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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ...  (More)

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Neighborhood Retail, Customers and Parking

Uploaded: Nov 29, 2015
The recently announced closing of two retail outlets on California Avenue brought an outpouring of sadness from former patrons and residents who wish for more neighborhood shopping choices.

There are some well-known retail trends that underscore the difficulties facing small neighborhood oriented retail outlets. One is the rapid growth of online shopping for many items including stationery, which was one of the stores announcing their Cal Ave closing. The online shopping surge means that a smaller share of our spending is going to store-based sales.

And recent statewide taxable sales data underscores that the sales areas that are still growing are mostly not local neighborhood serving establishments. Recent sales growth show

Overall sales up 5.6%
New cars up 7.1%
Restaurants up 9.4%
Furniture up 9.5%
Bookstores down 13.3%
Office supplies down 0.3%
General merchandise up 3.0%
Supermarkets up 3.3%
Clothing stores up 8.8%

If you put the growing online shopping together with the data above, you can see the long-term challenge for neighborhood serving retail.

My sense is for this kind of retail to sustain in Palo Alto, there needs to be strong growth in the nearby customer base. While the high PA rents will always be a problem they do not explain stores that have a declining number of customers.

So two popular online wishes are in conflict—more retail but almost no growth in nearby customers, i.e, jobs and housing. That math does not work.

So if residents want more retail but slower office growth, the only way that happens is with a large increase in nearby housing. Even then the future for neighborhood retail, as opposed to visitor retail, will be tough.

But more housing near downtown and Cal Ave definitely will be a plus for sustaining neighborhood serving retail.

I also think metered parking, perhaps $1 an hour, will help. If I think of the growing vitality of downtown Redwood City and Burlingame, both thrive with metered parking. For Cal Ave, another plus would be a shuttle from the Research Park so employees could eat and shop on Cal Ave without the parking hassle.

Without more customers and rational parking/shuttle policies the chances for neighborhood serving retail to survive downtown or around Cal Ave are mostly wishful thinking.
What is it worth to you?


Posted by mauricio, a resident of Embarcadero Oaks/Leland,
on Nov 29, 2015 at 3:57 pm

The solution of the pro growth/pro density crowd is always 'more housing', which is the absolute worst thing for Palo Alto. The more people and offices are squeezed into what has become a sardine can, the higher the housing costs and business rent become. Small local businesses can survive with reasonable rents. Online sales are here to stay, but many people would love to patronize local businesses. I always pick a locally owned store over a chain store when possible. Our skyrocketing rents will force out any local small business. We need to become again what we have always been and should be, a small town, not the new Manhattan. Once we do that, local businesses would be able to survive.

Posted by Gale Johnson, a resident of Adobe-Meadow,
on Nov 29, 2015 at 5:32 pm

I share your dream mauricio, but it is only a dream. I struggle and hate the hard reality of what's happening in my town. Oh, how I loved the town I moved to in 1961. It's gone forever. Tears are flowing!

Posted by Crescent Park Dad, a resident of Crescent Park,
on Nov 29, 2015 at 7:37 pm

Steve, would you please add to your analysis/hypothesis (what I think) is a missing factor? Retail space rental costs.

I don't know the formula - but certainly the high rents are a big factor and there needs to be some accounting for how much business would have to increase (2x, 3x, 4x ???) in order to cover higher operating costs? And then what is the multiplier that needs to be applied towards increased housing density?

I think it's a tough sell for your higher housing density argument when there's no quantitative examples. I know this is hard to put together --- but it would be much more effective for dialog on this subject.

For example, if you were to say that housing around Cal Ave. needs to increase by 15% (and what does that mean in terms of actual building efforts, units, etc.)...then people can chew on that and decide if that's OK or not. Or what if the number is 500%? That would seem overwhelming!

What do you think?

Posted by don't buy it, a resident of Midtown,
on Nov 29, 2015 at 8:44 pm

Younger folks who would occupy the dense housing you advocate would likely do much of their shopping online, rather than at small, local retailers. And many of the tech companies provide food for their employees who would then be unlikely to dine at local restaurants.

Posted by Adina, a resident of Menlo Park,
on Nov 29, 2015 at 10:33 pm

Regarding the spending of tech employees at local businesses, a survey conducted by 3 of the larger tech employers in downtown (SurveyMonkey, Palantir, RelateIQ) showed that employees regularly spend at downtown businesses - here's the data that was included in a letter to Palo Alto City Council on January 20.

At $117 per person at restaurants, bars, cafes and groceries, those folk aren't doing all of their eating and drinking at the cafeteria!

The letter said there were 1186 at those companies in downtown PA at the time and 759 respondents, so this would add up to over $12M spent at local businesses, if the majority of respondents are representative

Category of spend $/week
Restaurants and Bars $50
Cafes and Specialty Drink Shops $19
Grocery Stores $48
Retail/Shopping $39
Health and Wellness Services $30
Professional Services (legal, financial, etc.) $24

Most of these employees don't live in Palo Alto. If more were able to live near work with shorter commutes, it's most plausible that they'd spend more money shopping near home instead of eating at the cafeteria more than they do now.

Posted by Downtown Worker, a resident of Menlo Park: The Willows,
on Nov 29, 2015 at 10:50 pm

I work in downtown and I live quite close by - a short bike ride away. From my experience, myself and most of my younger colleagues do spend a lot of money downtown. There may be food available at the company cafeteria, but that's like eating lunch and dinner at the same restaurant every day. Everyone wants to go out occasionally, and most people work late enough that dinner out is a common option. (Maybe most people work late _because_ dinner out is an option?)

Similarly, if you need to go shopping for something, it's easier to do it during the workday than at night - things are closed then! Since downtown has a grocery store and a lot of retail, it's easier just to pop out and get something in a spare moment than otherwise. Yes, my wife and I buy a lot on the Internet, but you can't buy everything there. (I wish!)

So workers and young residents will definitely be heavy spenders in the local economy. Maybe they won't buy stationary - who writes letters on paper anymore? - but they will buy clothes, food, and anything else you can't easily get online. Just look at how downtown stopped being dead after 8pm ten years ago when Facebook became a big presence. And I don't remember the restaurants getting any less crowded when the company put in its cafeteria.

Posted by agree!, a resident of Charleston Gardens,
on Nov 29, 2015 at 10:52 pm

I totally agree with Steve. We have very little retail space and that makes it very expensive. We also haven't been offsetting that by adding more customers to our city. And we're definitely paying the price. You travel to other places and they can have things like stores dedicated to nothing but boardgames (and lots of playing space!), live music lounges, and all sorts of other neat and interesting bits of retail. Here, we just don't have the population to support it so all you get is bland and high-margin things. Every retail space has been getting uniformly fancier (do I really need a $70 onesie?) and also more boring.

Adding more housing and more customers won't hurt our small businesses. It'll be a big help. I've never heard a business say that a key to their success was saying "no" to new customers...

Posted by Adina, a resident of Menlo Park,
on Nov 29, 2015 at 10:53 pm

Also, in terms of trends in the retail market - it's true that online shopping is increasing, and younger folk do more online shopping. This is putting pressure on stores. But the shift to online isn't anywhere near as comprehensive as you might thing, see this report, for example, there's ongoing business for stores that meet customer needs.

Web Link

With technology trends, there are some products that are obsolete or decreasing in market share. Video stores are gone forever, many people read ebooks rather than paper books, and stream/download music instead of buying CDs (or cassette tapes, or vinyl records, or wax cylinders :-) )

I admire everyone who is still sending paper holiday cards, but that's a market in trouble.
Web Link

Nostalgia won't bring back businesses based on declining technologies.

Posted by Quality of Life Death Spiral, a resident of Palo Verde,
on Nov 30, 2015 at 8:16 am

Keep adding people under any justification possible when the infrastructure can't handle it. You need to control growth at this point, not justify it. I have lived in Palo Alto for over 20 years now. My wife and I were talking that we never go to Downtown or California Street anymore. It is to difficult.... to crowded... can't find a place to park. Please for the sake of the existing residents who made investments to live here, put a throttle on growth or make significant investments into infrastructure first (i.e., regional high speed, modern transportation).

Posted by Resident, a resident of Another Palo Alto neighborhood,
on Nov 30, 2015 at 9:17 am

I think that questioning what type of shopping we need as "immediate" rather than willing to wait for an online delivery is something we are very poor at.

Most stuff we can wait a day or two for. Some stuff is more immediate. Taking food out of the mix, a decent supermarket can get us a last minute birthday/anniversary gift, flowers, chocs, etc. School supplies if needed for tonight's homework may be available in a larger supermarket or a drugstore.

If we really need something immediately, then accessibility to the store and also parking is very necessary. We do not walk to get something urgent, we go by car. It is therefore very necessary that retail which carries urgent/immediate needs must have parking accessible without any hassle or it will not serve the purpose.

I agree with the idea of $1 per hour parking, provided we have some 30 minute spots outside all retail. Philz has put up their own signs for 10 minute parking.

If all our parking spots are being filled by professional coffee shop patrons spending hours on their laptops over one cup of coffee, we are ruining parking for potential customers who are in a hurry to buy more than just a cup of coffee and get on their way.

Posted by MP Resident, a resident of Menlo Park: Downtown,
on Nov 30, 2015 at 9:23 am

For Cal Ave - it feels like a strip of missed opportunity.

There's great bike connectivity (Park and Bryant bike boulevards, not far from the Embarcadero bike path), but on farmers' market days, good luck finding bike parking - it's all taken twice over. Insufficient bike parking is a huge missed opportunity to get more bike traffic to the shops, farmers market, etc.

There's a train station *right* there, with such a short walk that even your average lazy "drive to two shops in the same shopping center" shopper should be able to take the train and walk to the shops, not needing any parking. However, Caltrain's abysmal weekend and evening schedule is a huge missed opportunity - trains every 30 minutes during evenings and weekends would make this a far more practical option.

There's plenty of nearby parking (I have never seen full decks); the problem is not a lack of subsidized space to store automobiles; it's a lack of non-food destinations. We'll bike / train / drive there for the Cal Ave market, but there's not much else appealing other than coffee at Starbucks or maybe a burger at The Counter.

Posted by Downtown Worker, a resident of Menlo Park: The Willows,
on Nov 30, 2015 at 9:36 am

@Quality of Life - try going straight for a garage. I've never had trouble finding parking in the first garage I go to. Street parking is convenient and free, so obviously it's going to be full.

@ MP resident - your problem is that Starbucks is the wrong coffee shop. :) Try the coffee at Zombie Runner (it's fantastic) or the atmosphere at Printer's Inc. Also, if you have kids, the toy store is great.

Posted by Crescent Park Dad, a resident of Crescent Park,
on Nov 30, 2015 at 1:31 pm

BTW - the down-business statement from Village Stationers was very telling. Walk-in business has dropped by 50%...and that is happening even though housing density has gone up in the area. would seem that just upping housing density is not necessarily going to be the solution here.

Posted by MP Resident, a resident of Menlo Park: Downtown,
on Nov 30, 2015 at 2:42 pm

@Crescent Park Dad, Village Stationers is a poor example. As somebody who is more late-GenX than millennial, I use very little in the way of dead trees beyond post-it notes and commodity laser printer paper. Most of the millennials I know are the same way, except for not bothering with the printer.

Posted by Downtown Worker, a resident of Menlo Park: The Willows,
on Nov 30, 2015 at 2:49 pm

@Crescent Park Dad, @MP Resident - this area needs more senior housing, too!

Posted by Allen Akin, a resident of Professorville,
on Dec 1, 2015 at 9:18 am

If increasing housing density drives up the quantity and diversity of retail, then why do we have less (and less diverse) retail now than we did when housing density was lower?

Clearly other factors are much more important. The rise in rents, the economic incentives for property owners to convert retail to office space, the shift to online shopping, and so on.

Many of those factors we can't control. Reining in the growth of office space in both the University and California Ave cores would reduce competition for land, parking, and other shared resources, though. That would move the needle in the right direction (though perhaps not far enough on its own).

Posted by stephen levy, a resident of University South,
on Dec 1, 2015 at 2:56 pm

stephen levy is a registered user.

In response to some of the comments above, I do not think much of the new housing has been around downtown or Cal Ave, It has been a lot in the south.

I am talking about adding housing where the residents can walk or bike to those shopping areas.

Yes there are a lot of factors at play. Some retail like bookstores, stationery, video rentals have been replaced in one way or another. More housing is unlikely to be much help on retail areas in decline.

And yes rents are high but that cannot explain declining customer traffic.

I respect the nostalgia and am fine if folks do not want more neighborhood serving retail, but more retail without more nearby customers in the age of online shopping is just wishful thinking.

Look online at the numbers posted last week. Online up double digits. Cyber Monday up double digits. Other retail flat at best.

More customers and better parking and non auto access seem essential to me for store retail to prosper.

And when I walk around downtown every day, I see full eating and drinking places and relatively empty stores. So it seems like restaurants are what paying customers want.

Posted by MoreRetailUse, a resident of Downtown North,
on Dec 1, 2015 at 3:48 pm

I think we should seriously consider a ban of company cafeterias downtown or at Cal Ave. They make sense in the research park to cut down on driving. But anyone locating downtown should use our restaurants. Mountain View did this when they denied San Antonio a cafeteria on San Antonio

Posted by nauricio, a resident of Embarcadero Oaks/Leland,
on Dec 1, 2015 at 5:00 pm

We had much more robust local retail when Palo Alto was less dense, less urban and less populated. There's no question that the popularity of online shopping will (and does) force certain business like stationary and book stores out business. When rents are as astonishingly high as they are in Palo Alto, businesses have to make up for it by charging more for their products and services. Then, shopping online becomes even more attractive. Unless we deal with the root causes of the high rents for businesses in Palo Alto, neighborhood retail will keep declining.

You can't eat in a restaurant online, but I find myself hardly ever patronizing Palo Alto restaurants anymore, because they are very expensive, a product of high rents, and mediocre or less, perhaps due to the wrong assumption that customers would be so thrilled to eat in a Palo Alto restaurant that they won't mind the mediocre food and service.

Posted by Allen Akin, a resident of Professorville,
on Dec 1, 2015 at 6:00 pm

Stephen: With regard to housing near University Ave that's been built in the past 10 or 15 years, off the top of my head I can think of: The dense craftsman-style houses that were built on part of the Peninsula Times Tribune site (bounded by Emerson, Everett, Ramona, and Lytton, if I remember correctly). The condominium complexes that replaced the Palo Alto Medical Foundation buildings (bounded roughly by Ramona, Homer, Waverley, and Channing). 801 Alma. The 800 block of High Street. I'm sure I've missed a few. All of those are within a short walk of the downtown shopping district, and all increased housing capacity significantly compared to what was previously on their sites. I think the earlier observation stands: Increased housing capacity has not been enough to increase retail. Furthermore, none of this takes into account the huge increase in the number of commuters working downtown every day! The history of the University Ave area shows very clearly that the central problem is not a lack of customers.

The correlation between high rents and high retail prices has been covered by nauricio. I'd add that high rents have another effect: They make necessarily low-margin retail businesses non-viable. Those businesses served needs of residents, and without them, residents are less-inclined to shop downtown. There's probably a feedback loop here.

In this case, you may see "nostalgia", but a lot of us see "data". :-)

Posted by Open, a resident of Old Palo Alto,
on Dec 1, 2015 at 7:11 pm

Steve's theory makes total sense to me: We need the young, middle aged and seniors to feel comfortable shopping at local stores and not shopping online and driving elsewhere. It used to be you could take your car to California Avenue, go to the hardware store near your home, and there were plenty of places to eat. This is what makes for vital community where people feel they are a part of the social fabric. What we have increasingly in Palo Alto is young and old feeling disconnected and with fewer and fewer places to go for basics, such as hardware stores, stationary stores, auto repair stores... I have lived in Palo Alto for over 25 years, own property and have raised my family here and would prefer to see more local residents, young and old and new.... "crowding" the downtown and California areas with people who live and own here in connected spaces (not just single family dwellings) and not just folks from out of town. I have lived in higher density areas that felt far more accommodating and friendly than Palo Alto feels now. Create more affordable and smaller housing units as well as what we already have and get people anchored to the community who want to spend time here.

Posted by Abitarian, a resident of Downtown North,
on Dec 1, 2015 at 7:23 pm

I agree with Allen Akin. I live downtown, just half a block off University, and while the sidewalks are clearly more crowded due to the growing population of residents and commuters, this has not translated into a boom for retailers.

While I would prefer to do all of my shopping by walking from my home, it isn't feasible. Of course, some items are too heavy to carry, but the main problem is that the existing shops simply do not meet my everyday needs. I do get groceries by the Whole Foods and necessities by the CVS but visit other stores only sporadically.

(Much as I'd like to, I can't justify buying new shoes from Footwear every week.)

Interestingly, it is not only the privately-owned specialty stores that have failed in our commercial districts. Modestly-priced chain stores have departed as well. Ross, a discount clothing store, for example, left University but continues to do business in Mountain View and Redwood City.

Clearly, the issues at hand will not be resolved simply by bringing more people to University and Cal Ave.

Finally, Mr. Levy suggested implementing metered parking as a means to support retail. I can't imagine how this would attract customers. It seems like it would give people one more reason to avoid University and Cal Ave. Perhaps extending the free parking time limit might provide more of an incentive.

The solution for every problem is not more people. And more people bring additional problems. We need a thorough, data-based analysis but this doesn't seem to be forthcoming.

Posted by Curmudgeon, a resident of Downtown North,
on Dec 1, 2015 at 8:38 pm

So where's the benefit to local retail of bringing in upmteen thousands more people who shop online?

But, wow, what a transparent parody of a pat "solution." I think someone is impersonating and satirizing Steve Levy in his own blog. Chutzpah, thy name is ... .

Posted by the_punnisher, a resident of Mountain View,
on Dec 1, 2015 at 9:25 pm

the_punnisher is a registered user.

The change due to on-line shopping AND e-books make both bookstores and stationery supplies obsolete.
Your other purchases, like clothing are personal in nature and you still want to test drive a new car before buying one.

Local brick and mortar stores have had to deal with big chains like Home Despot and Mal-Wart ( yes, I call them that ) and now these two types of businesses are falling to both on-line and chain bookstores that have to be competitive with Amazon and their free e-book reader Kindle.( give them the razor, but sell them the blades; an OLD marketing setup that worked )

A bookstore CAN compete if it is part of a community center and stays relevant to the new generation(s).
Libraries have been digital for some time now. That started when libraries loaned out Music CDS and " Books on Tape " now on multi part CDs.
Many reference books are on CDs and the classic books like " The Prince " and " Alice in Wonderland " can be downloaded from " The Gutenberg Project " for the cost of your Internet connection. ( free with no other fees ).

That makes a needed visit to a library for this generation obsolete. You just do your homework on-line and you may even have the option of sending it to your teacher on-line when you are finished.

These are examples of the present generation having to deal with CHANGE. ( note: no stationery needed to do the homework! )

Right now, WE are using another form of communication that makes the stationery store obsolete!

Did anyone else note the irony of that last statement?

Posted by Chris, a resident of University South,
on Dec 2, 2015 at 12:25 pm

Other cities with vibrant shopping have pay parking. Free parking is something that is common to shopping centers not downtown districts.

If you want free parking, you have the option of going to Stanford SC. It is expanding again.

People who think of the 50's and 60's as nirvana have faulty memories. The opening and original expansion of SSC sucked the life and business out of downtown PA at a time when alcohol sales were not allowed. In the 60's, shopping and dining were at a low ebb. Allowing alcohol in downtown in the 70's led to a gradual increase in dining which took off in the 80's and 90's.
Retail did well until the took hold. There are fewer retail outlets downtown, but realistically, how often do you need something you can't find downtown?

Posted by palo alto mom, a resident of Crescent Park,
on Dec 3, 2015 at 1:31 pm

One VERY simple thing is driving most of the diverse, interesting retail out of Palo Alto - HIGH RENTS! Not a lack of parking or a lack of customers, rents are simply too high for many/most retail businesses. In addition, too many former retail spaces have been converted to office spaces instead, retail next to retail enhances foot traffic.

We don't lack customers in Palo Alto, between the daily influx of office workers and our residents, there are plenty of us to shop. We simple lack interesting options because we are too expensive.

Posted by Neilson Buchanan, a resident of Downtown North,
on Dec 3, 2015 at 2:16 pm

Steve, I cant find info on the www.

I dont understand simple city finance. Sales tax is an important component of city revenue. If an online sales in placed to a non-Palo Alto merchant "located" in California or elsewhere in Santa Clara County, does the same sales tax cash flow eventually find its way back to our city?

If the online transaction goes to a merchant in another state, what is the sales tax cash flow if any? My basic question is whether or not online transactions limit the cash flow in comparison to "in-store" transactions. The on-line shopping trend is very clear. I hope city financial health is not at risk.

Posted by the_punnisher, a resident of Mountain View,
on Dec 3, 2015 at 7:38 pm

the_punnisher is a registered user.

Our www is steadily losing the State Tax issue for companies actually located ( warehouse and retail ) in that State. If you buy INSIDE your State, the purchase may or may not be taxed. ( buying INTRASTATE )
When you buy INTERSTATE, most sellers do not charge ANY State or Federal Taxes. this non-taxable problem has been causing fits at the IRS since the Internet was born. Our Congresscritters heard their voters ( more likely big business ) and have claimed " More study is needed on this issue ". ( my first ex is a CPA specializing in tax matters )

This situation is part of the " FREE DATA MOVEMENT " brought by the Free Software Foundation ( FSF ). ( as a NETWORK ENGINEER, that is MY area of expertise )
We have the DMCA to satisfy Gates, Jobs, RIAA and MPAA. No other work in that area of our " FREE INTERNET " is currently being done ( my fingers are crossed ). NOTE: LINUX ( FREE, unless you need tech support ) is slowly eating into M$ sales worldwide. I use mostly free software because I can report bugs and fix them. ( you cannot do this with M$ software ). Yes, I'm mostly hardware but can do software if needed ( but I don't like that )

I hope that helped give everyone a " feel " of how our www works today.

Posted by MP Resident, a resident of Menlo Park: Downtown,
on Dec 4, 2015 at 9:52 am

The out of state tax issue is nothing new; LL bean's 1913 catalog had the same problem. It's escalated over the last 20 years, but was doing so via catalog retail even before the internet.

Posted by pendulum shift?, a resident of Menlo Park: Allied Arts/Stanford Park,
on Dec 4, 2015 at 10:13 am

The retail picture is more complex than portrayed here. The types of retail that thrive may differ from the past but nearly all of us prefer local places to eat, places to buy personal goods, clothing, plant nurseries. "retail" includes restaurants.
Considerable shifts have occurred with more online retail and big box or chain retail such as Home Depot displacing mom and pop or locally-based stores. Will the pendulum shift back because of consumer dislike of the limited variety in the big box stores and the horrific traffic congestion that makes it an ordeal to get there?
It isn't just nostalgia that causes us to crave retention of local retail businesses, personal services, and restaurants. For example, we increasingly eat out almost exclusively in Menlo Park because the traffic is so bad getting to other cities. We are seniors who can still walk. But we can't walk to businesses that are no longer even in our town.
I worry that it won't be possible for retail to thrive in the future because our city hall is allowing, even aiding, the continued loss of stores and places to eat or get personal services in favor of all-office developments.

Posted by MP Resident, a resident of Menlo Park: Downtown,
on Dec 4, 2015 at 10:56 am

@ pendulum shift?, if you want to eat out in other nearby towns without traffic or parking, give Caltrain a try! It's a 4-minute ride to downtown Palo Alto, or 5 minutes to Redwood City. No parking hassle, no Menlo Park style parking canyon, and a much better selection of restaurants.

Also, much of the retail that is in Menlo Park is furniture. I don't know about you, but I don't replace my kitchen table and chairs particularly often. This means it's generating minimal foot traffic for other retail and restaurants, and is "nearly dead" use of prime space.

In terms of what works in the internet age - think about convenience, services, and things that are not commodities. A great analogy is a bike shop - a good mechanic who can fix complex problems, build a sturdy wheel, and keep your ride in great shape is not something that can be replaced by Amazon. "We can order that for you" with marginal mechanical services can be replaced by Amazon, and mostly is.

Similarly - some clothing is high touch. For a suit, you need somebody to measure, do alterations, etc. For socks or t-shirts, there is no value add in local retail relative to Amazon.

Posted by stephen levy, a resident of University South,
on Dec 4, 2015 at 4:50 pm

stephen levy is a registered user.

Thanks for the interesting comments.

It seems like there is agreement that some types of retail are no longer viable anywhere and that number may grow in the years ahead.

There is agreement that University Avenue and the restaurants are crowded/busy although some posters are upset that restaurants and coffee houses are popular and expanding in number.

There are some posters who blame high rents but PA is now a high rent area and although one could envision some policies to lower the increase in rents, downtown and Cal Ave are never going to be populated by stores selling inexpensive goods.

I have proposed more housing and some parking solutions including more supply. pricing and go passes for employees. I have not heard a cogent argument against these ideas. Redwood City has both increasing downtown housing and paid parking and seems to thrive.

But mostly what I do not in these posts is alternative suggestions to realistically support more retail downtown and around Cal Ave.

I am not an expert on online taxation but it is hard for me to see how this relates to the connection between retail customers, housing and parking.

Posted by Abitarian, a resident of Downtown North,
on Dec 4, 2015 at 5:36 pm

Steve --

I don't understand how your suggestion to add metered parking would support retail on University and Cal Ave.

There may be good reasons to add metered parking, and I suppose it's possible that metered parking wouldn't hurt retail, but I don't get how it would help.

I can hear people saying "forget University (or Cal Ave.), it's hard to park *and* you have to pay".

Can you explain? Thanks.

Posted by Plane Speaker, a resident of Crescent Park,
on Dec 4, 2015 at 9:05 pm

If I had to guess why Palo Alto businesses are not doing well ... well, I'd
certainly would not chalk it up to lack of parking meters ????

In general, sad to say, my experience has been that for a given business type,
Palo Alto businesses offer less and cost more. Palo Alto businesses seem
to luxuriate in the fact they are in Palo Alto and so assume they don't have
to do much of anything except be closer to people they think are richer.

All the Palo Alto grocery stores are either inferior, Safeway, Whole Foods,
or cost way more, Piazzi's ... or both.

Cloths .. well, compare North Face and Patagonia with either Mtn. View's
or San Carlos REI.

We don't really even have a bookstore any more.

I don't mean to blame the business owners, though in some cases it is
their doing.

I think it has a lot to do with rents. The rents are so high for businesses
that they have to charge so much, so they have to either have an attitude
about Palo Alto, or they have to figure out how to make money when they
are giving away most of their revenue in rent.

That means in many cases they hire waiters that are lousy, do not speak
English, or they sell inferior products, always trying to find that arbitrage
point, or maybe they have one main cook that cooks during peak hours
and their off hour people are trainees.

There are endless coffee places where people rudely jostle each other
while they surf the web on their phones or IM some other person who
is probably jostling someone else.

There is so much attitude in Palo Alto these days, and no one likes
paying extra for it.

Posted by Plane Speaker, a resident of Crescent Park,
on Dec 4, 2015 at 9:14 pm

> There are some posters who blame high rents but PA is now a high rent
> area and although one could envision some policies to lower the increase
> in rents, downtown and Cal Ave are never going to be populated by
> stores selling inexpensive goods.

Yes, there are few to none best buys in Palo Alto anymore, that is for sure.
But, if you sell expensive goods, at least do not insult us and slap us in the
face by giving us inferior quality. I don't mind paying more ... but the problem
is that we expect more too. I don't go out to get insulted.

One good example was the Aquarius theater, where I just stopped going,
along with the Guild, they were both getting so unpleasant.

Well, the Aquarius just re-opened with all updated inside, restrooms, seating
and processes. It is very nice. A really very pleasant place to see a movie.
The seats are huge and all recline and have drink holders. WOW, I was
impressed. Yes, I watch a lot of stuff now online, mostly because the newer
movies are just not very good, but the good ones that interest me I have
not problem paying more for a nice place like the new remodeled Aquarius.

I wish I could say the same about the restaurants on the same block.
Again, I think the subtle driver of all this mediocrity is the rents. I don't
think any landlord should have to take a loss, obviously, but there is a
point where profit expectations are so high it will demoralize the entire
business climate, and it is hard to see because rents are not really
visible. As long as the landlords get their payments they are happy,
and their should be some mechanism besides doing out of business
that clues them into the fact that they may be squeezing too much.

Posted by Allen Akin, a resident of Professorville,
on Dec 5, 2015 at 10:32 am

Steve: You wrote "I have proposed more housing and some parking solutions including more supply. pricing and go passes for employees. I have not heard a cogent argument against these ideas." I assume you mean for the purpose of increasing retail downtown. The argument has been made, but maybe split across too many replies, so let me try to gather it in one place. I'm going to focus on the University Ave area because that's where I have the most information.

There's a widespread perception that the number and variety of retail businesses downtown has decreased.*

At the same time, the residential population has increased (due to creation of new multi-family residences) and the downtown worker population has increased (due to creation of new offices, primarily). As a result, the pool of potential customers has increased substantially.

Your hypothesis is that increasing the customer base (by building more housing, etc.) will cause an increase in quantity and variety of retail. However, the observations just given show that this has not been true. Therefore we have no evidence to suggest that any further increase in the customer base would be effective. In fact, on the surface, the evidence suggests just the opposite!

There are at least two other hypotheses. One is that retail establishments are being converted to office space. The other is that rents have increased to the point that many kinds of retail are no longer viable downtown (because the products/services are of a type that can't be sold at a profitable price, or because that price is too high for most of the potential customer base). These two hypotheses ARE consistent with the observations, and with enough research should be testable. If you really want to help solve the retail problem, that's where you should start.

* The premise should be checked, too. Anyone who's lived around here long enough knows that business "fashions" sweep through downtown from time to time. (Remember when we had three rug stores on University Ave?) My guess is that the number of retail establishments probably hasn't changed greatly, but the variety of products/services has declined. Just a guess, though; could be wrong.

Posted by stephen levy, a resident of University South,
on Dec 5, 2015 at 1:29 pm

stephen levy is a registered user.

Thanks Alan.

Let me give you an analogy.

BART and Caltrain have strong ridership gains. Single occupancy auto use in the region has declined. Yet the roads are more crowded. Demand has outpaced supply. Would you argue against expanding these services because recent gains have not been enough to offset job growth?

Well, the retail store (not restaurant or Apple type) have become much more competitive.

So, yes, more customers will be better than fewer customers just like more Caltrain capacity will be better than less.

The criterion is "compared to what".

The conversion to office space argument has absolutely nothing to do with stores where there are fewer customers because there products have declining in store demand.

And rents are going to be high, just like home prices and rents. This is a hot area and we need to deal with what is reality.

But if you have any pro-active suggestions instead of just criticism, please share.

Posted by stephen levy, a resident of University South,
on Dec 5, 2015 at 1:35 pm

stephen levy is a registered user.


Good question, thanks.

I propose a suite of parking/access policies:

--more garage space
--residential permit programs in these areas
--expanded go passes for employees

and paid parking.

While counter intuitive in some ways, the two towns that we visit with paid downtown parking (RC and Burlingame) seem to be doing quite well.

I think what happens is that less serious shoppers or others stop parking, opening up space for people willing to pay $1/hr to be able to find spaces.

And do remember parking is never free--It comes from the city budget or in the case of Stanford Shopping Center from higher rents and prices. Or from businesses that raise prices to cover their parking costs.

Posted by Allen Akin, a resident of Professorville,
on Dec 5, 2015 at 2:49 pm

Steve: You asked "Would you argue against expanding these services because recent gains have not been enough to offset job growth?" Sure, if there are less-expensive options that have acceptable outcomes, or other options that have superior outcomes. Wouldn't you?

But the subject is (alleged) loss of retail downtown, not mass transportation policy. Please write about the latter another time; I'm definitely interested in it.

If you re-read what I wrote previously, you'll see that it includes proactive suggestions: Get a more-accurate characterization of the retail problem. Check the two possible causes we know about to see if either applies. Use the information you gained to craft a solution (or look for other causes). That's simply what you have to do if you're going to persuade people that your proposed solution will work.

This applies to your "more customers will be better" contention, too. I think that one has been debunked, but if you want to keep it in play, you'll need to explain why the past increases in both the residential and commuter populations haven't resulted in retail retention or expansion, and why new increases in those populations will be different. Or that there really hasn't been a retail decline, which I've already acknowledged is possible.

Posted by Abitarian, a resident of Downtown North,
on Dec 5, 2015 at 5:09 pm

Thanks, Steve. I understand your perspective much better and appreciate your logic. I do think that parking contributes to retail success and agree there are multiple ways to address parking.

But, if a client said to me, "Redwood City and Burlingame both charge drivers directly for parking and both have thriving retail. If we start to charge drivers directly for parking, then our retail will thrive, too."

I would say, "How do we know that it is the driver-paid parking that is causing retail to thrive. Maybe it doesn't make a difference. Or maybe retail would thrive even more if drivers did not pay directly for parking."

Then, before proposing an expensive study, I would say, "Let's see if there is any existing research on this topic."

So, I made a Google search for "effect of paid parking on retail" and looked at the first page of results.

I skipped results that were clearly not scientific or not applicable to our situation. This left one result.

The study is called "Do parking fees affect retail sales? Evidence from Starbucks". It was published in 2014, in "Economics of Transportation", the official journal of the International Transportation Economics Association.

See Web Link

If you read the abstract, you will note:

"Regression discontinuity results suggest that when there is an excess supply of parking (i.e., many spaces are vacant), a small 50 cent per-hour parking fee deters commerce. At two separate Starbucks establishments, the meter fee reduced customer traffic by almost 30%. However, when there is excess demand for parking (i.e., all spaces are constantly occupied), there is no evidence that meters help to increase customer traffic."

According to this scholarly article, the addition of parking meters deterred commerce when parking was abundant and did not increase commerce when parking was limited. So, we would not be advised to add parking meters.

(Note. I have private parking half a block off University, so the presence or absence of parking meters has no impact on my downtown shopping behavior.)

Of course, my research effort was very limited. A more thorough search would certainly add more data and depth to the discussion.

These are complex issues. Where possible, we can all help keep it "cogent" by referencing supporting evidence.

Posted by stephen levy, a resident of University South,
on Dec 5, 2015 at 5:46 pm

stephen levy is a registered user.

Hi Albitarian,

You helped by providing the link but kind of forgot to include the following parts of the report.

I believe the article could as well be an argument for full pricing not sub optimal pricing.

From your link

"When parking is at capacity, lower than optimal fees do not increase customer traffic."

"On-street parking, however, is seldom priced at the market rate. When inefficiently priced, parking meters may negatively affect the businesses and individuals they are intended to serve."

So i do not think two Starbucks with sub optimal parking charges make your case about crowded shopping areas like downtown and Cal Ave but thanks for doing the research.

Posted by stephen levy, a resident of University South,
on Dec 6, 2015 at 10:17 am

stephen levy is a registered user.

Hi Allen,

I have heard your points but even if office competition with retail and its impact on rents WAS part of the cause of SOME retail closings, it is not relevant to what to do now--the topic I have been trying to engage you and others on.

My understanding is that council has adopted an anti-conversion ordinance prohibiting future ground floor conversions to office space.

So given that and the current trends in shopping, what are your ideas for supporting retail going forward in areas like downtown and Cal Ave?

Mine are more customers, complementing the city's existing goal of mixed use developments in these areaa, and a suite of policies to address access/parking issues.

Do you have other ideas?

If your position is to minimize any kind of further development in PA, please clariy that so we do not just go around in circles.

Thanks for participating in the discussion.

Posted by Allen Akin, a resident of Professorville,
on Dec 6, 2015 at 4:56 pm

Suppose for the moment that high rental rates are pushing out retail businesses. Perhaps the remaining businesses survived by having higher product/service pricing. Perhaps their prices are high enough that price-sensitive potential customers are unwilling to buy from them. So, will bringing in new residents boost retail by providing new paying customers? No, if those residents are sufficiently price sensitive. And to take the speculation a step farther, will affordable housing (an important part of any housing expansion strategy) tend to attract residents who are more price-sensitive or less price-sensitive than current residents?

I hope you can accept that this really is relevant to the question of what to do next. We've got anecdotal evidence that increasing the number of residents didn't expand retail. You need to understand if this is true and (if so) why it happened before asserting that increasing the number of residents again WILL expand retail. Otherwise the proposal just isn't credible.

I'm on record as saying that *for the transportation infrastructure we have now* (note emphasis), downtown is already overbuilt. I support a moratorium on projects that increase density *downtown* (again, note emphasis) until a viable plan is in place to reduce vehicle traffic below current levels, and the necessary funding for that plan has been committed. There are conditions under which I would change the latter position. I won't go into the reasoning for all this here (it would take too long), but you asked what my position was, and that's the best way I can summarize it briefly.

I won't make any suggestions for how to expand retail, because I'm aware that I don't know enough about it yet. I'm not sure anyone does. See above. :-)

In the meantime, I need to move on. I've agreed to provide feedback on phase 2 of the RPPP (a program I support, by the way), and I have to get going on the homework.

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