News


Small retailers in limbo at Hotel California building

Property owner plans to gut the ground floor, create open space

Pedestrians walk by the Hotel California, which has three empty stores on the ground floor, on Aug. 14. Photo by Veronica Weber.

They've left one by one: the cigar store, the bakery, the popular sandwich maker. Now, a dog-grooming business and a dry cleaners may need to find new homes as well if their landlord goes through with a plan to gut the first floor of the Hotel California building in Palo Alto's California Avenue shopping district, where they are located.

The two are the last retailers remaining in an increasingly empty 5,130-square-foot ground floor at the corner of California and Ash Street. The other three businesses operating out of the prominent beige building with the green awnings left starting in the summer of last year.

Cigar House, at 393 California, occupied a 581-square-foot space and closed on May 29, 2018. Palo Alto Baking Company, at 381 California, occupied 3,061 square feet and vacated Dec. 31, 2018. It was to remain a wholesale bakery elsewhere, according to a sign in the window.

Simply Sandwiches, the small grab-and-go spot at 2435 Ash St., occupied 207 square feet and suddenly shuttered in March 2019. The business owners of the three establishments did not return phone calls from the Weekly regarding the circumstances around their departures.

Matt Larson, spokesman for building owner Sand Hill Property Company, said Hotel California — a residence on the second floor offering single-room-only, extremely low-income units — will remain.

Sand Hill owners Peter and Suzanna Pau, through their foundation, made the top floor of the building into affordable housing for very-low-income individuals, with 20 units, in July 2016.

Sand Hill intends to renovate the first floor so it will be a larger, contiguous space, Larson said.

"They're rethinking the sizes of the space so there will be a better chance of filling it quickly," he said by phone.

Premier Properties lists the space for retail, restaurant and personal-services use and states that it is "divisible." Its website states that demolition plans are underway for an open layout. The company's executives did not return requests for comment.

Alexander's Dog Grooming and California Cleaners, which occupy 590 square feet and 685 square feet respectively, have been on month-to-month leases for years, the owners said.

They initially did not know that real estate developer Premier Properties, which posted signs advertising leases at the three empty spaces, was including their spaces as well, they said. When they inquired, the property manager told them they would not immediately need to vacate. Chris Choi, an owner of the family-run cleaners, said they have been at the location for 30 years and on a month-to-month lease since 2007. The family owns another dry cleaners on Middlefield Road. If the business is evicted, Choi would like to be able to work out a deal with Sand Hill, he said on Monday.

"I'm hoping they will give us a small space on the side for a pick-up and drop-off location. That's my request," he said.

Carole Brunning, owner of Alexander's Dog Grooming, said she has been at the location for 38 years. She learned about the plans to lease the entire ground floor after looking at Premier Properties' website, she said. Brunning said she invested in the building a few years ago by doing a total remodel. The landlord hasn't raised her rent recently, but a move would close her business.

"I can't afford to be here and to set up in a whole new building," she said.

Groomer Carol O'Connell, who has worked at the shop for 20 years, said she doesn't know what she would do if Alexander's must leave.

"I think it's really bad. We'll be dust. These big businesses, they're just running all the small businesses out," she said.

Whether the renovation leads to the loss of small retailers remains to be seen. The city's Comprehensive Plan Land Use and Community Design Element directs the city to "create regulations for the California Avenue area that encourage retention or rehabilitation of smaller buildings to provide spaces for existing retail, particularly local, small businesses."

Under city ordinance, the property is currently zoned regional/community commercial, which includes uses such as department stores, bookstores, furniture stores, toy stores, apparel shops, restaurants and non-retail services such as offices and banks, according to Palo Alto's Comprehensive Plan.

The city's zoning code does not allow the conversion of ground-floor retail to offices except where grandfathered in prior to March 19, 2001.

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Comments

10 people like this
Posted by PB
a resident of Midtown
on Aug 16, 2019 at 9:36 am

So sad. Alexanders is a great local service provider.


23 people like this
Posted by resident
a resident of Midtown
on Aug 16, 2019 at 10:15 am

Has there ever been any good news in this city about Sand Hill Property Company?


9 people like this
Posted by Cal Ave
a resident of College Terrace
on Aug 16, 2019 at 10:35 am

Sand Hill voluntarily converted the hotel into housing for extremely low income residents, which it privately subsidizes out of its own pockets. More developers should be doing this. What do you care more about? Housing less fortunate residents with nowhere else to go? Or a specific businesses being there... typical Palo Alto.


9 people like this
Posted by Clueless
a resident of Downtown North
on Aug 16, 2019 at 10:51 am

"Under city ordinance, the property is currently zoned regional/community commercial, which includes uses such as department stores, bookstores, furniture stores, toy stores, apparel shops, restaurants and non-retail services such as offices and banks, according to Palo Alto's Comprehensive Plan."

Does the city seriously think any of the above businesses will open there. Get a clue city council.


2 people like this
Posted by Mark Weiss
a resident of Downtown North
on Aug 16, 2019 at 11:48 am

Mark Weiss is a registered user.

SHP / Peter Pau manages a billion dollars worth of office ground leases Stanford land. It does, if you read these pages, push us for the greatest possible advantage.
They bought the building on Cali to preserve low income housing. They bought The Fox Theatre so the founder’s church could meet.
If the story is local business vs chain, that’s one thing. Doesn’t sound like they’d turn a corner ground floor into office — they’d likely want a mix, overall. Maybe the trend is they are going upscale, another French Laundry (food) spinoff.
But it sounds like Premier is managing it, or has a ground lease.

Palo Alto Sport and Toy went the opposite direction —looks like they are now 3 separate spaces.
Tamarine Restaurant in 500 block of Uni was 3 separate spaces.


22 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Aug 16, 2019 at 12:07 pm

Why is the city letting Sand Hill develop anything in Palo Alto when all they do is mess with resident-serving businesses! Shame on Sand Hill and shame on the city council for perpetuating this farce.


Like this comment
Posted by Clueless
a resident of Downtown North
on Aug 16, 2019 at 1:18 pm

Sand hill is within their rights to redo that building. [Portion removed.]


4 people like this
Posted by steve french
a resident of College Terrace
on Aug 16, 2019 at 1:35 pm

steve french is a registered user.

Noooo! We can’t lose Alexander’s Grooming, Maybe they could move the dry cleaners ( which I also frequent) to the old sandwich shop and allow both businesses to remain. These are the services our neighborhood needs!


15 people like this
Posted by margaret heath
a resident of Evergreen Park
on Aug 16, 2019 at 1:41 pm

margaret heath is a registered user.

"Sand Hill intends to renovate the first floor so it will be a larger, contiguous space, Larson said."

Perfect for another fitness studio. When the city council decided what businesses could occupy property zoned as retail there was a reluctance to include fitness studios until Councilmember Kniss pushed to add fitness studios to the list of allowable uses. It seems fitness studios will pay commercial property owners a higher rent than is sustainable for an existing retail business, retail that can only survive if not competing with non-retail uses like fitness studios.

Perhaps it is time for the council to revisit what are allowable uses in the "core" retail districts, such as California Avenue, so there is a sufficient concentration of adjacent retail to attract shoppers.


3 people like this
Posted by Mark Weiss
a resident of Downtown North
on Aug 16, 2019 at 10:14 pm

Mark Weiss is a registered user.

Maybe the space could be a combination bakery and Pilates.


Like this comment
Posted by Coral
a resident of Professorville
on Aug 17, 2019 at 2:36 pm

[Post removed.]


3 people like this
Posted by steve french
a resident of College Terrace
on Aug 17, 2019 at 2:51 pm

steve french is a registered user.

[Post removed due to deletion of referenced comment.]


3 people like this
Posted by Edgewiid
a resident of College Terrace
on Aug 18, 2019 at 11:01 pm

Is this the same company trying to renege on their offer to have a grocery at Edgewood?


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