The URL can be used to link to this page

Home My WebLink AboutStaff Report 2602-5977CITY OF PALO ALTO Retail Committee Regular Meeting Wednesday, March 18, 2026 4:15 PM Agenda Item 4.Designation of City Council Liaisons with Local Business Stakeholders and the March 2026 Economic Development Activity Report Staff Presentation Economic Development Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: March 18, 2026 Report #:2602-5977 TITLE Designation of City Council Liaisons with Local Business Stakeholders and the March 2026 Economic Development Activity Report RECOMMENDATION Staff recommends the Economic Development Committee discuss City Council business district liaison designations with various community serving commercial areas, business advocacy efforts, and receive the March 2026 Economic Activity Report. BACKGROUND The Economic Development Committee, established in 2024 and continued in 2025, is a Council Ad Hoc committee that follows the California Brown Act procedures. The Committee provides a regular forum for business and community stakeholders to engage with Council members on implementation of the City’s economic development strategy. The Economic Development Committee makes recommendations to the City Council on economic development and business vibrancy efforts, such as additional business support, proposed University and California Avenue improvements, and citywide retail zoning code changes, to name a few work plan efforts. At the January 24, 2026 Council Retreat meeting1, the Palo Alto City Council reached consensus on adopting a 2026 Economic Development priority titled, “Enhance Business Vibrancy” and renamed the Retail Ad Hoc Committee to the Economic Development Ad Hoc Committee, reflecting a broader focus on supporting business districts in Palo Alto. This priority emphasizes continued engagement with business districts and the hospitality sector through proactive outreach, collaboration, and partnership to strengthen the city’s overall business environment. 1 January 24 Council Retreat Meeting Agenda: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18520 This report expands on the issue of City Council involvement with local business stakeholders and seeks Economic Development Committee feedback. ANALYSIS City Council Liaisons Economic Development Activity Report This March 2026 Economic Development Activity Report provides an overview of the City’s retail landscape and notable updates for the Committee. CoStar is considered the industry standard for real estate data and reporting. While the data has its limitations, it provides a reliable foundation for understanding real estate market trends. It’s important to note, however, that it does not account for all external factors. For example, a property is only reported as vacant if no tenant is paying rent and it is available for lease or sale. If a tenant is still paying rent, even if the space is not yet occupied, it will not be listed as a vacancy. Nonetheless, the information remains useful for future benchmarking and comparisons. A map was created in CoStar bounded by Lytton Avenue on the North, Forest Avenue on the South, Alma Street on the West, and Cowper Street on the east side. This geographic area represents a significant portion of the retail core for the Downtown University Business District and does not include Stanford Shopping Center. The map is shown here as Figure 1. The average annual asking retail rent for vacant properties within the University Avenue Business District is $83.52 (~$6.96/mo) per square foot as of Q4 2025, representing a minor decrease from the high of the last ten years ($84.96 (~$7.08/mo) in Q2 2020 but higher than the low of the last ten years ($51.72 (~$4.31/mo) in Q4 of 2016). The current retail vacancy rate is 13.4% for Q4 of 2025, an increase from 11.1% from a year ago. Over the last ten years, the highest retail vacancy rate downtown was 17.8% in Q1 of 2024. The lowest retail vacancy rate in the last ten years was 0.7%. in Q3 and Q4 of 2015. Approximately 86,606 square feet of retail space was available in the University Avenue Business District as of the Q4 2025 Report in CoStar, a decrease of 31,379 square feet from 119,843 in Q1 of 2024 as the highest in ten years. California Avenue Business District from 48,762 square feet in Q1 of 2022 as the high in the previous ten years. Ramona Street FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW APPROVED BY: March 18, 2026 Alex Andrade Economic Development Manager Ruth Carias Economic Development Specialist Designation of City Council Liaisons & March 2026 Activity Report Economic Development Committee www.PaloAlto.gov/business 1 March 18, 2026 www.PaloAlto.gov/business City Council Liaisons •Committee Members and other City Council members have expressed interest in attending staff-organized business district stakeholder meetings. •To avoid formalizing the meetings, no more than one Economic Development Committee member can participate, while other City Council members (non-Economic Development Committee members) may observe the meeting without participating. Economic Development Committee Liaison Groups •Palo Alto Chamber of Commerce •University Avenue/Downtown •California Avenue •El Camino Real/Midtown •Hoteliers 2 March 18, 2026 Retail Property Metrics Q4 2025 •Average Annual Asking Retail Rent $83.52/sf (or ~$6.96/mo) •Current Retail Vacancy Rate is 13.4% as of Q2 2025, increase from a year ago •Approximately 86,606 sf of retail available, down 31,379 sf from 2024 Q1's high •2,108 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 $56.28/sf (or ~$4.69/mo) •Current Retail Vacancy Rate is 5.4% as of Q4 2025, down from a year ago •Approximately 14,497 sf of retail available, down from high of 48,762 in Q1 of 2022 •2,601 square feet of net absorption over past 12 months California Avenue 3 March 18, 2026 www.PaloAlto.gov/business Business District Updates Ramona Street •Orange barriers have been replaced with concrete spherical bollards & meridian mobile vehicle barriers •Parking improvements on the open portion of Ramona Street have been completed 4 RECOMMENDATION Staff recommends the Economic Development Committee discuss the City Council business district liaison designations with various community serving commercial areas, business advocacy efforts,and receive the March 2026 Economic Activity Report. PaloAlto.gov/Business 5 Thank you! 6