrow.
Is that your reality that I and some others don't appear to understand?
Posted by Bob Gardiner, a resident of the Midtown neighborhood, on Mar 10, 2007 at 9:24 pm
'Any' economist will tell you, inealisticity applies to all products, not just real estate. It reflects the respective competitiveness of a market. Price inelasticity exists in a monopolistic/less competitive market.
So that when prices rise, demand will remain constant. That implies I can raise my house price all I want, and demand will still be there.
I highly doubt that.
We don't seem to be getting anywhere on economic theory, nor the future of Alma Plaza.
Posted by Mike, a resident of the College Terrace neighborhood, on Mar 10, 2007 at 10:28 pm
Bob, your last comment is a perfect example of a bifurcated argument. You asked a question; I answered it. Then you took my example to a logical extreme, to prove your point.
That's pretty disingenuous. Clearly, you don't have a handle on economic theory, or you would plainly understand that a unit of value has marginal resistance even in a price inelastic market.
btw, price inelasticity does NOT apply to all products. Many products fail to sell of their price increases. That's why there's such a thing as "price elastic" products. It's the other side of the coin. (Econ 101)
Ferrari's are price inelastic, but that doesn't meann that you should be able to sell one for a billion dollars. Your's is an argument ad absurdium. (btw, I've coached debate classes, and am for hire)
Back to Alma Plaza, everything I've claimed holds true, ins pite of your bifurcated arguments, and attempts to could issues.
This is exactly the sort of thing that developers, future retailers, and fellow citizens shouldn't have to put up with, because they are the ones that pay the price for the small groupp of naysayers here that want to grind Palo Alto's progress to a halt.
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Mar 11, 2007 at 4:52 pm
It is interesting that people want primarily retail for alma Plaza--they had their chance a few years ago for primary retail and were unhappy with that proposal.
It seems that a small group of NIMBYists have decided to fight redevelopement of Alma Plaza at all costs--the original group leadership has stepped aside and put new figureheads in charge, so that people will not get the idea that the same people are opposing everything.
it is clear that there is a vocal group of people who are happy with Alma Plaa the way it is now--quite and no traffic and plan to keep it that way.
Anyway, let say it stayed all retail--what retail would go in there--do these people have retailer lined up--the fact that a group of vocal naysayers want retail does not mean that persons will risk their capital to open a store in Alma Plaza. You won't get a major grocer due to the silly 20000 sq. ft. limit needed to "protect" JJ&F etc (no free market economics in PA).
Posted by Bill, a resident of the Palo Verde neighborhood, on Mar 11, 2007 at 6:36 pm
To Not-so-fast: Well it is all interesting. Including the part where Mr MeNellis about 2002 was raving about what a great retail site Alma Plaza would be. But in the meantime, residential property value has increased and by coincidence, AP has now become unsuited for retail, though it has the same geography it did before. So now, is everyone opposed, wherever s/he lives, a NIMBYist? Seems like trying to win an argument by assailing the character, and not the logic, of your opponent. Btw, can you define for us the distance from AP that one must live to cease being a NIMBY ? And is it not true that when Mr McNellis bought the property that is Alma Plaza 3 years ago, he had long experience with its merchants, knew that it would have to be rezoned to support profitable housing, but wanted to make a speculative land-purchase in the hope that he could prevail with City Officials, but knowing he would meet with massive public resistance ? True, right ? Some speculative "investments" do not work out. We do not then talk about "ROI." We talk about the necessity of diversification for anyone taking big speculative risks.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 11, 2007 at 7:00 pm
Bill, How much do you think that delay has cost McNellis? Add it up. 12-15+% per year in construction inflation. Might interminable delays have something to do with a change in his plans, to optimize ROI?
Next, assuming a grocer goes in at Alma, how many residents demanding a grocer there would be willing to sign an annual "food debenture" over to the grocer, equal to 90% of those resident's projected household projected food costs? Probably none.
I bring this up because it's easy to say "we want retail" . It's a different story when it comes to walking the talk.
btw, what do you think a grocer going in at AP would do to Piazza's, less than a mile away as the crow flies. Given that, how many resident households would even be winning to sign the above debenture over to both Piazza's and the new AP grocer, with no return made to any resident that didn't fully spend out the debenture by year's end?
Here's my guess as to an answer: Probably less than 10% of resident clamouring for a grocer at AP would be willing to sign either food debenture.
How about debentures for other retail that goes in there - liek a dry cleaner, pisseria, bike shop, etc. etc. Will residents walk the talk. Let's see people put their expenditure budgets where their mouths are, walk the talk, and most imporatntly, share risk.
Are you willing to do that. If not, then we know where you really stand.
Posted by Bill, a resident of the Palo Verde neighborhood, on Mar 11, 2007 at 8:15 pm
Barb, I ask again: about the time Mr McNellis decided to buy Alma Plaza, did he not, while
saying AP was a greeat retail space, already know he would have to count on a long road to overturn zoning? Was it not a gamble? Purchase price plus years of City meetings. If the zoning change was a no-go, then he was out of pocket, tho not too much if he got a bargain
purchase. If he succeeded, then he got a big wind-fall when the 4 acres shot up in value due
to newly permitted profitable housing. I wonder why you think people should sign any kind of debenture. Or be required to walk the walk. Neither retail customers or potential housing owners need do that. The AP owner never in a realistic world expected that, and it
doesn't seem reasonable for you to be suggesting it.
Posted by Barb, a resident of the Adobe-Meadows neighborhood, on Mar 11, 2007 at 9:29 pm
Bill, You never answered the possibility of delay on the project forcing a switch to housing, to make up for lost ROI. We're going back and forth.
Sure, I'm willing to consider that McNellis is gaming the system, but given what I've seen in terms of resident-forced delay, McNellis probaly left his development options open so that he would have the flexibility to act in a certain way if ridicuous delays occured, and they have.
About "food debentures", you answered my question as I thought you might, by dismissing it. Why shuold that be. The "food debenture idea" is just an exercise to show that some residents who demand retail are unwilling to commit to supporting that retail after it's built. They just want the cozy feeling that they can shop nearby, when it suits them. THAT's the reason we're seeing small retail suffer here, and other places.
Juliet, you ask "how much profit does a developer require to make a project economically viable". That depends on the property, and the developer. Developers have to consider site costs, design specs, development capacity, land use modeling and yield targets - among other things. Development is a *costly* business, with *lots* of risk. The monolithic idea that developers just come along and buy land, and then reap a profit, is archaic. Many developers are responsible for investors who are sharing their risk, and so on.
And, who are we to say how much is too much? It's the developer's land. Has anyone questioned you about whwther the profits you'll take from your home when you sell it (if you own a home here) are excessive? How would you feel about being asked that question?
IN fact, everyone here who has enjoyed 1000+% run-ups in their homes out of sheer dumb luck of having bought in 2-4 decades ago are as much a part of the problem as any developer. Think about it.
We're in this together, folks. there is no "bad guy".
Posted by Bill, a resident of the Palo Verde neighborhood, on Mar 11, 2007 at 10:27 pm
"Barb," I think it was just a matter of months after Mr McNellis bought the property that he began promoting re-zoning of it. His manuevers, so far unsuccessful, have met the expected citizen resistance, and caused delay in commercial development. HE is the primary cause of delay. Had he not taken this path, a fine shopping center could have been built by
now. Being human and a businessman, he WANTS commercial use to be viewed as unprofitable, so that he NEEDS to be given the right to build houses. And make a very
nice profit in the process.
Anyway, No, he isn't turning to housing to make up his costs from his own delays.
This intent was there very close to the time of purchase, probably even before that.
It's his land, but it's zoned. It's been zoned for a long time. And you can bet he knew it.
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Mar 14, 2007 at 10:51 am
And where is that 29K sq. ft supermarket? Didn;t the neighbors shoot it down as too big? or was it the moratorium on building, a certain "neighborhood leader" got the city council to agree to in the dead of night that derailed the re-building of Alma Plaza?
Either way that is 4 years ago--Albertsons is gone and there is now a stipulation that no supermarket can be greater than 18,000 sq ft there.
Also not sure where you got that quote from since according to the PA Weekly archiive there was no issue on 1/19/03:
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Mar 15, 2007 at 2:19 pm
Piazza's and Safeway in Midtown are at about 20K sq ft or less--but everyone complains about the Midtown Safeway being to small.
There was a report in yesterday's PA Weekly about the planning meeting and how it went. Unfortunately it is not in the online edition so I cannot post a link to it. But two things stood out--one was that one of the people who got Alma Plaza included in the Charleston Road building moratorium a few years ago, and therefore put a halt to a previous plan to keep Alma Plaza mainly retail is now complaining about the current plans!!! Second is the fact that a few people are upset with the "hypocrisy" of some of the neighbors, who seem to oppose anything that is suggested for Alma Plaza.
those two points go along well with my suggestion that there is a small, but vocal group who are determined to keep Alma Plaza as it is now (vacant and quiet) in order not to haveto deal with "traffic" and "other problems" that any remodel will bring
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Mar 15, 2007 at 2:47 pm
Palo Alto Mom,
I think you will find that people do complain about the midtown Safeway--you can go through this forum and look at all the people that have posted that they do their grocery shopping in Mtn View or Menlo Park because the stores in PA are small and crowded.
my complaints about vocal groups may be getting old, but they are true--look at the recent history of PA and who has held up development and caused businesses to leave town (everyone knows that the squeaky wheel gets greased in PA)-of course the real blame lies with the city council and their inability to make decisions that may possible upset some people.
Posted by Bill, a resident of the Palo Verde neighborhood, on Mar 15, 2007 at 6:41 pm
Not-so-fast, Hi. Did you find the 2003 McNellis quote, yet, wherein he enthuses about Alma Plaza? 1-10-03, WEEKLY ARCHIVE. ".....the best thinking of urban planning...." when it was to be developed all-commercial. The geography's the same now as then. Other 20,000 foot grocery stores are prospering in PA neighborhoods. What do you really think now? And please don't comment about "vocal groups." You and I are both "vocal," along with everyone else who posts here. "Vocal" here means contributing to a debate. In some cases, the word means (I guess) resisting inconsistent stances, which appear to be little more than insincere rationalizations. Which portend degredation for Palo Alto. WELL, ANYWAY, DID YOU FIND THE QUOTE YET, AND DID I HAVE IT RIGHT ?
Posted by Shopper, a resident of Another Palo Alto neighborhood, on Mar 15, 2007 at 7:34 pm
Safeway at Midtown is too small. The aisles are too small, and so are the ones in Cal Ave Mtn. View. The biggest problems with midtown Safeway is that they are often out of popular items, e.g. bread, milk, bananas, etc. and they always, at any time during the day, have delivery people blocking the aisles stacking the shelves of things that are not the most popular. Oh, they need a good bakery there too.
Posted by Bill, a resident of the Palo Verde neighborhood, on Mar 15, 2007 at 9:51 pm
Safeway has about 20,000 sq ft. The aisles are fine. Same as at T.J.'s, they are often crowded with shoppers. Same as at Piazza's. That's the point: they are crowded with people who live nearby and want groceries. They are viable. They are 20,000 sq ft, and
viable. I can always get parking at any of them. Think all three are dandy. But, yes,
crowded and prospering. And in this context, it is the prospering aspect we're interested in.
because many of us don't buy the argument or opinion that a 20,000 sq ft grocery cannot prosper at Alma Plaza on a busy street, backed up by serious amounts of smaller retail.
Posted by Mike, a resident of the College Terrace neighborhood, on Mar 15, 2007 at 11:26 pm
Not So Fast is mostly right. The Alma Plaza issue has been turned into a municipal fiasco. A small coterie of people who took Alma on as their personal hobby horse have kept anything from happening there. The longer Alma festers, the longer this group has the ability weigh in and stay engaged in its hobby.
It sounds whimsical as first, until one realizes the bitter irony that's contained in the following insight: "for some, it's more about process than getting things done". Some can - for ahwtever reason - afford interminable process. Increasingly, most of us other can't.
Tilting at windmills has gone on long enough; it's time to get busy and grow.
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Mar 16, 2007 at 7:06 am
yes I found the quote. I guess we would have to ask McNellis why he has changed his thinking now--could be due to a change in what he thinks can get done at Alma Plaza or the fact that he now owns the plaza and in 2003 he did not.
But i think we are in general agreement that something needs to be done with Alma Plaza soon. the city council will have to bite the bullet and decide something, even though it may upset some of the neighbors.
Posted by fred, a resident of the Barron Park neighborhood, on Mar 18, 2007 at 10:49 pm fred is a member (registered user) of Palo Alto Online
How do speculative real estate projects work here? The developer bought Alma Plaza (what a dump, btw); he paid a price that he thought would let him turn a profit, given whatever assumptions he made. Maybe he assumed he could re-zone, maybe not. If he did assume it, and it turns out he's wrong, well, he made a bad investment. He's no different from tons of other entrepreneurs, who hoped for the best, spun the wheel, and lost out. So he either builds what he can and gets a lower value than hoped; or he sells to the next guys, hopefully at a price that doesn't assume re-zoning will occur. The retail rents reflect that price. One would assume there is some price at which the rent supports a neighborhood shopping center.
Is the place zoned for residential? If not, why would it get re-zoned (bad location, under-sized, or ??)? If it doesn't, isn't it simply a case of an over-optimistic developer, and the sooner he takes his lumps the better?
Posted by Neighbor, a resident of the Monroe Park neighborhood, on Mar 19, 2007 at 8:28 am
It is a tribute to uncompromising greed.
Many good things could be built here but the developer wants his pile of gold. He huffs and he puffs until we feel sorry for him and people like you lose patience. He tells the city council and the newspapers how hard and long he has worked. It's a ritual dance. He could build a good project today if he decided to observe the law, the zoning.
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Mar 19, 2007 at 11:30 am
Neighbor--oh really??? Will anything proposed for Alma Plaza satisfy the neighbors (or should I say the small vocal group that has held up Alma Plaza for years).
A number of years ago you could have had it as only retail with a 29000 square foot supermarket--that was too much retail. Now when the developer comes back with housing plus retail, it is not enough retail.The developer has to be able to make a profit from Alma Plaza or else there is no point in building anything, just like any of the stores that the neighbors want in the center need to be able to make a profit.
A small group of people who are exploiting the "Palo Alto process" and an indecisive city council have led us to this juncture regarding Alma Plaza.
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Mar 19, 2007 at 12:06 pm
Neighbor--I am expressing my opinion on the situation--I am not alone, check out this thread and other threads. Alma Plaza is just a symptom of a problem facing PA--an inability of the city leadership to make a final decision on anything.
You may be correct that the market has changed--now Alma Plaza will have to be partial housing and partial retail--I pointed out what happened a few years ago to make the point that the neighbors could have had all retail then, but that was still not enough for some people.
I guess only in Palo Alto can expressing your opinion a number of times be considered "bullying".
Posted by Karen White, a resident of the Duveneck/St. Francis neighborhood, on Mar 19, 2007 at 12:13 pm
Alma Plaza is a first and foremost a neighborhood shopping center. That the developer has chosen to partner with Greenbriar Homes -- which apparently has never developed a genuinely mixed use project -- is no rationale for subdividing the site and relegating most of it to housing.
The following comments, excerpted from a Palo Alto Weekly Guest Opinion by Jim Baer published May 26, 2004, are as relevant to Alma Plaza today as they were in the context that they were written. (The full opinion can be read at
The unpredictable bumps of the Process will not defeat a project if -- and this is critical -- the project has a sense of gravity (momentum) and downhill direction, meaning whether a project is "approvable," as consistent with community policies.
Here is where Hyatt created its own fully predictable failure. Experienced persons in the community predicted that more than 300 housing units would never be approved.
This was made clear to Hyatt as early as 1997, when Solit interviewed more than a dozen Palo Alto insiders (names familiar to Palo Alto readers). City staff, Chamber of Commerce leaders, council members, developers and residential activists advised Hyatt that its project was effectively dead on arrival.
The hotel was not the problem. A project with 200 housing units would have been approved within two years. Hyatt's proposed 300 housing units plus hotel could have received a denial within the same time. Hyatt prolonged the Process rather than (1) accept certain denial for its 300+-unit project or (2) cut back to 200 units.
We cannot know whether Hyatt's refusal emanated from Hyatt's Chicago headquarters, overconfidence from past successes, or local arrogance. In any case, Hyatt created its own Process -- for failure.
Posted by Jeremy Loski, a resident of the Ventura neighborhood, on Mar 19, 2007 at 1:19 pm
Ms. White, quoting Jim Baer, "First, one must learn to be a "Horse Whisperer." Monty Roberts' book, the basis for the Robert Redford film, teaches that even when a horse is stubborn or wild one doesn't use the whip but learns to speak the language of horses in movements, gestures and sounds. So, too, a successful developer learns to communicate respectfully with city officials, neighbors and policymakers, on their terms."
Nice in theory, but can anyone define what consistent body of "terms" ever existed for this site? Alma Plaza deserves a special theory of municipal "plate tectonics" all on its own.
Jim Baer is a well-known developer here, and has learned to use the system to drive profits for his company. He's done some good work; he's a smart guy; that's all laudable. He's one of three developers who have developed a stable of key players and techniques to make a good living for themselves in Palo Alto, and elsewhere. Good for them.
That said it's apparent that the necessary coterie of horses that Mr. Bear suggests whispering to (again quoting) - i.e. "...City staff, Chamber of Commerce leaders, council members, developers and residential activists..." often have their own, distinct and discrete mandates, often comflicting mandates. In Palo Alto, in other words, "horse whispering" takes "to darned long" (to say it like a cowboy).
The result is interminable process. Further, it's absurd that the delicate process of "horse whispering" (another name for "playing politics") be permitted to draw out to *years* of delay in residential and other projects around here. Who profits from this?
The best known developers are in a great position to profit from new development here - especially commercial development. The horses that he has been whispering to for all these years are in their stable, and well trained. The developers know the ropes.
Might it be that Ms. White's object lesson, using the experience of one of Palo Alto's most experienced "horse whisperer's" own object lesson is more a slam at and criticism of McNellis for choosing what he wants to do with *his* property, and a deflection away from some of the intransigence shown by certain public officials and "residential activists"? That's what it looks like from this side of the pasture.
Let's get back to basics. 20,000 sq. ft is plenty. Let McNellis build it. When it's complete, all the horses and their whispering brethren will forget about the current controversy and be on to their next political hobbyhorse, and development profit. Heck, they'll even all shop there (maybe, as many"residential activists" I know are wont to show up mostly to make hay about where the fenceposts should be placed, but disappear after that's been settled - witness local retail churn for proof.
One thing that Ms. White and Mr. Baer won't mention; that being the way development projects take hold here, in the first place. How about making intended development projects public *before* they go to city hall for "permissions"? That might give community members more of a stake in the up front stages of a project. Some might say that this will cause even more delay. To that I would answer "we have delay only because we don't have the guts to stop it". We want to please everyone.
Bottom line: we need far more up front transparency in development actions, *before* all the permissions have been given (sorry, that makes it difficult for the horse whisperers, but makes for more transparent community policy), and then some policy-making wisdom that says "We've heard enough, we've had sufficient discussion, let's get this thing done and move on". The latter is called "leadership", and it has little to do with the "herd" mentality that Palo Alto has too long sufferede (sic, Chaucer's my guy) from, especially given that that herd has not gotten to whispering enough outside its own stable.