After just one year in business, Khoury's Market at Palo Alto's College Terrace Centre plans to close, the second grocer at 501 Oxford Ave. to shutter in two years.
A previous store, College Terrace Market, closed in late December 2017 after only about six months in business.
The Khourys took over the spot in January 2019 after the space had been vacant for a year. In a recent, undated letter that announced the planned closure to customers, co-owner Chris Khoury said the business has been challenged by several months of scaffolding and fencing around the store for construction work around other parts of the building.
A dark shroud of black netting covers the front of the building. Colorful signs of fruits and vegetables on the side of the store are obscured.
"This gives the impression that the store is not open for business and also covers the windows, resulting in a lack of natural light within the store. Construction vehicles have been parked around the building constantly," Chris Khoury wrote.
The Khourys' letter does not specify a closing date. On Friday, a sign in the window announced the store's closure, and prices were 30% off.
A grocery store is a requirement at College Terrace Centre: In 2009, the Palo Alto City Council approved a more dense redevelopment and zoning changes in exchange for the developer's provision of the 8,000-square-foot space for a grocery store.
Without a functioning market, the property is considered to be in violation of its "planned community" zoning and is subject to fines of more than $2,000 per day until a new grocery begins its operation. The ordinance allows the city to begin issuing fines to the owner if the market space has been vacant for six months. The six-month grace period cannot exceed six cumulative months in any five-year period.
Owners of both Khoury's and College Terrace Market cited long delays with getting the necessary signage to give their businesses visibility. The market has also had numerous difficulties with the elevator — the sole access point to the store from the underground parking garage — and proper signage directing customers to the garage entrance has not been installed. The business was unable to overcome the obstacles, said Khoury, whose family runs other grocery stores in the Bay Area.
The city of Palo Alto's building and planning database indicates a host of permit requests since the Khourys moved in, which started with minor remodels and plans to replace the storefront in March 2019. In August, there was a permit request for signage at the market and a parking-directions sign. A separate August permit requested approval for exterior glazing. All were approved. In November, the owner's contractors received permits for new exterior paint.
"All of this makes it difficult for our customers to enter the market and enjoy our services," Khoury wrote. "Since we opened for business, we have worked hard to provide our customers with a gourmet shopping experience while maintaining a family-market atmosphere that allows us to understand and best serve the wants and needs of our neighborhood. We have sought to build relationships with and understand our customers in order to provide both the daily and specialty items needed to nourish our community."
After the College Terrace Centre construction was completed in 2016, the developer chose The Grocery Men 1 LLC investors to lease the site as College Terrace Market. New York-based Greystone Property Development then took over ownership and development of the complex.
Blox Ventures, a firm owned by local developer Jason Oberman, bought the blocklong development in July 2018 for $78.5 million. He brought the Khourys in to establish a market.
Khoury said the owner had wanted to repaint the building to distinguish it from First Republic Bank, which occupies the office space above the market and in an adjacent building. The work began in July and was supposed to take a month, but has stretched into seven months.
"We never even got to have a grand opening. We had a soft opening, but we were going to have a grand opening in September when classes started at the university and the landlord promised the work would be done by then.
"They were going to put a patio in for us and get our signs up. They changed the windows. That took a few months," he said.
He didn't doubt they could be successful at the new store if not for the construction. The Khourys have had loyal customers dating to when they took over JJ&F Market in 2011. They saw advantages in their proximity to Stanford University. (Their other store is situated near San Francisco State University.) They hoped to get a license to serve beer with lunches at an outdoor patio and to have other customer attractions, offering conveniences for people who don't want to cross El Camino Real.
"We were going to have kombucha on tap and we were going to do a cafe," he said, adding they planned to partner with a coffee vendor to offer an alternative to Starbucks.
"The construction killed us. Even the people upstairs (at the bank) said 'We thought you guys closed two months ago,'" Khoury said.
Neither Oberman nor his attorney have responded to the Khourys when they tried to contact them, he said. "We've had no contact. They haven't given us any information — not even to our lawyers," he said.
Recently, painters have started work on the back of the building, which Khoury said sparked his curiosity. If the owner wanted to keep them there, why not start at the front of the building so the store can be unburdened by the netting and scaffolding? he asked.
"I feel like they are doing it on purpose," he said.
The co-owner said he is perplexed and disappointed by the situation. Oberman came to their father, Jalil, also known as "Papa Joe," at their San Francisco store, and asked them to open in Palo Alto.
"I love Palo Alto. Mark and I drive down here from Sonoma every day. It's our baby — it's our living. We're not just some rich people taking over a store. We can't even pay our (personal) bills now because we have to pay for the store. Thankfully, I have some savings, but I should be using that for my retirement," Chris Khoury said.
The San Francisco store can't support all five siblings working there and "Papa Joe" has 22 grandchildren. "We have to support our families," he said.
Khoury said he has three children ages 6 and younger. He has a degree in business administration and would look elsewhere for work to support his family. His brother, Mark, who also worked at the store, has four elementary through high school aged children.
"My 6-year-old daughter has been asking me to take her to Disneyland since she was 3 years old. I can't do that, but hopefully, someday I can," he said.
He is disappointed and will miss the many friends they have made in Palo Alto.
"We're just thankful for what we had and what we have," he said.
Oberman and his attorney have not responded to requests for comment from the Weekly.
"While the City cannot comment on legal matters, we are disappointed to hear about the potential closure of Khoury Market," city spokeswoman Meghan Horrigan-Taylor said in an email to the Weekly. "City staff is reaching out to the parties to better understand the situation and will determine next steps once additional details are available."