For a glimpse of downtown Palo Alto's changing fortunes, one need look no further than the 600 block of Emerson Street, where zoning laws have been swaying with the economic tides in recent years.
When the economy was sagging in 2009, threatening the peripheral downtown block with vacancies, the City Council removed a longstanding requirement for ground-floor retail to give property owners the option of getting office tenants. These days, with vacancies virtually nonexistent and offices displacing several shops on this block, the zoning pendulum is swinging in the other direction.
In November, then-Vice Mayor Greg Scharff, Councilman Greg Schmid and Councilwoman Karen Holman released a memo calling for the city to reinstate the requirement for ground-floor retail on this block. The trio noted that several businesses, including Blue Chalk Café, Fraiche Yogurt and Jungle Copy had recently been replaced by offices and argued that other area establishments are now "vulnerable to office conversion."
On Wednesday night, in a response to this memo, the city's Planning and Transportation Commission voted 5-2, with Vice Chair Mark Michael and Commissioner Michael Alcheck dissenting, to restore the ground-floor requirement to the block between Hamilton and Forest Avenues.
The Wednesday discussion was the commission's second hearing on the subject. Much like in the first hearing, members talked about the importance of retaining retail on the periphery of University Avenue. Under the zone change the commission approved, existing offices on the block will be allowed to carry on as they are. But if a building remains vacant for 12 months, the ground-floor retail requirement kicks in.
"I think the issue is that if we don't do this, there is a significant chance that other properties will desire to take the higher rent and that we'll lose the connectivity to retail that is critically important," Commissioner Arthur Keller said, speaking in favor of the zone change.
The change went through with little controversy, with only two property owners voicing concerns about the action. Joyce Yamigawa, president of Hamilton Management (a subsidiary of Keenan Land Company), spoke out against the proposal, warning that the move could lead to vacancies. Her company owns the buildings from 624 to 640 Emerson St. She called the zone change "micromanagement of real estate."
"Nobody wants vacancies," Yamigawa said. "When you start requiring certain uses that may be contrary to what the market is telling you, that can cause those vacancies."
David Kleiman, owner of 203 Forest Ave., on the corner of Forest and Emerson, said he doesn't oppose the concept in general, but said it should not apply to his building because it has no windows and would not be viable as a retail site. The building, he said, is more than 50 years old and has been unsuccessful in the past when it had retail use.
"If you can think of a (retail) tenant who would take it, certainly let me know," Kleiman said. "I don't think one exists."
But the commission decided to go through with the change, noting that it would not impact the property unless it is vacant for a year. Alcheck was the only commissioner who spoke out against the rezoning, saying he opposes having the city meddle in the real estate market. Alcheck said the change may force property owners to scramble in the "eleventh hour" to find tenants just to avoid losing the office option. The change, he said, will restrict the property owners' flexibility.
"It's not so much that they won't be able to rent to an office in 12 months, it's that they'll be force to rent for less," Alcheck said.
Michael, the only other dissenter, had no problem with considering the policy change but argued that the zone change is premature at this time. The city is about to embark on a major downtown study that would assess the area's potential for new development and recommend zoning adjustments. Michael said he's not comfortable making the change on this block before that process unfolds.
"I support it in principle," he said, speaking of the ground-floor retail requirement. "But I think it's the wrong time."
Others didn't have these reservations. Chair Eduardo Martinez echoed the council's sentiment that if the city doesn't move with the changes, more retail establishments would be displaced with offices, which fetch higher rents.
"The fact that there are pressures that make (retail) not the first choice of property owners is a problem, and it really is a problem that doesn't serve the residents of this area, the downtown, which is losing retail space, or even the property owners themselves in the large scheme of things," Martinez said.
He added that once the block is embraced as a major retail area, the city will have the "responsibility" to put more resources behind it, whether for new trees or other streetscape improvements.
Commissioner Carl King, making his debut on the board, agreed that it's "important to protect retail in this viable corridor." He added that if the new policy leads to vacancies, the city will have a chance to address the problem at that time.
Comments
Another Palo Alto neighborhood
on Mar 6, 2013 at 8:16 am
on Mar 6, 2013 at 8:16 am
This is very interesting.
In the time I have lived in Palo Alto, I have seen Midtown lose retail (are banks called retail?) and turn into office space. Midtown almost died but is now doing reasonably well until I see that lately that Papa Murphys and Cafe Sofia are closed (due to high rents?) and hope that these spaces remain as useful retail and not change to office space.
Fairmeadow
on Mar 6, 2013 at 10:31 am
on Mar 6, 2013 at 10:31 am
The mix of office/retail/other/parking in the downtown area is not well documented. The City has spent over $2M for Business Development Managers, and still we don’t have a working land use/economic model for the downtown area.
Given how small this area is, there is no reason that the City has not developed a model that can predict (within reason) the traffic generated for a given land use mix of office and retail. Such a model would also provide some insight into the various tax revenue that this mix would generate, and the cost of providing services. Certainly, the need for parking would be something that such a model would be expected to generate also.
There is little in this article, and presumably less from the City, as to what the current office/retail mix is on this block of Emerson. Why shouldn’t we at least have an inventory of business occupants in the buildings on this block when we start a discussion about zoning restrictions for the use of those buildings?
The people in the decision process must be flying by the seat-of-their-pants, rather than using accurate, up-to-date data about how this block is being used, how much tax it is generating, and how much traffic it is likely to be contributing to the total traffic in the downtown area.
Building such a model would not be that difficult. How in the world can we, sitting in the heart of the Silicon Valley, be so behind the times in our use of modern planning tools?
Leland Manor/Garland Drive
on Mar 6, 2013 at 10:52 am
on Mar 6, 2013 at 10:52 am
Mr Martin makes some good points supporting the belief that "If you don't measure it, you can't manage it". The basic tenant information was in the PTC agenda for last night available on the web at Web Link
and although it is not an obvious link, if you click on "Staff report with attachments" below the agenda item, it will provide the staff report and on page 2 and attachment B, the occupancy info.
Embarcadero Oaks/Leland
on Mar 6, 2013 at 11:55 am
on Mar 6, 2013 at 11:55 am
I personally would love all new development between Alma, Hamilton, Lytton and Middlefield to be a retail/office/work zone, something similar to Newbury Street in Boston. First floor retail and restaurants, second floor offices, third and fourth residences.
Old Palo Alto
on Mar 6, 2013 at 3:43 pm
on Mar 6, 2013 at 3:43 pm
One excellent way to attract "mom and pop" stores is to zone the area for retail on lower floors, and residence on upper floors. Zoning should allow at least 4 stories, which would give sufficient room for most families, and provide space for retail plus office/storage/etc. To encourage retail owners and their families to live upstairs, create incentives (tax rebates, parking permits, etc.). Also, to discourage non-owners from living there, create dis-incentives (higher taxes, no parking permits, additional fees for services, etc.).
When I was touring Asia, I was impressed by the efficiency of shop owners living above their shops. There were many advantages, including less commuting, security of shop, longer open hours because owners were right there, etc.
If the zoning is done right, and building codes are flexible and reasonable, mom-and-pop-owned retail stores could become popular to the benefit of the city, the owners and shoppers.
I believe the one reason this concept is not more widely adopted in the USA is the many unreasonable zoning and code regulations that discourage this way of life.