HomeMy WebLinkAbout2002-02-19 City Council (4)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
PLANNING COMMISSION
FROM:CITY MANAGER DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
DATE:FEBRUARY 19, 2002 CMR:143:02
SUBJECT:COMMERCIAL DOWNTOWN (CD) MONITORING REPORT FOR
SEPTEMBER 1, 2000 TO AUGUST 31, 2001
This is an information report and no action is required.
BACKGROUND
An annual monitoring report on the-Commercial Downtown (CD) zoning area is mandated
by Comprehensive Plan Programs L-8 and L-9 that require reporting of non-residential
development activity and trends within the CD zone district. These reports are also
required as a result of final action on the Downtown Study approved by City Council on
July 14, 1986. Attached is the Downtown Study Results Summary of the actions taken in
1986 (Attachment A) and a zone map of the Downtown CD districts (Attachment B).
Due to limited staff availability and other priorities, a report was not submitted for the
monitoring periods of September 1, 1998 through August 31,2001. In the future, this report
will be submitted annually. This report includes cumulative data from September 1, 1998
through August 31, 2000 and has specific data and information for the September 1, 2000
to August 31, 2001 monitoring period. This report concentrates on changes in floor area
resulting from approved development and vacancy rates in the CD district. Field visits and
telephone interviews are conducted to determine current vacancy rates and prevailing rents.
DISCUSSION
Palo Alto’s downtown demonstrates stable economic health. Non-residential development
activity in downtown continued at a steady pace during this monitoring period. Vacancy
rates in general, including Ground Floor (GF) vacancies, are relatively higher than the 1999
monitoring period. As a result, the rents for retail and office space appear to have
decreased, at least temporarily.
CMR:143:02 Page 1 of 6
Non-residential Development Activity
The Downtown Study incorporated a growth limit of 350,000 square feet of additional floor
area above the total floor area existing in 1986, and provides for a re-evaluation of the CD
regulations when new development reaches 235,000 square feet. Since 1986, a total of
116,938 square feet has been added in the downtown area; therefore, no further evaluation
is required at this time. The changes in non-residential square footage are shown in
Attachment C.
Pro_iects Demonstrating Special Public Benefits
The Downtown Study reserved 100,000 square feet of the 350,000 square foot cap to be
used for projects demonstrating special public benefits. Since 1986, eight projects in the
downtown area have utilized the Planned Community zoning that requires a finding of
public benefit. Five of the projects exceeded the floor area that would otherwise be allowed
under zoning by a total of 34,378 square feet. The total of these projects is shown in the 4th
column of Attachment C; all the projects were approved before August 31, 1998. The
remaining three projects were mixed use projects that did not exceed allowed
non-residential floor areas. All of the projects either provided parking or paid a fee in-lieu
of providing parking.
Projects Qualifying for Seismic, Historic or Minor Expansion Exemptions
The Downtown Study set aside 75,000 square feet of the 350,000 square foot cap for
projects that qualify for seismic, historic or minor expansion exemptions in order to
encourage these upgrades. Since 1986, 44,506 square feet have been added in this
category. These projects are shown in the 5th column of Attachment C.
Vacancy Rate for Ground Floor (GF) Combining District
Tlae Ground Floor Combining District (GF) was created to encourage active pedestrian uses
in the downtown area. Other uses besides retail, eating and drinking, personal services and
a few conditional uses may be allowed through an exception process. One of the
requirements for making the exception is that the GF Vacancy rate must be greater than
5 percent. In September 2001, there were 624,330 square feet of GF area. In the staff
survey of downtown vacancies in January 2002, there were 8 properties, totaling 29,443
square feet, that met the requirements for vacant and available ground floor area. They
were:
Address Vacant Square Feet
116 University 2890
151 University 4903
165 University 2200
174 University 2400
518 Bryant 2800
525 Alma 3000
539 Alma 6250
575 High St 5000
Total 29,443 sq. ft
CMR: 143:02 Page 2 of 6
This results in a vacancy rate of approximately 4.72 percent therefore exceptions will not
be permitted for consideration.
Vacancy Rate for Entire CD District
For purposes of tracking the health of the downtown area, the vacancy rate for the entire
CD area is reported. This figure does not affect any of the exception or downtown cap
regulations. At the time of the January 2002 staff survey, the following were vacant and
available:
Street
Number
235
525
539
955 B
999
514
518
611
825
701
723
163
221
385
100
100
TABLE 1:Commercial Downtown (CD) Vacant & Available Floor Area
Street
Name
Alma St
Alma St
As of January, 2002
(Includes Upper Floor Office Space)
Zone
District
CDNP
CDCGFP
CDCGFP
’ CDS2P
CDS2P
CDCGFP
CDCGFP
CDCP
CDS1P
CDSP
CDSP
CDN1P
CDCP
CDCP
CDCP
CDCP
Alma St
Alma St
Alma St
Bryant St
Bryant St
Emerson St
Emerson St
Emerson St
Emerson St
Everett Ave
Forest Ave
Forest Ave
Hamilton Ave
Hamilton Ave
Vacant
Square Feet
384
3000
6250
2200
11000
3600
2800
6800
1434
4000
1500
3831
1100
1170
1500
3500
CMR: 143:02 Page 3 of 6
Street
Number
116
132
156
167
167
167
208
300
467
120
148
148
575
675
849
214
433
255
325
101
115
116
151
165
Street
Name
Zone
District
Hamilton Ave
Hamilton Ave
Hamilton Ave
Hamilton Ave
Hamilton Ave
Hamilton Ave
Hamilton Ave
Hamilton Ave
Hamilton Ave
Hawthorne Ave
Hawthorne Ave
Hawthorne Ave
. High St
High St
High St
Homer Ave
Kipling St
Lytton Ave
Lytton Ave
University Ave
University Ave
University Ave
University Ave
University Ave
CDCP
CDCP
CDCP
CDCGFP
CDCGFP
CDCGFP
CDCP
CDCP
CDCP
CDNP
CDNP
CDNP
CDCGFP
CDCP
CDSP
CDS1P
CDCP
CDCP
CDCP
CDCP
CDCGFP
CDCGFP
CDCGFP
CDCGFP
Vacant
Square Feet
2500
800
3750
3800
1200
1900
1500
4655
5O0
2750
700
1500
5000
1450
6000
3100
1200
9000
5000
7202
4300
2890
4903
2200
CMR: 143:02 Page 4 of 6
Street Street Zone Vacant
Number Name District Square Feet
174 University Ave CDCGFP 2400
360 University Ave CDCGFP 3850
530 University Ave CDCGFP 5000
579 University Ave CDCP 10027
560 Waverley St CDCGFP 2000
Total 155,146 sq. ft.
The entire CD area has approximately 3,650,000 gross square feet of floor area after
adjusting for the 1999-2001 projects. (This figure is rounded to the nearest 25,000 square
feet and was based on a table originally prepared in 1986.) Of this, abou~ 375,000 is used
for religious or residential purposes or is vacant and not available for occupancy. Thus the
net square footage of available commercial space is 3,275,000 square feet.
With a total 3,275,000 square feet of commercial floor area available for occupancy, the
155,146 square feet of vacancy equals a rate of 4.74 percent.
Retail Rents
According to commercial real estate agents offering properties for lease in the downtown,
current rents for retail space are generally ranging from $2.00 to $5.00 per square foot triple
net (NNN) (i.e. rent plus tenant assumption of insurance, janitorial services and taxes) with
a few higher rates reported. The lower end of this range is generally for spaces in older
buildings and away from University Avenue.
Office Rents
Current rents for prime Downtown office space (i.e., newer and!or larger buildings on
University Avenue and Lytton Avenues) and secondary office space (i.e. older and/or
smaller buildings further from University Avenue) are ranging from $2.00 to $7.50 per
square foot triple net (NNN). Rental rates have decreased since the last monitoring period
mainly because of higher vacancy rates.
POLICY IMPLICATIONS
This report and its findings do not represent any changes to current City policies.
NEXT STEPS
Due to limited staff availability and other priorities, this report is an abbreviated version of
past reports and concentrated on changes in floor area resulting from approved
CMR: 143:02 Page 5 of 6
development and vacancy rates in the CD district. A follow up report will be completed
next month and will discuss parking inventory and trends in use composition within thd CD
District.
ATTACHMENTS
A. Downtown Study Results Summary
B. Zone Map exhibit of the Commercial Downtown (CD) Zone District
C. Table: CD Non-Residential Change in Square Footage
PREPARED BY:
Roland Rivera, Assod/ate Planner
DEPARTMENT HEAD REVIEW:
Director of Planning and Community Environ, ment
CITY MANAGER APPROVAL:
EMILY HARRISON/
Assistant City Mana{~r
Architectural Review Board
Palo Alto Chamber of Con~-nerce
Palo Alto Board of Realtors
Downtown North Neighborhood Association
University Park Neighborhood Association
CMR:143:02 Page 6 of 6
ATTACHMENT A
DOWNTOWN STUDY RESULTS SUMMARY (July 1986)
The following are the primary measures adopted as a result of the Study:
A new Commercial Downtown (CD) zoning district, including three subdistricts
(CD-C, CD-S and CD-N), was created and applied to most of the Downtown area
previously zoned Community Commercial (CC) or Service Commercial (CS). The
basic provisions of the CD district include floor area ratios (FARs) that are more
restrictive than in the previous CC and CS zones, limits to project size and to the
overall amount of future development, and special development regulations for sites
adjacent to residential zones.
Growth limits were applied to the CD district restricting future development to a
total of 350,000 square feet beyond what was existing or approved in May 1986 and
providing for a re-evaluation of the CD regulations when new development reaches
235,000 square feet. In addition, 100,000 square feet of the total new floor area was
reserved for projects demonstrating special public benefits and 75,000 square feet
for projects which qualify for seismic, historic or minor expansion exemptions.
Exemptions to the floor area ratio restrictions of the CD zone were established for
certain building expansions involving historic structures, seismic rehabilitation,
provision of required handicapped access, or one-time additions of 200 square feet
or less.
o
New parking regulations were established for the University Avenue Parking
Assessment District that require new non-residential development to provide
parking at a rate of one space per 250 square feet of floor area. Exemptions to this
requirement are provided for certain increases in floor area related to provision of
handicapped access, seismic or historic rehabilitation, one-time minor additions
(200 square feet or less) and development of vacant land previously assessed for
parking. The regulations also permit, in certain instances, off-site parking and
parking fees in lieu of on-site parking.
Performance measures were established that specify that new development in the
Downtown should not increase the total parking deficit beyond that expected from
development that was existing or approved through May, 1986 (1600 spaces) and
that call for re-evaluation of the parking exemption regulations when the unmet
parking demand, resulting from exemptions, reaches one half (225 parking spaces)
of the minimum 450 parking spaces deemed necessary for construction of a new
public parking structure. Staff was directed to monitor the parking deficit.
o
o
A new Ground Floor (GF) Combining District was created and applied to the area
along University Avenue and portions of the maj or side streets between Lytton and
Hamilton Avenues, in order to restrict the amount of ground floor area devoted to
uses other than retail, eating and drinking or personal service.
Staff was directed to monitor the Downtown area in terms of development activity,
vacancy rates, sales tax revenues, and commercial lease rates to facilitate evaluation
of the effectiveness of the new regulations..
Staff was directed to undertake a site and feasibility study to evaluate an additional
public parking structure elsewhere in the Downtown, to consider development of a
parking facility on public lots S, L and F, and to explore the possibility of leasing or
purchasing privately-owned vacant lots suitable .as parking structure sites.
Policies and regulations were adopted which encourage Planned Community (PC)
zoning for parking structures and limit underground parking to two levels below
grade, unless there is proof that regular pumping of subsurface water will not be
necessary.
10.
11.
12.
A Twelve-Point Parking Program was adopted to increase the efficiency of existing
parking.
Traffic policies were adopted which prohibit new traffic signals on portions of Alma
Street and Middlefield Road, and prohibit a direct connection from Sand Hill Road
to Palo Alto/Alma Street. In addition, new signs were approved directing through
traffic off of University Avenue and onto Hamilton and Lytton Avenues.
Staff and the Architectural Review Board (ARB) were directed to consider the
possibility of an Urban Design Plan for Downtown and to develop design guidelines
for commercial structures in neighborhood transition areas and for driveways which
cross pedestrian walkways.
13.A temporary Design and Amenities Committee was created and charged with
developing an incentivd program (including FAR increases of up to 1.5) to
encourage private development to provide a variety of public amenities in the
Downtown area.
14.Staff was directed to study possible restrictions on the splitting and merging of
parcels as well as the establishment of minimum lot sizes in the new CD district.
The City of
Palo A1 to
PLANNING DIVISION
PF
Commercial Downtown
Zones
(CD)
This map is a product
of the
City of Palo Alto GIS
GO0"
Attachment C