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HomeMy WebLinkAboutStaff Report 2509-5228CITY OF PALO ALTO Retail Committee Regular Meeting Thursday, January 22, 2026 9:00 AM     Agenda Item     4.Economic Development Activity Report January 2026 Presentation Retail Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: January 22, 2026 Report #:2509-5228 TITLE Economic Development Activity Report January 2026 RECOMMENDATION Staff recommends that the Retail Committee receive this Economic Activity Report for the month of January 2026. EXECUTIVE SUMMARY This January 2026 Economic Development Activity report presents information on the City’s retail landscape, notable events and activations, business openings/closings, and business district updates. 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 Economic Development website1. As part of its 2025 priority setting process, the City Council once again selected Economic Development as a priority, refining the focus by replacing “Transition” with “Retail Vibrancy”. In March 2025, the City Council discussed the workplan for this priority which consisted of twelve Objectives2. These objectives were informed by the Economic Development Strategy and other community needs. The workplan was approved in May 2025 and provides 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 Ad Hoc Retail Committee, which first convened at the end of 2023. The committee evolved into a Brown Act Ad Hoc and began convening its meetings in public subject to the 1 Economic Development Strategy: https://www.cityofpaloalto.org/Business/Comprehensive-Economic- 2 2025 City Council Priorities and Objectives: Brown Act beginning in March 2024. During the 2025 Council Retreat, the City Council proposed to continue the Ad Hoc Retail Committee on a bi-monthly basis. ANALYSIS CoStar Information University Avenue Business District but higher than the low of the last ten years ($51.72 (~$4.31/mo) in Q4 of 2016). California Avenue Business District Approximately 32,026 square feet of retail space was available in the California Avenue Business District per the Q3 2025 report from CoStar, a decrease of 16,736 square feet from 48,762 square feet in Q1 of 2022 as the high in the previous ten years. Notable Event & Activations Business Openings/Closing (3877 El Camino Real). Staff has also monitored notable closures that occurred towards the end of 2025, including Sushirrito (448 University Avenue), which is now being replaced by Urban Momo, and Tacolicious (632 Emerson Street), which is being replaced by Meze Kebab. Ramona Street California Avenue 3rdThursday Transition Efforts Outdoor Activation and Parklets feasibility. Merchant feedback has focused on need for flexibility with investment options, interest in permanent solutions once a program is approved by Council, high-quality customer experience, parklet size, and pedestrian safety concerns regarding bicycle speeds. Staff will complete ARB ad hoc work, continue merchant engagement, refine parklet design and return to Council with recommended outdoor activation and parklet requirements informed by stakeholder engagement. Bicycle Lanes, Street Design and Near-Term Improvements including developing a concept for slow-two-way bicycle lanes, bicycle speed calming measures and signage, and diverting through bicycle movements to Cambridge Avenue. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW APPROVED BY: January 22, 2026 Ruth Carias Economic Development Specialist Economic DevelopmentActivityReportJanuary 2026 Retail Committee www.PaloAlto.gov/business January 22, 2026 Retail Property Metrics Q3 2025 •Average Annual Asking Retail Rent $84.60/sf (or ~$7.05/mo) •Current Retail Vacancy Rate is 13.3% as of Q3 2025, slightly up from a year ago •Approximately 88,464 sf of retail available, down 119,843 sf from 2024 Q1's high •437 square feet of Net Absorption over past 12 months Downtown University Ave All data provided by CoStar www.PaloAlto.gov/business •Average Annual Asking Retail Rent $57.84/sf (or ~$4.82/mo) •Current Retail Vacancy Rate is 6.4% as of Q3 2025, down 11.9% from a year ago •Approximately 32,026 sf of retail available, down from high of 48,762 in Q1 of 2022 •2,800 square feet of Net Absorption over past 12 months California Avenue January 22, 2026 Notable Retail Openings and Departures www.PaloAlto.gov/business Departures •Tacolicious (632 Emerson St) •Sushirrito (448 University Ave) •II Fornaio (520 Cowper St) Expected/Upcoming Openings •My Greek Yogurt (520 Bryant St) •Auntea Jenny (328 University Ave) •Node (180 University) •Solidcore (499 University Ave) •Peng's Kitchen (535 Bryant St) •Flo Pilates (3877 El Camino Real) January 22, 2026 Notable Events and Activations www.PaloAlto.gov/business Past Events •Coldplay Concert (May 2025) •87,000 attendees •Significant economic impact benefiting local restaurant, retailers, etc. •Code:ART Festival (October 2025) •27,000 attendees •12 partner businesses participated in the event, with the City promoting their businesses through social media and flyers in return •Cal Ave Holiday Spectacular (December 2025) •Well attended by both community members and non-local visitors and received positive feedback from local businesses Upcoming Events •Football Championship (February 8) •Cal Ave Activation Series (Spring 2026) •BTS Concert (May 16 & 17) •Global Soccer Tournament (June-July 2026) Code:ART Marvel Cake Pastries School of Rock during Cal Ave Spectacular January 22, 2026 www.PaloAlto.gov/business Business District Updates Ramona Street •Forthcoming improvements include the installation of concrete bollards and median barriers to replace the orange barriers. •Parking improvements on the open portion of Ramona Street completed. California Ave •Staff will continue merchant engagement, refine parklet design, and return to Council. •California Avenue District Gateway Signs, including a primary sign at California Avenue and El Camino and a sign at the Birch Street exit ramp, with City Council consideration later in 2026. Thank you!