HomeMy WebLinkAboutStaff Report 2603-6166CITY OF PALO ALTO
Retail Committee
Regular Meeting
Wednesday, June 03, 2026
5:30 PM
Agenda Item
3.Economic Development Activity Report June 2026 Staff Presentation
Economic Development Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Manager
Meeting Date: June 3, 2026
Report #:2603-6166
TITLE
Economic Development Activity Report June 2026
RECOMMENDATION
Staff recommend that the Economic Development Committee receive this Economic
Development Activity Report for the month of June 2026.
EXECUTIVE SUMMARY
This June 2026 Economic Development Activity Report presents information on the City’s retail
landscape, business district updates, Employee Reports, and business openings/closings.
BACKGROUND
The Economic Development Committee, established in 2024 (under the name Retail
Committee) 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 initiatives. 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 on values and priorities the 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
1 City Council Retreat Meeting Agenda:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=85283&dbid=0&repo=PaloAlto&searchid=c7ff9802-
2ad6-4705-a142-e2246d02dd70&cr=1
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.
ANALYSIS
CoStar Information
California Avenue Business District
Expressway on the South, Park Boulevard on the
East, and El Camino Real on the West side. The map of this is
shown as Figure 1.
Business District per the Q1 2026 report from CoStar, an increase of 1,146 square feet from
18,145 square feet a year ago. Also, a decrease of 29,471 square feet from 48,762 square feet
in Q1 of 2022 as the high in the previous ten years.
University Avenue Business District
Downtown University Avenue Updates
On April 29, staff from various departments met with the Downtown University Avenue
stakeholders to discuss the potential of an Entertainment Zone Ordinance for the closed
portion of Ramona Street, Public Safety in the Downtown, and University Ave Streetscape
Project update. It should be highlighted that the downtown stakeholder group would like to
continue thinking about the possibility of an entertainment zone ordinance in Downtown
University. The Police Department presented new efforts underway in the downtown area,
including the addition of a dedicated patrol officer. This enhancement was made possible
through organized retail theft grant funding awarded to the department. Public Works staff also
provided a brief update on the total project cost and engaged stakeholders in a discussion
regarding their interest in continuing the project.
On May 18, staff brought forward a waiver of the Downtown Business Improvement District
(BID) assessment fees for FY 2027 on the City Council’s consent calendar, which was approved
by the Council. Staff will also engage Downtown stakeholders in discussions to determine how
to proceed for FY 2028.
On April 21, staff met with California Avenue merchants to provide an update on the
discussions from the April 16 Architectural Review Board meeting and to continue
conversations regarding the proposed outdoor activation program and bicycle lanes on
California Avenue. Many businesses expressed support for the proposed standards and
provided feedback during the discussion.
On May 4, the City Council approved the second reading of the Entertainment Zone Ordinance
for the car-free portion of California Avenue. The ordinance will go into effect in June 2026 to
support California Avenue activations. The Palo Alto Recreation Foundation, in partnership with
the City and other community organizations, will kick off the California Avenue event series on
May 28th from 5-8pm on the Car Free Portion of California Avenue. The series is expected to
include six monthly events between May 2026 and October 2026 to help activate the street and
support the Entertainment Zone.
Economic Development staff monitor employment data to identify growth sectors, emerging
workforce trends, and informing policy and investment. Employment data is a key economic
activity indicator because it illustrates if the economy is expanding or contracting. The following
summarizes a portion of the memo prepared by Stephen Levy of the Center for Continuing
Study of the Californian Economy on the California Employment Development Department’s
(EDD) employment data (Attachment A).
The number of Palo Alto jobs increased by approximately 3,000 between Q2 2024 and
Q2 2025. Palo Alto’s workforce totaled just over 100,000 jobs in Q2 2025 (including self-
employment trends). While the trend today consists of adding jobs, after the pandemic
Palo Alto lost roughly 15,000 jobs through Q2 2024.
The pandemic exacerbated the work for home environment, which peaked in 2021 with
approximately 15,000 jobs locally. However, the number of Palo Alto jobs that were
worked from home has been on a steady decline at fewer than 8,000 jobs in 2024
though it remains far above the pre-pandemic level of around 3,000 in 2019.
The largest employment sector in Q2 2025 was Health Care and Social Assistance (e.g.,
non-government hospitals, medical services, nursing homes and social assistance) in
Palo Alto with just over 25,000 jobs. This was followed by the professional, scientific and
technical services sector (e.g., tech-related services and legal, accounting and
architectural services) with over 21,200 jobs and the Information sector (e.g., web
hosting and data services) consisting of over 13,800 positions.
Palo Alto’s unemployment rate in February 2020 was roughly 2.2% but increased to
over 4% after the pandemic in 2021. The 2026 unemployment rate is just less than 4%,
which is similar to the pandemic unemployment percentage height.
Over 90% of Palo Alto businesses have fewer than 20 employees. EDD data includes
information on the number of firms by number of employees. In terms of Palo Alto’s
larger employers, there were 13 businesses who had more than 1,000 employees in Q1
2020. In Q2 2025, there are now 9 businesses who employ more than 1,000 people.
Mr. Levy’s memo includes data comparing jobs, population, and housing. Historically,
Palo Alto has been home to many jobs, but the trends illustrate a declining ratio of jobs
relative to the population. For example, the jobs/population percentage decreased from
1.69 in 2020 to 1.47 in 2025, the jobs/households ratio decreased from 4.28 in 2020 to
3.67 in 2025, and the jobs/housing units ratio decreased from 3.95 in 2020 to 3.39 in
2025.
Business Openings/Closings
Through a separate report, staff are also able to track all businesses that apply for a Certificate
of Use and Occupancy. This report allows Economic Development staff to connect with
businesses as they begin navigating the development process. This includes upcoming openings
like Bistro Demiya (407 Lytton Ave), Rikyu (121 Lytton Ave), and Fireclay Tile (261 Hamilton
Ave).
In addition to the information previously included, staff have identified other notable business
activity. Yutori at 3375 El Camino Real hosted their opening in April 2026. The Pro hosted their
grand opening on May 12 at 541 Ramona Street. Also, Zingster‘s located at 220 University Ave
opened for business on May 15th. Staff are also tracking expected closures. As of the writing of
this Staff Report, an anticipated business closure includes Provident Credit Union located at
2390 El Camino Real #110.
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 is a critical component of the City’s economic development function.
Economic Development staff continue to meet and connect with business stakeholders through
individual conversations, monthly meetings with business districts, and through the monthly
Business Connect Newsletter.
This is not a project under CEQA because it is a continuing administrative activity under CEQA
regulation 15378(b)(2).
Attachment A: Summary of Recent Job Trends in the City of Palo Alto
:
Ed Shikada, City Manager
1
CENTER FOR CONTINUING STUDY OF THE CALIFORNIA ECONOMY
365 FOREST AVENUE 5A • PALO ALTO • CALIFORNIA • 94301
TELEPHONE: (650) 814-8553
www.ccsce.com
Alex Andrade
Assistant to the City Manager
Economic Development Manager
City of Palo Alto
Dear Alex,
This memo summarizes trends in jobs in Palo Alto using data acquired by the
City from the California Employment Development Department (EDD) and
includes other data requested by staff. The memo was prepared by Stephen
Levy at the request of and in consultation with Alex Andrade, Palo Alto’s
economic development director. The Center did this work on a volunteer basis
with no compensation.
Principal Results
Total Jobs
Palo Alto added jobs between the 2nd quarters of 2024 and 2025. This is in line
with recently released data for the Bay Area and Santa Clara County. The city
added nearly 3,000 jobs and had just over 100,000 jobs in the 2 nd quarter of 2025
including self-employment trends.
Total Jobs
Q2 2024 Q2 2025 Change
Payroll Jobs 95,394 98,302 2,908
Self Employed 2,144 2,144 0
Total Jobs 97,538 100,446 2,908
Source: EDD and ACS
EDD reported government jobs for only 2023, 2024 and 2025 so the analysis
below analyzed trends for all payroll jobs except government jobs as self -
employment was virtually the same during this period. After rising between Q2
2019 and Q1 2020 (pre-pandemic), Palo Alto jobs declined by roughly 15,000
through Q2 2024 before rising in Q2 2025. In comparison, the Bay Area lost
87,000 jobs during this period while Santa Clara County added 4,000 jobs.
2
Work From Home
The ACS collects data on workers with jobs in Palo Alto that work from home.
These jobs are also included in the payroll data reported above. The number of
Palo Alto jobs that were worked from home has steadily declined though it
remains far above the pre-pandemic level. Work from home is self-reported as
the primary method of getting to work. The decline in work from home means
employees spend more days in Palo Alto where they can spend money on retail
and dining.
Largest Industry Sectors in 2025
The largest sector in Palo Alto was Health Care and Social Assistance, which
includes non-government hospitals, medical services, nursing homes and social
0
2000
4000
6000
8000
10000
12000
14000
16000
2019 2021 2022 2023 2024
Worked From Home
3
assistance. Next was professional, scientific and technical services that included
tech-related services and legal, accounting and architectural services.
Information consists primarily of web hosting and data services. Government
includes federal, state, county and local government jobs including school
districts. Accommodation and Food Services includes hotels, restaurants, cafes
and bars.
EDD cannot provide data on industries within these categories or data by zip
code within Palo Alto without violating confidentiality rules.
A guide to sub-industry categories is included in the notes.
Jobs in Q2 2025
Health Care and Social Assistance 25,144
Professional, Scientific, and Technical Services 21,258
Information 13,846
Manufacturing 7,029
Government 6,620
Accommodation and Food Services 5,277
Finance, Insurance and Real Estate 4,840
Retail Trade 3,709
Unemployment Rate
The data below shows the Palo Alto unemployment rate for February starting
with the last pre-pandemic month in 2020 through February 2026. The data are
estimates based on historical relationships to the county data. The Palo Alto rate
is lower than the national, state and Bay Area rates but higher than the city rate
between February 2015 and 2019
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
2020 2021 2022 2023 2024 2025 2026
February Unemployment Rate
4
Companies by Number of Employees
The EDD data includes information on the number of firms by number of
employees though industry detail is severely limited by confidentiality rules. Other
information collected by the city may help in identifying the names of firms with a
large number of employees. The EDD data is complete for all industries
combined.
Companies by Number of Employees
250-499 500-999 1000+
Q1 2020 27 8 13
Q2 2023 24 6 10
Q2 2024 24 6 9
Q2 2025 29 9 9
Job, Population and Housing Comparison
Given the recent interest in the relationship between jobs and housing, the data
below is shown to provide context for continuing discussion. The population and
housing data is from the California Department of Finance (DOF) from the 2020
Census and annual estimates as of January 1. The jobs data above was used for
the calculations of jobs relative to population and housing. The trends all point to
a high but declining ratio of jobs relative to population in the city.
Population, Housing and Jobs Data
2020 2023 2024 2025 2026
Households 26,677 27,030 27,121 27,363 27,576
Housing Units 28,904 29,285 29,383 29,645 29,876
Population in HH 67,683 67,499 67,700 68,328 68414
Person per HH 2.54 2.50 2.50 2.50 2.48
Jobs 114,096 103,370 97,538 100,446
2020 2023 2024 2025
Jobs/Population 1.69 1.53 1.44 1.47
Jobs/Households 4.28 3.82 3.60 3.67
Jobs/Housing Units 3.95 3.53 3.32 3.39
5
For comparison, the Bay Area 2025 ratios were .58 for jobs in relation to
population and 1.52 for jobs in relation to households.
Notes
Data for the number of payroll jobs were provided to the city by the California
Employment Development Department (EDD).
Jobs on the number of self-employed residents comes from the American
Community Survey (ACS) published by the Census Bureau and the same source
provides data on Palo Alto jobs held by people who primarily work from home.
The ACS data is self-reported by a sample of residents. The ACS data was not
available for 2025 so the self-employment 2025 estimate on page 2 assumes the
same level as in 2024.
Data on city population, households and housing units is published by the
California Department of Finance (DOF).
The payroll jobs data comes from form DE9 used by employers to report
employment and payroll on a quarterly basis. It is considered a complete count
and is the same data used to report national, state and county job trends. Final
data are published with a 3-quarter lag and the latest data available when these
analyses were done is for Q2 2025.
The total job estimate for 2020 was developed by adding the 2025 estimate for
government jobs to the EDD estimate of payroll jobs and ACS estimate of self -
employment.
The file EDD provided to the city for Q2 2025 contains data on companies by
number of employees and payroll data in addition to the jobs data.
EDD required data to be reported as confidential if disclosing it could identify the
name of a firm. This occurred in many cases for data on the size of firms.
In the files sent by EDD government jobs are called public administration.
A detailed list of the sub industries within the major industry categories shown in
this memo can be found at naics.com.
June 3, 2026
Alex Andrade
Economic Development Manager
Ruth Carias
Economic Development Specialist
Economic DevelopmentActivityReportJune 2026
Economic Development Committee
www.PaloAlto.gov/business
1
June 3, 2026
Retail Property Metrics Q1 2026
•Average Annual Asking Retail Rent $84.22/sf (or
~$7.02/mo), an increase from a year ago
•Current Retail Vacancy Rate is 13.4% as of Q1
2026, a minor decrease from a year ago
•Approximately 86,807 sf of retail available,
down from 92,110 from a year ago
•(2,648) 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), a decrease from
$60/sf (or ~$5/mo)a year ago
•Current Retail Vacancy Rate is 5.4% as of Q1
2026, slightly up from a year ago
•Approximately 19,291 sf of retail available,
down from high of 48,762 in Q1 of 2022
California Avenue
2
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June 3, 2026
Notable Retail Openings and Departures
www.PaloAlto.gov/Business
Expected/Upcoming Openings
•Rikyu (121 Lytton Ave)
•Yutori (3375 El Camino Real)
•Zingster's (220 University Ave)
•La Corneta (324 University Ave)
•Bistro Demiya (407 Lytton Ave)
•Fireclay Tile (261 Hamilton Ave)
Departure
•Provident Credit Union (2390 El Camino Real #110)
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June 3, 2026
Business District Updates
www.PaloAlto.gov/Business
Downtown University Ave
•Through stakeholder engagement meetings;
•Staff provided an updated presentation on the University Ave Streetscape total
project cost and engaged stakeholders in a discussion regarding their interest in
continuing the project.
•Staff discussed the FY 2028 Downtown Business Improvement District (BID).
California Ave
•Thursday Live Ribbon Cutting – May 28th
•Next Thursday Live event: Thursday, June 25th from 5PM
to 8PM; the Entertainment Zone will be activated during the
Event.
4
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June 3, 2026
Employment Data
www.PaloAlto.gov/Business
5
Employment Data
•After the pandemic Palo Alto lost roughly 15K jobs through Q2 2024. Workforce totaled over 100K jobs in Q2
2025.
• Palo Alto jobs increased by approximately 3,000 between Q2 2024 and Q2 2025.
• WFH peaked in 2021 with approximately 15K jobs locally. Steady decline to fewer than 8K jobs in 2024.
Largest Employers – Q2 2025
•Health Care and Social Assistance - over 25K jobs.
• Professional, scientific and technical services - over 21K jobs.
• Information - approximately 14K jobs.
• Over 90% of local businesses have fewer than 20 employees.
• 13 businesses had more than 1K employees in Q1 2020. Q2 2025, 9 businesses employ more than 1K people.
June 3, 2026
Housing, Population, and Jobs
www.PaloAlto.gov/Business
6
Jobs, Population and Housing
Thank you!
Alex Andrade
Economic Development Manager
Alex.Andrade@PaloAlto.gov
Ruth Carias
Economic Development Specialist
Ruth.Carias@PaloAlto.gov 7