PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto 1
Draft: May 2024
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto i
Acknowledgements
City Council Members
Mayor Greer Stone
Vice Mayor Ed Lauing
Council Member Greg Tanaka
Council Member Julie Lythcott-Haims
Council Member Lydia Kou
Council Member Patrick Burt
Council Member Vicki Veenker
Planning and Transportation Commission
Chair Doria Summa
Commissioner Allen Akin
Commissioner Bart Hechtman.
Commissioner Bryna Chang
Commissioner Carolyn Templeton
Commissioner George Lu
Commissioner Keith Reckdahl
Ad Hoc Committee Members
Commissioner Allen Akin
Commissioner Bryna Chang
Commissioner Keith Reckdahl
City Staff
Jonathan Lait- Planning and Development Services Director Amy French- Chief Planning Official
Bruce Fukuji
Steven Guagliardo- Assistant to the City Manager – Economic Development Stakeholders
Premier Property Management – Jon Goldman, Brad Ehikia
Ellis Partners – Jim Ellis
Thoits Bros., Inc. – John Shenk
Chamber of Commerce – Charlie Weidanz
Performance Gaines – Chris Gaines
Italico – Franco Campilongo
Taste Buds Kitchen – Scott Andersen
Peer City Interviewees
City of Santa Monica: Jennifer Taylor- Economic Development Manager City of Santa Monica: Roxanne Tanemori- Principal Planner City of Los Altos: Nick Zornes- Development Services Director City of Redwood City: Evelyn Garcia- Associate Planner
Consultants
Michael Baker International
Cover Image Credit: Palo Alto online
Table of Contents
Executive Summary .................................................................................. 1 Introduction ............................................................................................ 2 Purpose ........................................................................................................ 2 Relationship to Comprehensive Economic Development Strategy ............. 2 Guiding Principle 3 ................................................................................... 2 Strategy 9 ................................................................................................. 2 Action Items ............................................................................................. 2 Study Area ............................................................................................... 3 Downtown/University Avenue ..................................................................... 3 California Avenue ......................................................................................... 3 Midtown ....................................................................................................... 3 El Camino Real .............................................................................................. 3 Outreach ................................................................................................. 4 Stakeholders ............................................................................................ 4 Peer Cities ............................................................................................... 4 City of Santa Monica .................................................................................... 4 City of Los Altos ............................................................................................ 4 Redwood City ............................................................................................... 5 Changing Nature of Retail ........................................................................ 6 Rise of E-Commerce ..................................................................................... 6 Palo Alto Specific Trend ............................................................................ 6 Experience-based Retail ............................................................................... 6 Market Profile .......................................................................................... 7 Demographic Profile .................................................................................... 7 Top Tier .................................................................................................... 7 Urban Chic ............................................................................................... 7 Laptops and Lattes .................................................................................. 7 Leakage and Surplus .................................................................................... 8 Leakage (Demand) ................................................................................... 8 Surplus (Supply) ....................................................................................... 8 Stanford Shopping Center ........................................................................ 8 Summary ...................................................................................................... 8 Vacancy Trends and Findings .................................................................... 9 Retail Space Trends and Findings ................................................................ 9 National Trends ....................................................................................... 9 Palo Alto Findings .................................................................................. 10 Comparison with Peer Cities .................................................................. 11 Office Space Trends and Findings .............................................................. 12 National Trends ..................................................................................... 12 Palo Alto Findings .................................................................................. 12 Comparison with Peer Cities .................................................................. 13 Best Practices ......................................................................................... 14 Land Use and Zoning Ordinance ................................................................ 14 Parking and Curb Management ................................................................. 14 Approval Process ........................................................................................ 14 AB 2097 Implications and Recommendations .......................................... 15 Zoning Analysis and Recommendations ................................................... 18 Zoning Review and Comparison ................................................................. 18 Zoning Recommendations .......................................................................... 18
List of Appendices
Appendix A: Outreach Summary
Appendix B: Market Study
Appendix C: Implications of AB 2097
Appendix D: Zoning Review and Comparison
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Executive Summary
The City of Palo Alto seeks to retain, attract, and reinvigorate existing commercial areas, particularly areas that provide retail services. The purpose of this study is to recommend zoning strategies to help retain, strengthen, and facilitate retail in the key commercial areas of Palo Alto.
This study complements and furth ers the Comprehensive Economic Development Strategy adopted by the City Council in August 2023.
This study includes:
Several immersive reviews of the Palo Alto Zoning Code Several rounds of stakeholder in terviews, including business and property owners, and property managers, peer city staff Reviews and summaries of best retail revitalization practices A review and summary of national and local retail and office market trends
Market and demographic profile of Palo Alto
Review of past City planning efforts and correspondence, including the recent Streetsense Comprehensive Economic Development Strategy study and the Car-Free California Avenue Engagement Reports
Multiple meetings and workshops with the Planning and Transportation Commission
Multiple meetings and reviews with Palo Alto Planning and Economic Development department staff
The trend analyses show significant and persistent vacancies in Palo Alto in both office and retail spaces. Some of the vacancy trends are consistent with larger regional and national trends, pa rticularly the impacts of the COVID- 19 pandemic. However, some of the local trends and patterns appear to be unique to Palo Alto.
There was a remarkably strong consensus among the stakeholders with respect to the opinions about the problems and recommended improvements. The zoning analysis revealed an extremely complex, complicated, confusing, and difficul t to comprehend and navigate set of regulations, which poses significant challenges for staff, property owners, and prospective businesses, alike. Th e code contains many overlapping, redundant, and narrowly targeted provisions. Altogether, it creates a negative, overly protective, and business-adverse regulatory environment.
The good news is that there are many opportunities to make improvements that will reduce and eliminate deterrents and unreasonable constraints on existing and future investments in retail uses in Palo Alto.
The recommendations of this study re flect the overall consensus on the following general principles:
1. It is better to have occupied spaces, patrons, customers, and services for the community than the deleterious effects of vacant ground-floor spaces.
2. It is extremely difficult, if not impossible, and often counterproductive to try to outsmart or manipulate the free market.
This study recommends a variety of mo difications to the Zoning Code to eliminate or reduce regulatory constraints, conflicts, and outdated zoning strategies that deter, discourage, or overcomplicate the attraction, retention, and adaptation of retail business in Palo Alto.
The recommendations include strategies for future specific zoning amendments. This study provides the background conditions, understanding, best practices, community and stakeholder engagement, and policy discussions and regulato ry implications that led to the development of the recommended zoning strategies. This study is intended to provide the foundational analysis, policy, and strategic recommendations to authorize and enable the developmen t and adoption of future specific zoning amendments.
This study contains approximately 20 recommendations organized around the following 7 primary strategies:
1. Conduct a Comprehensive Zoning Cleanup of Mature, Complex Code
2. Create Streamlined and Predictable Approval Processes
3. Limit the Retail Preservation Ordinance (RPO) (18.40.180)
4. Allow Non-retail Uses on Ground Floor with Limitations
5. Repeal the Office Conversion and Construction Limitations
6. Relax the Formula Retail Restrictions
7. Ease the Parking Regulations
Implementation of these recommendations will take time. Some may be able to be implemented quickly, while others will require considerably more time. It is important that the City take swift action to execute actions as soon as possible. The recommended zoning strategies in this study provide a coordinated framework to identify and implement individual and coordinated sets of revisions in phases.
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Introduction
Purpose
Like many retail districts throughout the United States, the City of Palo Alto is struggling with high rental and vacancy rates in addition to challenges elicited by the COVI D-19 pandemic and emerging retail trends. The City requested evaluation of its land use controls relative to the evolving economic and market conditions for the City's major retail areas and corridors. Regulatory and procedural complexities play a significant role in the retail challenges for the City. The main focus of this report is to analyze, understand, and recommend changes to these land use controls and, to a lesser extent, discuss procedural hindrances.
The report also reviews national and regional trends as well as best practices. In addition, local business owners, City staff, and neighboring communities were interviewed to understand the local trends and climate. Appendix A includes the outreach summary and lists the individuals and businesses/agencies that were interviewed.
Relationship to Comprehensive Economic
Development Strategy
This study complement s and furthers the Comprehensive Economic Development Strategy adopted by the City Council in August 2023. The
strategies identified in the Comprehensive Economic Development Strategy aim to reflect the delicate ecosystem that drives the vibrancy of the City’s downtown and commercial centers with a focus on the retail and hospitality sectors significantly affected by the COVID-19 pandemic and resulting hybrid work environment. Three guiding principles emerged from this study.
Each guiding principle has recommended strategies accompanied by one or more distinct actions. Guiding Principle 3, Strategy 9, and action items 9.1 – 9.4 of the Comprehensive Economic Development Strategy report are directly relevant to the purposes of this study and noted below.
Guiding Principle 3
Adopt policies that reflect changing market conditions by easing the regulatory burden for businesses, removing outdating restrictions that create hurdles to tenancy, and focus retail and retail like uses in places where they are market-supported.
Strategy 9
Streamline, update and/or remove unnecessary use restrictions and pursue regulatory reform to enable tenancy and competitiveness.
Action Items
Action 9.1 Consider removing or consolidating zoning overlays, incorporating an at a glance permitted use table and design standards, and an interactive online map with quick links to relevant regulations.
Action 9.2 Consider amending Section 18.76.20, Architectural Review, of the municipal code to enable more over the counter approvals for minor changes.
Action 9.3 Reevaluate the city-wide Retail Preservation Ordinance and consider refocusing its applicability to targeted areas of existing retail concentration while also allowing flexibility in non-street facing portions of buildings. Action 9.4 Enable growth in Neighborhood Goods and Services along California Avenue by updating the Formula Retail
Ordinance and easing use restrictions on in demand
neighborhood serving uses that are currently heavily regulated or prohibited.
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Study Area
Four major retail areas and corridors were identified and analyzed to understand the current retail trends and land use conditions across the retail landscape of Palo Alto. The areas that were reviewed are Downtown Palo Alto/University Avenue, California Avenue, Midtown, and El Camino Real.
These areas are depicted in Figure 1.
Downtown/University Avenue
Downtown Palo Alto, defined by the boundaries of Alma Street, Lytton Avenue, Hamilton Avenue, and Webster Street, is a mixed-use commercial district consisting of a variety of service industry land uses, including hotel, eating and drinking services, retail services, laundry services, theaters, beauty salons, public parks, places of worship, fitness studios, single- and multifamily housing, office, and parking.
California Avenue
California Avenue from El Camino Real to the California Avenue Train Station is a four-block-long commercial corridor consisting of a large mix of commercial and retail uses, including ea ting, and drinking services, banks, optometrists, offices, retail, health and wellness services, fitness studios, beauty salons, post office, hotel, and parking structures. The City Council authorized California Avenue as a temporary car-free street early in the COVID-19 pandemic as an economic recovery effort and to provide community members with outdoor spaces to gather. In December 2023, City Council determined California Avenue will permanently remain a car-free street.
Midtown
The Midtown retail district is located along Middlefield Road between Sutter Avenue and Moreno Avenue. Midtown is a traditional American horizontal mixed-use retail complex comprising mu ltiple buildings accessed largely by vehicle trips intended to attract patr ons from outside the immediate area.
Land uses include eating and drinking services, offices, civic/institutional, barber shops, fitness studios, retail services, beauty salons, dance, and music studios, and learning centers.
El Camino Real
El Camino Real is a 4-mile-long commercial highway corridor that runs the entire length of Palo Alto from Sand Hill Road to Los Altos Road. The corridor is a major thoroughfare supported by auto-oriented uses and large retail complexes, including hotels, banks, me dical and dental services, eating and drinking services, learning centers, car rental shops, beauty salons, multifamily housing, auto dealerships, veterinary services, gas stations, banks, fitness centers, public parks, and retail services.
Figure 1 Palo Alto Retail Study Area
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Outreachh
Outreach efforts included interviews with six stakeholders and three peer cities. The outreach efforts are summarized in Appendix A of this document.
Stakeholderss
Six stakeholders—landowners, businesses, and the Chamber of Commerce—were interviewed in order to understand the restrictions or hindrances to development; they then provided recommendations to mitigate them. There was a strong cons ensus on many issues among all of the stakeholders. Below are the main takeaways from these interviews. Provide flexibility in the reuse of ground-floor space. Rescind ground-floor Retail Protection Ordinance.
Remove ground-floor retail restrictions on side streets and blocks away from the main commercial corridor.
Expand the definition of “retail-like use” to include uses that generate pedestrian activity.
Remove restrictions on formula retail.
Make permitting process simple, quick, and predictable. Reduce in-lieu parking fee to allow new development or intensification.
Allow transfer between uses without requiring parking.
Peerr Citiess
To gain a broader understanding of Palo Alto's regulatory provisions and procedures and inform the recommendations, three communities were interviewed to identify gaps and differences in approaches to retail development as well as to review the zone districts most similar to Palo Alto.
The jurisdictions were identified during the Planning and Transportation Commission and stakeholder intervie ws as having flexible zoning codes, efficient permit procedures and processing, and similar or desired retail districts. These were the following:
City of Santa Monica (focus was on Third Street Promenade – Bayside Conservation District)
City of Los Altos (focus was on Downtown Triangle – CRS Zone) City of Redwood City (focus was on Downtown area)
City of Santa Monica
The City passed an extensive list of emergency orders during the pandemic.
These included both planning and building/safety emergency orders, many of which have been formally adopted or extended. The following are key policy and zoning changes identified in the interview with City staff. Changes in zoning included allowing a wider variety of uses by right in areas that were historically more restrictive, such as pop-ups and creative commercial uses.
The City eliminated the need for conditional use permits (CUP), minor use permits, and other discretionary approvals for several uses.
The City staff stressed the importance of City staff being a known, visible, and trusted figure in the community.
Figure 2 Third Street Promenade - Bayside Conservation District (BC) City of Los Altos
The following are key policy and zoning regulations and permitting procedures identified in the interview with City staff. Los Altos has an active Chamb er of Commerce that supports and works with businesses. Using a Downtown Vacancy matrix, the Chamber of Commerce tracks vacancies, allowed uses, and building floor area/square footage.
The City’s streamlined permit processing via online submittals take days, not months.
The City made alcohol sales an ancillary use allowed by right. The City does not typically use CUPs; uses are either allowed or prohibited.
Figure 3 Los Altos - Downtown Triangle - Commercial Retail Sales (CRS)
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Redwood City
The following are key policy and zoning regulations and permitting procedures identified in the interview with City staff. Any changes to use in the downtown area, including retail, can be done by right.
The City provides a floor area ratio increase if the applicant provides housing or mixed uses in their development project.
The City has several vacancies in the downtown and they are trying to attract other active uses, not just retail.
Figure 4 Redwood City Zoning Map
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Changing Nature of Retail
Rise of E-Commerce
Retail has changed significantly over the last decade with the evolution of online retailer platforms and flexible mixed-use spaces. The pandemic has exacerbated this evolution, increasing the quantity of purchasing of goods and services via a myriad of avenues, especially via e-commerce. This trend is less of an anomaly and more of a paradigm shift in retail. As consumers diversify the ways they purchase goods and services, the role of brick-and- mortar establishments and traditional retail districts are transitioning.
While there are always consumers who prefer e-commerce, many businesses remain important physical anchors in retail districts, such as grocery stores, eating and drinking establishments, personal services, exercise studios, medical services, and theaters.
E-commerce has and continues to grow as a percentage of total retail sales.
It grew from 8 percent to 19.1 percent of total retail sales from 2012 to 2021. The growth was significant dur ing the pandemic. In 2022, US e- commerce represented 21.2 percent penetration total retail sales and that in 2023 was 22.0%, according to Digital Commerce 360 analysis of US Department of Commerce data.
1 Figure 5: US E-commerce Sales as a Percentage of Total Sales
Source: Digital Commerce 360
The growth rate of e-commerce is significantly higher compared to the growth rate of total retail sales in the US, indicating a strong preference for online shopping versus brick-and-mo rtar stores. The US e-commerce grew
7.6 percent in 2023 and total sales grew 3.8 percent. This trend is projected to continue and create competition fo r and innovation in local retail and commercial spaces.
Palo Alto Specific Trend
While specific statistics on the share of e-commerce in Palo Alto may not be readily available, it is important to recognize that national trends significantly influence local communities. Palo Alto, like many other cities, experiences the effects of broader economic shifts. The Comprehensive Economic Development Strategy, done by Streetsense and adopted by the Council in 2023, indicated that there is an oversupply of 460,000 square feet of retail space in the City. While the shift to e-commerce is one of the factors, the study also indicates that hybrid work has reduced the demand for retail in Palo Alto by over 100,000 square feet.
Experience-based Retail
Experiential retail aims to provide customers with unique and memorable experiences beyond traditional shopping. The desire for retail experiences is on the rise with millennials saying that 52 percent of their spending goes on experience-related purchases. 2 “ Retailtainment” is a subset of experiential retail that elevates the customer experience through entertainment by offering immersive retail experiences, where brands are able to provide customers with fun, unique, and in-person experiences that elevate shopping to new heights. Key features of experiential retail include:
Unique Spaces and Objects: Retail spaces that stand out, interesting displays, and creative use of physical environments.
High Customer Engagement: Inte ractivity, personalization, and emotional connections.
Technology Integration: Leveraging tech to enhance customer interactions.
According to a recent report from Forrester and Adobe, brands defined as “experience-driven” are seeing an avera ge growth rate of 19 percent per year, compared to 13 percent for other types of retailers. That study also found that retailers utilizing experiential tactics are driving repeat purchases at rates nearly twice those of traditional retail.3
1 Digital 360, US ecommerce sales penetration hits new high in 2023, accessed April 18, 2024, https://www.digitalcommerce360.com/article/us-ecommerce-sales/. 2 Washington Post, “Shoppers are choosing experiences over stuff, and that’s bad news for retailers,” accessed April 18, 2024, https://www.washingtonpost.com/business/economy/shoppers-are- choosing-experiences-over-stuff-and-thats-bad-news-for-retailers/2016/01/07/eaa80b5a-b4a7-11e5- a76a-0b5145e8679a_story.html.
3 Experiential Retail: What You Need to Know in 2020, accessed April 18, 2024, https://www.commercialsearch.com/news/experiential-retail-what-you-need-to-know-in-2020/.
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Markett Profilee
Market research was conducted to understand the area's demographics and office and retail market conditions, as well as retail demand and supply. ESRI Business Analyst- demographic mapping software tool and CoStar- a real estate information tool, were used for this research; the information was supplemented by City staff and stakeholder interviews. The data used to summarize the market study can be found in Appendix B
This section is divided into three sections:
Demographic Profile: An understanding of demographics, their purchasing power, and the products they consume helps businesses located in the area to cater to these groups and, in turn, increase their chances of success.
Leakage and Surplus: An analysis of leakage and surplus provides a snapshot of the type of retail that is missing in the area. This information, along with the demographic makeup of the areas, helps business owners target the retail stores that will cater to the population in the area.
Summary: This section summarizes key observations and findings from the market profile.
Demographic Profile
ESRI provides a system of market segmentation built by using a large, well- selected array of attributes of demographic and socioeconomic variables to identify numerous unique consumer markets throughout the United States.
This system is called Tapestry Segmentation. The data can provide insight on essential consumer variables, such as age, education level, the likeliness of car or home ownership, a consumer's willingness to buy or purchase certain products, and their overall ec onomic purchasing power. This is an important aspect of market research and helps create an understanding of the types of land uses that will best serve the neighboring population in a 10-minute drive time.
More than 70 percent of the population living in the 10-minute drive time of the commercial areas in Palo Alto falls in one of these three tapestry segments:
Top Tier
These are the residents of the wealthiest Tapestry market and earn more than three times the median US household income. They have the purchasing power to indulge in any choice. Aside from the obvious expense for the upkeep of their homes, consumers select upscale salons, spas, and fitness centers for their personal well -being and shop at high-end retailers for their personal effects. They take lavish vacations and fill their weekends and evenings with opera, classical music concerts, charity dinners, and shopping. They mostly shop at high-end retailers such as Nordstrom, but also at other meddle-end stores such as Target, Kohl's, Macy's, and Bed Bath & Beyond. They also shop online.
Urban Chic
Urban Chic residents are professionals that live a sophisticated, exclusive lifestyle. Half of all households are occupied by married-couple families, and about 30% are singles. These are busy, well-connected, and well-educated consumers—avid readers and moviegoers, environmentally active, and financially stable. This market is a bit older, with a median age of 43 years, and growing slowly but steadily. They shop at stores such as Trader Joe's, Costco, or Whole Foods. They like to eat organic foods, drink imported wine, and truly appreciate a good cup of coffee. They travel extensively (domestically and internationally) and shop at upscale establishments. They embrace city life by visiting museums, art galleries, and movie theaters for a night out. In their downtime, they enjoy activities such as skiing, yoga, hiking, and tennis.
Laptops and Lattes
These residents are predominantly single, well-educated professionals in business, finance, legal, computer, an d entertainment occupations. They are affluent and partial to city living—and its amenities. Many residents walk, bike, or use public transportation to get to work, a number work from home. Laptops and Lattes residents are cosmopolitan and connected— technologically savvy consumers. They are active and health conscious and care about the environment. They spend money on nice clothes, dining out, travel, treatments at day spas, and latte s at Starbucks. Physical fitness is a priority, exercising at a club or other facility on a regular basis. They enjoy sports such as jogging/running, biki ng, tennis, soccer, skiing, yoga, and Pilates, as well as participating in fantasy sports leagues. They favor organic food and purchasing groceries at higher-end markets.
Source: ESRI
Source: ESRI
Source: ESRI
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Leakage and Surplus
ESRI's Retail MarketPlace database incl udes a leakage/surplus factor that measures the balance between the volume of retail sales (supply) generated by retail businesses and the volume of retail potential (demand) produced by household spending on retail goods within the same industry. Analysis of the data has led to the following results for supply and demand within a 10- minute driving time of California Av enue and University Avenue (Trade area).
Leakage (Demand)
Leakage in an area represents a condition where demand exceeds supply.
In other words, retailers outside the market area are fulfilling the demand for retail products; therefore, demand is “leaking” out of the trade area.
Such a condition highlights an opport unity for new retailers to enter the trade area or for existing retailers to extend their marketing outreach to accommodate the excess demand.
Trade area leakage includes- Auto parts, motor vehicle dealers, auto accessories, building materials, lawn and garden equipment, other general merchandise stores, florists, vending machine operators, direct selling establishments, special food services , drinking places, used merchandise stores, office supplies, stationery, and gift stores, gasoline stations, health and personal care stores, specialty food stores, and grocery stores.
Surplus (Supply)
Surplus in an area represents a condi tion where supply exceeds the area’s demand. Retailers are attracting shop pers that reside outside the trade area. The “surplus” is in market supply. Brand positioning and product mix are key differentiators in these types of markets.
Trade area surplus includes- Shoe stores, book, periodical, and music stores, furniture stores, department stores, home furnishings stores, electronics and appliance stores, jewelry, luggage, and leather goods store.
Stanford Shopping Center
It should be noted that the commercial areas along California Avenue and University Avenue receive direct comp etition from the Stanford Shopping Center due to being in its close vicinity. The Stanford Shopping Center is successful and attracts clientele from the region. The retail areas in the City can learn from the success of the professionally managed shopping center, which does not have the same zoning constraints. The mall emphasizes continuous pedestrian activation an d comfort, and more non-exclusive retail on the ground floor, such as spas, personal services, restaurants, and food and convenience. It should also be considered that parking is set, and tenants can change usage without triggering parking fees, construction,
restrictions, or City approval. All of this results in key advantages and competition for Downtown and California Avenue.
Summary
There seem to be several gaps in the market based on the leakage/surplus reports. These include personal services and grocery stores. At the same time, the demographics of the area seem to use upscale salons, spas, and fitness centers for their personal well-being and shop for groceries at Trader Joe's, Whole Foods, and other organic stores. Hence, such retail and retail- like uses, if provided in the area, have chances of success, and can help lower vacancies indicated in the findings section. Based on such findings, there are opportunities for possible co de and regulatory changes to help capture the market.
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Vacancy Trends and Findings
Retail Space Trends and Findings
National Trends
According to a CoStar report, “The US retail market has demonstrated remarkable resilience over the past three years, culminating in historically tight availability at the end of 2023 with the national average vacancy rate hitting a new low of just 4.0 percen t. Current demand and supply-side factors are likely to persist regardless of economic conditions. On the demand front, the retail sector has benefited significantly from a marked decrease in bankruptcies and large-scale store closures over the past three years, resulting in a 20 percent reduction in the amount of retail space vacated compared to pre-pandemic norms.
With retail tenants no longer moving out of spaces at the same robust clip seen in 2017 through 2020 and demand supported by a historic surge in consumer spending, the amount of avai lable retail space tightened quickly as less and less backfill space became available. Supply-side factors equally drove the rapid contraction in vacancy, as very little new retail development coupled with an active pace of demolitions resulted in the lowest levels of net retail space deliveries seen in decades.”
4 This trend appears likely to remain in place for the foreseeable future based on the current range of outcomes. In only the two most adverse scenarios, the Depression and Severe Downside alternatives, does retail vacancy increase above 5 percent.
The boost in consumption coming out of the pandemic, retail sales, excluding e-commerce, stand 10 percent higher than pre-pandemic levels, even after accounting for inflation. Th is increased sales potential suggests closures will likely be limited to a select few underperforming stores and those stemming from bankruptcies.
4 CoStar reports, “Retail Supply and Demand Likely To Remain in Balance for Foreseeable Future,” accessed April 18, 2024, https://www.costar.com/article/523238330/retail-supply-and-demand-likely- to-remain-in-balance-for-foreseeable-future.
Figure 6: US Retail Vacancy Trend
Source: CoStar
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Palo Alto Findings
Data derived from CoStar illustrates retail vacancy trends in Palo Alto.
Detailed ten-year trend tables and graphs for study areas in Palo Alto as well as peer cities are documented in Appendix B. Below are key observations and findings from the CoStar data.
Retail and office vacancy rates have increased significantly in each of Palo Alto's retail districts in the last decade, specifically in the Downtown, California Avenue, and El Camino Real-Town and Country area.
Unlike national trends, the trend in Palo Alto shows a rise in vacancy rates since the end of the COVID-19 pandemic.
Vacancies seemed to have been rising several years before the pandemic began. This could be due to a combination of factors such as changes in regulatory environment, rise of e-commerce, and a continued and latent expression of weakness in the retail sector following the Great Recession.
An evaluation of recent changes in vacancy rates over the last year (2023-2024) shows improvement in the California Avenue area and Midtown areas.5
Vacancy rates vary considerably quarterly, particularly in smaller market areas where one vacancy represents a significant percentage of the total.
The Town and Country area was hit particularly hard by the COVID- 19 pandemic, with vacancy rates increasing from among the lowest rates in Palo Alto to the second highest after Downtown. The rents for the retail spaces in the commercial areas that were studied have been on a steady rise despite increases in the vacancy rate, with the highest rent per square footage in the Downtown and Town and Country areas.
All retail areas still have vacancy rates greater than what they were pre-COVID.
Midtown has performed well regardless of the COVID-19 pandemic, likely due to being isolated and supported as local service to surrounding residential areas with a strong customer base. All areas except Midtown show an increase in period of months vacant since the pandemic with some retail spaces being vacant for 20 to 30 months in the Downtown and California Avenue areas. Retail space vacancy in the Town and County area has increased dramatically since the COVID-19 pandemic from an average of 4.5 months in 2019 and 2020 to over 40 months in Q1 of 2024. Landowners seem to be willing to forgo rents and keep their properties vacant for longer periods of time. According to a Harvard study, “Why Do Urban Storefronts Stay Empty for So Long?” 6 storefronts often remain empty for months or years at a time, even in some of the world’s highest-rent retail districts. The study concluded that, eventually, a primary driver of retail vacancy in dense urban areas is the fact that landlords are willing to forgo rents today to preserve the option to lease their space to someone else (who might pay higher rents) tomorrow. The study found that while a vacancy tax would decrease the vacancy rate and rents, it would also lower tenant quality and lead to faster churn in the city’s storefronts.
Table 1: Retail Vacancy Trends as of 2024 Q1
Area Total Retail Space (SF) Vacant Retail Space (SF) Vacancy Rate Vacancy Rate Change* (2023-2024) Rent per Square Foot
Downtown 740,000 112,000 15.1% 6.90% $77.11
California Avenue 295,000 28,200 9.6% -4.10% $54.47
ECR - Town and Country 175,000 21,400 12.2% 0.50% $76.70 ECR - California Avenue 54,300 5,000 9.1% 8.20% $48.81
ECR - South 463,000 8,100 1.8% 0.20% $53.65
Midtown 104,000 3900 3.8% -0.4% $55.67
TOTAL 1,831,300 178,600 9.8%
Source: February 2024 CoStar Group Analytical Reports
ECR = El Camino Real
* Indicates one-year change. A negative percentage indicates that the vacancy has reduced in a one-year period. Positive numbers indicate an increase in vacancy in one-year period.
5 CoStar Data Analytical Reports accessed February 9, 2024, https://www.costar.com/. 6 Moszkowski, Erica and Daniel Stackman, “Why Do Urban Storefronts Stay Empty for So Long?”, 2023, accessed February 7, 2024,
https://emoszkowski.github.io/ericamoszkowski.com/Moszkowski_JMP.pdf.
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Figure 7: Retail Vacancy Rate (2014 Q1 to 2024 Q1)
Figure 8: Retail Rent per Square Foot (2014 Q1 to 2024 Q1) Comparison with Peer Cities
As a part of the study, the retail vacancy trends were compared to peer cities Santa Monica and Los Altos. Detailed graphs of these trend comparisons can be found in Appendix B.
Similar to Palo Alto, unlike national trends, the vacancy rate significantly increased in Santa Monica in both a reas studied, i.e., the Third Street Promenade and the Main Street area.
The Third Street Promenade was hardest hit, post-COVID-19, of all the retail areas studied. One contributing factor could have been the pedestrian nature, which became less favorable due to limited in- person interactions during the pandemic. As a result, foot traffic and business activity declined, impacting the Promenade’s overall performance.
The vacancy rate in downtown Los Altos increased only slightly post- pandemic but has showed signs of recovery since 2021. It remains below 3 percent.
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Office Space Trends and Findings
National Trends
The US office vacancy rate has reached an all-time high due to the impact of remote work arrangements. It rose to a record-breaking 19.6 percent in the fourth quarter of 2023. This is the largest quarterly increase since the first quarter of 2021, and larger than the 19.3 percent level reached twice in 40 years. In conjunction, the new construction of office space has cooled to the lowest levels since 2012.
7 The remote work trend is seen as the foremost reason for high vacancy rates. The COVID-19 pandemic accelerated the adoption of remote work.
Many companies shifted to telecommuting, reducing the need for physical office spaces.
Industries like tech and finance have embraced remote work more readily, affecting office demand. Sectors that rely heavily on in-person collaboration (e.g., creative agencies, legal firms) may still require office space.
Lease expirations also provide opport unities for companies to renegotiate terms or explore alternative spaces. Some businesses choose not to renew leases, contributing to higher vacancies. Sustainability and environmental awareness are also influencing office design. Some companies prioritize green buildings or energy-efficient spaces. Older, less efficient buildings may struggle to attract tenants.
According to Office News, Class A office space in highly prestigious and well- connected locations is still in demand, especially where new or newly renovated offices are concerned. Premiums for high-end offices have increased nationwide by more than 30 percent since the onset of the pandemic, although it has not affected demand.
8 Palo Alto Findings
Vacancy rate data derived from CoStar illustrates retail vacancy trends in Palo Alto. Detailed ten-year trend tables and graphs for study areas in Palo Alto as well as peer cities are documented in Appendix B. Below are the findings.
Similar to national trends, the office vacancy rate has been increasing in Palo Alto. Vacancy rates are greater than 10 percent in most areas, post-COVID-19 pandemic.
Most office space in Palo Alto catered to tech companies. The demand for office space has been impacted by tech companies readily embracing remote work and lease expirations.
Downtown has the highest overall inventory of office space and highest square footage of vacancy. The vacancy rate has continued to increase post-COVID-19 pandemic with no sign of recovery. California Avenue has the highest vacancy rate as of February 2024.
While there has been some absorption of space from 2022 Q4 to 2023 Q4, reducing the vacancy by approximately seven percentage points, the vacancy increased again in the last quarter. This could be due to office closures or offices not reinstating lease agreements and shrinking office space in a hybrid work environment.
El Camino Real retail areas, except for Town and Country, show a drop-in vacancy rate post-COVID-19 pandemic. A relatively small amount of vacant office space in Town and Country (5,800 square feet) could result in a high vacancy percentage due to limited overall inventory.
Similar to Town and Country, Midtown shows a high vacancy rate with actual vacant square footage of only 8,900 square feet. Office rents have also dropped, wi th peak asking rents being right before the COVID-19 pandemic. However, this has not helped with net absorption. Overall, Downtown and Town and Country have the highest rents per square foot in Palo Alto.
x Most office buildings in the four-district study area are older. There is limited Class A building space in the study areas, the largest of which is in the Downtown area with 85,000 square feet. However, this is an older building, built in 1980s.
9 Table 2: Office Vacancy Trends as of February 2024
Area Total Office Space (SF) Vacant Office Space (SF) Vacancy Rate Vacancy Rate Change
(2023-2024) * Rent per Square Foot
Downtown 2,100,000 339,000 16.0% 3.7% $93.77
California Avenue 712,000 166,000 23.4% 1.0% $72.23
ECR - Town and Country 49,800 5,800 11.6% 2.3% $87.63
ECR - California Avenue 192,000 15,500 8.1% -4.6% $72.45 ECR - South 219,000 20,900 9.6% -5.6% $66.11
Midtown 43,200 8,900 20.7% -0.2% $65.13
TOTALS/AVERAGE 3,316,000 556,100 16.8% -1% $76.22
Source: February 2024, CoStar Group Analytical Reports
ECR=El Camino Real
* Indicates one-year change. A negative percentage indicates that the vacancy has reduced in a one-year period. Positive numbers indicate an increase in vacancy in a one-year period.
7 CNN Business, “Office vacancy rate hits record high,” January 8, 2024, https://www.cnn.com/2024/01/08/economy/office-space-vacancies-hit-a-record- high/index.html#:~:text=The%20national%20office%20vacancy%20rate,vacancy%20rate%20was%20ar ound%2016.8%25.
8 Office News, US Office Market Trends 2022 – Statistics, Challenges and Outlook, February 24, 2022, https://offices.net/news/us-office-market-trends-2022-statistics-challenges-and-outlook/. 9 Commercial Café, Commercial Listings Palo Alto, accessed February 7, 2024, .
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Figure 9: Office Vacancy Rate (2014 Q1 to 2024 Q1) Comparison with Peer Cities Similar to Palo Alto, the peer cities show increases in office vacancies post- COVID-19 pandemic. Detailed graphs of these trend comparisons can be found in Appendix B.
The vacancy square footage and the trend of increases in vacancy in the Third Street Promenade area is similar to Downtown Palo Alto but the vacancy rate is higher. For 2024 Q1, it is 27.1 percent for the Third Street Promenade area compared to 16.5 percent in Downtown Palo Alto.
Santa Monica Main Street also experienced a remarkably high vacancy rate of 29.9 percent, as of 2024 Q1.
The vacancy rate has increased significantly in Los Altos since peaking in 2021 Q3 at 24.3 percent to 13.7 percent in 2024 Q1. This is besides the fact that the rents in Los Altos are comparable to California Avenue and El Camino Real while being lower than Downtown Palo Alto. This is also despite the fact that retail areas in Palo Alto have closer proximity to regional transit facilities compared to Los Altos.
However, it should be noted that ab sorption of one office space in Los Altos could result in a significant drop in the vacancy percentage due to significantly lower overall inventory, compared to the Downtown Palo Alto and California Avenue areas.
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Best Practices
The best practices summarized here are derived from respected leading industry resources such as the Urban Land Institute and the National League of Cities. In addition, several jurisdictions in the state (Santa Monica, Santa Cruz, and San Diego) that have adop ted retail revitalization plans and strategies were also studied. Some of these may already be in practice in Palo Alto. The Recommendation Sect ion provides detailed suggestions specific to Palo Alto
These best practices and principles are summarized and organized into the following key categories:
1. Land Use and Zoning Ordinance
2. Parking and Curb Management
3. Approval Process
Land Use and Zoning Ordinance
1. Attract and Retain People. Allow land uses that can attract and retain people throughout the day and evening hours.
2. Prioritize People. Focus longer-term land-use code adjustments on efforts that put people's use (not vehicles or parking) of public space first.
3. Create Flexible, Permissive Zoning. Eliminate restrictive zoning for potential low-impact uses of vacant spaces and reduce regulatory hurdles.
Fill ground-floor vacant spaces by allowing the use of space to incubate small or start-up businesses.
Allow pop-ups, incubators, and temporary uses that can operate with short-term leases.
Allow artisan shops that create and sell products on site such as handmade candle shops, hand crafted jewelry and so on.
4. Create Certainty with Objective Standards . Replace vague and subjective standards with objective development standards.
5. Include Active Use as a Part of Retail Use. Broaden the definition of retail to include active uses—those that generate activity on the street, such as eating and drinking, hotels, entertainment, personal
10 Urban Land Institute, “Ten Principles for Rebuilding Neighborhood Retail,” January 1, 2003, accessed February 7, 2024, https://americas.uli.org/ten-principles-for-rebuilding-neighborhood-retail-2/. services, museums/galleries, health/fitness, performing arts, commercial recreation, and entertainment.
6. Encourage Complementary Uses. Non-retail complementary uses such as professional services and restaurants attract and allow people to stay in the area for longer and, in turn, support retail sales and street and district vitality.
7. Encourage New Office and Residential Uses. Office workers create a demand for retail along the street , especially in the morning and at noontime. Residential development in and adjacent to the commercial areas also generate customers, pedestrian activity, and retail demand. Office uses generate significantly more persons per square foot than residential uses.
8. Extend Retail and Restaurant Hours. Longer hours equal stronger sales, and strong sales define a successful shopping street.
9. Concentrate Retail on Blocks and Nodes. Shoppers typically will walk for only three or four city blocks.
10 10. Create Attractive Spaces. Incentivize privately owned public spaces and improve physical access to the public space.
Parking and Curb Management
While the focus of this report is not specifically on parking ordinance reform, parking is closely related to land use and retail recovery. Below are some best practices for creating healthy commercial areas.
1. Create a program to provide credits for municipal parking spaces to reduce the overall development burden.
2. Preserve on-street spaces for customers.
3. Promote shared parking that can support multiple different uses throughout the day.
4. Adjust (reduce) minimum requirements to better align with demand and reduce construction costs for developers. Minimums should be less than the actual demand.
5. Create a flat rate for parking regardless of use to provide flexibility in the change of use.
6. Create a parking relief program for businesses that have outdoor dining, are undergoing a change of use, or currently have off-site parking conditions.
7. Designate strategic zones with clear signage for rideshare uses and curbside delivery (e.g., Lyft, Uber, taxi).
8. Provide short-term and long-term bicycle parking at key locations throughout the commercial district.
9. Use technology to provide parking signage indicating "where" and "how many" spaces are available for parking.
Approval Process
Time, fees, complexity, and clarity/certainty of the approval process play a vital role in a developer's or business owner's decision to locate or invest in a particular area. Below are some best practices for improving the process and creating a business-friendly environment in a community.
1. Work with property and business ow ners and applicants to allow and make changes of uses and tenant improvements quickly to adapt and respond to changing market demands.
2. Amend use regulations, development standards, and approval processes to earn a reputation for quick, efficient, predictable, and business-friendly service and approvals.
3. Ensure that the business licensing and permitting process is not an impediment to good retail activity.
4. Ensure that zoning regulations are designed with flexibility in mind and that changes can happen administratively during times of need.
5. Allow most uses and improvements without discretionary approval (i.e., by right or ministerially). Retail and supportive uses should be allowed by right, without discretionary approval, to the extent possible.
6. Consider reducing or waiving fees associated with building construction or redevelopment in the focus area.
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AB 2097 Implications and Recommendations
The purpose of this portion of the study is to review the implications of recently adopted Assembly Bill (AB) 2097 on the City of Palo Alto’s parking regulations and management strategies, the adequacy of the existing parking inventory and potential impacts on retail establishments. The full AB 2097 analysis is contained in Appendix C.
Effective January 1, 2023, AB 2097 prohibits public agencies from imposing minimum automobile parking requirements on most types of development within a half-mile of a major transit stop. However, this reduction does not apply to projects that designate any portion of the project as a hotel, motel, bed and breakfast inn, or other transient lodging use, or reduce parking spaces designated for this purpose.
Exceptions are allowed in limited circumstances. The bill authorizes a city, county, or city and county to impose or enforce minimum automobile parking requirements on a housing development project if the public agency makes written findings, within 30 days of the receipt of a completed application, that not imposing or enforcing minimum automobile parking requirements on the development would have a substantially negative impact, supported by a preponderance of the evidence in the record, on the public agency’s ability to meet its share of specified housing needs or existing residential or commercial parking within 1/2 mile of the housing development.
Figure 10 identifies the areas of Palo Alto that are affected by and subject to the provisions of AB 2097.
There are approximately 6,677 public parking spaces across the four retail districts in the study area. Of these, 2,125 are on-street spaces and 4,552 are off-street public parking spaces within the public parking lots and public parking garages that existed at the time of this study. Based on the limited data received from the City as well as on interviews with the City’s Office of Transportation and stakeholders, there seems to be surplus parking in the commercial core areas of the City, espe cially the Downtown and California Avenue areas. The stakeholders did not express any concern related to availability of parking. However, as development occurs, the adequacy of the existing parking supply may be challenged from new or intensified land uses without construction of new on-site parking due to AB 2097.
Figure 10: AB 2097 Relief Areas
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Below are some of the recommended strategies from the AB 2097 parking and retail impact assessment.
1. Extend AB 209 to Entire CD-C Zone for Equity. Within Downtown, there are 16 parcels in the CD-C district on University Avenue that lie just north of the half-mile radius from a high-quality transit stop that are not exempted from the parking requirements by AB 2097.
Unless the provisions of AB 2097 are extended, these parcels will remain subject to minimum parking requirements and the
Commercial Downtown Assessment District standards of 18.52 of the PAMC. To ensure equitable development conditions for all parcels in the Downtown area, it is recommended that uniform regulations be applied to the entirety of the CD-C districts in the Downtown area.
2. Allow Retail Flexibility Without Requiring Additional Parking: In retail areas outside the influence of AB 2097, the conversion of retail space to other retail or retail-like uses (for example, changing a boutique store into a restaurant or art gallery) should not impose restrictions on developers to provide parking in accordance with the converted uses, as long as the square footage is not increased.
3. Parking Management & Optimization. Without the ability to require on-site parking or require in-lieu payments toward public parking, the City will need to focus primarily on management and optimization of the existing pa rking supply. An optimal parking threshold for commercial areas is typically around 85 percent occupancy11. Beyond this point, park ing availability becomes strained, leading to inconvenience for visitors and potential business impact. To address this, the City should actively monitor and manage parking utilization. At some point, future growth and intensification may challenge the adequacy of the existing supply.
4. Develop Ordinance to Unbundle Parking. The city should update the parking ordinance to include provisions of AB 1317 that will go into effect on January 1, 2025, which requires developers to unbundle parking from residential de velopments. The benefits of unbundling include more efficient use of existing parking spaces, cost savings for non-drivers, and clearer market valuation of land used for parking. It is especially helpful in areas not subject to minimum parking requirements.
11 Shoup Donald, 2011, The High Cost of Free Parking, Routledge Figure 11: Commercial Zoned (CD-C) Parcels Outside AB 2097 Impacted Areas- Downtown/University Ave
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5. Create Employee Parkin g Plan and Program. Business owners should encourage employees to not park in the most convenient customer parking spaces.
6. Pursue Shared-Use Agreements. The City can facilitate a shared parking between landowners by creating ready to use shared parking agreements. The City can also enter into parking agreements with the landowners to use private parking during hours that it typically goes unused. These areas can be advertised on-site and, on the website, as available parking spaces during certain times of the day.
7. Reevaluate City’s Paid On-Street Parking Program. The City could implement incremental increase in rates instead of a flat $25 per day for public parking garages and lots 12. The City could also evaluate implementing a paid on-street parking program instead of moving the vehicle every 2 hours when a parking utilization threshold is reached.
8. Enhance City’s Transportation Demand Strategy (TDM) Strategy.
The City has an ordinance granting the Planning and Development Services Director the authority to require TDM strategies. However, a developer’s influence is limited to the site. The City can be more effective in implementing area-wide TDM strategies such as public transit improvements, pedestrian-friendly infrastructure, and promotion of active transportation and mixed-use development as suggested by the Comprehensive Economic Development Strategy- Guiding Principle 2.
9. Explore Emerging Technologies. As innovative technologies emerge, it is advised that the City explore and implement technologies that can deliver real time information via app or website. These can be applicable to parking garages, lots and on- street parking spaces and can help patrons find and receive directions to the nearest available space.
10. Improve Signage and Wayfinding for Parking: Effective signage ensures visitors can find their way without confusion. Palo Alto has signage directing to the parking areas, but they don’t provide information on parking availability in particular garages or lots or directions to garage or lot. The existing APGS and emerging technologies can be integrated with digital signage at strategic locations, which can provide real time information on parking. This will reduce the time spent to find parking in the retail areas.
11. Curb Space Management. Increasing the opportunity to walk and bike to various locations and to co mplete short distance trips can alleviate pressure on parking. Adopting a micromobility program for shared bicycles and/or scooters and providing adequate curb space may also reduce the need for car for shorter trips.
12 Parking Work Plan, https://www.cityofpaloalto.org/Departments/Transportation/Parking/Palo-Alto- Parking-Action-Plan/Parking-Work-Plan, Accessed April 22, 2024
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Zoningg Analysiss andd Recommendationss
Zoning Review and Comparison
A detailed review of the Palo Alto Zoning Ordinance was conducted to review the permitted uses, development standards, and procedures. This is documented in Appendix D. The purpose of the analysis is to identify likely and potential constraints and opportunities to improve the health and function of retail uses and the ma in commercial retail and commercial corridors and provide recommendations for improvement. In addition, the analysis and recommendations are derived from the interviews with stakeholders, including developers, the Chamber of Commerce, and business owners (refer to Appendix A). Following the interviews with the cities of Santa Monica and Los Altos, the zoning for all commercial areas was reviewed and compared with zoning for the Palo Alto study areas. Appendix D contains excerpts and notes on the most relevant portions of the code.
Zoning Recommendations
The analysis resulted in the follow ing findings, observations, and recommendations.
The Palo Alto Zoning Ordinance is complex and robust. It is a mature code that reflects decades of cumulative modifications to address a variety of concerns. However, the overall structure and organization have grown to be intricate and complicated. As a result, it is difficult, even for a seasoned professional planner, to navigate, understand, and implement the many overlapping layers, sections, and exceptions, and unique, narrowly defined, and targeted provisions. This is common with older codes. They accumulate many targeted amendments and revisions over the years. This detracts from the original organization and can impact the overall functional integrity. The Zoning Ordinance is particularly complex with respect to the regulation of retail and office uses. It appears th at numerous individuals, specific amendments to address many concerns over the years may now have the cumulative effect of overregulating and preventing the healthy reuse and improvement of sites and buildings.
RECOMMENDATION 1.1
The current state of the code suggests that a comprehensive review, revision, and update is warranted to ensure the code functions efficiently, equitably, and as intended.
Examples of some symptoms and characteristics that suggest a comprehensive review and update are warranted include:
a. Many and overlapping combining districts.
b. Complex listings of permitted uses with multiple exclusions, exceptions, and footnotes
c. Inconsistent language and many variations of similar regulations
d. Reliance on subjective standards, findings, and determinations e. Complaints and frequent requests from applicants
f. Lengthy processing times, diff icult implementation, variable application and interpretation, and errors
It is recommended that the code be reviewed and revised to make it more user-friendly. In an effort to understand and evaluate the use regulations and development standards, comparative use tables for the commercial districts and the combining districts were created. The tables make it easier to see which uses are permitted in each district and improve the overall understanding of the zones through the comparison of districts.
RECOMMENDATION 1.2
The code could be made more user-friendly by integrating the use and development standards of the combining districts into the use and development standard tables.
Below are examples of some of the subtle differences and restrictions on personal service uses that warrant evaluation of their need and effect on protecting or restricting a healthy commercial corridor:
R Retail Shopping Combining District: Permitted: "Personal services, except the following on California Avenue: beauty shops; nail salons; barbershops; laundry and cleaning services as defi ned in Section 18.04.030(114)(B); fitness or exercise studios exceeding 1,800 square feet in gross floor area; and learning centers intended for individual or small group settings." GF Ground Floor Combining District: Permitted: "Personal services, except for parcels with frontage on Univer sity Avenue, where uses defined in Section 18.04.030(114)(B), (G), (H), and (I) are not permitted." [Prohibits:
laundry and cleaning; art and dance studios; fitness or exercise studios, and similar uses; learning centers.]
CD-N Zone: "A conditional use permit is required for the following uses when fronting on University Av enue: (A) Fitness or exercise studios, and similar uses; and (B) Learning centers intend ed for individual or small group settings."
CS Zone: "A conditional use permit is not required for medical office, or commercial recreation uses up to 5,000 square feet of gross floor area, with the following exceptions, for which a conditional use permit is always required: (A) medical office fronting on California Avenue and in the Midtown Shopping District; (B) commer cial recreation uses fronting on California Avenue and in the Town and Country Village Shopping Center." CC, CC(2) Zones: "A conditional use permit is required for the following uses when fronting on California Avenue: (A) Fitness or exercise studios, and similar uses exceeding 1,800 square feet in gross floor area; and (B) Learning centers intended for individual or sm all group settings. A conditional use permit is required for fitness or exer cise studios and similar uses exceeding 1,800 square feet in gross floor area in Town and Country Village Shopping Center."
CD-C, S, N Zones: "A conditional use permit is not required for commercial recreation uses up to 5,000 square feet of gross floor area, with the following exceptions, for which a conditional use permit is always required: (A) medical office fronting on University Avenue; (B) commercial recreation uses fronting on University Avenue."
CN, CC, CC(2), CS Zones: "Medical, Professional, and Business offices shall not be located on the ground floor unless any of the following apply to such offices:
"Occupy a space that was not occupied by retail services, personal services, eating and drinking services.
"Are located in new or remodeled ground floor area built on or after March 19, 2001, if the ground floor area devoted to housing, retail services, eating and drinking services, personal services."
These uses are typical and necessary components of a healthy commercial corridor. The complexity of the many variations and different applications suggests that these standards were created and adopted independently and may not be necessary or are unnecessarily restrictive.
1. Conduct a Comprehensive Zoning Cleanup
of Mature, Complex Code.
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RECOMMENDATION 1.3
A comprehensive review can streamline and standardize the standards where possible and reevaluate the need and effect of the precise standards and whether they are consistent with the broader goal of a healthy commercial corridor.
Where possible, it is desirable to allow project approvals through a ministerial, non-discretionary process subject to compliance with objective standards. This saves time and money for applicants and staff and enables timely improvement and investment s in private property and the public realm. Discretionary approval is necessary and appropriate where projects have unique features and circumstances that are beyond purely objective standards. In these cases, the decision-making authority should be kept at the professional staff level to the extent possible. Approval by the City Council should generally be limited to projects that involve policy and legislative matters such as general plans, specific plans, or zone changes, amendments, or deviations.
The Palo Alto Zoning Ordinance allows for approval of many projects by the Planning and Development Services Director. This is to be commended as this approach can significantly shor ten the approval period and reduce processing costs. It also has the benefit of avoiding or minimizing politicization of a particular project and decisions that are based on anything other than the objective merits of the project. Keeping the approval decision with professional staff and subject to objective standards and procedures is preferable for most projects.
However, every approval by the Planning and Development Services Director can be elevated to the City Council. While this is typical in the case of a formal appeal of a decision, the Palo Alto Zoning Ordinance encourages this elevation with a simple request from any party. This is allowed by Planning and Development Services Director decisions on relief from the Retail Preservation Ordinance (18.40.180[c][3]) and other normal staff approvals (18.77.060[c-f]).
The process requires notification of all neighbors within 600 feet of the project and a hearing and recommendation by the Planning and Transportation Commission (PTC). Th e PTC recommendation is forwarded to the City Council for a final decision. This adds considerable time, cost, and risk to every project. This process appears to create an environment where opinion and grievance could be favored or have a greater influence on the decision than compliance with objective standards of the Zoning Ordinance.
Combined with the many subjective standards, the approval process for even simple projects can easily become costly and cumbersome. In addition to the cost and risk to project applicants, this can dramatically increase the workload and resources on behalf of City staff as well as the PTC, City Council, and supporting staff.
RECOMMENDATION 2.1
The approval processes should:
1. Create a ministerial approval process for certain projects (e.g., minor tenant improvements, sign permits, minor changes of use, expansions, or additions).
2. Keep the majority of typical discretionary approvals at the staff or Planning and Development Services Director approval authority.
3. Limit projects that require City Co uncil approval to those that involve policy or legislative changes or formal appeals to the Planning and Development Services Director's decision.
This section of the Zoning Ordinance is an example of the complexity and extremely strict nature of the zoning regulations. It appears that the effect of the regulations, standards, and pr ocess may, contrary to the implied intent of the regulations, actually contribute to the erosion and decline of the health of the prime retail corridors. While regulations are necessary and can create great places and value, they also often have unintended consequences. They need to be evaluated periodically to ensure that they continue to function as intended.
Change among ground floor and retail and similar uses is common and a necessary part of a healthy commercia l corridor. Without change, there is less investment and updating of comm ercial spaces that typically occurs with new tenant improvements. As noted, the nature of retail has been changing, which has increased turnover and vacancies of many retail spaces and commercial corridors. The COVID-19 pandemic accelerated some of the shift to e-commerce and led to the failure of many retail and other commercial businesses. The RPO regulations appear to have contributed to the increasing vacancy rate by preventing alternative uses, which would otherwise be preferable to extensive and prolonged vacancies that detract from and impact the overall health and vitality of the larger district.
As noted in the 2023 Comprehensive Economic Development Strategy, there is a large amount of vacant commercial and retail space that exceeds the current and foreseeable market demand for retail. Large proportions of this space will remain vacant unless an d until it is allowed to be converted to uses other than retail. By preventing the conversion of former retail spaces to non-retail uses, the RPO has contributed to the increasing vacancies. Because the RPO is applicable to all retail uses citywide, the restrictions also have the effect of interfering with the natural selection and adaption of the market. It treats all re tail areas as equally important. As a result, there is no ability to adjust with and adapt to the market. Instead of allowing the market to concentrate the limited demand for retail on core areas of strength, the RPO effectively dilutes the limited retail demand citywide.
Further, it has been noted multiple times in interviews with property owners and managers that the RPO (and the limitations on the creation and conversion to office uses) has created traps for property owners. Once a retail use is established, the property is effectively locked into only that retail use. This dramatically limits th e ability of the property owner to manage and market the property and adapt to market conditions. This trap may have the unintended consequence of discouraging establishment of new retail uses for fear of the inability to ever change back to another use— at least without great difficulty, time, and cost.
It is essential that restrictive regulations have standards and procedures to obtain relief for hardships. The standard for relief of this section allows waivers based on economic hardship. However, the current standard is among the highest possible and most difficult thresholds to achieve—an unconstitutional taking and deprivation of all economic value.
This waiver threshold is disproportionate to the perceived potential threat of allowing non-retail uses on the gro und floor. It implicitly favors vacant former retail space over non-retail use.
RECOMMENDATION 3.1
This standard should be reconsidered. A lower and easier threshold or otherwise more permissive standards based on a simple finding of practical difficulty and/or economic hardship would help increase the occupancy of vacant former retail spaces, which would contribute to the overall activity and vitality within the corridor.
Section 18.40.180(c) Waivers and Adjustments; and Exemptions for the RPO should be revised to delete the unconstitutional taking of all economic value standard of subsection (A) Economic Hardship in favor of the practical hardship standard of subsection (B) Alternative Viable Active
2. Create Streamlined and Predictable
Approval Processes
3. Limit the Retail Preservation Ordinance
(RPO) (18.40.180).
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Use. Further, it is recommended that subsection (B) be amended to delete the exception of the applicability to the Ground Floor (GF) and Retail (R) combining districts to allow Alternat ive Viable Active Uses in the Downtown/University (GF) and California Avenue (R) areas.
Parallel revisions are recommended for Section 18.30(A).070 Waivers and Adjustments applicable to the R co mbining district. Section 18.30(C) Ground Floor (GF) Combining District Regulations does not have any waiver or adjustment provisions. It should be amended to also have a practical difficulty standard as recommended for the RPO and R combining district.
The alternative waiver option requires the applicant to demonstrate standards that are purely within the subjective determination of the City and potentially impossible, and are at least very costly and difficult, to prove:
"The permitted retail or retail-like use is not viable; The proposed use will support the purposes of the zoning district and Comprehensive Plan land use designation; and
The proposed use will encourage active pedestrian-oriented activity and connections."
The subjective, uncertain, and expensive waiver process is likely to deter many potential applicants from attempting the waiver or to give up before obtaining a decision. This has a chilling effect on the marketplace and contributes to a negative reputation for the City. This is particularly true for local, small, and sole proprietor uses that do not have the depth of resources and expertise to "fight City Hall."
Such restrictions appear to favor the national franchises and "formula retail" that Palo Alto has determined are problematic and should be restricted but are among the few that can afford to navigate the code and approval process. It is important to recognize that Palo Alto, while a strong and desirable market, is very much part of the larger competitive market.
Existing and prospective businesses have the ability and choice to locate in other cities where the regulatory environment is easier and more welcoming and supportive of their large and risky investments. Many suitable and desirable retail and othe r uses, even if allowed, may avoid locating in Palo Alto based on the knowledge of the code, complex process, and high costs and frustration that inev itably are experienced over the life of use.
RECOMMENDATION 3.2
Consideration should be given to whether the RPO is beneficial or should be modified or repealed. As an initial step, we recommend that the RPO be limited to the essential core retail areas of businesses fronting on Downtown’s University Avenue and California Avenue. Removal from the balance of the City will allow the conversion of excess retail space over time, as well as a concentration in the Downtown and California Avenue areas. The changes should be clearly communicated with the business and property owners. The effect of the changes should be monitored to evaluate whether the focused RPO is having the desired effect.
The relief and waiver provisions of the RPO and R and GF combining districts should be eased to be based on achievable objective standards, to keep the decision-making authority at the Planning and Development Services Director level (unless formally appealed), and to allow the practical difficulty standard of the alternative viable active use waiver option.
The Ground Floor (GF) and Retail (R) combining districts in the Downtown/University Avenue and California Avenue core commercial areas, respectively, add a level of complexity and regulation that may not be necessary. The extensive and persistent ground-floor vacancies in these areas suggest that alternatives or modi fications to the restrictions may be appropriate. The overall objectives and outcomes are to reduce vacancies, increase occupancy, foot traffic and vibrancy.
Several strategies could be employed to allow more retail-supportive uses on the ground floor, such as personal service uses and small professional offices that bring employees and generate customers and foot traffic in the area to the benefit of overall activi ty and vitality. This objective could include a modification to the definition of “retail and/or retail-like” to allow a broader range of uses. The list of permitted uses in the relevant zone and combining district use tables can be amended.
There are many methods and mechanisms to manage such uses, if necessary, to ensure a balance of compatible and complementary uses and to preserve and encourage active street frontages. The following are examples of potential zoning strategi es to permit non-retail or retail-like uses:
Amend the definition of “retail-like” to include the following performance- based uses: “commercial uses that a re accessible to the general public, generate walk-in pedestrian clientele, and contribute to a high level of pedestrian activity.”
Allow non-retail uses:
In back office, not street-facing locations (i.e., behind retail or store fronts)
On side streets, off University and California Avenues When vacancies exceed threshold (by percentage and/or duration) E.g., when vacancies exceed 10% in district for more than 12 months.
Subject to limits (concentration, size, proximity), e.g.:
Minimum 25% ground-floor commercial (Palo Alto Mixed- Use standards)
Maximum 15% of total floor area (Town & Country office standards)
Maximum 30% of all street frontage within 300-foot radius (San Francisco)
Maximum 50% of street frontage per building > 100-foot frontage (Thousand Oaks)
Increase fitness, spas, exercise without a CUP from 1,800 to 3,000 square feet to match the industry average!
Allow other viable active uses without a CUP:
Examples: pet grooming, beauty sh ops, nail salons, barbershops, small learning centers, day care
Medical office with retail component, lifestyle, health services If necessary, require a CUP for certain uses in excess of a maximum size (Palo Alto for offices, commercial recreation; CN district uses) RECOMMENDATION 4.1
Amend the zoning code with one or more of the above methods to allow more retail-supportive uses on ground floor. The selected methods should be part of a coordinated package of amendments.
There are two provisions of the code that limit office construction:
18.40.210 Annual Office Limit and 18.18.060 Development Standards for
4. Allow Non-retail Uses on Ground Floor with
Limitations.
5. Repeal the Office Conversion and
Construction Limitations.
PALOO ALTOO RETAILL REVITALIZATIONN STUDYY
City of Palo Alto 21
the Downtown Commercial (CD) District. These are notable in their own right, but also as they interact with the RPO.
Section 18.40.210 limits the conversion of existing non-office uses to office uses to 50,000 square feet per year. The annual limit serves as another constraint to the loss or conversion of retail space and appears to lessen any need for the RPO. Office workers represent a major portion of the retail customers, sales, and market base. The dramatic loss of office uses, and reduced occupancy and days workers spend in the office since COVID-19 has had a proportionately significant reduction on retail demand in Palo Alto.
While there has been some recovery, the long-term trend and reduced office occupancy is expected to pers ist for the foreseeable future. Office vacancy rates in Palo Alto have increased dramatically since COVID-19 to over 556,000 square feet, an average of 17 percent of all office space in Palo Alto. The total vacancy is project to increase over the next five years according to CoStar.
The perceived threat of office outcompeting and converting ground-floor retail spaces to office uses, which was the basis of the regulation, is extremely low and effectively no longer exists. Conversion of vacant, formerly retail ground-floor spaces to personal service and office uses that generate customers for nearby reta il is preferable to extensive and persistent vacancies that create a sense of failure and blight that remaining retail uses must combat. Occupancy of the vacant office spaces should be encouraged. Conversion of excess vacant retail spaces, particularly by uses that generate potential customers and pedestrian foot traffic, and those that do not front on University or California Avenues, should be allowed.
It appears that Section 18.40.210 could be repealed as the conditions and circumstances and rationale for its existence no longer exist.
Section 18.18.060 limits the total amount of office to a total of 5,000 square feet per site in the CD-S and CD-N zones. The rationale, purpose, and public benefit of this limitation are not clear. It appears to establish an arbitrary limitation that may cause more harm than good. This provision is not proportionate to the size of the site or building—the larger the site, the greater the constraint and loss of development potential. Further, this provision appears to apply to all office spaces, both ground floor and upper floor. Upper-floor office space is supportive of ground-floor retail and other commercial uses. It is not clear why there should be a limit on an upper- floor commercial on any given site. Rather, such uses should be encouraged.
RECOMMENDATION 5.1
The purposes, assumptions, and impacts of these provisions should be evaluated. If any limits are found to be necessary, they should be designed to minimize the restriction to the extent possible. They should only apply to ground-level office spaces, such as a maximum percentage of the street- facing façade to ensure a percentage for retail and retail-like uses. Ground- floor office uses that do not front on University or California Avenues, i.e., behind retail frontages, should be allowed. There should be no limit to upper-level office uses. Any limitation should be proportionate to the size of the site or building to ensure an equitable impact. Section 18.40.210 Annual Office Limit should be revised to replace the unconstitutional taking of all economic value standard of (e) Economic Hardship Waiver or Adjustment, with a practical difficulty standard like that recommended for the RPO, R and GF combining districts.
The rationale for limiting “formula retail” on the basis of the franchise and standardized merchandise and branding on California Avenue is not clear and should be stated explicitly. The a ssumptions and perceived threats of ten or more of the same uses, standardized merchandise, décor, color scheme, uniforms, façade, and trademark use has been evaluated for current relevance and necessity. Research of and interviews with peer cities and business and property owners indicated only limited concern over such uses and a desire to limit and relax the formula retail restrictions. It was noted that formula retail or franchise businesses often represent and bring new innovations and trends and foot traffic that benefit other businesses in the vicinity.
It is also noted that concerns over the impact of a standard and generic corporate franchise design can be regulated more directly and objectively through design standards rather than limiting or preventing use on the basis of the characteristics of formula reta il. The regulation appears to prevent otherwise appropriate and desirable us es and occupancy of vacant spaces without a clear or superseding public benefit.
RECOMMENDATION 6.1
Consideration should be given to modifying or eliminating this restriction.
Any restrictions should be demonstrated to be the minimum necessary to advance a legitimate public purpose. It is recommended that the threshold to qualify as a “formula retail” use be increased from 10 to 50 such businesses. It is also recommended to limit formula retail to restaurant uses. Another option the City may consider is to limit the number of formula retail establishments in certain areas. This method can ensure a balance between formula and non-formula uses.
Similar to the waiver provisions for the RPO, the code assumes that formula retail and certain other personal service uses are detrimental unless proven otherwise. The need to obtain a CUP is already a high standard and barrier, but the required findings are again subjective, numerous, and must all be met. Such standards make it easy to deny and prevent any use or applicant for nearly any reason or perceived objection by staff or City Council (Section
18.76.015):
"A conditional use permit shall not be granted in an R-Combining district for a formula retail business, or a beauty shop, nail salon, barbershop, or financial services use, unless it is found, in addition to the findings required by section 18.76.010, that:
"(1) The retail or personal service business will offer merchandise and/or services that meet the underserved needs of the City's residents and visitors.
"(2) The type of retail or personal service business will enhance the balance and diversity of businesses in the district and in the City as a whole.
"(3) The retail or personal service business will enhance the economic vitality of the district where the business is proposed to be located and of the City as a whole. In considering this finding, the director or city council may consider existing retail vacancy rates within the district and in the City as a whole. "(4) The retail or personal service business is consistent with the character of the district where the business is proposed to be located.
"(5) The design of the retail or personal service business will be compatible with the architectural and aesthetic character of the district where the business is proposed to be located." While always a best practice and feature of the best land use codes, an increasing number of cities have initiated the review and revision of their development codes in recent years to reduce and replace subjective standards with objective standards and certain and efficient approval processes. They recognize that such regulations allow and encourage desirable and necessary growth, as well as a continuous cycle of renewal and improvement, and are important to the overall health of the City.
RECOMMENDATION 6.2
The Palo Alto Zoning Ordinance and existing and future property owners, businesses, and uses would benefit from objective development standards and a streamlined approval process program.
6. Relax the Formula Retail Restrictions.
PALOO ALTOO RETAILL REVITALIZATIONN STUDYY
City of Palo Alto 22
While not a major focus of this analysis, as a major development cost, design, and spatial constraint, excess parking supply and excessive minimum parking standards are among the most common deterrents to a healthy and vibrant commercial district. Many municipalities continue to rely on outdated parking standards that, more often than not, were based on reference to other adopted standards as opposed to actual demand and occupancy studies. Most standards are also based on low-density suburban land use patterns, not the more dynami c urban patterns like those in Palo Alto. The following are a few high-level observations and recommendations related to zoning code. See Appendix C for more comprehensive analysis and recommendations.
RECOMMENDATION 7.1
Promote Public Shared Parking Over Off-Street/On-Site Parking.
Private, off-street/on-site parking is the most inefficient type of parking. It generally is not appropriate for dense, pedestrian-oriented commercial and mixed-use districts where the majority of properties are developed with buildings and have little or no room for efficient parking. On-site parking is least likely to be shared. Shared public parking is most appropriate for such districts. It allows maximum access, utilization, and effective management to respond to changing conditions.
RECOMMENDATION 7.2
Reduce Minimum Requirements
A parking use survey and approach should be evaluated to reset standards to appropriate levels. For example, the minimum of 16 to 30 spaces per 1,000 square feet of gross floor area for eating and drinking services is punitively high. It may be used to effe ctively prohibit fast-food franchises and drive-through facilities. These standards are based on the outmoded concept that restaurants are destination uses that operate and need to be parked independently of all other uses with no sharing of trips or parking.
This is inconsistent with the actual and preferred operation of most urban commercial districts and most certainly exceeds actual parking demand.
There are three typical approaches to improving downtown and main street parking standards:
i. Reduce outdated minimum requirements to require fewer spaces than the cumulative demand for the district.
ii. Eliminate minimum parking standa rds and let business and property owners provide the parking deemed necessary to support the uses. iii. Establish maximum parking standards to limit and prevent oversupply and inefficient use of land at the expense of buildings and uses.
Recently adopted AB 2097 effectively codified these best practices by eliminating minimum parking requirements within one-half mile of High- Quality Transit Stop. As discussed in greater detail in Appendix C of this report, this exemption applies to the core commercial areas on University and California Avenues as well as portio ns of El Camino Real. This requires Palo Alto to change its approach to parking in these areas. It will require a change from a regulatory approach to provide adequate parking to the active management and optimization of existing public and private parking spaces to meet the existing and pr ojected long-term growth and parking needs in the affected areas. The areas not directly affected by AB 2097 and still subject to minimum parking requirements should still be evaluated for the parking relief and modifications described in this section.
RECOMMENDATION 7.3
Allow Change of Use
If adequate parking is available in the vicinity of the use, allowing a change of use for existing spaces without a requirement to provide additional parking could be considered. Existing buildings and outdoor spaces could be exempted from providing parking for a change of use.
RECOMMENDATION 7.4
Incentivize Priority Uses
Reducing requirements for desired or priority uses like restaurants could be taken into consideration. Incentives could also be provided, such as increased credits and/or reductions in minimum requirements for shared parking.
7. Ease the Parking Regulations.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix A, Page 1
Stakeholder Interview Summary
Stakeholder interviews were conducted with developers and the Chamber of Commerce to under stand how the City can support the retail revitalization efforts in the study area. The stakeholders discussed issues and recommended changes related to the zoning ordinance, parking, and administrative processes . Below is the list of stakeholders that were interviewed.
• Premier Property Management – Jon Goldman, Brad Ehikia • Ellis Partners – Jim Ellis
• Thoits Bros., Inc. – John Shenk
• Chamber of Commerce – Charlie Weidanz
• Performance Gaines – Chris Gaines
• Italico – Franco Campilongo
• Taste Buds Kitchen – Scott Andersen
Discussion Summary
These interviews revealed s everal issues that the stak eholders viewed as restrictions or hindrances to development and provided recommendations to mitigate them. There was a strong consensus on many issues among all of the stak eholders. These discussions are categorized and summarized below based on common themes.
General
1. Important to create an ecosystem of uses that generate trips and keep people downtown.
a. Services will drive people downtown.
b. There are fewer workers downtown due to transition to remote work.
c. There has been a loss of office space, which is hurting retail.
2. Need to actively attract and support growth and investment, renewal and maintenance, and improvement of existing buildings.
3. There are significant assets downtown, the loss of retail is not a physical design issue.
4. There needs to be more flexibility in the reuse of ground floor space.
Allowed uses should be flexible to accommodate the changes in the market in order to reduce vacancies.
5. Perception of retail in Palo Alto:
a. Retail zones and corridors are not 100 percent retail but rely on a mix of complementary uses (office, restaurants, personal services, professional services, residential and retail use). These uses pro vide the client ele for retail uses and allow people to spend time in the commercial areas, in turn supporting retail. b. Need to repair and reverse the City's reputation with the industry (e.g., business/property owners, agents, etc. ).
Businesses need predictability, and cur rently, they don't have that.
6. Many retailers in Palo Alto are amazing but often time people are not aware of events/businesses.
a. Businesses need a large online presence to attract customers.
7. Street closure on California Ave has improved business (up 40 percent). However, several retailers left the area due to street closure.
8. Important to understand customer behavior and how it has changed over the last four years (2019-2023).
9. Window shopping is down, everything is destination based. a. Need to provide incentives for customers to visit.
10. The City has been very helpful since business operations have begun, partnering with the City is the most important thing that a local business can do.
11. Times of business activity more inconsistent now, people are not coming in for lunch anymore from nearby offices.
12. Disconnect between the businesses that exist and what businesses are desired (e.g., medical retail/office)
Retail Preservation Ordinance
1. Rescind ground floor Retail Protection Ordinance (2009, 2017 amendment). It has created the very problems that it was intended to prevent.
2. Leave it to the market to thrive , don’t force retail. Focus on the existing retail district.
3. Ground floor retail restrictions on side streets and blocks away from the main commercial corridor are not practical as retail will not locate in these areas.
4. Code is too rigid , very narrowly defined , and complex. The o lder system worked better and allowed for more flexibility.
5. ‘’The definition of “retail” is too restrictive on use. Expand it to be more inclusive and nuanced to include uses like personal services, medical professional/office, spas, fitness, insurance, restaurants, commercial recreation and other uses that create pedestrian activity.
6. Rescind "Formula Retail" Ordinance on California Avenue.
7. Increase height limits on El Camino Real and in other areas.
8. Restaurant owner could not reduce the square footage from 8,000 square feet to 5,000 square feet.
City Permit Process
1. Businesses are avoiding locating to Palo Alto as the permitting process is lengthy and unpredictable.
2. Difficult to get a permit even for simple changes such as restriping, signage, and s mall additions (e.g., 3-6 months to receive a sign permit – AT&T).
a. Delay in signage permits can hurt the business even before it starts.
3. The determinations of code and process are inconsistent and, at times, conflicting among the staff.
4. There is a lack of staff continuity or institutional knowledge.
5. Fees are excessive (e.g., conditional use permit $15,000; sign permit $4,000).
6. All permits go through the City Council which takes away power and undermines staff recommendations/determinations.
7. Permitting process is not clearly described.
8. There is a s tigma against national chains (e.g., Pete’s Coffee) , yet the zoning and process do not make it easy for smaller local businesses to locate in the City.
9. Difficult to navigate the process as a single business/property owner.
10. Sentiment that City staff are disconnected from or understand the community they are working in (e.g., live outside Palo Alto)
11. The process makes it difficult to do any business in /startup a business in Palo Alto.
12. Long permitting pr ocessing times (e.g., up to 18 months to get through the planning process for an event space).
13. Needed a conditional use permit for beer and wine license ($11,000).
14. Signage permit took longer than demolition and construction permit for event venue business.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix A, Page 2
Parking
1. In-lieu parking fee is a hard cap on any new development or intensification.
2. Reinstate the California Avenue Parking Assessment District. a. The City should allow transfer between uses.
b. Can't change uses currently and can't add parking for change in uses. This is making it difficult to fill the vacanc ies in the changing market conditions.
c. The City requires additional parking to comply with parking requirements. Many/most buildings cover the entire site and have no space for on-site parking.
d. Buildings already paid for the parking garages , which were to support the district. Since it was paid off in 2017 and no longer charges payment fees, the City has reverted back to requiring on-site parking to comply. Fees were based on deficiency of parking. But the developers are not getting credit when changing uses or adding space.
e. The City created a parking fee if they cannot provide parking = $150,000 per space. This is excessive and not affordable. f. The City moved staff parking fro m on -street to the garages.
Now customers have to park in the neighborhoods instead of the garages.
3. A new, more flexible parking policy is ne eded as most customers (office workers, shoppers) are already in the district.
4. Hard for employees to get permits f or the parking garages in California Ave.
a. Make it easier for employees who need to park – especially 2+ hours but not all day.
b. Pricing does not make sense for employees to invest in permits.
5. No parking issues in California Ave, there is enough parking to support all businesses and events at a variety of times (for lunch or dinner, weekends, and during the farmer’s market).
1 City Council Makes Pandemic-Era Zoning Changes Permanent to Support Business Success in Santa Monica.
https://www.santamonica.gov/press/2022/10/12/city-council-makes- City Interviews:
Palo Alto and Neighboring Communities
To gain a broader understanding of Palo Alto's regulatory provisions and procedures and to also inform the recommendations, three communities were interviewed to identify gaps and differences in approaches to retail development. The jurisdictions were iden tified during the Planning and Transportation Committee and stakeholder interviews as flexible and efficient with permit processing. These include the Cities of Santa Monica, Los Altos, and Redwood City.
Santa Monica
Making COVID-Related Changes Permanent
The City discussed an extensive list of emergency orders during the pandemic. These include both planning and building/safety emergency orders, including time extension on open permits of up to four years. In October 2022, the City permanently adopted tw o zoning ordinance amendments with the intent of reducing regulatory barriers for small businesses, as described below. Th e economic recovery ordinance was extended for five years in September of 2023 . In summary, the following proposed zoning changes focus on the Third Street Promenade area.
1. allowing greater flexibility for restaurants th at provide entertainment within the Third Street Promenade Area District,
2. expanding Alcohol Exemption (AE) permits to additional uses to further streamline the review of alcohol permits while also correcting and refining existing AE permit conditions,
3. allowing the Director of Community Development or designee to consider commercial uses that are not clearly defined in the Zoning Code,
4. allowing a longer term for Temporary Use Permits, and
5. allowing outdoor rooftop commercial uses on public parking structures owned by the City.
Relaxing Restrictions on Uses
Changes in zoning included allowing a wider variety of uses by right in areas that were historically more restrictive, including in the downtown and Third Street Promenade areas. Efforts highlighted by City Staff included allowing new uses such as pop -ups and creative commercial uses that do not fit pandemic-era-zoning-changes-permanent-to-support-business-success-in- santa-monica
exactly into the existing use categories, including new alcohol services and pickleball. The City eliminated the restrictions on the number of restaurants per block on Main Street and expanded opportunities for outdoor dining.
The City has traditionally been very restrictive in requiring retail uses on the ground floor; however, due to the changi ng market and feedback from the community, the City has been re-evaluating what mix of uses will work in its retail areas. This is also in response to an increased focus on housing and the City’s larger efforts in its Housing Element. The City noted that b eing open to a wider mix of uses is important in serving the needs of residents.
Streamlined Permitting
The City eliminated the need for conditional use permits, minor use permits, and other discretionary approvals for several uses including childcare, cinemas and theaters, general retail sales (medium size), hotels and motels, medical and dental offices, food halls, and general personal services, among others. The City removed the public hearing requirements for a change of use from a restaurant to a diffe rent use. This streamlined permitting expedites and simplifies the permitting process. This provides certainty and predictability to existing businesses and prospective businesses considering locating in Santa Monica. As of July 2023, there are 38 new deve lopment projects in downtown Santa Monica comprised mostly mixed -use and housing, including affordable housing.
Communication and Outreach with Business Owners
The interviewees discussed the importance of educating the public through comprehensive, consistent communication and outreach efforts. They stressed the importance of City staff being a known, visible, and trusted figure in the community. The City of Sant a Monica highlighted a number of outreach efforts including working with community groups, business improvement districts, City staff, and City council. Efforts included an “open for business flyer,” blog, e-mail blasts, broker’s round table event, and a 3- 1-1 system where anyone can e-mail or call with questions. The City offers online planning services, and virtual counter reviews, and hosts an online appointment system to increase the number of permitting activities that can be done online.
The City has extensively documented and advertised these zoning and regulatory changes on its City website 1 and provides comprehensive data regarding vacancies and employment on the Downtown Santa Monica website2.
2 Downtown Santa Monica, Third Street Promenade.
https://downtownsm.com/downtown-data#section-8666
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix A, Page 3
Interview Questions and Responses
1. Have you evaluated the impact of COVID and/or online shopping on retail in Santa Monica?
▪ The City started to see the i mpact of e -commerce prior to COVID -
19. ▪ The City created a “Buy Local” campaign in 2010 and increased messaging during COVID -19 to educate the public on the importance of supporting local businesses.
o Through the campaign the City identified and informed pe ople which retailers had gift cards and how businesses were
operating during the Holidays.
▪ During COVID the City supported businesses through a variety of strategies which included:
o Established pick-up and delivery zones,
o Connected business owners with the Los Angeles Small Business Development Center for education and technical support, o Waived fees (e.g. loading and pick-up zones),
o Encouraged shopping locally through informing customers which businesses support gift cards during Holiday shopping, ▪ The Cit y can track online versus in -store sales reports through a sales tax report and can track by geographic area and by sector. o Art gallery pivoted to online, had high sales, and started artists' talks and other events/features they didn’t have before. o The city has anecdotal data that shows an increase in sales activity but is hard to isolate.
2. What, if any, efforts did you undertake to preserve retail as a response to COVID-19?
▪ The City passed s everal emergency orders during the pandemic related to both planning and building and safety.
o The City provided time extensions on open permits – up to 4 years in some cases.
o The City allowed more uses to be permitted by right in the Downtown and Third Street Promenade areas.
▪ Allowed flexibility for creative and temporary uses that don’t fit the prescribed use categories in the Downtown and Third Street Promenade.
▪ Positive feedback from stakeholders resulted in the interim ordinances becoming permanent – codified in August 2023. o One block in the Third Street Promenade had high vacancy rates, so the City has loosened the use restrictions – they are focusing on making it a food, art, and entertainment
district/hub.
o The City is seeing alcohol licenses being paired with innovative and creative uses. (e.g. Pickleball).
▪ The City is focusing on food establishments and assisting applicants through the permitting process.
Where and how to allow business to expand into the
right-of-way to not access and circulation issues.
Restaurant owners voiced the need for expanded
permanent outdoor space to sustain business.
3. How did the City work with the business owners during the zoning changes?
▪ The City along with Downtown Santa Monica Inc. (Property Based Assessment District) asked property owners and businesses what kind of new uses they were interested in and what challenges they were facing with the permitting process, the City then identified opportunities on how the emergency orders and interim zoning can start to address the issues.
▪ Held collective meetings with Business Impr ovement District (BID) leaders (Main Street, Montana Ave, and Pico Boulevard) to talk through zoning changes.
▪ The City created an “Open for Business” flyer.
▪ Implemented a 3-1-1 system for businesses to ask questions to City staff regarding zoning.
4. What types of metrics does the City utilize to track changes in business? ▪ The City tracks occupancy rates and pedestrian counts in association with Downtown Santa Monica Inc. (see Downtown Santa Monica data below)
▪ The City also monitors sales tax data and business license permits.
5. Does the City allow residential Downtown or in other commercial districts?
▪ Downtown is a true mixed-use district – residential is permitted everywhere but particularly seen from 2nd Street to 7th Street. ▪ Several current Downtown housing projects (thousands of units) are in development to create a “24/7 community.”
o Downtown previously saw affordable housing and now a trend to mixed-income housing.
o Change in demand in the Downtown to more local serving uses like restaurants – previously tourism drove development trends (~8 million visitors/year prior to COVID, now 4.5 -5 million visitors/year)
▪ Residential is integrated and embedded in all commercial districts.
6. Are there any restrictions on the usage of ground floor space in the commercial areas?
▪ The City has historically been very restrictive on the ground floor with a focus on retail and restaurant.
▪ The City has been rethinking strategy to allow more uses in certain configurations while still promoting retail and restaurant – the office is still restricted.
▪ The City is trying to be flexible as property owners figure out the right mix of uses – having the choice is positive for all parties. ▪ The City has utilized interim ordinances as an experimentation to see how effective/successful an ordinance can be (up to five (5) years). The economic recovery ordinance was extended for five years in September of 2023.
7. Have developers used the provisions of AB 2097 in developments for parking? How is the City ensuring there will be parking for visitors and residents in the wake of AB 2097?
▪ State law has changed the City’s parking practices since a majority of the City exists within ½ mile of a major transit stop. ▪ Before state law the City eliminated minimum parking requirements for a majority of active uses Downtown in 2017.
▪ The City has major parking investment in the form of ten (10) City - owned public parking structures in the Downtown District – “well- served to over-served.”
o Parking structures were funded through bond financing in the 70’s – all but one (1) are paid off.
o Parking structures were funded by revenue generated by parking and transportation impact fees (in -leu fee for businesses) – the City has since eliminated this impact fee. o Parking structures have active ground floor retail space which the Economic Development Department manages (3 tenants) – provide revenue to the City.
o The city is working to bring in a rooftop cinema company to lease the top floor of one of the parking garages (made possible by the interim temporary use ordinances).
▪ The City has no parking requirements for businesses going into existing footprints.
o The City prefers that there is no more parking built in the Downtown, they would like the business to invest in other ways.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix A, Page 4
o In terms of new mixed -use housing development, the City is seeing both zero (0) parking and proposed projects with parking – Projects tend to be dependent on lender and financing strategy to make the project marketable.
o The City has a cap on parking in the Downtown that can’t be exceeded.
o The City has worked with developers to look at shared parking, shared mobility programs, bike parking, EV charging, carshare, automated driving companies (Waymo), and the integrations of the bike infrastructure as an alternative to parking.
8. Do you have recommendations for jurisdictions looking to preserve/encourage retail uses?
▪ Review the zoning ordinance, permitting procedures, and how those factors affect the cost of doing business.
▪ Determine how your jurisdiction can support businesses operating outdoors.
o The City reviewed and contacted several jurisdictions for best practices regarding parklets and expanded outdoor dining. o Where possible, make operating outdoors permanent.
▪ Provide certai nty to businesses so they know what they can and can’t do.
▪ Due to the small size of Santa Monica, City staff has seen the importance of relationship building, being visible, known, and a trusted figure in the community so people know who to contact for questions or issues.
Important for jurisdictions to work together regionally and throughout the State to become competitive as whole (i.e. align programs and fees) – don’t try and steal from business.
Los Altos
Interview Questions and Responses
1. Have you evaluated the impact of COVID and/or online shopping on retail in Los Altos?
▪ Yes, because of the physical limitations in the early/middle portion of COVID.
▪ Main commercial area in Los Altos is similar to California Ave in Palo Alto.
o No major commercial ret ail or national retailers – mom-and- pop and small businesses
o “Downtown Triangle” is restaurant heavy with passive
businesses.
2. What, if any, efforts did you undertake to preserve retail as a response to COVID-19?
▪ Small non -residential footprint, emphasis was focused on restaurants.
▪ Los Altos has an active Chamber of Commerce that supports and works with businesses.
▪ Los Altos Village Association (LAVA) worked with downtown businesses to facilitate resiliency during COVID.
3. Have you made any change s to the zoning code during post -Covid? Are these changes permanent? Can you describe how some of these changes have helped maintain and encourage retail?
▪ The City is undergoing rezoning downtown to allow all mixed -use and to allow additional height; drive n in part by the Housing Element.
o Nothing in the rezoning that is explicit for commercial but it will provide opportunity for new and existing commercial.
o Much of the downtown is currently old commercial in old buildings. We haven’t had new development in many years, just renovations. We expect new mixed -use developments in near future.
▪ The City made alcohol an ancillary use allowed by right and made it permanent post covid. A business just needs an ABC license from state.
4. Were there any other zoning chan ges that were considered but not made and why?
▪ Office/administration uses on Main Street and State Street are not allowed on the ground floor.
o The City wants this area to be the retail and restaurant core, there are some existing non-conforming uses like banks. ▪ The City is exploring an option of requiring use like hair and nail salons to get a CUP.
o There is a proliferation of these uses in downtown competing with one another.
o The City does not need as many as they currently have – in some instances there are two next to each other.
▪ The City is looking to address vacancy in terms of empty display windows and pop-up shops through a zone text amendment. ▪ Vacancies downtown last for 6 -9 months outside of three (3) properties where businesses have closed due to ADA lawsuits. o Businesses open quite easily in Los Altos but the length of occupancy is varied.
5. Is change of use by right or do you require discretionary approval? ▪ It is by right unless it’s a major tenant improvement (i.e. structural). ▪ Only in rare inst ances are CUPs used , it’s either allowed or prohibited.
▪ The City has an online submittal process and a change of use permit can be processed in a couple of days – everything is pretty streamlined.
6. Who is the approving authority for the following and typical permit time for each of these?
▪ If something had to go to a hearing body it would go to the planning commission which could be a 4 - 5 month process, especially due to incomplete applications.
▪ The City hasn’t had any new commercial development in 10+ years – Housing Element rezonings will allow for a lot of newer commercial square footage allowed in tandem with residential. ▪ Signage has never been beyond an administrative design review – no issues.
7. Have developers used the provisions of AB 2097 in devel opments for parking? How is the City ensuring there will be parking for visitors and residents in the wake of AB 2097?
▪ Does not apply to downtown but does apply to an extremely small area on El Camino Real – mostly redeveloped with entirely residential.
▪ The City is going to be conducting a comprehensive downtown parking ratio update for residential and commercial uses through a parking study.
8. Do you have a municipal public parking/parking district or any exemptions for parking?
▪ The City has public parking plazas in addition to small parking lots - 6 acres of parking lot to the north and south of Main Street and State Street.
▪ In the 1950s downtown property owners passed a measure that any existing commercial square footage does not have to park their business use.
9. Do you have any other improvement districts such as the Business Improvement District (BID), Community Facilities District (CFD), or Enhanced Infrastructure Financing District (EIFD)?
▪ The City doesn’t have a BID but will be exploring the cr eation of a Property Business Improvement District in the upcoming year (assessed against property owners not businesses).
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix A, Page 5
o There are three (3) big property owners who want to see major infrastructure improvements to improve the public realm. o Looking to reo rient parking to be parallel to recapture half depth of angle parking to expand the sidewalks – property owners would like to see the expansion of the public realm in front of their properties to create more usable space.
10. Does the City have any programs or incentives to attract retail? ▪ Some businesses may actually need to close to allow new uses, they are holding usable space for redevelopment.
▪ The City probably would have lost most of the restaurants if they hadn’t deployed the parklet program.
11. Are there best practices or efficient permitting and flexibility that your City follows and that have helped you retain and attract retail uses? ▪ Downtown Vacancy matrix created by the Chamber of Commerce to identify where the vacancies are located, what is allowed in those spaces, and what is the footprint.
▪ The Chamber of Commerce works to connect property owners with interested businesses, there are a lot of older buildings and old - school property owners and old school in how they lease space.
12. Any recommendations for jurisdictions looking to preserve/encourage retail uses?
▪ Parklet Program – had a sunset date to either make permanent or revisit and revamp.
o The City didn’t want the temporary COVID program to be the permanent one.
▪ The City identified what has been working and what hasn’t been working.
▪ The City also didn’t want mismatch parklets.
▪ The permanent program goes into effect in January with a new set of standards.
o The City conducted outreach with several business owners and restaurant groups to discuss issues and needs.
o Some were very receptive and some pushed back because of the cost to change parklets.
Redwood City
Interview Questions and Responses
1. Does the City have ground floor use restrictions?
▪ Ground floor active uses are encouraged, not required. Active use definition: Uses that allow the public to walk in and interact with the business owner - personal services and pet stores are active uses.
o There is a stretch in the Downtown where office is not allowed on the ground floor.
2. How does the City process change of use permits , by-right or discretionary approval?
▪ Any changes to use in the downtown, including retail, can be done by-right. No approval is needed , o nly a building permit from the building division is required.
3. Please identify the approving authority and typical permit time for the following:
▪ Depends on complexity . Generally approved by Planning Staff (2 to 4 months) and building division (4 to 6 weeks).
▪ New construction (permitted uses) . Planning staff : 3 to 4 month planning approvals; Building division: 4 to 6 weeks.
▪ New construction (CUP uses). Planning Commission if they exceed height limit or CUP outside DT. Within the DT, CUP can be approved by staff. 3 to 4 -month planning approvals, building division 4 to 6 weeks.
▪ Major remodeling/tenant improvement . Planning Staff :
Depending on the complexity, it can be done over the counter. ▪ Minor Changes. Planning Staff: Depending on the complexity, it can be done over the counter.
▪ New Signage/Signage Change. Over the counter generally. If existing space is part of the Master sign program (3 or more retail/commercial generally have a master sign program), if it is a part of a commercial strip, then they just need a permit from the Building division. If not, they need to apply with planning and then to the Building division (3 to 4 months).
4. Does the City track and report permit approval times for development projects (submittal to approval)?
▪ The City has a tracking system to input dates, but they don't really track processing times.
o They try to follow the Permit Streamlining Act. Review within 30 days and 60 days for a decision.
5. Does the City have other programs or incentives to attract retail? ▪ FAR increase if the applicant provides housing/ mixed-use. ▪ The retail task force helps to attract retail.
▪ Retail outreach efforts are conducted via the economic development office.
▪ Community development incentives for open space include an increase in height or FAR.
6. Does the City have any parking programs to help reduce parking requirements?
▪ No formal programs. If a use is converted to retail, they don't need to provide extra parking based on new retail use.
▪ The City is currently exploring reductions to minimum parking.
7. Does the City have a municipal public parking/parking district or any exemptions for parking?
▪ The City has municipal garages and lots. Also, visitors can park in any other retail parking lot. Offices open up their garages to visitors on the weekends. All parking garages are fee based.
▪ New technology installed around downtown to inform where and how many spaces are available.
8. Does the City provide information for developers explaining permitting process/timing expectation?
▪ The City has meetings with the developers and has a submittal checklist for new construction. If it is an existing building, they go directly to the building division.
9. Has the City seen any trends in retail as it relates to permit applications?
▪ None for retail. Lately, the interest has been in daycares, restaurants, and offices.
10. Please add any other information related to best practices or efficient permitting and flexibility your City follows that has helped you retain/attract retail.
▪ There is a lack of retail in the downtown, there are several vacancies including World Market which has been vacant for four years. ▪ There are more retail vacancies but the City is open to attracting other active uses in those spaces.
▪ The downtown retail task force is helping with attracting, educating, and retaining retail uses.
ESRI Report Data
California Avenue
• Total sales: $301,350,000
• Total employees: 1,562
• Total businesses: 235
• Retail: 6.5% businesses; 6.4% employees
• Accommodation and food services: 10.4% businesses; 11.9% employees Demographic Summary 2021 2026 (Projected)
Population 141,015 146,566
Households 55,632 57,798
Families 32,242 33,552
Median Age 37.5 37.5
Median Household Income $161,252 $176,564
Top Tapestry Segments Percent
Top Tier (1A) 25.5%
Urban Chic (2A) 24.2%
Laptops and Lattes (3A) 21.1%
Trendsetters (3C) 8.1%
Enterprising Professionals (2D) 5.8%
See reports at the end of this Appendix for detailed profiles of Top Tier, Urban Chic, and Laptops and Lattes. Other profiles can be found at https://doc.arcgis.com/en/esri-demographics/latest/regional-data/tapestry-segmentation.htm.
Retail Leakage
• More than 40%: Auto parts, motor vehicle dealers, auto accessories, drinking places, direct selling establishments, florists, vending machine operators • 20% to 40%: Lawn and garden equipment, healthcare stores, gasoline stores, used merchandise • 10% to 20%: Grocery stores, specialty food stores, and services Retail Surplus
• More than 40%: Shoe stores, book, periodical, and music stores • 20% to 40%: Furniture stores
• 10% to 20%: Department stores, home furnishings stores, electronics and appliance stores Downtown/University Avenue
• Total sales: $1,871,207,000
• Total employees: 8,322
• Total businesses: 1,063
• Retail: 7.5% businesses; 4.6% employees
• Accommodation and food services: 8.4% businesses; 14.0% employees
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 2
Demographic Summary 2021 2026 (Projected)
Population 20,938 21,195
Households 9,370 9,441
Families 4,950 5,015
Median Age 43.0 43.7
Median Household Income $186,084 $200,001
Top Tapestry Segments Percent
Laptops and Lattes (3A) 46.4%
Top Tier (1A) 34.6%
Urban Chic (2A) 10.8%
Social Security Set (9F) 8.2%
Dorms to Diplomas (14C) 0.1%
See reports at the end of this Appendix for detailed profiles of Top Tier, Urban Chic, and Laptops and Lattes. Other profiles can be found at https://doc.arcgis.com/en/esri-demographics/latest/regional-data/tapestry-segmentation.htm.
Retail Leakage
• More than 40%: Auto parts, motor vehicle dealers, auto accessories, building material, lawn & garden equipment, other general merchandise stores, florists, vending machine operators, direct selling establishments, special food services, drinking places
• 20% to 40%: Used merchandise stores, office supplies, stationery, and gift stores, gasoline stations, health and personal care stores, specialty food stores, grocery stores Retail Surplus
• More than 40%: Furniture stores, shoe stores, books, periodicals, and music stores • 10% to 20%: Department stores, jewelry, luggage, and leather goods stores Midtown Shopping
• Total sales: $101,684,000
• Total employees: 451
• Total businesses: 116
Demographic Summary 2021 2026 (Projected)
Population 30,295 30,639
Households 11,318 11,401
Families 7,917 8,006
Median Age 44.0 44.0
Median Household Income $200,001 $200,001
Top Tapestry Segments Percent
Urban Chic (2A) 45.8%
Top Tier (1A) 38.9%
Laptops and Lattes (3A) 8.8%
Enterprising Professionals (2D) 5.5%
Trendsetters (3C) 1.0%
See reports at the end of this Appendix for detailed profiles of Top Tier, Urban Chic, and Laptops and Lattes. Other profiles can be found at https://doc.arcgis.com/en/esri-demographics/latest/regional-data/tapestry-segmentation.htm.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 3
CoStar Retail and Office Summary (February 2024)
Retail
Table 1: Retail Overview - Palo Alto, Los Altos, and Santa Monica (2024 Q1) Retail
Total/Average
Palo Alto
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real –
Town & County
(CC)
Palo Alto
El Camino Real
– California Ave
(CN, CS)
Palo Alto
El Camino
Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
INVENTORY SF 1,831,300 740,000 295,000 175,000 54,300 463,000 104,000 433,000 461,000 1,300,000 Under Construction Square Feet 0 0 0 0 0 0 0 0 0 50,000 Vacant Square Feet 178,600 112,000 28,200 21,400 5,000 8,100 3,900 11,074 47,700 340,000 12 Month Net Absorption Square Feet -44,851 -51,300 12,200 -853 -4,500 -832 434 -282 -12,800 -32,800 12 Month Net Absorption Square Feet
(one year change) -1543% -381% 504% -158% -9277% -110% 164% 27% -35% 33% VACANCY RATE 9.8% 15.1% 9.6% 12.2% 9.1% 1.8% 3.8% 2.6% 10.3% 25.9% Vacancy Rate
(one year change) 1.9% 6.90% -4.10% 0.50% 8.20% 0.20% -0.40% 0.10% 2.80% 2.50% Market Asking Rent/ Square Feet $61.07 $77.11 $54.47 $76.70 $48.81 $53.65 $55.67 $49.05 $67.56 $79.85 Market Asking Rent/ Square Feet (one year change) -0.52% -0.50% -0.70% -0.40% -0.30% -0.70% -0.50% -0.40% 1.30% -1.80% Market Sale Price/ Square Feet $828 $1,129 $788 $593 $913 $797 $748 $767 $916 $909 Market Sale Price/ Square Feet
(one year change) -0.83% -2.00% -0.80% 0.20% -1.60% -1.20% 0.40% -0.70% 2.10% -0.80% Market Cap Rate 4.45% 4.20% 4.50% 5.00% 4.20% 4.50% 4.30% 4.60% 4.60% 4.90% Market Cap Rate (one year change) 0.85% 0.10% 4.50% 0.20% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 4
Table 2: Retail Vacancy Rate - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1) PERIOD
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real –
Town & County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real –
South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica 3rd
Street
INVENTORY SF 740,000 295,000 175,000 54,300 463,000 104,000 433,000 461,000 1,300,000 2024 Q1 15% 10% 12% 9.1% 2% 4% 3% 10% 26%
2023 Q4 14% 9% 12% 9.1% 2% 5% 3% 11% 25%
2023 Q3 14% 9% 12% 0% 1% 5% 2% 10% 26%
2023 Q2 14% 13% 12% 0% 1% 5% 2% 8% 24%
2023 Q1 9% 15% 13% 0.00% 1% 5% 2% 11% 23%
2022 Q4 8% 13% 10% 1.6% 2% 4% 3% 5% 23%
2022 Q3 10% 14% 10% 2% 2% 4% 2% 6% 22%
2022 Q2 9% 15% 11% 2% 3% 4% 3% 8% 24%
2022 Q1 12% 13% 12% 2% 3% 4% 2% 6% 22%
2021 Q4 10% 15% 13% 0% 3% 3% 2% 5% 19%
2021 Q3 8% 13% 14% 0% 3% 3% 4% 8% 22%
2021 Q2 11% 12% 12% 0% 2% 3% 3% 11% 21%
2021 Q1 9% 12% 12% 0% 2% 1% 2% 9% 12%
2020 Q4 6% 11% 14% 4% 3% 1% 3% 11% 12%
2020 Q3 5% 11% 11% 4% 2% 1% 4% 11% 12%
2020 Q2 4% 9% 7% 4% 1% 1% 3% 7% 11%
2020 Q1 4% 9% 6% 4% 1% 1% 3% 5% 12%
2019 Q4 4% 6% 3% 17% 1% 1% 2% 5% 9%
2019 Q3 4% 6% 0% 19% 1% 1% 1% 6% 9%
2019 Q2 5% 6% 2% 0% 1% 1% 1% 2% 8%
2019 Q1 4% 6% 2% 1% 1% 2% 0% 4% 10%
2018 Q4 5% 3% 3% 0% 1% 0% 0% 4% 9%
2018 Q3 3% 3% 1% 0% 1% 0% 1% 5% 7%
2018 Q2 3% 1% 2% 0% 1% 0% 0% 5% 8%
2018 Q1 3% 2% 2% 0% 1% 0% 0% 6% 7%
2017 Q4 4% 6% 0% 0% 1% 0% 0% 5% 4%
2017 Q3 4% 1% 1% 0% 0% 0% 2% 4% 4%
2017 Q2 4% 7% 0% 0% 1% 1% 2% 4% 3%
2017 Q1 6% 6% 4% 0% 1% 2% 3% 3% 3%
2016 Q4 2% 0% 1% 2% 1% 1% 2% 2% 4%
2016 Q3 3% 2% 1% 2% 1% 4% 1% 3% 5%
2016 Q2 1% 1% 1% 0% 0% 0% 2% 2% 3%
2016 Q1 3% 3% 1% 0% 1% 0% 2% 2% 4%
2015 Q4 1% 4% 1% 0% 2% 0% 2% 1% 5%
2015 Q3 1% 0% 1% 0% 1% 0% 2% 1% 5%
2015 Q2 1% 2% 0% 0% 2% 3% 3% 1% 4%
2015 Q1 2% 2% 0% 0% 2% 3% 2% 1% 4%
2014 Q4 1% 2% 1% 0% 1% 3% 0% 0% 5%
2014 Q3 0% 2% 1% 0% 1% 3% 1% 1% 6%
2014 Q2 3% 0% 0% 0% 1% 3% 1% 1% 6%
2014 Q1 1% 1% 0% 16% 2% 3% 1% 4% 4%
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 5
Figure 1: Retail Vacancy Rate - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1)
0%
5%
10%
15%
20%
25%
30%
2024 Q1 EST
2023 Q4
2023 Q2
2022 Q4
2022 Q2
2021 Q4
2021 Q2
2020 Q4
2020 Q2
2019 Q4
2019 Q2
2018 Q4
2018 Q2
2017 Q4
2017 Q2
2016 Q4
2016 Q2
2015 Q4
2015 Q2
2014 Q4
2014 Q2
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town & County
(CC)
Palo Alto
El Camino Real – California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica 3rd Street
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 6
Table 3: Retail Vacancy Square Footage - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1) PERIOD Total Square Feet
Palo Alto
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real –
Town & County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
TOTAL SF 1,831,300 740,000 295,000 175,000 54,300 463,000 104,000 433,000 461,000 1,300,000 2024 Q1 178,597 111,905 28,235 21,425 4,960 8,132 3,940 11,074 47,714 339,654 2023 Q4 173,194 105,375 27,999 21,425 4,960 8,132 5,303 13,710 48,409 326,979 2023 Q3 155,957 100,547 26,293 20,493 - 3,321 5,303 9,107 48,227 337,217 2023 Q2 168,361 101,016 38,228 20,493 - 3,321 5,303 9,753 36,496 312,798 2023 Q1 143,381 67,478 43,128 23,606 - 4,241 4,928 10,178 52,416 305,582 2022 Q4 127,229 56,165 38,353 17,732 875 10,164 3,940 11,274 21,180 307,835 2022 Q3 146,933 73,475 41,897 17,830 875 8,916 3,940 6,696 26,681 293,504 2022 Q2 152,945 69,354 43,158 19,652 875 15,316 4,590 13,825 34,620 310,164 2022 Q1 168,125 86,236 39,326 21,032 875 16,066 4,590 10,651 26,314 291,790 2021 Q4 160,156 73,735 44,743 22,812 - 15,866 3,000 10,248 24,212 261,303 2021 Q3 140,829 58,301 39,325 24,337 - 15,866 3,000 15,648 38,160 298,801 2021 Q2 149,691 82,789 34,225 21,761 - 7,916 3,000 11,339 49,132 283,694 2021 Q1 133,446 69,048 33,721 21,761 - 7,916 1,000 6,789 41,828 158,202 2020 Q4 114,225 44,786 29,321 24,340 2,062 12,716 1,000 13,349 50,688 158,302 2020 Q3 98,700 39,340 29,573 19,554 2,062 7,321 850 15,605 49,298 161,951 2020 Q2 77,103 32,350 25,526 12,541 2,062 3,774 850 12,040 31,726 143,160 2020 Q1 71,609 29,528 23,666 10,967 2,062 4,536 850 14,077 25,024 157,851 2019 Q4 68,273 32,146 17,349 5,226 9,402 3,300 850 9,964 22,153 122,571 2019 Q3 64,283 32,578 17,349 - 10,206 3,300 850 5,667 26,343 126,847 2019 Q2 61,946 35,423 17,149 3,424 - 5,100 850 2,913 11,286 109,811 2019 Q1 56,015 26,552 17,149 4,324 750 5,640 1,600 1,383 19,971 127,702 2018 Q4 53,397 35,982 9,250 5,335 - 2,830 - - 20,559 114,843 2018 Q3 34,381 19,785 9,465 1,911 - 3,220 - 3,100 24,870 94,342 2018 Q2 31,228 20,830 3,017 3,711 - 3,670 - - 23,992 111,338 2018 Q1 36,373 22,483 6,317 4,337 - 3,236 - 250 27,425 92,497 2017 Q4 51,354 29,687 17,651 780 - 3,236 - 1,800 23,648 54,170 2017 Q3 32,545 26,296 2,797 2,152 - 1,300 - 7,344 16,706 47,270 2017 Q2 57,323 33,513 18,832 - - 3,688 1,290 8,344 17,421 46,153 2017 Q1 74,259 43,793 18,332 6,751 - 3,538 1,845 11,280 15,621 37,648 2016 Q4 25,103 15,915 - 2,436 875 4,962 915 9,944 11,311 55,410 2016 Q3 34,582 20,515 5,191 1,264 875 2,738 3,999 4,290 13,268 60,582 2016 Q2 17,374 10,500 2,986 2,100 - 1,788 - 10,500 9,427 42,179 2016 Q1 37,919 23,261 7,358 2,429 - 4,871 - 9,990 9,142 51,035 2015 Q4 24,547 4,350 10,597 2,429 - 7,171 - 10,172 6,166 65,780 2015 Q3 12,725 5,350 1,358 2,429 - 3,588 - 9,515 3,150 67,286 2015 Q2 27,143 8,084 6,158 329 - 9,488 3,084 11,428 3,322 54,211 2015 Q1 34,214 17,459 6,158 - - 7,513 3,084 10,092 5,172 59,104 2014 Q4 18,344 5,226 4,800 1,722 - 3,512 3,084 1,000 - 72,902 2014 Q3 20,198 3,600 4,800 1,722 - 6,992 3,084 2,500 4,260 80,946 2014 Q2 29,786 19,900 310 - - 6,492 3,084 3,200 6,175 83,840 2014 Q1 36,931 10,402 2,200 - 10,432 10,813 3,084 5,124 18,144 57,548
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 7
Figure 2: Retail Vacancy Square Footage - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1)
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2024 Q1 EST
2023 Q4
2023 Q2
2022 Q4
2022 Q2
2021 Q4
2021 Q2
2020 Q4
2020 Q2
2019 Q4
2019 Q2
2018 Q4
2018 Q2
2017 Q4
2017 Q2
2016 Q4
2016 Q2
2015 Q4
2015 Q2
2014 Q4
2014 Q2
Total Square Feet
Palo Alto
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town & County
(CC)
Palo Alto
El Camino Real – California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica 3rd Street
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 8
Table 4: Retail Market Asking Rent Per Square Foot - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1) PERIOD
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real –
Town & County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real –
South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica 3rd
Street
TOTAL SF 740,000 295,000 175,000 54,300 463,000 104,000 433,000 461,000 1,300,000 2024 Q1 $77 $54 $77 $49 $54 $56 $49 $68 $80
2023 Q4 $78 $55 $77 $49 $54 $56 $49 $68 $81
2023 Q3 $76.8 $54.3 $75.7 $49.0 $53.3 $55.2 $49.0 $67.3 $80.9 2023 Q2 $77.1 $54.5 $76.4 $48.8 $53.6 $55.6 $49.2 $67.0 $81.2 2023 Q1 $77.7 $54.9 $77.1 $49.1 $54.1 $56.0 $49.3 $66.8 $81.4 2022 Q4 $77 $55 $77 $49 $54 $56 $49 $67 $82
2022 Q3 $77 $54 $77 $49 $54 $56 $49 $66 $81
2022 Q2 $77 $54 $76 $48 $53 $55 $49 $66 $81
2022 Q1 $76 $54 $75 $48 $53 $55 $49 $65 $79
2021 Q4 $76 $54 $75 $48 $53 $55 $48 $65 $79
2021 Q3 $76 $53 $74 $48 $53 $54 $48 $64 $79
2021 Q2 $75 $53 $74 $48 $52 $54 $48 $64 $78
2021 Q1 $74 $53 $73 $47 $52 $53 $47 $64 $78
2020 Q4 $74 $52 $73 $47 $51 $53 $47 $64 $78
2020 Q3 $74 $52 $73 $46 $51 $53 $47 $64 $79
2020 Q2 $74 $52 $73 $46 $51 $53 $47 $64 $79
2020 Q1 $73 $52 $72 $46 $51 $52 $46 $64 $80
2019 Q4 $73 $52 $71 $46 $50 $52 $46 $64 $80
2019 Q3 $72 $51 $71 $46 $50 $52 $46 $64 $81
2019 Q2 $72 $51 $70 $45 $50 $51 $46 $63 $81
2019 Q1 $71 $51 $69 $45 $49 $51 $45 $63 $80
2018 Q4 $71 $50 $69 $45 $49 $51 $45 $63 $80
2018 Q3 $70 $50 $68 $45 $49 $50 $44 $62 $78
2018 Q2 $70 $50 $68 $44 $48 $50 $44 $62 $78
2018 Q1 $69 $49 $67 $44 $48 $49 $44 $62 $78
2017 Q4 $69 $49 $66 $43 $47 $49 $43 $61 $77
2017 Q3 $68 $49 $65 $43 $47 $49 $43 $61 $79
2017 Q2 $68 $48 $65 $43 $47 $48 $43 $60 $80
2017 Q1 $67 $48 $65 $43 $46 $48 $42 $60 $80
2016 Q4 $67 $47 $64 $42 $46 $47 $42 $59 $80
2016 Q3 $66 $47 $63 $42 $45 $47 $42 $59 $79
2016 Q2 $65 $46 $62 $41 $45 $46 $41 $59 $75
2016 Q1 $65 $46 $61 $41 $44 $46 $41 $58 $73
2015 Q4 $64 $45 $60 $40 $44 $45 $40 $57 $72
2015 Q3 $63 $45 $59 $40 $43 $44 $40 $57 $71
2015 Q2 $63 $44 $59 $39 $43 $44 $39 $56 $70
2015 Q1 $62 $44 $58 $39 $42 $43 $39 $55 $69
2014 Q4 $61 $44 $57 $39 $42 $43 $39 $55 $68
2014 Q3 $61 $43 $57 $38 $41 $42 $38 $54 $67
2014 Q2 $60 $43 $56 $38 $41 $42 $38 $54 $66
2014 Q1 $60 $42 $55 $37 $40 $41 $37 $53 $66
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 9
Figure 3: Retail Market Asking Rent Per Square Foot - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1)
$30
$35
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
2024 Q1 EST
2023 Q4
2023 Q2
2022 Q4
2022 Q2
2021 Q4
2021 Q2
2020 Q4
2020 Q2
2019 Q4
2019 Q2
2018 Q4
2018 Q2
2017 Q4
2017 Q2
2016 Q4
2016 Q2
2015 Q4
2015 Q2
2014 Q4
2014 Q2
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town & County
(CC)
Palo Alto
El Camino Real – California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica 3rd Street
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 10
Table 5: Retail Vacancy by Months - Palo Alto, Los Altos, and Santa Monica (2014 - 2024 Q1) PERIOD
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town
& County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica 3rd
Street
TOTAL FA 740,000 295,000 175,000 54,300 463,000 104,000 433,000 461,000 1,300,000 2024 Q1 8.5 40.6 2.3 23.1
2023 Q4 11.5 15.1 39.2 0.9 21.7 2.2 4.8
2023 Q3 13.0 22.3 32.1 18.7 11.1 10.9 12.1
2023 Q2 11.5 27.8 15.6 20.8 4.0 10.0
2023 Q1 29.2 24.8 12.6 6.4 23.1 16.5
2022 Q4 6.3 5.1 23.4 10.9 9.7 15.1 3.8 10.5
2022 Q3 5.8 19.1 7.9 12.4 0.5 5.7 2.1
2022 Q2 5.7 29.6 16.3 4.8 11.5 2.4 14.2 6.1
2022 Q1 4.9 6.8 15.9 1.8 8.5 6.8 11.4
2021 Q4 13.6 15.5 12.8 7.4 12.6 2.6 16.9
2021 Q3 17.4 13.3 4.4 10.2 31.0
2021 Q2 6.0 8.3 12.2 13.3 10.4 7.4
2021 Q1 14.6 9.2 10.3 13.3 5.7
2020 Q4 7.6 6.3 17.2 17.4 17.4 4.2 8.2
2020 Q3 6.0 5.2 14.2 14.4 5.0
2020 Q2 17.8 4.1 11.2 11.4 9.4
2020 Q1 15.1 2.0 8.2 8.4 5.0 2.5 8.1
2019 Q4 7.0 3.8 4.4 5.2 7.4 3.0 6.5
2019 Q3 4.0 1.8 2.2 4.4 3.6 4.0
2019 Q2 4.1 3.2 18.8 3.9 8.0
2019 Q1 3.5 1.7 1.0 3.8 2.7 6.2
2018 Q4 5.1 5.3 0.4 0.9 3.1 6.0 16.4
2018 Q3 6.4 5.5 15.5 2.0 5.2
2018 Q2 16.5 4.1 2.9 4.2 8.8 4.8
2018 Q1 2.3 6.5 9.5 19.2 2.4 10.1
2017 Q4 13.8 0.3 5.5 8.9 12.0 4.3 16.1
2017 Q3 6.3 3.6 9.4 6.5 2.9 5.5
2017 Q2 4.6 5.3 2.1 10.2 6.2 1.6 4.7 10.0
2017 Q1 10.2 7.2 15.4 1.1 0.5
2016 Q4 7.0 7.2 3.3 4.2 6.7 3.4 4.4
2016 Q3 9.3 17.1 3.2 0.3 4.1 3.2 18.1 3.8
2016 Q2 5.0 3.5 6.7 8.6 9.0 1.4 7.0
2016 Q1 5.0 6.0 6.7 6.4 4.5 6.9
2015 Q4 34.6 3.7 6.1 10.1 4.0 11.5
2015 Q3 4.9 6.9 7.4 4.3 5.8 6.9
2015 Q2 5.6 3.9 4.3 17.0 7.0
2015 Q1 1.6 0.9 1.8 3.9 5.1
2014 Q4 2.7 3.3 1.4 7.6 1.8 8.5
2014 Q3 3.9 0.2 5 4.5 2.1 9.8
2014 Q2 2.9 0.9 2.5 9.3 5.1 5.0
2014 Q1 6.1 5.5 3.8 6.0
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 11
Figure 4: Retail Vacancy by Months - Palo Alto, Los Altos, and Santa Monica (2014 - 2024 Q1)
0 2
4 6
8 10
12 14
16 18
20 22
24 2024 Q1 QTD
2023 Q3
2023 Q1
2022 Q3
2022 Q1
2021 Q3
2021 Q1
2020 Q3
2020 Q1
2019 Q3
2019 Q1
2018 Q3
2018 Q1
2017 Q3
2017 Q1
2016 Q3
2016 Q1
2015 Q3
2015 Q1
2014 Q3
2014 Q1
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
Palo Alto
El Camino Real – Town & County
(CC)
Palo Alto
El Camino Real – California Ave
(CN, CS)
Linear (Palo Alto
Downtown
(CD-C/GF))
Linear (Palo Alto
California Ave
(CC2/R))
Linear (Palo Alto
El Camino Real – South)
Linear (Palo Alto
Midtown
(CN/GF))
Linear (Los Altos
CRS Zone)
Linear (Santa Monica
Main Street)
Linear (Santa Monica
3rd Street)
Linear (Palo Alto
El Camino Real – Town & County
(CC))
Linear (Palo Alto
El Camino Real – California Ave
(CN, CS))
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 12
Office
Table 6: Office Overview - Palo Alto, Los Altos, and Santa Monica (2024 Q1) Office Total/Average
Palo Alto
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real –
Town & County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real
– South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa
Monica
Main Street
Santa Monica
3rd Street
INVENTORY SF 3,316,000 2,100,000 712,000 49,800 192,000 219,000 43,200 188,000 247,000 1,300,000 Under Construction Square Feet - 0 0 0 0 0 0 0 0 0
Vacant Square Feet 556,100 339,000 166,000 5,800 15,500 20,900 8,900 24,300 77,400 364,000 12 Month Net Absorption Square Feet (59,913) -77,600 -6,500 -1,100 8,800 16,400 87 -4700 -26,800 -122,000 12 Month Net Absorption Square Feet
(one year change) 42% 8.8% 89.5% 69.2% 26.4% -46.5% 102.7% -126.2% -164.0% -89.8% VACANCY RATE 17% 16.0% 23.4% 11.6% 8.1% 9.6% 20.7% 12.9% 31.4% 28.3% Vacancy Rate
(one year change) -1% 3.7% 1.0% 2.3% -4.6% -5.6% -0.2% 2.5% 11.0% 9.5% Market Asking Rent/ Square Feet $76.22 $93.77 $72.23 $87.63 $72.45 $66.11 $65.13 $71.82 $59.36 $66.34 Market Asking Rent/ Square Feet (one year change) -1% -0.8% -1.6% -1.0% -1.6% -1.3% -1.8% -0.5% 0.6% 0.4% Market Sale Price/ Square Feet $928 $1,077 $894 $1,149 $969 $749 $727 $679 $840 $734 Market Sale Price/ Square Feet
(one year change) -7% -6.4% -7.4% -8.3% -7.9% -7.1% -7.8% -7.0% -5.6% -7.2% Market Cap Rate 5.9% 5.9% 5.8% 5.7% 5.7% 5.9% 6.5% 6.1% 5.7% 5.8% Market Cap Rate (one year change) 0% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.3% 0.3%
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 13
Table 7: Office Vacancy Rate - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1) Period Palo Alto Downtown
(CD-C/GF)
Palo Alto California
Ave
(CC2/R)
Palo Alto
El Camino Real –
Town & County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto Midtown
(CN/GF)
Los Altos
CRS Zone Santa Monica Main Street Santa Monica
3rd Street
INVENTORY SF 2,100,000 712,000 49,800 192,000 219,000 43,200 188,000 247,000 1,300,000 2024 Q1 16.0% 23.4% 11.6% 8.1% 9.6% 20.7% 12.9% 31.4% 28.7% 2023 Q4 17.6% 17.6% 11.6% 4.6% 14.9% 20.7% 13.4% 30.1% 26.6% 2023 Q3 16.8% 18.2% 11.6% 6.0% 14.3% 20.0% 13.7% 26.2% 21.9% 2023 Q2 16.2% 23.4% 11.6% 6.0% 13.9% 19.8% 13.0% 23.0% 21.4% 2023 Q1 14.0% 25.1% 11.6% 8.1% 14.4% 22.0% 10.2% 24.0% 19.2% 2022 Q4 10.8% 20.0% 7.2% 16.9% 16.0% 19.9% 10.6% 17.2% 18.5% 2022 Q3 9.6% 26.4% 0.0% 12.3% 17.5% 19.1% 17.5% 18.6% 21.1% 2022 Q2 8.6% 15.5% 0.0% 12.3% 29.5% 19.6% 17.9% 19.9% 16.4% 2022 Q1 7.8% 16.3% 0.0% 15.3% 29.2% 19.6% 19.5% 15.3% 13.0% 2021 Q4 8.7% 17.7% 3.8% 17.4% 29.9% 7.7% 20.4% 14.4% 14.5% 2021 Q3 9.4% 14.8% 3.8% 16.2% 22.1% 8.8% 24.3% 15.7% 12.6% 2021 Q2 11.7% 14.8% 3.8% 15.8% 18.9% 14.7% 13.3% 22.5% 12.4% 2021 Q1 10.7% 10.0% 3.8% 17.7% 17.4% 26.6% 14.2% 15.8% 10.8% 2020 Q4 11.6% 9.6% 3.8% 14.8% 9.2% 26.6% 13.7% 16.7% 9.2% 2020 Q3 9.3% 8.5% 5.6% 14.8% 13.3% 12.3% 14.1% 15.2% 9.7% 2020 Q2 5.1% 5.2% 7.8% 13.9% 16.5% 7.7% 14.6% 5.2% 7.6% 2020 Q1 4.8% 4.6% 5.9% 3.7% 14.7% 4.6% 11.8% 3.9% 4.7%
2019 Q4 3.5% 6.9% 0.0% 3.7% 6.7% 4.6% 13.3% 5.1% 4.0%
2019 Q3 2.9% 4.0% 0.0% 3.7% 6.6% 13.1% 2.7% 3.8% 6.3%
2019 Q2 2.1% 5.7% 0.0% 2.9% 6.9% 13.1% 2.7% 0.6% 5.2%
2019 Q1 1.9% 8.3% 0.0% 6.9% 5.4% 13.1% 2.0% 0.5% 4.5%
2018 Q4 2.0% 7.5% 0.0% 33.3% 4.8% 14.4% 1.5% 0.5% 2.8%
2018 Q3 2.3% 7.5% 0.0% 3.2% 4.5% 0.0% 0.9% 2.2% 2.9%
2018 Q2 2.1% 3.5% 2.0% 6.3% 10.4% 0.0% 1.0% 2.2% 7.6%
2018 Q1 3.2% 11.0% 2.0% 8.3% 3.7% 0.0% 2.7% 5.2% 5.7%
2017 Q4 4.4% 9.6% 2.0% 7.3% 4.1% 0.0% 3.4% 3.2% 7.6%
2017 Q3 3.4% 8.2% 2.0% 7.6% 2.2% 0.0% 4.2% 9.6% 7.2%
2017 Q2 3.0% 5.9% 5.8% 5.9% 5.3% 0.0% 4.2% 11.1% 7.3%
2017 Q1 5.1% 5.6% 4.7% 9.8% 4.7% 0.0% 3.3% 4.5% 8.4%
2016 Q4 3.9% 4.5% 4.7% 6.5% 3.6% 0.0% 5.1% 6.4% 8.0%
2016 Q3 3.6% 3.4% 0.0% 7.0% 1.3% 0.0% 5.5% 3.7% 8.1%
2016 Q2 3.2% 1.5% 0.0% 9.2% 2.9% 0.0% 2.7% 6.3% 7.0%
2016 Q1 2.1% 2.4% 0.9% 5.0% 1.3% 0.0% 4.7% 3.1% 6.1%
2015 Q4 1.6% 3.0% 0.9% 3.5% 4.3% 0.0% 4.7% 3.4% 7.7%
2015 Q3 3.0% 5.3% 0.9% 4.5% 4.7% 4.6% 5.9% 1.2% 10.3%
2015 Q2 3.4% 10.6% 0.9% 4.0% 2.1% 0.0% 1.7% 1.7% 9.4%
2015 Q1 3.4% 6.3% 0.0% 10.1% 1.5% 0.0% 6.5% 2.1% 7.8%
2014 Q4 3.2% 5.8% 0.0% 16.8% 4.0% 0.0% 14.1% 2.6% 7.2%
2014 Q3 3.2% 3.5% 0.0% 5.5% 12.9% 0.0% 0.0% 5.3% 7.1%
2014 Q2 3.0% 3.7% 3.2% 3.6% 15.9% 0.0% 0.0% 2.7% 9.2%
2014 Q1 2.7% 4.5% 5.7% 1.3% 9.6% 0.0% 0.0% 8.5% 7.5%
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 14
Figure 5: Office Vacancy Rate - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1)
0%
5%
10%
15%
20%
25%
30%
35%
2024 Q1 EST
2023 Q4
2023 Q2
2022 Q4
2022 Q2
2021 Q4
2021 Q2
2020 Q4
2020 Q2
2019 Q4
2019 Q2
2018 Q4
2018 Q2
2017 Q4
2017 Q2
2016 Q4
2016 Q2
2015 Q4
2015 Q2
2014 Q4
2014 Q2
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town & County
(CC)
Palo Alto
El Camino Real – California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 15
Table 8: Office Vacancy Square Footage - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1) Period
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town &
County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
INVENTORY SF 2,100,000 712,000 49,800 192,000 219,000 43,200 188,000 247,000 1,300,000 2024 Q1 338,980 166,439 5,768 15,473 20,880 8,939 24,340 77,431 369,593 2023 Q4 373,997 125,480 5,768 8,914 32,472 8,939 25,297 74,240 342,659 2023 Q3 356,287 129,448 5,768 11,514 31,271 8,653 25,884 64,601 281,799 2023 Q2 343,975 166,543 5,768 11,514 30,435 8,533 24,435 56,739 274,774 2023 Q1 296,317 178,598 5,768 15,488 30,775 9,499 19,192 59,219 246,795 2022 Q4 228,762 142,548 3,600 32,520 34,099 8,583 20,027 42,506 237,438 2022 Q3 204,888 195,380 - 23,713 37,370 8,253 33,036 45,998 271,948 2022 Q2 182,597 115,147 - 23,713 62,987 8,461 33,642 48,241 211,668 2022 Q1 166,536 120,902 - 29,313 62,363 8,461 36,703 36,982 167,152 2021 Q4 183,733 130,842 1,881 33,353 63,940 3,326 38,424 34,829 186,772 2021 Q3 200,319 109,783 1,881 31,153 47,138 3,810 45,703 38,130 157,999 2021 Q2 249,472 109,639 1,881 30,313 40,471 6,359 25,046 54,411 156,037 2021 Q1 227,481 74,063 1,881 34,056 37,202 11,471 26,801 38,412 135,137 2020 Q4 246,443 71,183 1,881 28,380 19,680 11,471 25,741 40,470 115,644 2020 Q3 198,350 62,618 2,803 28,380 28,531 5,315 26,599 36,802 121,745 2020 Q2 108,452 38,263 3,872 26,713 35,197 3,315 27,434 12,606 94,942 2020 Q1 102,288 34,426 2,950 4,743 31,497 2,000 22,155 9,504 59,198 2019 Q4 75,003 51,261 - 4,743 14,396 2,000 24,972 12,476 50,570 2019 Q3 60,668 29,639 - 4,759 14,206 5,671 5,146 9,324 79,541 2019 Q2 45,072 42,238 - 3,775 14,773 5,671 5,052 1,470 65,206 2019 Q1 39,774 61,431 - 8,959 11,621 5,671 3,804 1,195 56,110 2018 Q4 41,800 55,749 - 61,500 10,271 6,203 2,910 1,195 35,511 2018 Q3 48,961 55,552 - 6,000 9,678 - 1,624 5,217 36,305 2018 Q2 44,085 25,221 1,006 11,650 22,255 - 1,944 5,217 95,083 2018 Q1 67,447 79,176 1,006 15,364 7,977 - 5,010 12,484 72,085 2017 Q4 93,961 68,883 1,006 13,423 8,834 - 6,451 7,733 95,575 2017 Q3 72,062 58,663 1,006 14,058 4,729 - 8,006 23,331 91,024 2017 Q2 63,375 42,736 2,878 10,856 11,262 - 8,006 26,922 91,771 2017 Q1 106,579 40,027 2,337 18,051 10,110 - 6,251 11,000 105,311 2016 Q4 81,137 32,422 2,337 12,038 7,730 - 9,671 15,459 101,340 2016 Q3 75,143 21,830 - 12,938 2,870 - 10,448 8,946 102,816 2016 Q2 67,517 9,857 - 17,017 6,170 - 5,109 15,248 88,763 2016 Q1 43,012 15,710 464 9,158 2,870 - 8,950 7,480 77,429 2015 Q4 32,332 19,032 464 6,199 9,217 - 8,950 8,110 98,179 2015 Q3 60,015 34,390 464 8,019 9,951 2,000 11,154 2,942 130,653 2015 Q2 67,695 70,579 464 7,166 4,516 - 3,186 4,023 119,298 2015 Q1 67,094 41,829 - 19,238 3,224 - 12,328 4,942 98,873 2014 Q4 63,266 36,802 - 36,015 8,560 - 26,489 6,319 91,257 2014 Q3 63,406 22,370 - 11,684 27,325 - - 12,848 90,162 2014 Q2 59,714 23,692 1,595 7,773 33,604 - - 6,471 117,272 2014 Q1 52,525 28,587 2,859 2,865 20,112 - - 20,364 95,659
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 16
Figure 6: Office Vacancy Square Footage - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1)
0 50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2024 Q1 EST
2023 Q4
2023 Q2
2022 Q4
2022 Q2
2021 Q4
2021 Q2
2020 Q4
2020 Q2
2019 Q4
2019 Q2
2018 Q4
2018 Q2
2017 Q4
2017 Q2
2016 Q4
2016 Q2
2015 Q4
2015 Q2
2014 Q4
2014 Q2
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town & County
(CC)
Palo Alto
El Camino Real – California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 17
Table 9: Office Market Asking Rent per Square Foot - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1) Period
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town
& County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
INVENTORY SF 2,100,000 712,000 49,800 192,000 219,000 43,200 188,000 247,000 1,300,000 2024 Q1 $94 $72 $88 $72 $66 $65 $72 $59 $66
2023 Q4 $94 $72 $88 $72 $66 $65 $72 $59 $66
2023 Q3 $94 $72 $88 $72 $66 $65 $72 $59 $66
2023 Q2 $94 $73 $88 $73 $67 $66 $72 $59 $67
2023 Q1 $94 $73 $88 $73 $67 $66 $72 $59 $66
2022 Q4 $95 $74 $89 $74 $67 $67 $72 $59 $66
2022 Q3 $96 $76 $90 $76 $68 $67 $73 $59 $66
2022 Q2 $97 $76 $92 $77 $70 $68 $74 $59 $65
2022 Q1 $97 $76 $92 $78 $69 $68 $74 $59 $65
2021 Q4 $99 $78 $95 $80 $71 $69 $75 $58 $64
2021 Q3 $99 $78 $94 $80 $71 $69 $75 $58 $63
2021 Q2 $98 $77 $92 $79 $70 $68 $74 $58 $63
2021 Q1 $98 $77 $93 $79 $70 $68 $75 $59 $64
2020 Q4 $99 $78 $96 $80 $72 $68 $78 $59 $65
2020 Q3 $102 $80 $100 $82 $75 $70 $78 $60 $66
2020 Q2 $103 $80 $103 $82 $76 $71 $79 $62 $69
2020 Q1 $106 $82 $105 $84 $78 $73 $79 $63 $71
2019 Q4 $105 $82 $107 $84 $79 $73 $80 $63 $72
2019 Q3 $104 $82 $105 $84 $78 $73 $79 $63 $71
2019 Q2 $104 $82 $104 $84 $78 $73 $78 $62 $69
2019 Q1 $104 $82 $105 $84 $79 $74 $78 $62 $68
2018 Q4 $103 $80 $103 $83 $78 $72 $77 $61 $67
2018 Q3 $104 $80 $106 $83 $79 $72 $76 $62 $67
2018 Q2 $104 $80 $107 $83 $80 $73 $73 $61 $67
2018 Q1 $103 $79 $107 $82 $79 $73 $72 $59 $66
2017 Q4 $100 $77 $104 $80 $77 $70 $71 $59 $65
2017 Q3 $99 $75 $102 $79 $76 $69 $71 $59 $64
2017 Q2 $99 $76 $102 $80 $77 $70 $71 $59 $64
2017 Q1 $100 $77 $101 $80 $77 $71 $70 $58 $63
2016 Q4 $102 $78 $102 $81 $78 $73 $71 $57 $62
2016 Q3 $101 $78 $100 $80 $77 $72 $71 $56 $62
2016 Q2 $100 $77 $97 $79 $76 $72 $70 $56 $61
2016 Q1 $105 $79 $101 $81 $78 $74 $69 $55 $60
2015 Q4 $101 $77 $97 $78 $76 $71 $67 $54 $58
2015 Q3 $99 $76 $97 $77 $75 $71 $66 $53 $58
2015 Q2 $96 $73 $93 $75 $73 $68 $65 $51 $56
2015 Q1 $92 $70 $88 $71 $69 $65 $62 $50 $55
2014 Q4 $88 $67 $84 $68 $66 $62 $60 $49 $53
2014 Q3 $85 $64 $80 $66 $63 $59 $57 $48 $52
2014 Q2 $82 $61 $76 $64 $60 $56 $55 $47 $51
2014 Q1 $81 $60 $76 $63 $61 $56 $53 $46 $51
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 18
Figure 7: Office Market Asking Rent per Square Foot - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1)
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
$105
$110
2024 Q1 EST
2023 Q4
2023 Q2
2022 Q4
2022 Q2
2021 Q4
2021 Q2
2020 Q4
2020 Q2
2019 Q4
2019 Q2
2018 Q4
2018 Q2
2017 Q4
2017 Q2
2016 Q4
2016 Q2
2015 Q4
2015 Q2
2014 Q4
2014 Q2
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town & County
(CC)
Palo Alto
El Camino Real – California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 19
Table 10: Office Vacancy by Months - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1) Period
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real –
Town & County
(CC)
Palo Alto
El Camino Real –
California Ave
(CN, CS)
Palo Alto
El Camino Real –
South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Santa Monica
3rd Street
INVENTORY SF 2,100,000 712,000 49,800 192,000 219,000 43,200 188,000 247,000 1,300,000 2024 Q1 9.5 11.0 15.3 11.6 5.5 4.3 4.7
2023 Q4 10.7 4.4 13.9 10.2 7.6 6.2 6.2 2.3 21.6
2023 Q3 10.1 9.1 10.9 7.0 9.8 2.8 1.4 10.6
2023 Q2 3.9 15.9 7.9 3.9 25 5.0 9.2 16.9
2023 Q1 32.0 15.0 4.4 4.6 10.9 5.0 6.0 1.9 5.6
2022 Q4 3.2 14.4 1.9 2.2 17.7 8.8 4.4 8.7
2022 Q3 3.5 12.8 24.2 16.8 19.0 12.4
2022 Q2 5.4 13.6 17.7 15.8 18.9 1.0 15.0
2022 Q1 10.4 19.0 14.7 12.8 6.1 5.1 13.8
2021 Q4 10.5 7.6 21.3 9.7 12.3 2.1 2.6 17.4
2021 Q3 16.5 14.3 18.2 6.7 12.2 16.9 7.3 19.8 3.5
2021 Q2 11.2 8.1 15.2 7.4 11.3 11.1 12.4 9.5 3.3
2021 Q1 5.3 12.2 6.2 10.4 10.3 9.5
2020 Q4 6.1 20.1 9.3 7.2 7.6 3.7 12.0 7.4
2020 Q3 11.5 5.5 4.1 4.6 1.8 2.3 3.6
2020 Q2 12.2 2.7 3.7 2.8 4.7 3.7
2020 Q1 6.7 8.8 0.2 1.4 13.7 3.4 4.6 4.0 11.9
2019 Q4 5.1 3.4 10.1 12.2 3.2 6.1
2019 Q3 8.5 4.1 0.8 6.1 5.6 4.2 5.0
2019 Q2 6.2 7.1 3.6 7.1 4.5 2.7
2019 Q1 4.8 4.3 0.9 2.9 4.2 1.3 4.2
2018 Q4 6.4 9.6 3.8 18.8 5.2 7.4 4.8
2018 Q3 4.6 6.4 0.8 15.8 2.6 1.8 3.3 6.6
2018 Q2 4.3 5.2 12.7 1.3 5.8 0.8 6.8 6.3
2018 Q1 3.1 7.4 9.8 9.8 4.5 41.9 3.5 5.6
2017 Q4 8.4 9.1 6.8 6.8 2.4 11.7 3.9 3.7
2017 Q3 4.6 3.3 3.8 4.1 5.3 6.7 7.6
2017 Q2 3.7 4.4 4.5 2.6 3.7 4.5
2017 Q1 2.5 1.9 4.1 7.9 5.6 6.0 3.9
2016 Q4 7.7 3.9 1.1 5.3 5.4 6.1 5.8
2016 Q3 3.6 4.7 4.0 5.0 11.8 4.0 2.0
2016 Q2 5.6 3.7 3.7 2.2 4.1 11.0 6.7 0.5
2016 Q1 10.1 9.4 4.8 8.3 5.7 10.9 8.5
2015 Q4 9.8 5.3 17.9 5.7 3.0 5.3
2015 Q3 2.9 2.4 6.9 7.5 6.1 2.8 2.6 4.6
2015 Q2 4.4 7.0 3.9 4.4 4.5 1.8 15.2
2015 Q1 3.6 6.4 0.9 6.8 1.6 4.6 7.1
2014 Q4 2.5 31.1 4.4 22 2.2 2.7
2014 Q3 3.3 2.2 2.9 10.6 1.6 4.8 4.2
2014 Q2 2.9 5.4 3.0 2.5 7.4 5.0 5.7
2014 Q1 2.3 3.4 9.2 1.2 6.2 3.4 4.0 3.5
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix B, Page 20
Figure 8: Office Vacancy by Months - Palo Alto, Los Altos, and Santa Monica (2014 Q1 - 2024 Q1
0 2
4 6
8 10
12 2024 Q1 QTD
2023 Q3
2023 Q1
2022 Q3
2022 Q1
2021 Q3
2021 Q1
2020 Q3
2020 Q1
2019 Q3
2019 Q1
2018 Q3
2018 Q1
2017 Q3
2017 Q1
2016 Q3
2016 Q1
2015 Q3
2015 Q1
2014 Q3
2014 Q1
Palo Alto
Downtown
(CD-C/GF)
Palo Alto
El Camino Real – California Ave
(CN, CS)
Palo Alto
El Camino Real – South
Palo Alto
Midtown
(CN/GF)
Los Altos
CRS Zone
Santa Monica
Main Street
Palo Alto
California Ave
(CC2/R)
Palo Alto
El Camino Real – Town & County
(CC)
Linear (#REF!) Linear (Palo Alto
Downtown
(CD-C/GF))
Linear (Palo Alto
El Camino Real – California Ave
(CN, CS))
Linear (Palo Alto
El Camino Real – South)
Linear (Palo Alto
Midtown
(CN/GF))
Linear (Los Altos
CRS Zone)
Linear (Santa Monica
Main Street)
Linear (Palo Alto
California Ave
(CC2/R))
Linear (Palo Alto
El Camino Real – Town & County
(CC))
PPALOO ALTOO RETAILL REVITALIZATIONN STUDYY
City of Palo Alto Appendix C, Page 1
Introductionn
Purpose
The purpose of this study is to review the implications of the recently adopted Assembly Bill (AB) 2097 on the City of Palo Alto’s parking regulations and management strategies, the adequacy of the existing parking inventory and potential impacts on retail establishments.
This parking review was conducted for the four major retail areas and corridors in Palo Alto: Downtown Palo Alto/University Avenue, California Avenue, Midtown, and the El Camino Real corridor. The study area boundaries are shown in Figure 1. Parking supply and occupancy data is based on limited city survey data from 2018 and 2019. The study areas included public on- and off-street parking. Downtown and California Avenue have the majority of the parking capacity, which resulted in their being the primary focus of the analyses and recommendations.
AB 2097 Summary
AB 2097 was signed by Governor Gavin Newsom in September 2022, and went into effect January 1, 2023. AB 2097 prohibits public agencies from imposing minimum automobile parking requirements on most types of development within a half-mile of a major transit stop. AB 2097 does not apply to projects that designate any portion of the project as a hotel, motel, bed and breakfast inn, or other transient lodging use, or reduce parking spaces designated for this purpose. AB 2097 does not reduce, eliminate, or preclude the enforcement of any requirement for parking spaces that are accessible to persons with disabilities or electric vehicle spaces and supply equipment for new multifamily residential or nonresidential development that is located within one-half mile of public transit. Additionally, AB 2097 does not affect event center parking requirements for employees and other workers as required by local ordinance.
The bill authorizes jurisdictions to impose or enforce minimum automobile parking requirements on a housing development project if the public agency makes written findings, within 30 days of the receipt of a completed application, that not imposing or enforcing minimum automobile parking requirements on the development would have a substantially negative impact, supported by a preponderance of the evidence in the record, on the public agency’s ability to meet its share of specified housing needs or existing residential or commercial parking within 1/2 mile of the housing development. These findings cannot be made against certain housing development projects, including those with specific income thresholds or fewer than 20 dwelling units.
AB 2097 does not prohibit off-street parking from being built if that is desirable. Voluntary parking may be provided at a ratio less than what would otherwise have been required by the Zoning Ordinance.
AB 2097 Parking Relief Areas
The study areas subject to relief from enforcement of minimum parking standards provided by AB 2097 are shown in Figure 1 and described below.
Detailed maps for each area can be found in Attachment 3.
Downtown/University Avenue: The Downtown/University Avenue study area is within a half-mile of the Palo Alto Caltrain Station and the Palo Alto Transit Center and hence is subject to AB 2097. This High-Quality Transit Area nearly encompasses all but a half-block with 16 parcels of the Downtown/University Avenue commercially zoned (CD-C) study area.
California Avenue: The entire California Avenue study area is within a half- mile of the California Avenue Caltrain Station, a High-Quality Transit Stop, and hence is subject to AB 2097 provisions.
Midtown: Midtown is not within a half-mile of a High-Quality Transit Stop and therefore is not impacted by AB 2097. Development in this area is subjected to the parking standards set forth in the City’s zoning code.
El Camino Real Corridor: The northern portion of the El Camino Real corridor, north of Acacia Avenue which includes Town and Country and areas around California Avenue, is wi thin a half-mile of the California Avenue Train Station, a High-Quality Transit Stop, and hence is subject to AB 2097 provisions. AB 2097 is not applicable to the rest of the corridor. There are over 200 commercial parcels where the City can continue to impose minimum parking requirements, between Acacia Avenue and Los Altos Avenue.
PPALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix C, Page 2
Figure 1: AB 2097 Parking Relief & Study Areas
PPALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix C, Page 3
Existing Conditions
Parking Supply
At the time of this study, there are approximately 6,677 total public parking spaces, which includes public parking lots, public parking garages and on- street spaces within the four retail districts in the study area. Of these, 2,125 (32%) are on-street spaces and 4,552 (68%) are off-street public parking spaces. Detailed maps and tables for each area can be found in Attachment
2. These are summarized in the following table.
Table 1: Study Area Public Parking Supply
Study Area
Public Parking
Notes On-street Parking* Off-street Parking Total per Study Area Downtown/ University Avenue 1,035 3,220 4,255
76 percent of off-street parking is provided by structured parking.
Excludes 14 spaces as a result of permanent vehicular closure of a segment of Ramona Street, between Hamilton Avenue and University Avenue . Parking data received from Office of Transportation based on 2019 survey data.
California Avenue 756 1,239 1,995
62 percent of off-street parking is provided by structured parking.
Excludes 65 spaces as a result of permanent vehicular closure of California Avenue, between El Camino Real and Birch Street). Parking data received from Office of Transportation based on 2019 survey data.
Midtown 25 93 118 All off-street parking spaces are provided by parking lots. Parking data has been counted manually from Google Earth (February 2024).
El Camino Real 309 0 309
One public parking lot was identified; ho wever, it provides parking for the Stanford/Palo Alto Community Pl aying Fields and was not counted. It should be noted that the Palo Alto City Council is considering a resolution to remove parking on El Camino Real to install bike lanes as a part of the upcoming repaving project per Caltrans’ request. Parking data derived for the study area from April 1, 2024 staff report (item 11) presented to City Council,
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=14217.
Total per Parking Type 2,125 4,552 6,677
PPALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix C, Page 4
Outreach
This study included outreach to business owners and peer cities to obtain input on parking issues and regulatory approaches and recommendations to inform this study.
Stakeholder Input Summary
Interviews were conducted with six business/property owners who operate their businesses in Palo Alto to identify any regulatory constraints they have experienced. The list of business and property owners that were interviewed can be found in Appendix A of this report. The following is a summary of the comments, issues, and concerns regarding parking.
1. Excessive in-lieu parking fees.
2. Allow parking transfer between uses.
3. Unable to add parking for a change in use.
4. City staff parking is occupying valuable off-street parking spaces.
Customers have to park on-street in the neighborhoods instead of the garages.
5. Need more flexible parking regulations when it is not feasible to provide required on-site parking.
6. There is ample parking in California Avenue.
7. On-street parking time limit is a hindrance for employees.
8. Hard for employees to get permits for the garages due to limited number of permits available.
9. Provide range of times for pricing to accommodate a mix of users.
It should be noted that the comments 1, 2, 3 and 5 summarized in the list above are no longer applicable for AB 20 97 implications areas. Also permit availability was an issue pre COVID- 19 pandemic. Since then, the demand has decreased for parking permits.
Peer City Parking Management Best Practices
The following are parking management best practice strategies identified from the following jurisdictions through staff interviews (Cities of Santa Monica and Los Altos) and research (City of Pasadena). City staff were asked
1 Santa Monica Municipal Code- Sectio n 9.66.070, Accessed May 1, 2024, https://ecode360.com/42752344#42752425
about parking supply, adequacy, regulatory approach, impacts and responses to AB 2097, and recommendations.
Santa Monica, CA
The City of Santa Monica has developed a robust parking program that maintains the walkable character of the downtown while providing ample parking for those who need it. Prior to the adoption of AB 2097, the City eliminated minimum parking requirements for a majority of active uses in the downtown. The City also developed 10 public parking structures in the downtown district funded by in-lieu fees for businesses, which provide plenty of parking for the area. The following describes a few of Santa Monica’s parking demand management strategies.
Unbundling Parking: One parking strategy Santa Monica uses is unbundling parking. The municipal code requires that parking spaces be leased or sold separately from residential or commercial structures. This way, non-drivers are not required to pay for parking they do not need, and the parking spaces that exist will be used more efficiently. For commercial developments, requiring that parking be unbundled he lps facilitate the State’s Parking Cash-Out Program.
Transportation Impact Fees: Santa Monica has a transportation impact fee program that requires developers to pay a fee based on the number of residential units or on the amount of square footage for nonresidential developments. Establishing this program required a nexus study demonstrating the relationship between the expected transportation impacts of new developments and the fees required to address those impacts through transportation improvements and trip reduction strategies. Santa Monica utilizes the funds from transportation impact fees for projects that reduce vehicle traffic which also helps manage parking demand. Such expenditures may include, but are not necessarily limited to the following:
x Reimbursement for all direct and indirect costs incurred by the City to construct transportation improvements pursuant to this Chapter, including, but not limited to, the cost of land and right-of-way acquisition, planning, legal advice, engineering, design, construction, construction management, materials, and equipment. 2 Transportation Demand Management: a set of strategies aimed at improving transportation efficiency, reducing congestion, and promoting sustainable travel options.
x Costs of issuance or debt service associated with bonds, notes or other security instruments issued to fund transportation improvements identified.
x Reimbursement for administrative costs incurred by the City in establishing or maintaining the transportation impact fee reserve account required by this Chapter, including, but not limited to, the cost of studies to establish the requisite nexus between the fee amount and the use of fee proceeds and yearly accounting and reports.1
It should be noted that the City of Palo Alto also has a Citywide Transportation impact fee (Chapter 16 .59 of Municipal Code). These funds are expended only on the installati on, acquisition, and construction of eligible citywide transportation enhancement including but not limited to bicycle and pedestrian improvements, and roadway and intersection improvements. Citywide transportation enhancements do not include intersection improvements designed primarily to accommodate increased traffic generated by a specific development or the addition of through- traffic lanes designed for primary use by private motorized vehicles.
Transportation Demand Management Plan Requirements for New Developments: The City of Santa Monica also requires Transportation Demand Management (TDM) plans for new developments with 16 or more residential units or at least 7,500 commercial square feet.2 Strategies to reduce vehicle travel may include both programmatic measures and site improvements.
Palo Alto also has TDM requirements per Section 18.52.050 (d) of Municipal Code that grants the Director of Planning and Development Services the authority to require including TDM strategies for any project requesting a reduction in parking or generating 50 or more net new weekday (AM or PM peak hour) or weekend peak hour trips.
Los Altos, CA
The City of Los Altos has a three-block by three-block downtown with two parallel commercial corridors, referred to as the Downtown Triangle. This retail district includes mostly single-story retail and restaurants, which is comparable in scale and character to California Avenue in Palo Alto. The City
PPALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix C, Page 5
owns six acres of parking in the form of parking plazas and smaller lots (10 total) located north and south of the two commercial streets, which along with on-street parking provide all of the parking for the existing uses. The following describes a few of Los Altos’ parking strategies.
Customer Parking Permits - "Yellow Book Passes": Los Altos offers downtown businesses the option to purchase a book of 25 all-day parking permits at a $25 fee, to be used in any of the 10 downtown parking plazas.
Parking is free downtown, but is subject to time limitations ranging between 20 minutes and 3 hours. The passes allow customers to exceed the time limits in the respective off-street parking lots. Permits are expected to be provided to customers free of charge and are not to be resold to customers.
Downtown Employee Parking Permit Program: This program provides all- day parking for downtown business owners and employees in designated spaces on an annual and quarterly basis at $100 and $40 fee respectively.
Pasadena, CA
The City of Pasadena has a thriving business district, Old Pasadena, which includes shopping and dining establishments. The following describes a few of Pasadena’s parking demand management strategies.
Park and Walk: Pasadena parking rates are more expensive for on-street parking than for its Park and Walk garages. The Park and Walk garages were intended to provide those more convenient on-street spaces for customers visiting specific businesses. The following lists the City’s parking rates. x The on-street metered rate in Old Pasadena is $1.25 per hour and $0.75 per hour on the edges of Old Pasadena.
x The Park and Walk garages are $1 for the first 2 hours; $2 per hour thereafter; $12 daily max.
x Visitors can use the Passport Parking app, which allows a driver to pay for the metered parking, extend the parking sessions from anywhere, and get reminders for time limits.
3 Transit Oriented Development Amendment, Accessed May 1, 2024, https://www.cityofpasadena.net/Planning/Transit-Oriented-Development- Amendment/
Parking Maximums and Public Parking in Transit-Oriented Development Areas: Pasadena’s Municipal Code establishes maximum parking requirements for new development in its transit-oriented development areas. The strategy of limiting parking provision is meant to help the City achieve long-term sustainable mobility goals and reduce private vehicle ownership and use. The City allows an exception for commercial parking in excess of the maximum, provided that the parking is available for public use, that signs advertise the availability of public parking on the property, and that rates do not exceed the City garage rates by more than 150 percent. In this way, parking maximums can help incentivize the provision of publicly available parking3.
PPALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix C, Page 6
Findings
1. Parking Availability
There is significant public parking availability in the study areas. The stakeholders that were interviewed expressed no concern regarding parking availability. Data received from City’s Office of Transportation (2023) show that the average sale of parking permits per month in Downtown was 1,989 out of 3,878 available permits (51 perc ent) and for California Avenue they sold 510 out of 1,075 available permits (47 percent). A parking occupancy study conducted in 2019 (pre-COVID-1 9) by the Palo Alto Office of Transportation indicated occupancy of 47 to 76 percent in the Downtown area for off street public parking spaces, with the highest occupancy around noon. The same study indicated on California Avenue area ranged between 35 to 88 percent with peak occupancy during noon. A majority of this occupancy can safely be assumed to be from office workers in the pre- COVID-19 era. Hybrid schedules and va cant office space has significantly reduced the parking demand post-COVID-19. While a parking demand study has not been done for the commercial areas in Palo Alto post-COVID-19 except for El Camino Real, the interview with the Office of Transportation indicated that there is ample availability of parking of more than 40 percent in parking garages in both Downtown and California Avenue area.
Table 2: Parking Supply and Occupancy Ratios
4 How Hybrid Work has Impacted Parking, January 23, 2024, Accessed April 24, 2024, https://www.vendpark.io/post/how-hybrid-work-has-impacted-parking Table 2 provides the parking supply and occupancy ratio for the study areas.
The following findings listed here are relative to 2024 data received from the City.
x There is excess capacity in the Downtown even during the peak hour with 76% occupancy and a 3.7% vacancy rate in 2019. Hence, there is a growth potential of 9% in Downtown. Note that the vacancy rate in Downtown in 2024 is 16.5% compared to 3.7% in 2019.
x There was optimum parking capacity during the peak hour with 88% occupancy and 6.7% vacancy in 2019. Parking management
strategies can be applied to manage parking to keep it at an optimum level. Note that the vacancy rate in Downtown in 2024 is 11% compared to 6.7% in 2019.
x It should be noted that the data is from 2019 when hybrid work was not prevalent. The shift towards hybrid work and flexible workspaces due to the pandemic has led to a decrease in overall parking demand. As employees split their time between home and the office, fewer people are commuting daily, resulting in less pressure on parking spaces while occupying office space. "According to a survey by Leesman, 66% of employees expect to work from their organization’s workplace two days or less per week.
While many companies are still perfecting and evolving their working models, office occupancy hovers around a nationwide 5 Palo Alto Municipal Code, Accessed February 7, 2024,
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-81074. average of 50% leaving many buildings underutilized. The lack of office utilization has also led to a decrease in overall parking demand.” 4
x There may be the possibility of growth in both Downtown and California Avenue areas without building new parking since the potential lack of office utilization may have led to a decrease in overall parking demand. More up-to-date data is required to determine change in parking demand.
2. Parking Assessment Districts
AB 2097 essentially invalidates the Downtown/University Avenue Parking Assessment District regulated by Section 18.52.070 of the Palo Alto Municipal Code. Since the commercial and residential uses in the affected area are no longer required to meet the minimum one parking space for each 250 gross square feet of floor area requirement provide parking, rendering the parking assessment district in the affected areas not enforceable or applicable. Downtown/University Avenue has a Parking Assessment District regulated by Section 18.52.070 of the Palo Alto Municipal Code
5, which states that,
“Any new development, any addition or enlargement of existing development, or any use of any fl oor area that has never been assessed under any Bond Plan G financing pursuant to Title 13, shall provide one parking space for each 250 gross square feet of floor Area Total Floor Area-
(SF)*
Floor Area
Vacancy Rate
2019*
Floor Area
Vacancy Rate
2024*
Off-Street Public
Parking
On-Street Public
Parking
Total Public
Parking
(2024)
Peak Hour Public
Parking
Occupancy***
Public Parking
Supply Ratio
per 1,000 SF
(2019)
Public Parking
Occupancy Ratio
per 1,000 SF
(2019)
Growth Potential at
85% 0ccupancy
(2019)
Downtown/ University
Avenue** 2,900,000 3.7% 16.5% 3,220 1,035 4,255 76% 1.47 1.12 9% California Avenue 1,000,000 6.7% 11.0% 1,239 756 1,995 88% 2.00 1.76 -3% El Camino Real 1,306,000 2.2% 9.9% 0 309 309 47% 0.24 0.11 NA**** Midtown 149,000 1.9% 8.6% 93 25 118
Notes: * Floor area and vacancy rates are for all property types based on CoStar classification and include office, retail, multi-family, hospitality, health care, specialty, industrial, sports, and entertainment. ** In 2019, 52 percent of total Down town off street parking spaces we re restricted to permit-only parking. Eight of the 19 parkin g facilities did not have any permit-only pa rking. The percentages of permit parking spaces in the remaining 11 facilities vari ed between 32 and 98 percent.
***Peak hour occupancy for both Downtown and California Avenue area was during noon based on 2019 data received from the City. Hence, the worst-case scenario is analyzed. Due to lack of data availability peak hour occupancy for off-site spaces was applied to on-street spaces for Downtown and California Avenue. Data for El Camino Real is from Staff Report #2403-2745 which refers to data collected on Saturday February 24, 2024, from 1pm-2pm. No occupancy data is available for Midtown area. **** Growth potential cannot be calculated confidently since off-street parking is unknown and on-street parking is a very small proportion of the total parking demand.
PPALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix C, Page 7
area, except as may be exempt from such requirement… In connection with any expansion of the supply of public parking spaces within the CD commercial downtown district, the city shall allocate a number of spaces for use as "in-lieu parking" spaces to allow development to occur on sites which would otherwise be precluded from development due to parking constraints imposed by this chapter. Off-site parking on such sites may be provided by payment of an in-lieu monetary contribution to the city to defray the cost of providing such parking.”
Based on stakeholder interviews, the participants were more concerned with parking regulations and fees than availability of existing parking needed to support business.
3. Curb Parking Space Management
It is expected that AB 2097 will reduce the creation of new off-street parking spaces. This reduction may create more competition for limited on-street parking spaces. Among other things, reducing the number of parking spaces increases competition for the curb space from residents that may want to use on-street parking spaces, employees and visitors looking to park, and rideshare drivers dropping off the passengers. In addition, curb space is used for bike parking, parklets, landscaped islands and so on.
While there may be parking spaces in garages and lots, there will always be competition for on-street spaces that are be more convenient. The City currently regulates the long-term use of curb space in Downtown and California Avenue areas by imposing a two-hour time limit. The City also has designated bike spaces allocated alon g University Avenue and California Avenue.
Curb space is also covered by parklet s- outdoor dining area using parking spaces. These have become prevalen t during COVID-19 pandemic and are well received by the patrons. These also create much needed vibrancy in the area. However, they reduce the number of spaces available for parking.
4. Residential Permit Parking Program
The Palo Alto Residential Permit Parking Program (RPPP) aims to provide parking availability for residents and employees living and working in RPPP areas. The RPPP allows residents and employees to obtain permits for on- street parking. These permits grant pe rmit holder a priority access to on- street parking spaces within designated zones for certain time periods.
6 SB 834: Vehicles: preferential parking: residential, commercial, or other development project. Accessed May 1, 2024,
https://digitaldemocracy.calmatters.org/bills/ca_202320240sb834 The RPPP areas in the Downtown stud y area are shown in Figure 2. RPPP requires all vehicles to have a permit to park on designated streets for more than two hours between 8 a.m. and 6 p.m., Monday through Friday. A permit is not needed to park for le ss than two hours. AB 2097 does not directly impact the existing RPPP a reas because it specifically targets minimum parking requirements for new developments near transit stops.
Existing residential permit parking regulations can remain unaffected by AB 2097.
Figure 2: Downtown Permit Parking Areas
However, despite the RPPP designating specific hours for residents, visitors may still choose to park in these zones due to the lack of alternative options or lack of knowledge of RPPP zones. The City must actively enforce RPPP regulations to discourage unauthorized parking. Regular patrols, ticketing, and penalties can serve as deterrents.
Installing conspicuous signage is essential. There are several signs indicating RPPP zone in Downtown. However, some signs are not visible due to the vegetation growth. Signs are also small, and some information is displayed in small fonts that can easily be missed (refer to Figure 3). Enhanced design and proper placement can make these signs more visible. It is also important to indicate the consequences on the signs. Additionally, educating both residents and visitors about the RPPP hours and consequences is crucial.
Effective communication ensures that visitors understand the rules and potential repercussions.
It should be noted that a pending SB 834 that was introduced during the 2023-2024 legislative session, if passed, will prohibit local authorities from issuing permits for preferential parking privileges to residents or vendors of developments within 1/2 mile of publ ic transit and exempt developments from parking minimums. The bill would require the local authority to revise the boundaries of any such preferenti al parking district to exclude all preferential parking within 1/2 mile of public transitǤ6 Figure 3: Downtown Permit Parking Signage
5. Retail Locations Outside of the AB 2097 Areas
Retail locations outside the designated AB 2097 areas are not subject to the parking reduction requirements specified by this law. These areas can continue to follow existing parking regulations without the constraints imposed by AB 2097. Additionally, sixteen parcels in Downtown area are just outside the AB 2097 radius and will need to comply with parking regulations per zoning code. These parcels are at a disadvantage compared to rest of
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the parcels within Downtown. For equity purposes, it is advised that the City consider extending the provisions of AB 2097 to these parcels.
6. Peer City Management Strategies
Parking management strategies from peer cities include integrating parking with TDM development standards, unbundling parking, establishing parking maximums to incentivize public parki ng provision, instituting employee parking programs, and implementing demand-based pricing.
7. Eliminates Possible Incentive Tool
By removal of the parking requirements, AB 2097 creates and incentive for new development within the affected areas. However, many cities use parking reductions as a tool to incentivize desired uses or improvements.
This possible tool will be very limite d or not otherwise available in areas covered by AB 2097 provisions.
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Recommendations
AB 2097 will dramatically limit and reduce the creation of new privately constructed or funded parking spaces associated with new or expanded development within the affected areas. This will require a shift from creation of new parking with development projects to a focus on management and optimization of the existing parking inventory to balance the supply of parking with the demand for parking from existing and future uses and development.
Management and optimization will require ongoing monitoring of the use of the existing supply. The supply incl udes not only public parking garages, surface lots and on-street spaces, but also the private off-street parking.
This section will discuss a number of the tools and methods to manage and optimize parking both in and outside of areas affected by AB 2097.
Based upon the findings of this report, the following section provides further detail of specific recommendations for the identified impacts on parking for retail business in the four study areas of Palo Alto.
1. Extend AB 2097 to Entire CD-C Zone for Equity
Within Downtown, there are 16 parcels in the CD-C district on University Avenue that lie just northeast of the half-mile radius from a high-quality transit stop that are not exempt from the parking requirements by AB 2097 (refer to Figure 4). Unless the provisions of AB 2097 are extended, these parcels will remain subject to minimum parking requirements and the Commercial Downtown Assessment District standards of 18.52 of the PAMC. To ensure equitable development conditions for all parcels in the Downtown area, it is recommended that uniform regulations be applied to the entirety of the CD-C districts in the Downtown area.
2. Allow Retail Flexibility Without Requiring Additional Parking In retail areas outside the influence of AB 2097, restrictions on retail conversion to retail or retail-like uses (for example, changing a boutique store into a restaurant or art gallery) can be removed due to provision of parking in accordance with the new use as long as the square footage is not increased. This will remove restriction s on developers and allow them to experiment with new uses to fill in vacancies.
Figure 4: Downtown / CD-C Zoned Parcels Outside AB 2097
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3. Parking Management & Optimization
Based on the initial findings, there is currently an ample supply of parking to absorb significant new development and to fill existing vacancies in both Downtown and California Avenue. However, as redevelopment occurs, the combination of intensification and the lack of parking requirements due to AB 2097 will begin to impact the existing parking supply. Optimum parking occupancy is approximately 85%. This ensures excellent utilization of a precious resource, but adequate availability to ensure reasonable access without excessive search and delay
7. Beyond this point, parking availability
becomes strained, and visitors may find it challenging to locate suitable parking spaces. When parking spaces are consistently occupied beyond this threshold it can lead to:
x Inconvenience: Visitors may struggle to find available parking spots. x Reduced Foot Traffic: High pa rking demand might discourage potential customers.
x Business Impact: Commercial areas could lose business due to parking constraints.
In order to understand this impact, it is recommended that the City conduct a parking supply and demand study of these areas at least once a year or as significant development or changes to mobility options occur in these areas.
Below are some parking trends and factors to explore in such a study.
On-Street and Off-Street Parking
x What is the supply and demand of on street and off-street parking conditions during the peak hours, on weekdays, and on weekends? x Who are the parking user groups using these spaces—customers, business owners, employees, delivery drivers, or others? Peak Parking Demand
x What time does peak parking demand occur on a typical weekday and on a typical weekend?
x What is the overall parking occupancy rate for the study area on these typical days?
Turnover of Parking Spaces
x How long are cars staying and ho w often are spaces turning over and where?
7 The High Cost of Free Parking, Donald Shoup.
8 The bill would define “qualifying residential property” as any dwelling or unit that is intended for human habitation that (1) is issued a certificate of occupancy The City can use time limits and parking fees to manage and balance the use and occupancy of the parking supply at or near the optimum levels. Shorter parking periods can encourage more turnover and higher hourly parking fees are generally increased in the most popular areas while longer parking periods and lower parking fees are allowed in less popular areas.
Recommendations 3 to 9 listed in this section include other methods to help manage and optimize the parking resources.
4. Develop Ordinance to Unbundle Parking
AB 1317, passed in October 2023, focuses on unbundling parking in California, requiring owners of qualifying residential properties8 to separate parking costs from rent, i.e., renting or selling parking separately rather than automatically including it with the price of building space. The law goes into effect on January 1, 2025. Unbundling parking is the set of policies and actions to create a balance between the supply and demand of parking, reducing the inefficiencies that result in both high concentrations of localized parking demand in some a reas and underutilized spaces in other areas.
Benefits of unbundling include:
x The parking spaces that exist will be more efficiently used. x Non-drivers are not required to pay for parking they don’t need. x The market value of land used as parking becomes clear.
Unbundling is especially helpful in ar eas that are not subject to minimum parking requirements, which now includes most of the Downtown and all of California Avenue study areas, due to their proximity to High Quality Transit Stop as defined by AB 2097. The success of this strategy also hinges on parking management, which seeks to ensure that concentrated locations of high parking demand are efficiently disbursed to locations where parking availability is plentiful.
5. Create an Employee Parking Plan and Program
Businesses can encourage employees not to park in the most convenient customer parking spaces. If patrons must drive around the block several times to find parking, they could potentially leave to seek another similar business with better parking space options. This situation often arises because employees use the on-street and off-street spaces that are most convenient to business patrons. If employees are encouraged to not park in these parking spaces and instead use the spaces that would otherwise be on or after January 1, 2025, (2) consists of 16 or more residential units, and (3) is located within the County of Alameda, Fresno, Los Angeles, Riverside, Sacramento, San Bernardino, San Joaquin, Santa Clara, Shasta, or Ventura. unused, it will reduce the perception of a parking shortage and need to oversupply parking. The City could co llaborate with business owners and employees to understand parking needs and work schedules.
During interviews, the stakeholders expressed concerns about employees encountering challenges when obtaining permits for parking garages. These permits come in various types (three -month, six-month, and annual) and can be purchased during specific period s of the year. In addition, the City charges flat $8 daily rate for garages and lots beyond the free 2-to-3-hour parking. Their suggestion is that the City should offer a variety of pricing options for different time periods. It is recommended that the City work with business owners to find solutions that are acceptable to both City and business owners.
Stakeholders also expressed that the time limit for on-street parking poses challenges for employees. As prev iously recommended, employees should refrain from using on-street parking spaces, reserving them instead for visitors. Educating business owners about the impact of employee use of on-street parking could foster an understanding of the necessity for parking in off-site garages and parking lots.
6. Pursue Shared-Use Agreements
Owners of private parking facilities may be willing to enter an agreement that allows public parking outside of certain established hours. For example, if adequately compensated, offices may be willing to allow public parking in the evenings and on weekends, or religious institutions may be willing to allow public parking on weekdays. The City can facilitate shared parking between landowners by creating ready-to-use shared parking agreement.
The City can enter into parking agreements with the landowners to use private parking during hours that it ty pically goes unused. These areas can be advertised on-site and, on the website, as available parking spaces during certain times of the day.
7. Paid Parking Program
Paid on-street parking can effectively increase turnover rates and the supply of convenient parking spaces. Both California Avenue and University Avenue offer free on-street parking for the first two hours and then the visitors must move their vehicle. Downtown has a system of color zones- purple, coral, lime, and blue, once the time limit expires in a given color https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1 317, Accessed April 29. 2024.
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zone you must move your vehicle out of that zone. Reparking is not allowed in the same zone on same enforcement day once the time limit expires9.
The off-street parking is free for first 2 to 3 hours depending on the lot or garage. It jumps to a flat rate of $8 per day after that. The City could implement incremental increase in rates instead if a flat $8 per day 10. This recommendation was brought to the PTC in 2019. At the time of recommendation, the flat rate was $25 per day. This was reduced to $8 during COVID 19 pandemic.
It is recommended that the City evaluate implementing a paid metered on- street instead of moving the vehicle every 2 hours when a parking utilization threshold is reached. While colored zones system may be a financially viable option for frequent turnover it requires familiarity and can be confusing for the visitors who may not be aware of the zones.
Similar to Pasadena, the City of Palo Alto can also implement higher rates for on-street parking and lower rates for public garages and lots to encourage long-term visitors and employees to park in the off-site garages and lots and leave more convenient parking for short-time visitors.
8. Enhance the City’s Transportation Demand Management (TDM) Strategy
TDM refers to a set of strategies aimed at improving transportation efficiency, reducing congestion, and pr omoting sustainable travel options.
These strategies encourage a shift away from single-occupancy vehicle trips and prioritize alternative modes of transportation, thereby reducing the need for parking spaces.
Palo Alto’s Municipal Code Section 18.52.050 (d) grants the Director of Planning and Development Services the authority to require including TDM strategies for any project requesting a reduction in parking or generating 50 or more net new weekday (AM or PM peak hour) or weekend peak hour trips. While the developer is limited to the project site for the implementation of a TDM program/strategy the City can implement a TDM program/strategy at neighborhood or citywide scale which can have a more significant impact on the parking im pacts in Downtown and California Avenue.
An assessment by Comprehensive Economic Development Strategy adopted by the City Council in August 2023 focused on city-wide access and connectivity of transit and bike networks as these systems provide an
9Downtown Color Zone Parking,
https://www.cityofpaloalto.org/Departments/Transportation/Parking/Parking- Programs/Downtown-Color-Zone-Parking, Accessed April 29, 2024 alternative source of access to the single occupant vehicle as well as a first, last, and/or only mile link to destin ations, especially for locals. These are essential ingredients of TDM strategy. The report found that there is a robust regional bus network, but there is a lack of bus redundancy in parts of the City around neighborhood serv ing districts. This gap is being addressed to some degree with the recently instated on-demand transit service pilot program. While there is a robust bicycle network, some critical routes connecting commercial distri cts with neighborhoods and other destinations lack adequate signage an d lane markings. Lastly, there is no micro mobility program for shared bicycles and/or scooters, which are now common and widely used services for people of vastly ranging ages and socioeconomic status.
The report recommended several strategies under Guiding Principle 2, all of which will help the City enhance its TDM strategy and reduce the need for parking.
Guiding Principle 2: Improve accessibility by embracing walking and biking solutions to/from/within all of the City's commercial districts and addressing parking policies and systems.
This strategy is also applicable for areas not covered by AB 2097.
9. Explore Emerging Technologies
Palo Alto actively embraces technology to manage parking efficiently and enhance urban mobility. Pa lo Alto has deployed
automated parking guidance system (APGS) in its Downtown and California Avenue area garages. These systems feature ceiling-mounted multi- function camera sensors that monitor and display the status of up to six parking spaces per aisle. Integrated LED indicators indicate space availability and permitted parking types. This real-time information helps drivers find available parking spots more efficiently.
In 2015, Palo Alto installed 545 Internet of Things (IoT) sensors throughout the city most of which were installed in Downtown
11. These sensors are
equipped to provide real-time data via website and app on vacant parking spots in the Downtown area. The goal is to reduce congestion and enhance the overall parking experience. However, there is no information on the data received by these sensors on the website and there is no app available to find parking spaces. Currently these sensors are nor active. 10 Parking Work Plan,
https://www.cityofpaloalto.org/Departments/Transportation/Parking/Palo-Alto- Parking-Action-Plan/Parking-Work-Plan, Accessed April 22, 2024 As new technologies emerge, it is advised that the City explore and implement technologies that can deliver real time information via an app or website. These can be applicable to parking garages, lots and on-street parking spaces and can help patrons find and receive directions to the nearest available space.
This strategy is also applicable for areas not covered by AB 2097.
10. Improve Signage and Wayfinding for Parking
Effective signage ensures visitors can find their way without confusion. Palo Alto has signage directing to the pa rking areas, but they don’t provide information on parking availability in particular garages or lots or directions to particular garage or lot.
Figure 5: Downtown Parking Signage
11 Government Technology, California Cities Turn to Internet of Things to Solve Parking, Traffic Problems, October 27, 2015,
https://www.govtech.com/fs/california-cities-turn-to-internet-of-things-to-solve- parking-traffic-problems.html
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Most garages in Downtown and California Avenue area have APGS as discussed in previous recommendation. Hence, once the patron reaches the garage, they can have the information on availability of parking. The existing APGS and emerging technologies can be integrated with digital signage at strategic locations, that can provide real time information on parking. This will reduce the time spent to find parking in the retail areas.
11. Curb Space Management
Increasing the opportunity to walk and bike to various locations and to complete short distance trips can alleviate pressure on parking. Adopting a micromobility program for shared bicy cles and/or scooters and providing adequate curb space may also reduce the need for car for shorter trips.
Other strategies, such as encouraging employees to not park in the most convenient customer parking spaces and instead use the off-street parking, will reduce the burden on curb space. Lastly, paid parking effectively increases turnover rates and the supply of convenient parking spaces.
Leveraging technology to provide real-time information on parking availability can play an important ro le in efficient parking management These strategies are discussed in the Recommendation section of this report.
This strategy is also applicable for areas not covered by AB 2097.
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Attachment 1 - Parking Requirements
The following are the minimum off-street parking requirements for retail establishments.
Table 3: Minimum Off-Street Parking Requirements
Use Parking Requirement
Retail
Intensive (retail not defined as extensive) 1 per 200 sq. ft. of gross floor area Extensive (retail with more than 75% of gross floor area used for display, sales, and related storage, with
demonstrably low parking demand generation per
square foot of gross floor area)
1 per 350 sq. ft. of gross floor area
Open lot 1 space for each 500 square feet of sales, display, or storage site area
Shopping Center 1 per 275 sq. ft. of gross floor area
Table 4: Minimum Off-Street Parking Requirements for Parking Assessment Districts Use Parking Requirement
Downtown University Avenue Parking Assessment District
All uses (except residential) 2 1 per 250 square feet
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Attachment 2 - Existing Parking
Downtown/University Avenue
Figure 6: Off-Street Parking - Downtown/University Avenue
Figure 7: On-Street Parking - Downtown/University Ave
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Table 5: Downtown/University Avenue Public Parking Supply Type Parking Spaces Size (Acres)
Off-Street Structure
High/Alma South Garage (R) 210 0.5
High/Alma North Garage (Q) 130 0.8
Ramona/University Garage (B) 133 0.5
Bryant/Lytton Garage (SL) 681 1.1
Webster/Cowper Garage (WC) 587 1.4
Civic Center Garage (CC) 721 2.0
Total Off-Street Structure 2,462 6.3
Off-Street Lot
Emerson/Ramona Lot (N) 48 0.4
Cowper/Hamilton (H) 93 0.6
High/Hamilton Lot (P) 52 0.4
Lytton/Kipling Lot (T) 52 0.4
Lytton / Waverley Lot (K) 97 0.7
Hamilton/Waverley Lot (D) 84 0.7
Gilman/Waverley Lot (G) 53 0.3
Gilman/Bryant Lot (E) 35 0.9
Florence/Lytton Lot (F) 47 0.4
Ramona/Lytton Lot (C) 52 0.5
Emerson/Lytton Lot (A) 68 0.5
Emerson/High Lot (O) 77 0.5
Total Off-Street Lot 758 6.3
Total Off-Street 3,220 12.6
Total On-Street 1,035 -
Grand Total 4,255 12.6
California Avenue
Figure 8: Off-Street Parking - California Avenue
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Figure 9: On-Street Parking - California Avenue
Table 6: California Avenue Public Parking Supply
Type Parking Spaces Size (Acres)
Off-Street Structure
Lot 5 - Cambridge E/Garage (A) 157 0.7
Lot 3 - Cambridge W/Garage (B) 182 0.7
350 Sherman Garage (C) 627 1.0
Total Off-Street Structure 966 2.4
Off-Street Lot
Lot 9 - Birch/Cambridge (D) 28 0.2
Lot 1 - Cambridge/Park (E) 27 0.2
Lot 2 - Cambridge/Birch (F) 28 0.2
Lot 8 - Sherman/Ash Lot (G) 103 0.8
Lot 4 - Cambridge/Birch (H) 87 0.5
Total Off-Street Lot 273 1.9
Total Off-Street 1,239 4.3
Total On-Street 756 -
Grand Total 1,995 4.3
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Midtown
Figure 10: Off-Street Parking - Midtown
Figure 11: On-Street Parking - Midtown
Table 7: Midtown Public Parking Supply
Type Parking Spaces Size (Acres)
Off-Street Lot
Colorado/Midtown Ct Lot (A) 93 0.7
Total Off-Street Lot 93 0.7
Total On-Street 25 -
Grand Total 118 0.7
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El Camino Real
Figure 12: On-Street Parking - El Camino Real
Table 8: El Camino Real Public Parking Supply
Type Parking Spaces Size (Acres)
PAMF Drive to Galvez St. /
Embarcadero Rd. 26 -
Serra St./ Park Blvd. to College Ave. 61 -
Sheridan Ave. to San Antonio Rd. 222
Total On-Street 309 -
Grand Total 309 -
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Attachment 3 - AB 2097 Relief Areas
Figure 13: AB 2097 Relief Area - Downtown/University Avenue and El Camino Real- Town and Country
Figure 14: AB 2097 Relief Area - California Avenue
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Figure 15: AB 2097 Relief Areas - Midtown
Figure 16: AB 2097 Relief Area - El Camino Real s
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Introduction
A detailed review of the Palo Alto Zoning Ordinance was conducted to review the permitted uses, development standards, and procedures. The purpose of the analysis is to identify likely and potential constraints and opportunities to improve the health and function of retail uses and the main commercial retail and commercial corridors and provide recommendations for improvement.
Zone Districts
There are five primary zone districts with several subdistricts and combined districts layered on the base districts, as follows:
Neighborhood Commercial (CN)
The CN district is designed to create neighborhood shopping areas primarily accommodating retail sales, personal service, eating and drinking, and office uses of moderate size serving and compatible with the immediate neighborhood.
Community Commercial (CC)
The CC district is designed to create major commercial centers accommodating a wide range of uses intended to support the greater Palo Alto and regional community identified in the General Plan.
Community Commercial 2 (CC[2])
The CC (2) subdistrict is designed to modify the site development regulations of the CC district and has a different approval process compared to the CC district.
Service Commercial (CS)
The CS district is designed to accommodate local and regional services that generally require vehicular access and convenience.
Downtown Commercial (CD)
The CD district is designed to cover the entirety of downtown Palo Alto and support a wide variety of uses to support local and regional businesses with the following key objectives:
• Control the rate and size of commercial development
• Preserve and promote ground-floor retail
• Enhance pedestrian activity
• Create transitions from commercial to retail uses
• Preserve historic buildings
The CD district includes the following subdistricts:
• CD-C (Community)
• CD-S (Service)
• CD-N (Neighborhood)
Combining Districts
Retail Shopping (R)
Modifies the CN, CC, and CD districts to allow only retail, eating, and service- oriented commercial on the ground floors.
Pedestrian Shopping (P)
Modifies the CN, CC, and CD districts to require pedestrian site design amenities, including:
• Display windows or retail display areas
• Pedestrian arcades, recessed entryways, or any covered pedestrian areas
• Landscaping or architectural design features
• Vehicular restriction on pedestrian areas
Figure 1: Palo Alto Layers of Regulation
Source: Streetsense
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Ground Floor (GF)
The district provides de sign standards when combined with the CD -C subdistrict and permits the uses allowed in the commercial districts and subdistricts to promote active, pedestrian -oriented uses, with a high level of transparency at ground level. Office not allowed.
Pedestrian and Transit Oriented Development (PTOD)
The PTOD district permits a mix of uses and densities through development standards as well as providing context -based design criteria standards aimed to activate and create an attractive pedestrian -level environmen t along the California Avenue corridor. The objectives of the PTOD district include:
• Supporting use of public transportation
• Encouraging a variety of housing types, commercial retail, and limited office uses
• Encouraging context-based project design
• Requiring streetscape design elements that support pedestrian and bike infrastructure
Definitions
Formula Retail Business
Retail, personal, or eating and drinking service that has more than 10 locations throughout the United States and are standardized in character and function, typically known as a franchise or chain. Standardized merchandise, menu and/or services are defined as having 50 percent or more of in-stock merchandise from a single distributor bearing the same or similar markings, and 50 percent or more of menu items identical in name and presentation with other locations.
Retail Service
Retail service in Palo Alto is defined as open to the public during typical business hours and relates to retail sale, rental, service, processing, or repair of items intended for consumer or household use. Retail services are further separated into two categories:
• Extensive retail service : A retail sales use that has more than 75 percent of the gross floor area used for display , sales, and related storage.
• Intensive retail service: Any retail service use that is not defined as extensive retail service , including limited food services such as premade food and packaged items.
Retail-like Use
Retail services and closely related services are open to the public during typical business hours, and include the following type of uses: eating and drinking services, hotels, personal services, theaters, travel agencies, commercial recreation, commer cial nurseries, auto dealerships, and daycare centers.
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Permitted Uses
The following table details the permitted retail uses for each district, subdistrict, and combining district.
Table 1: Permitted Uses by Area and Zone Dsitrict
PALO ALTO RETAIL ZONING STUDY El Camino Real, Midtown California Ave University Ave El Camino Real Combining Districts Land Use CN(1) CC, CC(2) CD-C CS
R
(ground floor use restrictions)
(Cal Ave)
GF
(ground floor use restrictions)
(Univ Ave)
PTOD
(Cal Ave)
Retail Use
Eating and Drinking Service, except drive -in or take -out services P P P P P P P
Retail Service P P P P P P P
Shopping Center P P
Liquor Store CUP P P P
Retail-like Services
Hotel P P P P P
Personal Services P P(6) P(4) P P(2) P(3) P
Travel Agency P
Commercial Recreation
Less than 5,000 sf CUP(5) CUP(5) P(7) CUP(5) P P Over 5,000 sf CUP(7) CUP P
Day Care Centers P P P P CUP P
Business or Trade School P CUP
Financial Services (no drive-in) P CUP CUP
General Business Service CUP CUP
Learning Center (small) CUP CUP
Formula Retail on California Avenue CUP
Beauty Shops, Nail Salons, Barbershops, Fitness Studios > 1,800 gfa, Small Learning Centers (6) (4) CUP
Professional, and General Business Offices P* P* P P* Medical Offices CUP(5) CUP(5) P CUP(5)
NOTES:
California Ave R Combining District in conflict with this footnote - R Combining District doesn't list and therefore prohibits where explictly allowed with a CUP in CC(2) zone.
Conflicts between GF and underlying zone - Combining/overlay supersedes base zone.
PTOD is limited to approximately 2 small properties on/near CalIfornia Ave.
FOOTNOTES:
(1) For properties in the CN and CS zone districts, businesses that operate or have associated activities at any time between the hours of 10:00 p.m. and 6:00 a.m. require a conditional use permit (CUP).
(2) Personal services, except the following on California Avenue:
Beauty shops; nail salons; Barbershops; Laundry and cleaning services as defined in Section 18.04.030(114)(B); Fitness or exercise studios exceeding 1,800 square feet in gross floor area; and Learning centers intended for individual or small group settings. (3) Personal services, except for parcels with frontage on University Avenue, where uses defined in Section 18.04.030(114)(B), (G),(H), and (I) are not permitted. (4) A CUP is required for the following uses when fronting on University Avenue:
(A) fitness or exercise studios, and similar uses; and
(B) learning centers intended for individual or small group settings. (5) A CUP is not required for medical office or commercial recreation uses up to 5,000 square feet of gross floor area, with the fo llowing exceptions, for which a CUP is always required:
(A) medical office fronting on California Avenue and in the Midtown Shopping District; (B) commercial recreation uses fronting on California Avenue and in the Town and Country Village Shopping Center. (6) A CUP is required for the following uses when fronting on California Avenue:
(A) fitness or exercise studios, and similar uses exceeding 1,800 square feet in gross floor area; and (B) learning centers intended for individual or small group settings.
A CUP is required for fitness or exercise studios, and similar uses exceeding 1,800 square feet in gross floor area in Town and Country Village Shopping Center.
(7) A CUP is not required for commercial recreation uses up to 5,000 square feet of gross floor area, with the following exceptions, for which a CUP is always required:
(A) medical office fronting on University Avenue;
(B) commercial recreation uses fronting on University Avenue. * Per 18.16.050(a), Medical, professional, and business offices shall not be located on the ground floor, unless any of the f ollowing apply to such offices:
1. Occupy a space that was not occupied by retail services, personal services, eating and drinking services.
2. Are located in new or remodeled ground floor area built on or after March 19, 2001, if the ground floor area is devoted to housing, retail services, eating and drinking services, personal services.
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Grandfathered Uses
CN District Office Uses
In the CN district, all office uses existing as of August 1, 1989, which were conforming permitted uses or conditional uses operating su bject to a conditional use permit and exceeding 5,000 square feet in size or 25 percent of lot area, may remain as legal nonconforming uses and shall not require a conditional use permit.
CS District Office Uses
In the CS district, medical, professional, or general business or administrative office uses existing on August 1, 1989, and which, as of such date, were lawful conforming permitted uses or conditional uses operating subject to a conditional use permit may remain as nonconforming uses and shall not require a conditional use permit or be subject to termination.
Development Standards
CN, CC, CC(2), CS , and CD districts have development standards for exclusively no nresidential and mixed-use and residential. The following table identifies the maximum size of retail establishments by type. A comprehensive list of the development standards for the CD district can be found in Table 4.
Table 2: Maximum Size of Retail Establishment by Type
Maximum Size of Establishment (sq ft)
Type of Establishment CN CD
Personal Services 3,000 3,000
Retail Services, except grocery stores 15,000 15,000
Grocery Stores 20,000 20,000
Eating and Drinking Services 5,000 5,000
Neighborhood Business Services 3,000 -
Retail Preservation Ordinance 18.40.180
(Relevant portions excerpted)
1. Conversion of Retail and Retail-Like Uses Prohibited. a. Any ground floor Retail or Retail-Like use permitted or operating as of March 2, 2015, may be replaced only by another Retail or Retail- Like use, as permitted in the applicable district.
2. Non-conforming Uses.
a. The requirements imposed by the retail ordinance do not apply to Retail or Retail -like uses that are no longer permitted or conditionally permitted in the applicable district.
3. Waivers and Adjustments; and Exemptions.
a. Economic Hardship. An applicant may request that the requirements of this section be adjusted or waived based on a showing that applying the requirements of this section would force an unconstitutional taking of property or otherwise have an unconstitutional application to the property; or
b. Alternative Viable Active Use. Except in the GF or R combining districts, an applicant may request that the requirements of the retail ordinance be adjusted or waived based on a showing that: the permitted retail or retail-like use is not viable; the proposed use will support the purposes of the zoning district and Comprehensive Plan land use designation , and the proposed use will encourage active pedestrian-oriented activity and connections.
4. Exemptions.
a. A 100% affordable housing project not within the Ground Floor (GF) and/or Retail (R) combining districts or on a site abutting El Camino Real (households with income levels at or below 120% of the area median income).
b. A 100% affordable housing project on a site abutting El Camino Real in the CN and CS zone districts outside the Retail (R) combining district(households with income levels at or below 120% of the area median income and where the average household income does not exceed 80% of the area median income level).
c. A high -density residential or mixed -use project in the CS zone district, but not within the Ground Floor (GF) or Retail (R) combining districts, shall be required to replace only 1,500 square feet of an existing retail or retail -like use. For the purposes of this partial exemption, high-density shall mean 30 or more dwelling units per acre.
d. Reconstruction. Any ground floor Retail use existing on or after March 2, 2015 may be demolished and rebuilt provided that the portion of square footage used as Retail use on or after March 2, 2015 is not reduced except that Retail square footage may be reduced by the minimum amount needed to provide access to any new upper floor and/or lower level.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 5
Parking Requirements
Table 3: Minimum Off-Street Parking Requirements by Use Minimum Off-Street Parking Requirements Minimum Off -Street Parking Requirements for Parking Assessment Districts
Use Vehicle Parking Requirement (# of spaces)
For Downtown University Avenue Parking Assessment
District:
All uses (except residential) 1 per 250 sf
For California Avenue Parking Assessment District:
Retail Uses1
Intensive 1 per 200 sf of gross floor area 1 per 240 sf of gross floor area Extensive 1 per 350 sf of gross floor area 1 per 350 sf of gross floor area Open lot 1 space for each 500 sf of sales, display, or storage site area 1 for each 500 sf of sales, display, or storage site area Eating and Drinking Services
With drive -in or take -out
facilities
3 per 100 sf of gross floor area 3 per 100 sf of gross floor area All others 1 space for each 60 gross sf of public service area, plus 1 space for each 200 gross sf for all other areas.
1 per 155 sf of gross floor area
Personal Services 1 per 200 sf of gross floor area 1 per 450 sf of gross floor area Hotel/Motel/Inn 1 space per guestroom; plus the applicable requirement for eating and drinking, banquet, assembly, commercial or other as required for such uses, less up to 75% of the spaces required for guestrooms, upon approval by the director based on a parking study of parking generated by the mix of uses.
1 For residential mixed-use developments in the CD-C zone, CC(2) zone, on CN and CS zoned sites abutting El Camino Real, and on CS zoned sites abutting San Antonia Road between Middlefield Road and East Charleston Road, the first 1,500 square feet of ground-floor retail uses shall not be counted toward the vehicle parking requirement.
Parking Regulations for CD Assessment District 18.52.070 (Relevant portions excerpted)
On-site parking
1. On-Site Parking Requirement
a. Any new development, addition, or any use of any floor area that has never been assessed under any Bond Plan G financing pursuant to Title 13, shall provide one parking space for each 250 gross square feet of floor area.
2. Exceptions
a. Square footage for handicapped access, which does not increase the usable floor area, and square footage for at or above grade parking, though such square footage is included in the FAR calculations b. A conversion to commercial use of a historic building shall be exempt from the on-site parking requirement in subsection provided that the building is fifty feet or less in height and has most recently been in residential use. Co nversion must not eliminate any existing on -site parking.
c. Vacant parcels shall be exempt from the requirements at the time when development occurs. Development shall be exempt to the extent of 0.3 parking spaces 1,000 s quare feet of site area, provided that such parcels were at some time assessed for parking under a Bond Plan E financing or were subject to other ad valorem assessments for parking.
Off-site parking
1. Must be within a reasonable distance of the site using it or, if the site is within an assess ment district, within a reasonable distance of the assessment district boundary and approved in writing by the director of planning and community environment. Any development occurring on the site where parking is provided shall not result in a net reducti on of parking spaces provided, considering both the parking previously provided and the parking required by the proposed use.
In-lieu parking
2. In connection with any expansion of the supply of public parking spaces within the CD commercial downtown district , the city shall allocate a number of spaces for use as "in -lieu parking" spaces to allow development to occur on sites which would otherwise be precluded from development due to parking constraints imposed by this chapter. Off-site parking on such sites may be provided by payment of an in-lieu monetary contribution to the city to defray the cost of providing such parking.
Criteria to be eligible for in-lieu parking program:
a. On site parking would impact historic structure
b. Site is >10,000 sf
c. Site is located in an area where curb cuts are prohibited d. Physical constraints
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 6
Table 4: Palo Alto Zoning Comparison Matrix - Santa Monica and Los Altos #
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
1 Level of regulation –
Zone Districts
Zone Districts
Downtown Commercial (CD)
Neighborhood Commercial (CN)
Community Commercial (CC)
Community Commercial 2 (CC[2])
Service Commercial (CS)
Downtown Districts
Bayside Conservation (BC) – Third Street
Promenade Area
Mixed-Use Boulevard (MUB)
Neighborhood Village (NV)
Transit Adjacent (TA)
Ocean Transition (OT)
Wilshire Transition (WT)
Lincoln Transition (LT)
Design Guidelines
Zone Districts
Neighborhood Commercial (NC)
Main Street
Pico Boulevard
Ocean Park Boulevard
Montana Avenue
Mixed-Use Boulevard Low (MUBL)
Mixed-Use Boulevard (MUB)
General Commercial (GC)
Zone Districts
Commercial Downtown (CD)
Commercial Retail Sales (CRS)
Commercial Retail Sales/Office (CRS/OAD)
2 Overlay Districts Combining Districts
Retail Shopping (R)
Pedestrian Shopping (P)
Ground Floor (GF)
Pedestrian and Transit Oriented Development
(PTOD)
Neighborhood Conservation (NC)
Purpose of identifying, conserving, maintaining, strengthening, and enhancing a neighborhood’s cohesive and distinctive architectural or physical characteristics.
Off-Street Parking (A)
Intended to provide adequate parking facilities to support important commercial corridors and neighborhood commercial areas.
Loyola Corners Specific Plan (LCSP)
LC/SPZ overlay (14.42) applies to CN zoned areas
surrounding Miramonte Ave and Fremont Ave.
Special requirements in addition to base zoning.
Certain restrictions on expansion of existing
office/administrative and retail uses under a
master use permit
Parking requirements encourage of non-
conforming uses to turn over to conforming
uses
Ground floor retail uses encouraged in
LC/SPZ overlay through restricting new net
square footage of other ground floor uses
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 7
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
3 Ground floor use
regulations/restrictio
ns
Combining Districts
Ground Floor (GF) - The district provides
design standards when combined with the CD-
C subdistrict and permits the uses allowed in
the commercial districts and subdistricts to
promote active, pedestrian-oriented uses,
with a high level of transparency at ground
level.
Prohibits ground floor office Downtown
and Midtown unless grandfathered.
Retail Shopping (R) - Modifies the CN, CC, and
CD districts to allow only retail, eating, and
service-oriented commercial on the ground
floors.
Prohibits ground floor office on California
Ave.
Retail Preservation Ordinance (RPO) (18.40.180)
Any ground floor Retail or Retail-Like use
permitted or operating as of March 2, 2015,
may be replaced only by another Retail or
Retail-Like use, as permitted in the applicable
district.
Restaurants, bars/nightclubs/lounges, car
showrooms, offices, personal services,
food and beverage sales, and instructional
services allowed with CUP or specific
limitations.
Office and residential limited to upper
floors or behind ground floor tenants.
Franchise restaurants (+150 locations)
prohibited on the ground floor.
Active Ground Floor Use and Design 9.11.030(A)
Active Use Requirement
Active use requirements on the ground floor
street frontage on Main Street and Montana
Ave.
Cultural facilities;
Food and beverage sales;
Eating and drinking establishments;
Grooming and pet stores;
Banks and credit unions;
Business services;
Commercial entertainment, recreation,
and Instructional Services;
General personal services and personal
physical training;
General retail sales; and
Childcare facilities.
Active Commercial Design
Design standards (i.e., façade) for ground floor
street frontage active uses.
Pedestrian-Oriented Design
Design standards to improve the ground floor
level environment for pedestrians.
Active Uses
Active uses and active ground floor uses are
required/encouraged in certain commercial
districts.
Design guidelines to promote active ground
floor uses (e.g. transparency requirements)
Sites over 5,000 sq. ft. with existing retail or
restaurant space on the ground floor must
retain the existing sq. ft. of those uses (CD
district)
Office uses restricted to upper floors (CN,
except for new development)
Housing restricted to upper floors (CD,
CRS/OAD districts)
Trade schools restricted to upper floors (CRS,
CRS/OAD districts)
Certain uses restricted on ground floor on
Main Street or State Street (CRS district)
Minimum ceiling height on ground floor to
promote active uses (CT, CD/R3 districts)
Retail expansion limited, but more
encouraged than office/administrative uses
in LC/SPZ overlay district
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 8
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
4 Change of Use/
Intensification
process
Change from retail use prohibited in Ground Floor
(GF) and Retail Shopping (R) combining districts.
Minor Use Permits and Conditional Use Permits (9.41)
All Minor Use or Conditional Use Permits must meet the following criteria:
The proposed use is conditionally allowed within the applicable Zoning District and complies with all other applicable provisions of this Ordinance and all other titles of the Municipal Code. The proposed use is consistent with the General Plan and any applicable specific plan. The subject parcel is physically suitable for the type of land use being proposed. The proposed use is compatible with any of the land uses presently on the subject parcel if the land uses are to remain.
The proposed use is compatible with existing and permissible land uses within the district and the general area in which the proposed use is to be located (e.g. size, intensity, hours of operation, number of employees, or the nature of the operation). The physical location or placement of the use on the site is compatible with the surrounding neighborhood.
No significant environmental impacts
Not deemed detrimental to the public interest, health, safety, convenience, or general welfare.
Certain districts allow commercial expansion only
under specific circumstances or of specific sizes.
Certain districts encourage turn-over of non-
conforming uses in active use areas.
5 Retail Definition Retail Service
Retail service in Palo Alto is defined as open to the
public during typical business hours and relates to
retail sale, rental, service, processing, or repair of
items intended for consumer or household use.
Retail services are further separated into two
categories:
Extensive retail service: A retail sales use that
has more than 75 percent of the gross floor
area used for display, sales, and related
storage.
Intensive retail service: Any retail service use
that is not defined as extensive retail service,
including limited food services such as
premade food and packaged items.
Retail-like Use
Retail services and closely related services are open
to the public during typical business hours, and
include the following types of uses: eating and
drinking services, hotels, personal services, theaters, travel agencies, commercial recreation, commercial
nurseries, auto dealerships, and daycare centers.
Retail Sales Use Classification 9.51.030
General Retail Sales, Small-Scale. The retail sale or rental of merchandise not specifically listed under another use classification. This classification includes retail establishments with 25,000 square feet or less of sales area; including department stores, clothing stores, furniture stores, pet supply stores, small hardware, and garden supply/nurseries stores (with 10,000 square feet or less of floor area), and businesses retailing goods including, but not limited to, the following: toys, hobby materials, handcrafted items, jewelry, cameras, photographic supplies and services (including portraiture and retail photo processing), medical supplies and equipment, pharmacies, electronic equipment, sporting goods, kitchen utensils, hardware, appliances, antiques, art galleries, art supplies, and services, paint and wallpaper, carpeting and floor covering, office supplies, bicycles, video rental, and new automotive parts and accessories (excluding vehicle service and installation). Retail sales may be combined with other services such as office machines, computers, electronics, and similar small-item repairs. General Retail Sales, Medium-Scale. Retail establishments with more than 25,000 square feet - 80,000 square feet of sales area.
General Retail Sales, Large-Scale. Retail establishments with over 80,000 square feet of sales area.
Retail Uses
Defined as: uses that predominantly sell products
rather than services, directly to the public, and
generally for consumer or household use. Retail
uses are designed to attract a high volume of walk-
in customers and have floor space that is devoted
predominantly to the display of merchandise to
attract customers. Retail businesses may also
provide incidental after-sales services, such as
repair and installation, for the goods sold.
“Extensive retail” as used with respect to
parking requirements, means a retail use
primarily selling large commodities such as
home or office furniture, floor coverings,
stoves, refrigerators, other household
electrical and gas appliances, including
televisions and home sound systems, and
outdoor furniture, such as lawn furniture,
movable spas and hot tubs.
“Intensive retail” as used with respect to
parking requirements, means any retail use
not defined as an extensive retail use.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 9
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
6 Approval Processes
(ministerial, principal
permitted use, CUP,
Special Permits,
variances, deviations)
Review Procedures – Summary (18.77.050)
Variance, Conditional Use Permits, and
Neighborhood Preservation Exception
Staff - Review
Director – Tentative Decision
Planning Commission – Hearing and
Recommendation (upon request)
City Council – Final Decision (upon
request)
Major Architectural Review
Architectural Review Board - Hearing and
Recommendation
Director – Decision
City Council – Final Decision on Appeal
Minor Architectural Review
Staff – Tentative Decision
Architectural Review Board - Hearing and
Recommendation (upon request)
Director – Decision (if ARB hearing is
requested)
City Council – Final Decision on Appeal
Administrative Approval (9.39)
Required for non-housing projects of more than 1,000 square feet, all new construction, and new additions to existing buildings that do not exceed the following:
Tier 1 maximum limits;
In Neighborhood Commercial and Oceanfront Districts, 7,500 square feet; In the Pico Neighborhood Area 7,500 square feet.
Chapter 9.40 Development Review
Intended to allow the construction of certain projects for which the design and siting could result in an adverse impact on the surrounding area.
Required if the following thresholds are met:
Tier 1 maximum limits;
In Neighborhood Commercial and Oceanfront Districts, 7,500 square feet; In the Pico Neighborhood Area 7,500 square feet.
Chapter 9.42 Variances
Mechanism for relief from the strict application of zoning code where it will deprive the property owner of privileges enjoyed by similar properties because of the subject property’s unique and special conditions.
Property owner must provide required findings to prove special conditions.
Waivers (9.43.40)
Waiver may be granted from the following requirements.
Upper-story stepbacks.
Build-to lines.
Active commercial design standards, including transparency. Active use requirement.
Unit mix.
Pedestrian-oriented design standards
Design and Transportation Review—Multiple-
Family, Public and Community Facilities, Office
and Administrative, and Commercial Districts
(14.78)
Staff level review (Director or designee); or
Planning Commission review if larger than
500 sq. ft., 50% increase in size, or increasing
height.
Director can require administrative design
review based on special circumstances.
Multimodal transportation review (14.78.090)
Required for projects subject to Planning
Commission design review
Complete Streets Commission review at
public meeting and recommendation to
Planning Commission
Variances (14.78.070)
Variances reviewed by Planning Commission
at public hearing based on special
circumstances of the property
Use Permits (14.80)
Director or designee initial review
Use permits reviewed by Planning
Commission at public hearing
Appeals or call-ups to City Council
7 Approving Authority
& Approval Times
(Ministerial/Building
department, Planning
Staff, PC, City Council)
New construction (permitted uses)
Director — Varies
New construction (CUP uses)
Director — Varies
Major remodeling/tenant improvement
Director — Varies
Minor changes
Director — 6+ Months
New signage/signage change
Director — 6+ months
Zoning Conformance Review — Director
Administrative Approval — Director
Conditional Use Permit — Planning Commission
Development Review Permit — Planning Commission
Minor Use Permit — Director Hearing (Zoning Administrator) Temporary Use Permit — Director
Minor Modification — Director
Major Modification — Director Hearing - (Zoning Administrator) Waiver — Director Hearing (Zoning Administrator)
Variance — Planning Commission
Conditional Use Permit — Planning
Commission
Design & Transportation review (minor) —
Director
Design & Transportation review (major) —
Planning Commission (with Complete Streets
Commission recommendation)
Temporary Use Permit — Director
Variance — Planning Commission
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 10
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
8 Permitted Uses Downtown Commercial (CD-C)
Retail Use
Eating and Drinking Services, except drive-in
or take-out services
Retail Service
Shopping Center
Liquor Store
Retail-like Services
Hotel
Personal Services
Commercial Recreation – Day Care Centers
Business or Trade School
Financial Services (no drive-in)
Professional, and General Business Offices
Medical Offices
Community Commercial (CC, CC(2))
Retail Use
Eating and Drinking Service, except drive-in or
take-out services
Retail Service
Shopping Center
Liquor Store
Retail-like Services
Hotel
Personal Services
Commercial Recreation – Day Care Centers
Professional, and General Business Offices
Bayside Conservation (BC) - Third Street
Promenade Area
Commercial Uses
Animal Care, Sales, and Services
Grooming and Pet Stores
Commercial Entertainment and Recreation
Cinemas & Theaters
Convention and Conference Centers
Eating and Drinking Establishments
Food Hall (up to 175 seats)
Food and Beverage Sales
Farmer’s Market
Liquor Stores
Lodging
Bed and Breakfast
Hotels and Motels
Personal Services
General Personal Services
Retail Sales
General Retail Sales, Small- and
Medium-Scale
Neighborhood Commercial (NC) – Main St, Pico Blvd,
Montana Ave
Commercial Uses
Eating and Drinking Establishments
Restaurants, Full-Service, Limited Service &
Take-Out (2,500 – 5,000 square feet and
smaller, including Outdoor Dining and
Seating)
Commercial Retail Sales (CRS) – Main St, State St
Business, professional, and trade schools
Office-administrative services
Personal services
Private clubs, lodges, or fraternal
organizations
Restaurants, excluding drive-through services
Retail
Cocktail lounges
Uses which are determined by the
community development director to be of
the same general character
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 11
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
9 Conditional/
Limited Uses
Downtown Commercial (CD-C)
Retail-like Services
Commercial Recreation – Over 5,000 sf
General Business Service
Community Commercial (CC, CC(2))
Retail-like Services
Commercial Recreation – Less than 5,000 sf
Medical Offices
Bayside Conservation (BC) - Third Street
Promenade Area
Commercial Uses
Automobile/Vehicle Sales and Service
Automobile Rental L(10)
New Automobile/Vehicle Sales and
Leasing L(8), L(5)
Business Services L(15)
Commercial Entertainment and Recreation
Large-Scale Facility L(21)
Small-Scale Facility L(5)
Eating and Drinking Establishments
Bars/ Nightclubs/ Lounges
Restaurants, Full-Service, Limited
Service & Take-Out (2,500 square feet
and smaller, including Outdoor Dining
and Seating) L(22)
Restaurants, Full-Service, Limited
Service & Take-Out (2,501 -5,000
square feet and smaller, including
Outdoor Dining and Seating) L(22)
Restaurants, Full-Service, Limited
Service & Take-Out (greater than
5,000 sq ft, including Outdoor Dining
and Seating) L(22)
Food and Beverage Sales
Convenience Market
General Market
Instructional Services L(1), L(5)
Live-Work L(1), L(13)
Offices
Business and Professional L(1)
Creative L(1)
Walk-In Clientele L(1)
Personal Services
Physical Training L(17), L(5)
Neighborhood Commercial (NC) – Main St, Pico Blvd,
Montana Ave
Commercial Uses
Eating and Drinking Establishments
Restaurants, Full-Service, Limited Service &
Take-Out (greater than 5,000 square feet,
including Outdoor Dining and Seating)
(10)(11)
Food Hall (up to 175 seats)
Food and Beverage Sales
Convenience Market
Farmers Markets
General Market L(12)
Liquor Stores
Instructional Services L(17)
Live-Work L(14)
Maintenance and Repair Services L(2)
Nurseries and Garden Centers L(17)
Offices
Business and Professional L(21)
Creative L(21)
Medical and Dental L(21)
Walk-In Clientele L(21)
Retail Sales
General Retail Sales, Small-Scale L(2)
Commercial Retail Sales (CRS) – Main St, State St
New building >7,000 sf
Commercial recreation
Day care centers
Hotels
Housing
Medical and dental clinics or offices >5,000 sf
Uses which are determined by the planning
commission to be of the same general
character.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 12
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
10 Major remodeling/
tenant improvement
process, limits
N/A Major Modifications (9.43.030)
For uses permitted by right or by discretionary review. May be granted relief on no more than 2 of the following. Setbacks
Build-To Line
Parcel Coverage
Height
Ground Floor (Floor-to-Floor) Height
Landscaping. Up to 10% of the required landscaping
May not be granted for the following.
Parcel area, width, or depth;
Maximum number of stories;
Minimum or maximum number of required parking spaces; Residential density; or
Maximum floor area ratio (FAR).
N/A
11 Minor change
process,
requirements
Design Enhancement Exception (DEE)
Granted to site development and parking and
loading requirements to enhance the design
of commercial development – subject to
architectural review.
Design enhancement include minor
architectural elements and design features.
Exceptions limited to minor changes to the
setback, daylight plane, height, lot coverage,
parking lot design and landscaping
configuration, and additional flexibility in the
required proportion between private and
common open space.
Minor Modifications (9.43.020)
For uses permitted by right or by discretionary review. May be granted relief on no more than 2 of the following. Setbacks
Build-To Line
Parcel Coverage
Height
Transparency
Parking, Loading, and Circulation
Outdoor Living Area
Bicycle Parking
Parcel Lines
May not be granted for the following.
Parcel area, width, or depth;
Maximum number of stories;
Minimum or maximum number of required parking spaces; Residential density; or
Maximum floor area ratio (FAR).
N/A
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 13
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
12 New signage process,
requirements
Signs (16.20)
Design review required by Architectural
Review Board.
Master sign program for multiple signs as part
of one building project.
Prohibited signs include flashing or moving
signs and roof signs that have not been
grandfathered.
Signs are prohibited on public property.
Specific requirements for fuel price signs,
freestanding signs, wall signs, projecting signs,
and awning signs.
Signs (9.61)
Sign Permit application requirements include:
Site Plan.
Existing Building Elevation.
Proposed Building Elevations.
Sign Illustration.
Sign permit application reviewed by The Secretary of the Architectural Review Board The Planning and Community Development Director can administratively approve sign permits if the type of sign is permitted.
Prohibited signs include:
Animated signs
Emitting signs
Miscellaneous signs
Paper, Cloth, or Plastic Streamers and Bunting
Total sign area regulated by District.
Provisions for portable signs and upper-level signs in the Bayside Conservation District (Third Street Promenade).
Signs on Private Property (Chapter 14.68)
Initial review by Director. Successive reviews:
(1) Staff (2) Architectural and Site Review
Committee and/or Board of Adjustments (3)
Planning Commission (4) City Council
Master Sign Program required for all multiple
tenant sites, nonresidential projects and
buildings
Regulations vary by district.
Sign Permit not required for certain sign face
changes, wayfinding/informational signs
Prohibited signs: animated, upper floors,
emitting, billboards, A-frames (unless
permitted in Downtown Outdoor Display
Permit Guidelines)
Digital signs permitted in windows of stores
in the downtown commercial district under
certain circumstances
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 14
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
13 Parking strategy -
minimum
requirements?
Parking Regulations for CD Assessment District
(18.52.070)
Minimum Off-Street Parking Requirements
Retail Uses
Intensive - 1 per 200 sf of gross floor area
Extensive - 1 per 350 sf of gross floor area
Open Lot - 1 space for each 500 sf of
sales, display, or storage site area.
Minimum Off-Street Parking Requirements for
Parking Assessment Districts
Retail Uses
Intensive - 1 per 240 sf of gross floor area
Extensive - 1 per 350 sf of gross floor area
Open Lot - 1 space for each 500 sf of
sales, display, or storage site area.
No minimum off-street parking
requirements for all land uses within the
Downtown Community Plan area.
Retail Sales (Maximum parking allowed)
5,000 SF or less = 1 space per 500 SF
5,001 SF or more = 1 space per 300 SF
Parking, Loading, and Circulation (9.28.40)
Projects Outside of One-Half Mile of a Major
Transit Stop (minimum parking required)
Retail, less than 2,500 sq. ft.- 1 space per
300 sq. ft.
Retail, 2,500 – 5,000 sq. ft. - 1 space per
300 sq. ft.
Retail, 5,000 sq. ft. or more - 1 space per
300 sq. ft.
Projects Within One-Half Mile of a Major
Transit Stop: no minimum parking required.
Location of Parking for Mixed- Use and
Nonresidential Districts above ground
restricted to Interior Side and Rear Setbacks
and Rooftops except in Neighborhood
Commercial Districts.
Provisions for required setbacks, openings, and
parking podium heights for subterranean and
semi-subterranean parking structures.
All off-street parking spaces associated with
new nonresidential projects in the
Neighborhood Commercial District require
unbundled parking.
Off-Street Parking and Loading (Chapter 14.74)
Regulations vary for commercial vs.
residential uses in districts which allow
mixed-use
Public Parking District: allows participating
properties not to require parking for new or
changed uses for the first 1.0 of floor area
ratio. Parking required if square footage
exceeds lot area.
If not subject to Public Parking District
regulations the following ratios apply:
Office: 1/300
Commercial
▪ Intensive: 1/200
▪ Extensive: 1/500
Bars, cafes, nightclubs, restaurants: 1 per
3 employees and 1 per 3 seats
Assembly/recreation uses: varies
Residential (in mixed-se commercial
district): 1-2 depending on size, and 1
visitor per 4 units
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 15
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
14 Improvement
Districts
(BID/Promotion/
Economic
Development
Programs/
Departments)
Palo Alto Downtown Business Improvement
District
Downtown Santa Monica, Inc.
Bayside and Downtown Mall Operations & Maintenance District Central Business District - Business Promotion Assessment Colorado Avenue Property Based Assessment District PBAD Overlay Zone Downtown Santa Monica Property-Based Assessment District (PBAD) Lincoln Boulevard Property-Based Assessment District
Main Street
Main Street Business Assessment
Main Street Light and Sidewalk Cleaning Assessment Area Montana Avenue
Montana Avenue Assessment
Pico Boulevard
Pico Boulevard Assessment
Santa Monica Alliance
The Santa Monica Alliance is a collaborative effort of the City of Santa Monica and the Santa Monica Chamber of Commerce dedicated to nurturing a vibrant, healthy, and profitable business climate in Santa Monica working to attract, retain, and to help grow Santa Monica businesses. Improvement district mechanism in place for
neighborhoods, however this seems to have
limited applications.
Downtown BID feasibility study considered in
2018, but not ultimately funded.
15 Housing - allowed?
Min. max.;
encouraged?
Residential not allowed in Ground Floor (GF)
or Retail (R) Combining districts.
100% affordable housing projects are exempt
from the Retail Preservation Ordinance, but
can’t be within the Ground Floor (GF) and/or
Retail (R) combining districts or on a site
abutting El Camino Real.
Residential limited to upper floors on Third
Street Promenade.
If development is approved above the
base FAR and height, it must be
accompanied by a range of community
benefits from 4 priority categories:
Affordable Housing, Trip Reduction and
Traffic Management, Community Physical
Improvements, and Social and Cultural
Facilities.
Residential limited to upper floors for parcels
located on Main Street, Montana Avenue, Pico
Boulevard, and Ocean Park Boulevard.
Permitted on all floors for all other parcels.
Varies by district:
CD/R3: Permitted use
CN and CT: Mixed-use residential
conditionally permitted
CD, CRS, CRS/OAD: Residential above ground
floor conditionally permitted
Not permitted in LC/SPZ
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 16
#
ZONING STANDARD/
APPROACH PALO ALTO
SANTA MONICA
LOS ALTOS
Downtown Community Plan
(Bayside Conservation - 3rd Street Promenade)
Mixed-use and Commercial Districts
(Neighborhood Commercial)
16 Formula (i.e.
Franchise) retail
regulations
Conditional use permit required for formula retail
business in a R-Combining district - five required
additional findings.
Formula retail business - one of ten (10) or more
business locations in the United States.
Regulations in place before the pandemic.
Restaurant, Limited-Service, and Take-Out
establishments with frontage on the Third Street
Promenade are prohibited if:
More than 150 locations nationwide; and
Restaurants where orders are placed at a
walk-up window, counter, or machine;
payment prior to food consumption; and
food served with disposable, one-time, or
limited-use wrapping, containers, or
utensils.
Regulation in place for 5 years and can be
updated or continued after that by council
approval.
N/A No limit on chain stores in our downtown area. The
City doesn’t have chain stores in the downtown
currently. They would like to attract some through
new redevelopment projects in downtown to help
facilitate some bigger companies and retailers to
come to town which will in turn support the other
businesses.
Neighborhood Commercial NC
(2) Limitation shall only apply to new construction and alterations to existing buildings that result in a combination or enla rgement of tenant spaces: Limite d to facilities with no more than 7,500 square feet of floor area and/or 40 linear feet of ground floor street frontage; greater area and/or width requires approval of a Conditional Use Permit. (10) Limited to restaurants with 50 or fewer seats.
(11) Limited to 2 restaurants greater than 5,000 square feet per block along Main Street. A block is defined as both sides of Main Street and the adjacent sides of adjoining side streets. Portions of Main Street to be designated a “block” for the purpose of this Section are as follows:
• Block 1: South City limits to Marine Street.
• Block 2: Marine Street to Pier Avenue.
• Block 3: Pier Avenue to Ashland Avenue.
• Block 4: Ashland Avenue to Hill.
• Block 5: Hill to Ocean Park Boulevard.
• Block 6: Ocean Park Boulevard to Hollister Avenue (total of 4 restaurants and bars permitted in this block). Block 7: Hollister Avenue to Strand. • Block 8: Strand to Pacific.
• Block 9: Pacific to Bicknell.
• Block 10: Bicknell to Bay.
• Block 11: Bay to Pico Boulevard.
(12) General markets greater than 15,000 square feet require a Conditional Use Permit. In the Neighborhood Commercial District, establishments shall not exceed 25,000 square feet of floor area. (14) If the commercial use requires a MUP or CUP, an application shall be required in accordance with Chapter 9.41. Even if the commercial use would otherwise be permitted, no such use shall be approved where, given the design or proposed design of the live-work unit, there would be the potential for adverse health impacts from the propo sed use on the people residing in the unit. An example of a potential health impact is the potential for food contamination f rom uses that generate airborne particulates in a unit with an unenclosed kitchen.
(17) Limitation shall only apply to new construction and alterations to existing buildings that result in a combination or enlargement of tenant spaces: No individual tenant space in the NC District shall occupy more than 7,500 square feet of floor area an d/or exceed 50 linear feet of ground floor street frontage without the approval of a Conditional Use Permit. (21) Permitted if within buildings existing as of July 24, 2015, subject to the active use requirement set forth in Section 9.11.030(A)(1), except:
• All new construction, including new additions of 50% or more additional square footage to an existing building at any one time, or incrementally, after the effective date of this Ordinance, requires approval of a Conditional Use Permit.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 17
• In the NC District, ground floor, street-fronting, tenant space occupied by non-media production, support facility uses shall not be changed to an individual office use or media production, support facility use occupying more than 12,500 square feet of floor area and/or exceeding 75 linear feet of street frontage without the approval of a Conditional Use Permit. • In the NC District, no non-medical or non-dental office use tenant space shall be changed to an individual medical or dental office use anywhere in an existing building occupying more than 7,500 square feet of floor area and/or exceeding 50 linear feet of ground floor street frontage without the approval of a Conditional Use Permit. • In the MUBL, MUB, and GC Districts, no non-medical or non-dental office use tenant space shall be changed to an individual medical or dental office use anywhere in an existing building occupying more than 12,500 square feet of floor area and/or exceeding 75 linear feet of ground floor street frontage without approval of a Conditional Use Permit.
Bayside Conservation (BC) Third Street Promenade Area
(1) Limited to upper floors, and on the ground floor where the entire tenant space shall be located at least 25 feet from the front property line, except for residential units shall be limited to upper floors only. (5) Permitted if within buildings existing as of the date this Ordinance effective. Permitted in new buildings, except:
(a) No individual ground floor tenant space shall occupy more than 7,500 square feet of floor area and/or exceed 50 linear feet of ground floor street frontage without a Conditional Use Permit. (b) Ground floor tenant spaces in the Santa Monica Place are not subject to size limitations. (10) Permitted as an ancillary use to support a primary use. (13) If the commercial use requires a MUP or CUP, an application shall b e required in accordance with SMMC, Chapter 9.41. Even if the commercial use would otherwise be permitted, no such use shall be approved where, given the design or proposed design of the live -work unit, there would be the potential for adverse health impac ts from the proposed use on the people residing in the unit. An example of a potential health impact is the potential for foo d contamination from users that generate airborne particulates in a unit with an unenclosed kitchen. (15) Limited to the ground floor with frontage along 2nd Court and 3rd Court alleys or to upper floors. (21) No individual Fitness Center tenant space shall exceed 100 linear feet of ground floor street frontage without the approval of a Conditional Use Permit. (22) Restaurant, Limited-Service and Take-Out establishments with frontage on the Third Street Promenade and the following characteristics shall be prohibited:
(a) More than 150 locations nationwide at the time that the application for the establishment is deemed complete by the City; and (b) Characteristics, including, but not limited to, orders placed at a walk-up window, counter, or machine; payment prior to food consumption; and food served with disposable, one-time, or limited-use wrapping, containers, or utensils.
Palo Alto Retail – Zoning Comparison with Santa Monica Summary/Key Takeaways
1. Level of regulation – Zone Districts
a. Santa Monica’s primary retail/commercial areas are Downtown (Third Street Promenade), Main Street, Pico Boulevard, Ocean Park Boulevard, and Montana Ave. b. The Downtown Community Plan provides development standards as well as design guidelines for new development projects. c. Zone districts are very prescriptive but clear in intent and procedure.
2. Overlay Districts
a. Santa Monica has two primary overlay districts but aren’t applicable in the established retail/commercial corridors.
3. Ground floor use regulations
a. Santa Monica allows for a variety of uses other than retail on the Third Street Promenade, however there are specific limitations per use. b. Santa Monica also provides active ground floor use and design provisions for the Mixed Use and Commercial Districts.
4. Change of Use/Intensification process
a. Santa Monica doesn’t prohibit change of use from retail.
5. Retail definition
a. Santa Monica defines Retail Sales as any establishment that allows the retail sale or rental of merchandise.
6. Approval Processes
a. Santa Monica has administrative review and development review (discretionary) and provides the option for variances and waivers from development standards.
7. Approving Authority
a. All Planning related permits are approved by either the Planning and Community Development Director or the Planning Commission, the Director has approval authority in Palo Alto unless appealed in which case the final approval is from City Council in Palo Alto.
PALO ALTO RETAIL REVITALIZATION STUDY
City of Palo Alto Appendix D, Page 18
8. Permit Process
a. New construction (permitted uses and CUP uses)
i. Santa Monica allows by right and conditionally allows a variety of uses in their Downtown and Mixed Use and Commercial Districts. b. Major remodeling/tenant improvement and Minor changes i. Santa Monica allows for relief on up to two development standards. c. New signage
i. Santa Monica’s sign standards are very prescriptive.
9. Parking strategy
a. Santa Monica has parking maximums for Downtown and minimum parking requirements for projects outside of one-half mile of a major transit stop.
10. BID/Promotion/Economic Development Programs / Departments a. Santa Monica has property based assessment districts for all of their commercial/retail corridors.
11. Housing
a. Residential is limited to upper floors along the Third Street Promenade and along the primary retail corridors.
12. Formula retail regulations
a. Restaurants with 150 locations are prohibited on the Third Street Promenade.