Loading...
HomeMy WebLinkAboutStaff Report 2503-4440CITY OF PALO ALTO Retail Committee Regular Meeting Wednesday, April 16, 2025 9:00 AM     Agenda Item     1.Economic Development Activity Report April 2025, Title Updated, Late Packet Report, Staff Presentation 6 9 4 4 Retail Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: April 16, 2025 Report #:2503-4440 TITLE Economic Development Activity Report April 2025 RECOMMENDATION Staff recommends that the Retail Committee receive this Economic Development Activity Report for the month of April 2025. EXECUTIVE SUMMARY This April 2025 Economic Development Activity report presents information on the City’s retail landscape from CoStar and retail businesses reporting. Please note that this is an abbreviated report given limited staff availability. BACKGROUND The Palo Alto City Council approved Palo Alto’s comprehensive Economic Development Strategy in August 2023. The full strategy is available on the City’s business website1. As part of its 2025 priority setting process, the City Council once again selected Economic Development, updating the focus by removing “Transition” and adding “Retail Vibrancy”. In March 2025, the City Council discussed the workplan for this priority which consisted of thirteen objectives2. These objectives were informed by the Economic Development Strategy and other community needs, and pending formal approval scheduled in May 2025, serve as the focus of the City’s economic development work for 2025. To help advance the City’s Economic development strategy and objectives, the City Council created the Retail Ad Hoc committee, which first convened at the end of 2023. The committee since became a brown-acted Ad Hoc and began convening its meetings in public subject to the 1 Economic Development Strategy: https://www.cityofpaloalto.org/Business/Comprehensive-Economic- Development-Strategy 2 2025 City Council Priorities and Objectives: https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=c975a9ba-6051-49f1-8c02-cf12a9afc87b 6 9 4 4 brown act beginning in March 2024. During the 2025 Council Retreat Council proposed to continue the Ad Hoc Retail Committees on a bi-monthly basis and are expected to continue in even months during 2025 (April, June, August, October, etc.). ANALYSIS Costar Information University Avenue Business District 3”. Approximately 97,000 3 Costar Glossary: https://www.costar.com/about/costar-glossary#go_r:~:text=a%20specified%20level.- ,Retail%20Property,-A%20Retail%20property%27s Figure 1. Map of University Avenue Business District 6 9 4 4 square feet of retail is available for lease or sale in the University Avenue business district, a decrease of 27,000 square feet from 124,000 in Q1 of 2024 as the high. Figure 2. Ten-Year Trend in Retail Vacancy Rates in Downtown University Ave (2015-2025) California Avenue Business District Figure 3. Map of California Avenue Business District 6 9 4 4 The net absorption figure for the past 12 months for the bounded region is approximately 6,000 square feet. This is low of highs of 18,000 square feet in Q1 of 2021. Figure 4. Ten-Year Trend in Retail Vacancy Rates in California Ave (2015-2025) Engaging with New Retail Businesses 4. Based on this report, staff is now tracking and engaging on proposed new businesses, such as Woof Gang Bakery, Gregory Coffee, and Molly Tea. Work is also underway for Tasty Pot at 443 Emerson, the former site of Jing Jing Chinese Gourmet. 2025 City Council Priorities 4 PAMC 18.04.030(a)(125.1): https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0- 76379#:~:text=%C2%A0%C2%A0%C2%A0%C2%A0%C2%A0%C2%A0(125.1)%C2%A0%C2%A0%C2%A0%E2%80%9C- ,Retail%2Dlike%20use,-%E2%80%9D%20means%20a%20use 6 9 4 4 •Council approval of outdoor activation guidelines for California Avenue – outdoor activation guidelines are under development with business stakeholder engagement scheduled in April/May with City Council/Committee review scheduled for June 2025 through the summer. The intention behind these schedules is to support an implementation timeline in preparation of the winter season. •Resume work on new parking garage structure in Downtown core – On April 14, 2025, the City Council will consider direction on a preferred option for a new parking structure in the downtown. With this direction, the Council would provide staff direction to continue next steps, preliminary design and environmental review for the garage. •Complete build-out of fiber-to-the premises pilot Phase 1 with grid modernization – Staff continue capital investment in key infrastructure such as the building of the fiber hut; in parallel, staff have developed initial rate structures for the internet service provider services and scheduled reviews with the Utilities Advisory Commission, Finance Committee and City Council beginning this month through June. •Council consideration of an ordinance that expands retail opportunities and promotes retail resiliency- This item is anticipated for Q4. Staff is working with a consultant on the zoning ordinance update. Although outcomes have not been predetermined, there will ultimately be recommendations related to comparing each use classification with its definition, refining each definition where needed, and suggesting changes to permit levels (i.e., permitted vs. conditionally permitted). •Council consideration of an ordinance restoring subjective wireless communication facility regulations – This item was pulled from the City Council agenda and is tentatively scheduled to be heard by the end of June 2025, pending agenda scheduling. •Enhance partnerships with private-sector stakeholders: Staff continue meetings with business districts with meetings expected to occur in both Cal Ave and Downtown districts in April and May. •Council approval of funding to continue Downtown cleanliness enhancements and other medium-term investments ($) – Council approved additional funding for the current fiscal year as part of the FY 2025 Mid-Year Budget review. As part of the FY 2026 budget development, the Finance Committee and Council will have an opportunity to consider ongoing funding proposals addressing enhanced cleaning. •Council approval of Ramona Street design and funding appropriations ($) – A consultant contract for near-term street improvements and outdoor activation standards was approved in December 2024 and work is underway. Council consideration of the standards and streetscape improvements is anticipated in summer 2025. Funding for implementation of the streetscape improvements is included in the proposed CIP budget; completion is targeted for December 2025, contingent on Council approval of the funding. 6 9 4 4 •Council approval of a design option for Cal Ave ($) – Staff are in the process of finalizing design alternatives and engaging with the business and community on these alternatives prior to bringing them forward to the Retail Committee for review. Significant financial investment will be necessary for a new design, and financial support and feasibility will be an important variable for consideration. •Begin feasibility analysis of Assessment District for University Ave streetscape ($) – Staff are in the process of a solicitation for a service provider to complete this assessment. In parallel to this, staff plan to seek feedback from the business community on the support for such an organization and the improvements to determine if there is sufficient support to continue these efforts. New budget allocation for the contract to determine feasibility will be needed. •Propose and implement outdoor activation guidelines for car-free Ramona St. ($) – outdoor activation guidelines are under development with business stakeholder engagement scheduled in April/May with Committee/City Council review scheduled for June 2025 through the summer. The intention behind these schedules is to support an implementation timeline in preparation of the winter season. •Refine destination marketing efforts and enhance Palo Alto’s reputation ($) – The City with the support of Good City Company and in partnership with the Chamber of Commerce is meeting with hotels to assess desire for establishing organized destination marketing efforts. FISCAL/RESOURCE IMPACT No additional funding is needed at this time for the information provided in this report. The City’s Economic Development and Retail Vibrancy efforts may result in changes to revenues, which will be incorporated into future projections and budgets as appropriate. STAKEHOLDER ENGAGEMENT Stakeholder engagement is a critical component of the City’s economic development function. Economic Development staff continues to meet frequently with business stakeholders through individual conversations, meetings with business districts, regular communication with the Chamber of Commerce and through various other communication channels. ENVIRONMENTAL REVIEW Receipt and acceptance of this report is not a project under CEQA. ATTACHMENTS Attachment A: Permits (Retail) by Type APPROVED BY: Ed Shikada, City Manager Retail Building Permits By Type: October 2024 - March 2025 Retail Permit by Type & Remodel REAL, STE# F199 PATISSERIE Remodel/Repair REAL, SPACE# EE PROPERTIES Remodel/Repair REAL, STE# EE service April 16, 2024 Kiely Nose Assistant City Manager Economic DevelopmentActivityReportApril 2025 Retail Committee www.PaloAlto.gov/business April 16, 2025 University Avenue Data: CoStar Data •Current retail vacancy rate is 12.4% for Q1 of 2025 •Highest within last ten years was 17.4% in Q1 of 2024 •97,000 square feet of retail available All data provided by CoStar www.PaloAlto.gov/business April 16, 2025 •Current retail vacancy rate is 5.3% in Q1 of 2025 •Highest within last ten years was 16.3% in Q2 of 2022 •6,000 square feet of retail available CoStar Data California Avenue Data: All data provided by CoStar www.PaloAlto.gov/business April 16, 2025 www.PaloAlto.gov/business 2025 Economic Development & Retail Vibrancy Priority Objectives The Council reviewed and tentatively approved 12 priority objectives for the 2025 Council priority. Highlights of some of these activities underway, further information provided in the staff report: ➢Outdoor activation guidelines for California Avenue: stakeholder engagement and Committee/Council review expected by end of June 2025 ➢Ramona Avenue standards and streetscape improvements Council consideration is anticipated in summer 2025 ➢Enhance partnerships with private -sector stakeholders: ➢Routine meetings with both Cal Ave merchants and Downtown businesses are being scheduled to discus key project status, FY 2026 utility rates, and district specific topics. ➢Staff and the Chamber of Commerce are working on outreach with hoteliers for consideration of coordinated destination marketing efforts.