The retail health of Palo Alto’s various commercial districts has ebbed and flowed over the decades, influenced by economic cycles, competition from shopping malls and big-box retailers, retail consolidations and — most recently — the internet and online shopping.
In an era of increasing challenges for small-business owners, creating successful retail environments has been shown to be more art than science. The transformation of Town & Country Village, for example, from a tired and uninspired center to the bustling retail hub it is today came about because a new owner carried out a successful plan for achieving a tenant mix that turned out right for the community.
No ordinance pushed them to achieve this make-over; it came about through skillful property management. Whether one likes or dislikes the “new” Town & Country Village, developments like this show that even with all the challenges facing retailers, the right mix of stores, restaurants and offices can create a winning formula.
But translating this success to commercial districts where there are multiple building owners competing for tenants is a vexing problem. Every owner has different financial objectives, time horizons and levels of concern for the overall health of the shopping district. Some are quick to adjust rent levels during economic downturns. Others opt to keep rates high even if it means a space remains vacant for months or years. Most have little retail leasing expertise or leverage to attract top quality stores, as privately owned and managed shopping centers have.
In Palo Alto, the city’s attempts to preserve ground floor retail has a long and complex history.
City planners and policy makers in the mid-1980s initially created restrictions in the core downtown area that prevented the conversion of retail ground-floor uses to offices and have eased or tightened them as economic conditions changed.
Two years ago, concerned about the continuing trend of retail closures throughout the city, the City Council adopted an interim citywide urgency ordinance that prohibited retail and “retail like” uses from converting to non-retail uses. That interim ordinance will expire at the end of April, and the council Monday night is scheduled to review a replacement ordinance that is aimed at keeping controls in place but loosening the definition of “retail” to give property owners more flexibility.
For example, the proposal allows personal training and small fitness or yoga studios in store fronts. (One need only look at the fact that California Avenue now has two new gyms occupying large prime store-front space to recognize why this is a bad idea.)
One of the root problems is that office, medical and some service uses command a much higher rental rate than retail, so if left to the free market, non-retail uses would begin proliferating in our commercial districts as long-term leases expire and owners seek to maximize their financial return.
Property owners and leasing companies bristle at regulation and argue that nothing kills off a retail environment faster than the vacant store fronts that current rules can create. They advocate for the loosest possible restrictions on use and limiting them to the core commercial streets, such as University Avenue and California Avenue, so that retail is concentrated.
Everyone can agree that vacancies in a business district are harmful and detract from the ambiance that attracts shoppers. But property owners in Palo Alto generally understand and accept that locating offices on the ground floor is as bad as store vacancies in disrupting a shopping environment, so the debate centers on how to regulate what is and isn’t allowed.
While we support the continuation of the current interim restrictions on ground-floor uses, we don’t for a minute believe that they are the answer.
Instead of thinking that ordinances can be regularly tweaked to shape and control the tenants on traditional retail shopping streets, the city needs to aggressively invest its efforts toward bringing together property owners, current ground-floor tenants and property managers with retail experts who can create coordinated ground-floor leasing strategies. Outreach by the city to the business community to date has been woefully inadequate.
The city should be filling its vacant economic-development director position with an expert on retail leasing who can support this effort, and it should be looking for models elsewhere (Los Gatos and Burlingame are good examples) for how other cities have supported and achieved vibrancy in their shopping districts. Just as privately owned shopping centers use financial incentives to attract key anchor tenants, the city should also explore how it might work with property owners to provide such incentives.
There is no easy fix to the trends that are causing traditional retail to leave our shopping districts, but the city needs to look beyond regulation for the solutions.
Another spot on editorial beginning with the reclamation of Town Country.
But more importantly, our City urgently needs an highly qualified person to fill the vacant economic-development director position and take the load off of our Council.
What concerns me and probably others is what is the vision for Midtown? It is well used, vibrant and most of all useful. We want it to stay that way.
We don’t want it turning into another upscale boutique and restaurant place. We want it to remain useful, affordable and the sort of place we might bump into people we know. The new Wells Fargo has to be there for a reason? What is that reason I wonder?
It is getting to be quite obvious that the city council, the developers, the techies, the billionaires etc all want the middle and upper middle classes to up and LEAVE Palo Alto, leaving it only to the very wealthy!
The powers that be, as well as the millennial. have also made it quite clear 5hat they want anyone over45 years old to leave, so they can have our homes!
Give Trump a chance/- if he keeps his campaign promise to retract the real estate capital gains taxes, all of the obnoxious and pushy richies will get their wish!
And we can go somewhere clean, unpolluted, and with a higher standard of living!
I paid uber millions for my house and I expect to be served when I want and how I want. I want the nicest restaurants and fancy boutiques and screw all of the help than NEEDS to serve me.
When council discussed retail protection a year or so ago, council member Kniss reported that she had checked out University Avenue and found it to be thriving. Therefore, Kniss argued, there was no need to further define what types of businesses should be allowed on the core retail streets and what businesses should be supporting retail on the adjacent side streets. In other words, let well alone.
However, as we have seen all too often. when council doesn’t plan in advance for the best outcome, we end up with unfortunate results. And by then it is too late.
Take, for instance, the corner of California Avenue and Birch Street, a prominent retail location, where a personal training studio now occupies the former stationary store space. The large retail windows are often black when I drive past, particularly uninviting, and when the lights are on what you see is a large almost empty room with a scattering of exercise equipment. This completely interrupts the flow of retail and restaurants and discourages walking any further.. A second personal training studio has also opened on California Avenue, but it’s location is not quite so prominent.
Council have agreed how important it is to have a core mix of lively shops and restaurants in close proximity. While personal services (without a retail component) are also very important, the best place for them il is on the adjacent side streets where they will bring in foot traffic to support the retail without having a deleterious effect.
Unfortunately, a laissez faire attitude is probably the fastest way to erode a critical mass of thriving retail and restaurants.
While you can dictate which kind of businesses can be located where, you can’t dictate against empty storefronts due to those businesses not being profitable. You may want to ask yourselves why those professional services can command a much higher rent… or why every retail establishment downtown (and everywhere else in Palo Alto) has a “help wanted” sign.
The exercise studio located at the former stationary store location is a blight to the neighborhood. The exercise studio is almost always deserted. Is it a front for something else?