HomeMy WebLinkAbout0138.092-
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January 3C, 1932
HONORABLE CITI COUNCIL
Palo Alto, California
A phnning Policy Audit of Retail Ar€is_jn th~ (tu_ of Pa10 Alto
Members of the Council:
Attached is a copy of the City Council-directed consultant study prepared by
Gruen Gru~n + Associates cn -A Planning Policy Audit of Retail Areas in the (;ty
of Palo AHo.·
Public hearings on the report findings will b~ held by the Planning Commission
on FebriJary Ni~ 1992. and the City (lluncll atl March 16, Hl92. Informal review
of the report will also take place on February 13, 1992, wlth the Palo Alto
Chamber of COlTl!lerce and the City of Palo Alto Economic Outlook. COllll1ittee. At the
time of Planning COImI;ssion and City Council review, a staff ana1ysfS of the
study will be available for public reIJiew~
ReSP"tfUllY~U itted, . \ au( d~"L"
CAROl JANSE ~
C;(jOf Plannin(Off1Ci.l r": / /.~ \ ~ k1/~i I~~
V
Attachment
cc: Planning Commission
Architectural R€IJ;ew Board
(hamber of (orrmerce
St.nford University (Andy Ooty,
Stanf~rd Shopping Cent€r (DaIJid
Charleston Heado"s Neighborhood
eMR: 138: 92
...-/./' '.' /
(Ui?/Ut"/l ;1 d?d.t"U"&",/
KENNETH R, SCHREIBER
Director of Planning and
Oi ane He.l ,yJ
Longbine)
Association
Comunity En-..;,"onment
cc, continued:
Barron Park Association
BarrG~ Square Condo As~ocilt;on
lnterdale ,,'ay Homeowners Association
Park Central Cammercial Condominium Association
Ventura Neighborhood Association
Hoover Park Neigh~rhood Associatio~
Greenmeadow Community Association
College Terrace Neighborhood AssQciation
Ev~rsreen Park Neighborhood Association
Grant Avenue Condominium Owners As:ociation
Chestnut-Wilton Homeowners Association
CMR:138:92
p:\CJ1Ir\~t;all!lr
1/30/92
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Gruen Gruefl -+ Associal es
564 Howard Street
A PLANNING POLICY AUDIT
OF RETAIL AREAS
IN THE CITY OF PALO ALTO
A Report to
The City of Pa!o Alto
from
GRUEN GRUEN + ASSOCIATES
January, 1992
C736
San Francisco, Ca. 94105~3071
(415) 433-7598
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TABLE OF CONTENTS
SUMMARY OF PRINCIPAL CONCLUSIOfllS
'rhe Need for PloBr::tiva Public Policy ... , .. ",.
Area-specific Inclusions •• , ••.•.... , , . ,
Stanford Shopping Center _'.""" .. '
The California AVf.inue District and tne
'rown & Country S~opping Center
The ThraEl Neignborhood Centers
The EI Camino fleal
INTRODUCTION
Study Purpose
The Fiv{; Types of Study Are~s
Study Approach
Organization of the Report
THE NEEO FOR PROACTIVE PU~lIC S'rRATEGIES
The Changirlg Long-term Determinants of
Retail Sales in Palo Alto , ... , ...
Employment end Income
Ihu In~ome Elastlc!ty of D~m8ml With Respect
to Retail Purchasos , ..... .
T\'hJ Changing fietsi] Industry
Thf) Escalation in the Amount of Retail Space. , .
Recent Retail Sales Trends in Palo Alto .. ,', ..
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Table of Contents, continued
Qwum e-
ChAnges in the City's Stiles TtI)( Patterns;
'988·'990 .......................... . 22
Rf.lf.:snt Retail Sales Trends in Santa Clara County , , .. 24
III THE EL CAMINO REAL. CALIFORNIA AVENUE BUSINESS
DISTRICT AND TOWN 8. COUNTRY COMMERCIAL AREAS . 27
IV
Introductio.... .. .... ,"',. 27
The EI Camino Aeal , ... 29
The Historical Evolution of EI Carnino ~8al 30
Change'S in the Study Area's Retail Base and
a Comparison of The Stl1dy Area's Share of the
City's Taxabie Sales " ....... , ...... ,', ..
An Analysis of the Type of BlJsinass Activity
in the fl Camino Real District .. ,
Tha EI Camino Fleal Hotol/Motel Market
Nonconforming Uses
Options Open to EI Camino Property Owners
California Avenue Business District
Town &. Country Shopping Center.
PoliCY Implications,
NEIGH6CRHOOO CENjERS
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40
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51
The Neiuhborhood Shopping Centor Issues, , , .. , , .. 51
The Alma Plaza Cent8f , , ..... , .. , , . , .... , .• ' , , . , ... , . 52
Chafteston Center
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APPENDIX
lebla of Conumts. continued
£dgltwoori Plaza "", ..
PoliCY Implications .. , , , , ..
STANrORD SHOPPING CENTER ISSUES ....•...
THE REAL ESTATE ECONOMICS Or: AL TEFiNA fiVE
OEvELOPMENT
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LIST OF TABLES
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hllmated Palo Alto Employment by Industry:
"8~. 1987, 1988, 1989 "' ... '."""""'. ",'" 14
2 £111m_ted Santa Cisra County Private Sector
(m".oyment by Industry: 1985, '987, 1968 and 19B9 , , , , . " 16
3 A COt'n~fl50n of the City of Palo Alto With the
C~f" of S~nt8 Clara 1985 and 1989 Emplovment
[)"ttiMlonS """""""""""""""""'" 17
4 Cn, 0' Palo Alto Taxable Sales by Retail Sales
Ca'.gorv: 1985-1990., .. , ... " .... ". ",23
5 T .... bl. Sales in Santa Clara County by Retail Sales
Cat~lIIory: 1985-1990 , ... , .. , .,., ... ".25
6
7
the Study Area's Share of t~e City's Tota! Taxable
Revenues and tha City's Share of the County's
TOIal Tuabie Sales: 1988-1990, .. , ... ,.",
A '988·1990 COmparison of Sales "ax Rovenues
Gen{'rated 'forn Retaii Stores and Nonretail Outlets
for CIty of Palo Alto. and the Ei Caf'tlInO Real and
Callforr-IiB Avenue Study ArSBs
. " 28
32
a Change In EI Camino Sa!e~ Tax RevonuBs by Major
TVpe of Business Activity: 1988-1990 " ., .. 34
9 Change in California Avenue Sales lax Revenues
b ... Malor TYPb of BUSiness ActiVity: 1988-1990,. ., 42
10 Change ill Town & Country's Sales TaK f'1 evenues
by Major Type of Business Activit.,.: 1988-199 . . . . , .. , 46
'1 Changes in Sales Tax Revenues for Three N.eighborhood
Centers: 1988-1990"""",.,.,.".,., .. " .. ,., .. 55
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Map
l'lwnl>i!.
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LIST OF MAPS
Study Ares Locations •• , , . , • , , , , , , .. , , ... , , .
Nonconforming Use Addrll8s8s, EI CamIno Ilepl Area
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SUMMA~Y OF PRINCIPAl CONClUSIONS
THE NEEO FOR PROACTIVE PUBllC POUr;V
Th~ City of Pelo Alto will need to tal(e I} proactive stence to encourage the long-fun
physical maintenance and fiscal hoolth 0: its retailing bose, 11"1 en ere of health'll
economic growth and surging demand, such B5 Polo Alto experienced in the '70'&.
City policies which were primarily directed at reducing negative externalities ii~A
traffic did not result in e r"loticeable reduction In sales reVem)8S. In the economiC
climate of the '90's. when Pdla Alto is forecast to experience a s\owdowl! Or even &
negative trend in thd growth of employment and inc orne (see Chapter til. pol,c,e~.
which t1dversely impact the long-fun competiilve strellgth of thfl City's retailing areas
need to be ra-e"lloluated if the City wishes to avoid the lo!ls of fuHlf{l Sf\i~S fevanues
snd tho delerioration of some of iB shopping ar~8S.
Thi~ projected slowdown in the growth of employment 81'(t income In combination
with other demand dampening conditions including a dflcrease In tha proportion of
disposable income consumers spend I'" retelll stofes, the agrng of the popul;Hlon
(older populations tend to spend loss on retail goods Ulan do younger-aged adul1 ~,i,
Hnd a reduction In the amount of yond,., that the consumar fee.ls hI) or she "r1Elt:d~",
ate wotkfn(] tugathar to dMken the oAmand picture faced by tho Clty'~ merc1'llnts
This chango hom tho demand corH'jitlons that have historit::8liy appioed to Pain Altn
makes for 8 particularly compot:live Situation now because of the large amount l1f
additional retflll space that has been built within tho region du~;r,g the last decllde 01
resl estate over-Qptimism. rhe dmmatic nature vt the change In demand In ref!el":ted
in B 7.2 percent decline in inflfltion adjustod in-store fetail sa!es batwaen , 988 And
1990. This decline was calculated by deflating Palo Alto's retali sale~ by the
Consumer Price Index (CPII and deducting the growing amounl of retail SHI€s dollars
from nonstore sales. It IS the consultants' opinion that tho (ecent aeciine of rehW
sales within Palo AltO stores is not just a blip ceusod by the recession but stems
frOm these more petsist!)nt demand-influencing trends.
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AREA-5PECIFIC INCLUSIONS
Stanford Shoppino Centor
The Stanford Shopping Center. which continues to be healthy, is the Citv's most
impottllnt destination shopping arel! :!Ierving the entire peninSUla. It is VAry important
thl!t municipal Pl'Jlicy permit thiS Center to continue l:O onjoy its regionel dominance.
As discussed in Chapter V. the upgrading of the San Antonio Center in Mountain
View is not l!I.:;:oly to threaten the viability of the Stanford Shopping Canto,.
However I if this Center is to continue the adaptations reQuired for it to mafntain its
dominance, the City's present 65,OOO·squara-foot growth cap must be removed,
Furthermore, It would vary much Oe to the best interest of the City and the
Shopping Center if they could work. together to solve the very significant
traffic/t rSl"lsportatiOI1 problem causeD by the lack of a Sand HIli Road e:.:ten8ion.
Without the Sand Hill Road extension, Stanford WOUld not ba able to aCcomm('uatf!
an additional anchor. though it might ba able to add more spaCe than th~ ptesent
cap would allow in l! multiplex theatre complex and Other nighttime tlDtertainment
facilities. Such nighttime aCTivities, whet' located in major regional shopping
centers, are less likely to craate the traffiC and parking impacts that il major daytime
draw would be expected to encourage. Such compiementary uses en(:ourage she red
perking opportunities.
The California Avenue District end the
Town & tIDm~9D[jing Center
Both the California Avenue Business District and the 'rown & Country Shopping
Center we(e found to be basi..::ally healthy Gnd capable of adopting to future
competitive conditions in the retail marketplace (refer to Chapter III). However, it is
important fCJ( thf.l City to proceed with the implementation of the parking oxpension
in the California Avenue Business District to bG accomplished by the park.ing
jmprovement district, Cutrent land use regulations which OJllow f.I floo( }lrea ralio of
2: should not be altered «9J _,0_,_-A finding influencing all of the study areas is tr.at it is the
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p8rking regulations, not the floor proa ratio, that currently ect as the major rEigulatorv
influence on density. Particular attention wi!! MavEt to be paid to encouraging thH
continued u(lhencernijnt of the C8liforni~ Avenue Bus,iness District's reteil and food
service space, if retail Qxpansion takes ploce Within thl;! Stanford Research Park.
Sholild the City pur:!ua its current policy end lower the di~trict's FAA to ,he same
1:1 ratio that is oxistent in the downtown. the rAduced FAR 'NIl[ militate against the
dovolopmen!. of mid-rise office structures on top of ground level ratai! which, In turn,
will Biter the longer-term reuse patterns ot the District.
Ib§.I!:u:u Neighborhood Centers
Condition!l within neighbo-t1ood 5hopping .;anters ;,\re considerably less saluttuy, as
discu!l8ed in Chapter IV. It will bo difficult for many of Palo AIH/s el(istlng
neighborhood canters to av(Ji(J becomIng increasingly obsolete. In arcer to Incroase
their ability to respond to 1 he demands of thPlf rnarkBts, the City ..... hlJuld COr"\SIUo)r tl"l(l
following policy changes'
" Perking requiNmenlS per squore fOf)t of retail and restaurant
space should be lowered for noighborhood c8flters.
Empirical studIOS performed by organllations like The Urban
land Institute suggest a 4,5 ratio to bo mOre than adeql1e1o
for rnO!tt-silad shopping centers.
7.. The currant cap of 20.000 s(Juare f(>£H on g,ocery stores
should be ehminated, If they are not, the C,ty will lose
increaSIng dollars to those adjaco;)nt cornmUnl\IOS that
provide sites for I~uge superm8rket~.
3, The potential for rho conversion of portions nf obsolete
centers to residential use should be anhanced by increasing
the certoillty that denSities between' 5 and 25 units to the
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DCle would be allowed on portIons of such r'leighboftlaod
Cflnters.
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The interple." af \1'\8 &ppitcable re",1 8!.tata economics, the relative lack ot demand for
the kind of space that Ol(i6[B today, the I'ncome tax laws, and Palo Alto's planning
regulations all work to militat.e I;l.gainst the ConV6fSio£\ of ohSofute properties along
the El CatninQ into more economicRllv healthy uses Ire for to Chapter Ill), ihis is nOt
to 88V ,t"lat some such conversions will not take place, they will, HOW8Vlir, a not
insignificant I>ortion at the p(operty owners within the ,)fea are likely 10 cut
mai('ltens\'\(:u costs to tho bone and p9tmiy thair properties to continua to deteriorate
in 8n effort to wting some income out of what wi,lt be a diffiCUlt situation. While
!lome conversions 1,0 residentlsl u~s fne ta.king place. that market is very thin lind
thete is ve r .., little potontl6{ for additional conversions unless effective densities (n th.e
15· to 25-scre rsnge S({l pe1minad.
DisCUSSiO!1S with developers lead the <;onsu\tar.t", to cO(lclude that existing
regulations as the.., 8fe implemented do not provide any aSSUrances of residentlsl
denSities in the 15-25-per-£Icre range. Dna problem IS that the averago ~iza of for
sale condominium units dictated by the dAvelopars' perception of the tr.)r-~ale mArkot
t5 rT'UJch lafger than the average size of the apartment units 6nvisioMO when the
Floor Area Ratios (fAR) called for in the mdin,ance were drafted. ThereforE, because
ot larger than anticipated \..lClits, the effect 01 the FAR rule is to decrease maximum
density. The combination 01 height, bu)k and pa(kmg regu(stiQns (two or more
parking stalls am required bv the market IO( higher-priced condominiums) also ale
working to lower the effective densi1:l{Js of residential units, Tha Ctfll me;v WIsh to
consider downzoning the shallower par~els along the EI CamIno iH)rll eN [0 RM-15
or RM-30 to encourage the orderly transition from increaGingly obsoletf} to mOfE~
desirable (sod uses whilo, at tl1e same [ime, altering the permitted parking "ti05 and
FAA'5 to reUeet the demand for someWhat larger-sIxed condominiums.
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Gruen GrUfm + Associates
The oMouot o{ smell stores and space en wOiCh &mell stores can be b\Jilt e,.,.ceed~
the dem6nds for !luch space. The r.,rnW\lI1 I){ l'\oncon1orming uses and. in fac.L tha
anticipation ot such removal, will tand to lower the asking prieD of sums propenie.<;.
'his Olav create opportunities for SOl"':! \!'\!'\ovet\>JQ (\ew feCffsatlO(\al and
enter\alnment UStt& bo(;h DS sports bars, indoor game centers ca1.6ring to youngor·
aged children, multiplex or specIalized movie the<ltra ';umplex6s, However,
innovatioos. 8(0 (\ot liket" to be Imple.m"nte.d \Ioless the CiW e.do]'\ts eo mOf~ i:e"ib\t.
Bnd PD~itivo policy towerd thO cruation of such new developments, ihul is becp,use
land assemblages lind/or maior remodeling efforts are likelv to ba required to cre~tf!
new us.e aPPQ(tu!1lties. Wovl(j·be land os~"'bl{ire. eM u'ffiMelers cO\Jld be
encOI.'IT8Qed i'f tho City adopted a policy th8~ enablec.1 developers to oorain
Confi(mation in advance that the C:t..,. would allow va(lances to a_isting regulatIOns tn
csses where f8d~velopl"nen\ QI' fe-h'6bilit0tioo wQo:d wenk to facilItate now viabbJ. uses
that craate no mort-traffic or other problems than the statuS QUO.
If the City wishes to increase the number of Palo Aito's (etadlvislti.)r enttlrtainment
developments ~\vi"S tl'\e (egiooal mnrkel, It mu~t "'e,l1ch ~Of opportonities to Cleate
rB\Btiva\y largo agglomerations. OIH~ gire that would soen', ided1 tor both a liH90 pew
,",oUtl and additional office .':P8C6 when the market for SUCh I).ses returns w<luld b~
tl-w! cOIner 01 Page M,II ~oud and E.I Camino. It is of"\hk.ely th~t the CUlfent O\IBr\ay
zoning over tho RickY's Hyatt property will ul")~(1urage thP. rede\lelopment of t hilt
largo site tur hotel use, ltw Cufr!!Clt demand tu' n~w hQ,el fooms I~ v~(" we"k
thlougnout the coontfy bm:auslJ most "roas are signl~icantly o\lfHbuilt. GG-I' Aha ..
not condllcted an Clnalysis of tho dOrTIMd/supply rl]li1tion~hip for the ety of Pillo
Alto, b\,It it Palo Alto's !';iHJation is Slmite.r \u mOSt U,S. \ocatmns, thore IS unllkel¥ \0
btl sufficient demand to oncourage new dflvelopmem until tha laHer part 01 1;ollS
decade. E .... en wl"l(ln this oow demand wOIJk1 warrant additlon(ll hoi'! I rooms., thop.
staif's pToposal, if! the 198\} Cily-wide Land Use t)nd rrrmsportafion Study, of a .75
FAR, would be unlikely to induce the {equi~ed fifl8ncial ,nvestm~nL A 1:' ~AR
WOIJIQ permit a tirst-c\ass ?"fiQ-room hotel "'\h~h lin'u,-eo CQ!'"Ite(f;(\Ca 1a(,;I!ti",~. A 500·
to 700-room facilIty With tntflllSB fB1:aillng development and the eb,lIty to nllindle
(egi<Jnal meetings mIght (eQuln! up to a 2 1 F-AFI" In order to create MW roaglQf\bt o '"-,,-.. __ . 5
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nodes of activities and encourage the adoptive and beneficial reuse of properties in
tho EI Ce.mino study 8(68, incree8ed planning flexibility snd 8 pfOMtiv8 attitude
towt'lrd crestivo possibilities would be helpful.
FUfthor. Bction should be teken now to relocate the nonconforming US(1', pt'lrticularly
automobile uses, that will have to move from the EI Camino in 1993, Thft
consuttams are not in the position to recommtllld a specific receiving {lfasCs).
Unfonunotoly. auto-related uses require large amounts of spactl at relatively low
ronts_ They also noed to be relatively self·conta!ned a~d isola tad hom highor~end
Commercial and reSidential uses, Regulotions that work to improve the eesthetics of
an ar€la militate against its use for automobile·rE!!ated 6ervices. Zoning can be
utilized to preserve en 8res for Auto-related uses but thi3 lonlng should not be u!lod
to keep other incubator uses out. The SOrA area currentiy contains a verioty of
uses that might conUict with fin Buto-related zoning. While we hav~ not studied the
eroa in sufficil3nt depth to deSignate it to be th~ best (eCeiviflg JQ(.!ation. Urban LanA
would appe.,r to warran~ further study for a potential reloniny hecause it offers an
aCCessible locatio('\ that is also welJ buffeted trom competing uses,
Finally. we recommend that the trends we have presented end attempted to
Interpret in thiS report be monitored by t"e City on an ongoing basis.
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CHAPTER I
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CHAPTER I
INTRODUCTION
STuDY PURPOSE
Gruen Gruen -+ Associates jGG+AJ was Bskad to evaluate the effect of the-policies
of the City's Comprehemi;ve Plrln on the revenue-generating .'bility and economic
viability of spveral older commercial areas i!~ Palo Alto, The study';,. o .. ~rall uojactfv6
was to suggest strategies consistent with Campr~hensive Plan p(Jlicits Hnd land use
lle~lIgnations for the commercial Bress to be studied that would m8Lnt~'n and
possibly incfea68 (avenues and enhance the economic viability of BetLvitie ... wittWl
these Dreas. Judgments were also to be n.<toe as \0 which Cr;om:'~;;TJensi\le pltw
policies and regulations may be retarcing econ'.:.rnlc viability because they wor~ to
discourage rehabdita'I(I/l and iJpgrdding of la('1d uses.
THE FIVE TYPES OF S,uoY AREAS
The City 8skad that we cOr'lcentratfl our effvrts w"1 four types of study areas with th6
greatest priority given to the E: Camino Real district tram Stanford Ave-nue to the
Mountain View CIty Limits. In addition, we were (0 evaluate the most likely future
of three olde.r neighborhood !:hopp1ng c:onHH'j; Edgewood P!8t:{j, Ch."iloston Cel1t,er
and Alma Plaza. The California AvenuB bUSiness dlstrlcr 8nd !he Tow ... &. Country
and Stanford Shopping Center were the remaining thffte 'Study area .. GC: +A was
asked to evaluate,
For each of the abOve study areas, we wertt 8s .. ed to Ind'CDt6
1. The sale~·per·sQvar~·fO(lt hierarchy by primary HH&II U'lt
found In each of the fes~:')9ctlve study 11'685
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2.
3.
The economiC, social and demogrsphic factor5
influencing the demand for retail sales in the past .;HId
future;
The historic causes of present ratall space s~IOply
conditions and the way in which the local r8al estate
market is likely to respond to existing and future
changE'S In public policy, economic alld rnerk:et
conditions;
4. Public policv changes that will encourage b13neficllll 6nd
viable real estate investments and discourage the
prevalence of undesirable foal estate conditions within
the study areas.
SpecifiC issues to btl addressed f,Jr the EI Camino study area includu, but were not
limited to:
1.
2.
The effectiVEInoss of the I"Io-,sl overlay lone; Bnd
TI)e relationship between the arTlount of !ilnd zoned eN
and CS and the likely demand fOr ttWSA uses in the light
of the flonconforrning use problem which entails the
zOning out of major auto repair faCilitlBs beginning In
1983.
For the three neighborhood shoPPII"Ig centart', wo were asked to address the
followinu specifIC issues:
1. The tlffect of si2:~ caps find other restriCtions Imposed
by current land use regulations;
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2.
3.
The likelinood tha1 multi-family hou.$ing or ~ome othor
use would, over time, be more economical than th,~
presently-pefmitted rlJlflil 6r\d (;ornmefcial uses; snd
The likelihood that undergrour.d pori(ing development
would be feasible to permit higher-intensity site uses.
Finally, we askod wh6ther the prosently in force 65,OOO-squarfJ-fout development
cap would limit the Stanford Shopping Center's ability to rt!rnain ~lImp(ltltiv(l 8s H
superregionel shopping center in future years.
STUOY AP.ROACH
In order to direct our stlJdy effort mosf effICi;lcIOlJsly, we undfirtOOk the following
study tasks:
'.
2,
3.
We r(hfiawed available (lconl)rni;,::; (iJt<) to obtain a
general lee I for demand condnions as they pertain tu ttw
if'dicateO study Oirflas_
WIJ undertook; ~itu Visits {lnrJ r'l"lfjt with I!;nowlfldgtj8ule
City staff end lTlAlnbt"'rs cf the busmess Cvmll1un1ty to
help refine OLlr ~!LJdy hypotheses.
We imerviaw('d kf'lOwtt,rJ!J~)~Jle ['l"Ien"\btJrs oj fhO rooi
estate !(1du~try, including developers familiar wITh
condition:; within Palo Alto commerCia! areas.
4, We evaluated sale') tax revenue data provided to u') by
the City's consuitant, Municipal Resource C(mSlJltant~
IMRCI; and
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Gtuel"l Gruen + A!lSOcll1tes
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5, We considered the t8al estate economir.s in the lIyh! of
tha indic8ted demand and the City's regulatorv policy.
OROANiZAilON OF THE REPORT
The next chapter of this report reviews general conditions in PatD Alto and the nation
95 they effect retail sales. The recent Irer d of retail sales in Palo Alte is roviewed
and future market COnditions forecast. Chapter lit reViews conditions and reaches
Conclusions concerning the Ei Conlino Real study area. the California Avenue
BUSiness Distfict and [he Town & Country Shopping Center. Chapter IV summarizes
our fegearch end analysis conr.erning neighb(](hOod centers. The Stanford Shopping
CentfJt is discussed in Chapter v, Map 1, which follows, identifieS tha locations of
the Commercial areas included in cur stuoy. A generic 1escription of relevant real
estate economiC relationships used to reach tha policy conc!usiorl!i dil':icussed in
Chapters III and lV IS presented as Lin Appef1diX ta thi'1 report.
~ " .. ,_. ,-,~ 10
!
.i ;:{
1
MAP 1: Study ~~locat;o~
Source: Gruen Gruen + A'i.$ociat.es
l.1
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f,j
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CHAPTER II
THE NEED FOR PROACTIVE PUBLIC STRATEGIES
THE CHANGING tONG-T::RM DETERMINANTS OF
RETAIL SALES IN PALO ALTO
As wo will review toward the end of this chapter, retail sales in the City of Palo Alto
have been growlnQ much rnote slowly in recent years than they have in tIle pest. If
the estimates of recent retail sales tMat one obtains from thfJ Cit\,'s sales tax receipts
were adjuSTtid for increases in the sales 01 tile nonrotail outlets that pay sales tax
(slIch 8S manufacturer direct sale!j) l.lO..Q for the effect of inflation. such 8 constant
dollar measure would show that in the 1988-1990 period Pelo Alto's retail sales
aClually declined. But before feviewing these estimates, we wilt discuss below some
of the factors likely to influence retail demand i., Palo Alto for the foreseeable future.
We wil! not diSCUSS the effects 01 the general reCeSSion, which obviousl', did
contribute to the recent decline in the VOlume of retail activity in Palo Alto stores.
ThiS influenCe IS igno(ed because lIVe understand that the purpose of thj~ study is to
provide Informat.on for tho.'>a reviewing IOcai planning policies, such poliCies, which
infiuence land use activity over a long period, Cannot be expected to rospond to tho
exigencios of the miativoly short-term bus. ness cycle. But, as we will discuss
below, 1.'16 basic determinants of retail darnand that are influenCing the SCene now
Bnd will affect Palo Alto JocatiOI1S In the long-te:m are showing ~videnco of changes
t~at we feel are very "'1portant. The bilsic determinants Include the growth of
populslion, the growth of it1come and emploYrTii!N, and tho percentage of income
devoted to in-store retail sales,
In addition to these "pufe demand" factors, the success of retail saies and the
development of retail agglomerations will and is buing influenced by signifiCAnt
nation-wide changes in the retailing industry. Our VIOW of these changes will be
discussed bel(!w, In addition to thOSe that more directly infJunn('e demand Taken
together, the changes in the underlying determinants suggest to us that the City of
~alD Alto must take a very much more proactive stance tOward ftttail land use
~ '2 ~ Gruen Gruen + ASSOCiates •
-------------------------------------------~.
£ ,
~
.~
::~
development than it h155 in the past if it wishes '0 Bvold declines in r8\eil activity
that will influence lhu City's revenues and the physlr.al and economic condition of 'fs
shopping 8gglomera1Ion~.
EMPLOYMENT ANCJ INCOME
Employment 6nd .ncome tend '\0 go hand-in-ha:nd. Ouring the 1 g70's and eariy
, 980'tj, the g~nttf.1 path of the employment-generating economy IIffec·.iflg PlIlo Alto
was strongly up It wliiS the rapid grOWlh of "Silicon Valley" that preserVf'~d th~
vitality 01 maf'lu!IJctu,,(I\l employment in the Bay Area and sp .... Hed the QrowtF'l of jobs
and incomes In nlan" seCtors. Palo AI(O benefitted because, as the seat 01 many of
the more impofillfH fl'search area development aclivltles. It W8~ at the economic
center of {ne lob m";fC'I~eS Bnd healthy employment growth. But based on astimates
of private employn,l'nt lemployml;lnt COV8HH) by SOCial Sl;lcunty) that we prepareci by
purchasing tapf:!s hum Ihe C(lnsus Bureau and using an In-hOUS8 program thaI
emplOYS ZIP (;o"e~ 10 50ft thfl data, the upward trend of growth seem recently to
have reached a zen.th We ~.til;led l.;p codes 94300-94309 Whit~h, whde nOT lOe.
percent coterminous. prOVide Ihe best lit ~or ttle c,ty. For example, the academiC
component of Star\to,d Un.vors.ty, which 1$ located 11\ liD Cl)d~1 94305, fall~ out51Ce
the City'5 bOundalles &~, we predict that 1I.I(llre empioyment growth wiil be at
8 much siower fiJtl? than it 1;1I8S In past decades and there is a real chanco ot
statlonury or eve (I declining eml-l'oy'-(H)I\t find i."Icomu il1 (rll;~ area,
In the recent past, ovorall employment in the City of Pall) Aito hOis shrunk, 3,93
percent with the number of jobs decreasing from 71,241 in 18~5 t.o 613,440 in
1989, Those duta are shown in Table 1, which indlca.tes the estimated Pa:o Alto
empioyment by inCustt'y fo( 1985, 1987, 1988 and 1989 obtained by utlllllng thR
GG+A prup(iot~Hy program to estimate private sectOl employment from t)ata
collectad by the U.S. Bureau of Census from social $o(;urity payrnents.
The two private sector categories showing the greatest increiis8 In urnployment tHa
retail trade which realized a 30 perCent inCrease between 1985 and 1989, and
13
Gruen Gruflln + Associalus
.;' ,
'~\'i I "
'fl
TABLE 1
Estimllred Palo Altg Emg/ovmem' by {ndvs{(y~5. 1987. 1988 1 a'fJ.9
INIImbto. of Employ ••• )
~!2WlIL.fn>m
lruIII>lJ:~ l.lli illl ~ 1m. llc§.Z fill fill , # • It % % %
f,LR.E,l 3.230 4,190 3,996 3,996 9.40 4,33 4,33
Agticutturs, For~stl~ ::!>9 180 154 177 ·30.50 -40,54 -31,66
lmd Fishing
Mining 95 9G 96 n LQ5 1.05 ~75.79
ConstructiOn 1,407 988 1.128 983 -29,18 -19,83 -30,'4
Manufacturing 03.736 21,968 20,479 19,784 '1.45 -13.72 -16,65
T,C.U.J 925 907 871 917 -1.95 -5.84 5.62
Who1esill'e lrade 4,728 ',232 3,911 3.315 -10,49 ·'17.2a '29.B9
Retaillrade '0,765 11,383 12,090 , 4,020 5,7. 12,31 30,24
SMV;COS 24,669 27,621 26,860 24,601 11.91 e,B8 -0,28
Unclassiflod 827 189 Q 564 -77,15 -100,00 ·31.80
TOTAL 71,241 71,754 69,585 68,440 0,72 ·2,32 -3_93
1 Emplovment u;clurl'nu 1I0~8,"mfnl ... 1 Il.nd O"t.~<: Ilrirr,i,,",lrlllion Ilq;vili .. ,.
F,n.n"", I.,.",on"., e.(ld f«"'! ~~\&\".
1 TfM'lIlI)O\'lloll<lI'I, "QmrT'Unl"a~,'ona, lind .,1I1I!'II8
S"1.I1C.":
~
u.s, Sur..,u ut ltle C.n.u8. Crllmty Ihufnus PlJf",,,& Spllci.t Zip Cqd. T~!lI~riu"., 1'95ij, 1987, 1988. 1(U'9,
U.s, r"., Oll,"~ "',,\10(181 !nform&tior> 0 .. 111 C,tI\('Jf. N,.IIon'" F'YII,Difli' Z,p Carl, lIf,d Pad OfflCt!l O""CfOfy
/19891; Gruen (;.u .. " -t-p..",,<},:,I"'.1i
14
GJuen Gruen .... Maoelate,
1
'I
;.~
~
" I(
fil'8nce, insuraoce end reel estate If ,\JUU whictl eXP8flc1ed by scmElwhut over 4
perC8:ot between 1985 and' 8S9. The m~r'luf3C\\Jrin9 &&<:'I\)' 6)1peri.:mcoo the \8t(Jj}fil
numericol decline. dec(easing by about 4,000 6rnplo.'188S be-tween '9S~ arad '989.
or by almost 17 p9rcont over this 4·vesr period, This loss, in m8T\\)foctuf\1'\g jobs is
1'\0 doubt 6ttciblJtBb\e to the g~nef01 downturn in the e\ec;tror)lcS industry and the
Silicon Valle'1 e.CQnUtl''I. In e.dditi(}ll, who\eg,ale tfad~ s)lper;enced on almost 30
porcent decrease with iI loss of O .... Cf 1.400 emplO'f8e.'o a:'\d ,r.&HI wa~ also 8 30
perc ant decline In construction consisting of e 4Z4·an,ptu't'ee drop during tnis SIlfl)e
tiens poriod.
Ttlble 2 prefisnts en 8stim;).t~ (If ~ante Clara CQ\Jl"lty pri'll .. le S6clor ~mp\O'ymM1 luy
industnal sector fOf 1985, 1981, 1988 end '989. CouM'i-wida employment
inC(1;"I3sed bV 4.67 perCMt betwoen '1%15 il'"ld the ana of 1990. Se(vlCas grew by
16 percent, O( bv about 31,000 emp!oyOe~. retail \I(\Qe by 9 percem. or by
e:pprOl(':rn"tely 11,OQO, ami wholesale trade hI{ 10 p~rcent, u( by 6,000 ~f(\OIQY6~S.
Togath8t. these 3 cMegories tlGcoum fM ttbl)ut an 48.000 Increa~1) OvC{ 'thIS ~-vf'.rll
time pariod. The manufa.~:tlJril'lg sector experienCl:ld D tounw-w,dlJ d'~cr~.3~e nl about
12.00Q emplo\fees,
Table 3 Dfesents t!'le 19B? and ~ g89 dl!,t((tJution of arT'lD~o'lment b..,. ',("I,dustri3 i, secto(
fOr the City Q~ Pal(l Att.u nlld 5antr. <:'ldf3 Co'.J1"'\\y, As mont,l,nerj above, botn t~l!o
City and tho County ~)I;po(iellced {H'fIplo-ymen\ d~cle"5es III \he man111actvr.ng br-,d
construction sectors as well as i(\ the less numericall" signlilCOf\t "gn,uit\.1f<'l\ <lnd
mining sectors. This 15 a bnsic shift from the '70's whe(l both Santa Clara COI.ln!'i
and the C1t'J's growth in the rl'\a~~j~actuf,ng Se.ctOf ie-I e~(;eeOeo lhe not' on-wille
gwwth rate. In 3ddi~ion. Sa!it~ Ciora r-\Oill\)"eo a decrea~f,' if\ t!"te pmcpnl oi F d\.L
Amplovo6s, while. the Ctty rea.li;::a,j an 8,6 perc<Jnt gain In r ,U~.E. ~mp\uvml'nt
between 1985 and tht! end of 1989 Trv~ CiW ot Palo Alt.o fealil£lcl mor~ SlgOiiic • .mt
percentage gains tr,an l.Iio ,ho Counw tor tf')a fetEd and wholesale trade StH':lors
thQugh, in both H ,<;tances, 'he C,ty !';tl)rtoo fit a lower p6rcent8g~ base. TrIO primary
cOl"ocklsiUl\ that can be dr0wn hem Table 3 is ,h;n both the Coun1y and the CI'Y
he.vQ. experienced 6, decree-se in their i{'l\port~f\t export c-f basic \f'ol.h.lS\f\tI\ sectoT,.
I,
Gluen Gru&f'l + ASSociate,
1.
TABLE 2
Estimated Santa C1J!lre County Private Sector'
EOORlsn!!!lImS' b~ ICdl.l5:ttii 1~85, 1982 HI:88 ~md ]aa~
INul'nb., of Empluy ••• )
~ ~(g~dll EUlm
Jmulliia)Jl!Jllm ~ 1J!8.l ~ 11111 ll.HI ~ §Hl! ~;.~ • • • • ',. % %
F,I.R.E.J 36,747 41,265 36,994 37,268 12,29 0.67 1,42
Agriculture. Forestry, 3,499 3,939 3,862 4,165 12.58 10,37 19,03
and Fishing
Mining 321 307 236 145 -4.36 ·26.48 ·54,83
Construction 35,879 34,451 36,885 35.702 -3.98 2.80 -0.49
Ma.-.ufacturing 236,919 214,978 228,085 224,659 ·9,26 ·3,73 ·5,17
T,e.U.-' 24,853 24,306 27,246 26.643 ·2,20 9.63 7,20
Wholesale TraGI) 59,480 65,747 66,333 65.469 10.54 11.52 10.0'l
Retaill(ada , 25.093 134,394 139,03" 136,409 7,44 11.'5 9.05
Services 188,502 211,466 217,207 219,076 12.18 15,23 16.22
Uncla.ssifled 13,94.7 3,B66 0 9,601 ·72,28 ·100.00 -31. 16
TOTAL 725,240 734,719 755,886 759,137 , .31 4,23 4,67
I Employment e"ch,.odln\o1 gOI/<ilrnmenltl Ifill publiC IU;I'll'nl.'ratlOn ""'iV'I,u.
Fmanll., 'n .... ' .. nll'. end " ... 1 .'!"'",
Tra"aport.tu:m, cIlmm'mlCIIlIon8, lind u\;itti6l!:.
Sl)l.tt" .. ; U.S. (1)'aeu of the C"nllu8, COunty Bu.*in.n P.rtlm$. SQacfal Z.p Cod, rcabul.,ill'lJiI, lQ8t., 1987, 11188, 1989; U S.
<Qf"OI' Oll,ce NelIDn.1 InlormallUn Ollt" Canl"" N.lio".' Fnll·DI(/,/ Z'p Cod'lfflrJ PO.Jlt om,.. lhr.f'fory 1198111. Gruen
[g (jrll"" +-Altoc"u" ..
Gruen Gru$n + As.OC'~te8
16
TAGLE 3
A Compltrilion of the City of Pltlo Alto With the
~~ta Clata 1985 Mnd 1 989 L:tT!p!oymem Dlstrjbuli.Qm
Q1'i..!tlJ'..llg....AJlQ ~~S~
Industrial
_~=L
F,I.R,E.
Agriculture
Mining
Conatf\lc!ion
Manufacturing:
T,C,V,
Wholesale Trade
Relail Trade
Services
Unctassified
total
lJlJlli 1Q89
% %
5.33 5.84
0,36 0,26
0.13 0.03
1,97 1.44
33.32 28.91
1.30 1.43
(j,64 484
15.11 ?O 49
34.6:) 3~.85
1.16 032
100_0 100.0
Change,
~~ tl!l2 Hill!
% % '"
86 5.07 4.91
-27.8 0.48 0.55
-76.9 0,04 0,02
,26.9 4.95 4.70
-13.2 32.67 29,59
10.0 3.40 3 51
27.1 B.20 8.62
3~,.6 , 7.25 17.97
3.8 2500 28.86
29.3 , .92 , .2tl
99.98· 99.99-
'To! .. t .. dB not equ"t 100 ~ .. rQ.tl1 UUOI !Q HI""oJ",IO.
Sllurc .. · U.S. BUlu" ~, th. C.n~~~, C"u/trr SIISlnflU f'w1l.fnS Sp.L,.1 Z,p
(; .. ,11 rlllu/(1",,"$, 1911';>, 1~s7, 19~1l. 1911:1: U.S. I'"at Olilce 'J .. t,,,,,,,'
;nfQ'm"t;on Data C"ruM, NfI,rou.1 F'~fI-O!iJlI ",p '.;;;dr .n,'-"IJu
(i;(!~'1 D,efll:'''''' Il~\l91; Gf .... " Gf"." .. Anoclat ..
17
Gtllen Gtven + A!.!.OCI8Ies
Change,
.Ui.I&J2-~
'"
·3.2
·14.6
-50.0
-4.'
·9.4
3,2
5'
4.2
11, ,
1.4
..
, ,
"., , ~,.,.""'.\.'.-
',. ;1
W-~" "
" '\",
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"
While there is no 1990 and' 991 date aveilBble, all indicatiuns such filS news (eports
of lay-offs suggest that the manuhn::tunng sector in Silicon Valley hlt5 not nOf is not,
likely to spring beck to its earHer domimmce. At the ~eme time, there has been 8
steady w~flkaning of the service sectors that is occurring nationrwide, Thera atG
few signs thllt the service sectors will rebound from their present slump before mid
to late decade. This, in turn, suggests the ShO(H8nge ABAG retoil model that
forecasts slow to no growt/"! in per capitli 8)(pendltures is likely to be cotrect, not
only on the County level for which elasticities were calculated. but for the City level
as well.
THE INCOME ELASTICITY OF DEMANO WITH RESPECT
10 RET AIL PURCHASES
The above discussion of employment trends ~UggBst that incomes may not be rising
in the fO(llsoBabla future as t/ley have in the last decade, In a docede In which
averago 'ncornes did just a little baUer than Inflation. Tills IS H problem, But that
problem IS aggravattld by changes taking pl<ice in the p6fcentagB of growth in
income tMt is tlilotted by consumers to purchases In retail stores, In the somewhat
arcane jargon of er.onomists, this i~ (eferfGd to as meom/; elasticity. If the
percentage spent is greater than the percentage increase in incomes, then income is
said W be elastiC. Conversely, if the percentage increas(I in retail purchases is less
than the percentage inCrease In income, thtm the income elastfcity of demand is said
to be inelastic,
According to a recent Association of Bay Area Governments IABACl retailing
analYSIS, a\imagfl household income within the 9-ccunty Bay Area Increased 90.9
percent between 1980 6nd 1990 (from $26,525 to $50,6471. while t3ay Area
median rent jumped 1;3 1.8 percant flom $274 to %35 pel' rflonth, lJnd the modian
value of Qwnar-occupied units increased by 152.8 percent, rJr from $98,100 to
$257.775 over the decade of the 80's ('311 GO[l",parisons are in constant 19B9
~, .. , .. ,-,,-18
f
I ,
dollars). During this S8me time intt'Hval, dispo!ioble income fell for (,lost Bav Area
residents, I
The ABAG trend 8nal'1515 levAaled a weakening linkage between personal incomo
end taxabie sale~ IjOro .... th within thl) nine-county Bay Region that can be ettdblJt~ble
to this reduction In d,~poSBble income occurring at the ~ame time thet (utpendllures
fuf housing hit .... e tl.:Jl1 ~o flse. SpecificaUy, sometime in 1984, there was 11 ~Ignificant
decrease in the ft':d!.Of'lShlp between fASI income gains and [he amount of Income
expAnded fOr 1(,:,,' C __ uds. ThroughO\)! tM6 -/O's and early 80'5, with a 1 percent
gain in le81Inco,.,. .. , p·t"\' was It 1.12 percent increase in ratail ~xc>enditu(eS, SIf"!ce
1984, this relat'o·1 .... '·D hE'S nQt held 1]3 households were required to expend a greater
ahare of th~1F !o",,.nl..rqg Of slowly-growing dispOS8bh! inCOFl'\e fur hOUSing,
trdnsportetion, h(>.l'ri'l and EI(1vcatIOn. This downward s~\ilt In Income elasticity With
regard to retaol ('.~,>t'f)dltures has resulted in a lOr"lger·terl1'l 1980-1990 elasticity
measure of ,912 tH1rj a SI'IOrter·term 1985,1989 mea5l.1re 01.848, which mean:) (ha(
for evary $1 .00 .nCf·~;)!ie In per capita income less than a doHar W;;JS expended for
retail ooods lind 'it'" ... ces. 'Tho el<Jsticity measures for S':lrlta CliHa Count v WAS
somewhat higher but SIIII did not reach il 1 to-1 expenditure levAl. FOI ~)(ample,
between 1970 and 1980, the 111come elasticity of delnal"\d tor taxable sales for the
Coumy of Santa Clara w"s 1.125 but for the 1980-1990 t:me period It h2:u drop~f'd
below 1 to .960 8etween 1985-1989, thiS measure h",d fallen still fl,lrther to .869
50 thilt only approKlmately $.S7 of oach additional dollar In per cap,ta Incomo WBS
being expanded for retail 1J0ods ond serVices, For the Bay Reg'on as a whole, had
resloonts devoted the Sdml' p,-,rct)!"lt of growth in inc';II'Ile to retail pur(:ha"es in i 990
as they had in 1965, the Region's retail sales would have been 1 ~ percen! higher
than they actually WUle. rhe Af3AG short-term 1991-1995 forecasts suggest';. a
continued stagnatiOn or 510w gt.)wth in f~tail salas throughout the ,"line-county
region,
lSource: T(lItld A"Blv_'<'~, A," Ti"tld!l Uulul (Dr Prv}IIC"'1f1 RlIl.'-1 Tt .. dll .ml S..,,,Ir,,_', ABAG,
'E'IE'o.,d StQlemb,', 1 991
)9
Gruen Gruen + Associates
< .:,~
','
~.
T~E CtiANGING RETAIL INDU.STRY
While the factors discussed I!Ibove wi\] influence the doUars. available for retlill
pucche.sos. direc\l\f .• ctl,ltll Bl<penditures in SlareS arB alsO ~O!ng \0 be. inHuc('\ced b'l
the changes Wlt",m ttl~ Is\eil inoustrv disCus$@d balow. At the saMO time, therB
tuwe been both n.1I1.0I"la! and regiol"1ul e(;onomlC 1actorS e)(~rt\!'\g downwerd pressures
on retail sale.s, t~f. h.n a\so bticn ch.anges in tl"la retailing industty that hav& altered
COnsumer (J,.;pen-l'h"f. ~1,ems.
The levefa9~d b ... " (.j.,lt foJror o( the 80's had a particularly oOMO!')!) impact O(l
department stO't'\ tv'.;,ng sucn retaihng gi:t'nts a~ Federated De(!(trrmeot Sto(es Into
b8f'lk.(l,.Iptcy. 1,..f' ,,,,. ... 11 of finMclal wheeliflg find deiliing h{lv& had a deloterious
effect on the e,tJ,l,t, of mun'j Cllsh-shorl departmfll)t stores to allocato st)tticiAnt
resources '0 {tie (nt'r(:handislng end of theil el)talpflStl. These actil/it~!; took place in
a decade In which Ar11erlCil was e .... idenci('lg a greater polarization In Incomos and a
COllcomitallt ~tI"rI~ll\g III the number of mlcdle.-\!Icome hOlJseholds • which
\1Metofore Sell/'l'd' 115 !!"Iese gC('IcrallTlerchandlse anchors' primary cu~.tOT1ler bass.
Partially as 'a 1i.>5POllW to thiS polamation In Inc-ome, thl) SO';} S3W a pro~hHation o~
the off-pllce, d,$COl,.lrlt, 8(\(J power cenlers These new typos 0' discount and otf
phce centers are e~t'octlng 8'\ increasing share ot those consl~mer dQ;lars that had
heretofore beeN ellpeMerJ at the trrldit!onal department 5l0(es. Tna off-price center
typically offers n~mc brands, direct from factory oroducts !ike Bllrlingtol1 o( Nike.
etc.., W\"'lI\S power cent{!fs uHm d,s:::ount" through high-volume iow-marg\n sales.
llower centers lue so namad boca use of their obihty to draw from an oJ(tended
fOg\onal maf\!;et area and because of theIr high s3le~ vollJma era Bble to ect-lieve
gr(latBI turno .... el m .... emOly than the t,adltional department storA chain, While all ot
these operations pay relatively hlW leas!:! or rontJI (dtas, tho!r hllJh sales. .... olume
make them highly deslfable OO(',fat(Ons to cOInmuni\lilS \ook'ng for sales tox doller
genefators
~ , .. ,,",.~.,-. 20
An increaaioo proPoftion of J6tail dollars are being dlv&rtec to CBIBlog ~8Ios, For
many upper~mlddle·Cla!5!1 profossionais w~o haQue(ltly fi(ld 8n even groater SPlQrtBge
i(\ di4f')Osabte timu thso thoB'{ do in diS?Q'Se.bl~ dolla(s, ce.te1vgues seNe as the retoiler
of cnoice. not only for gifts but clothing [.nd household goods 8S weil. According to
th(!l Oot(]bo(, 1991 issue of Mirabel/OJ, 8 WOm8n'G fashion magal".ioe, ~4 percent of
A\TIerice.ns shopped by I"'!oll II) 1990 respoMlng to n .. 6 billion catalog\.las $&t'lt \hot
yaar. ihe 90's will not only see e prolitoration of such print media, but will al'5o :j8P
electronic media sales increase once optical fibers s,Qnificar,tly expand T,V. cho('l(le
cepBclt'j end ints,.. .. c\ivs \e!eVisioll becomes r(,ore common. Ins1.tlad 01' gOing to \1e'
favorite (IIppa(sl Gtora, a busy woman would be able to Indicate het actual
meas-urements on her homo Ot IIffiee r::;l)ffiPl.ItOr and computer 9(SphICS will ~how twc
how 1he item 01 apparel wi\! lOOK on oer body conf,guratlof'l without tim h,rvlng tfl
lellve her chair. $1,.1I;h ('\t')r"lstorl:l retml sales will not onlv rewrd the growth In demano
tor additIOnal retail space, blJt Will alSoO rCl,tvce th.e em(lu(\t o{ tUtUfC tax doUafs thnt
will om~r the ~ofle(!1 u1 loe;)! m\lniclpalltH~S.
THE ESCALATION IN THE AMOUNT OF RElAtl SPACE
DurIO,] the. decade. of the 80's, both tt"l~ (\~IIO(\ and the [eel-OO e)(.peri€fK .. ed s
significant growth in tht! Dumber 01 retail oullel.5 ar.t1 the flJ'f\Ount of t"'i\t retail
space, itlis 'Incroase in retal) space has rosl,.Ilted In an Ove(supply 01 square footage
in 6.Hip, rV;J,gt\borivJOd and commuT\it""slzed shopping centers. The Impe.Ct h<1S be\)(\
181t mvch lass try tho \(tfget-silt>d regional and super-regional 5hoP~.1I1I9 centers Since
onlv 8 relativlJly few (typiC<;lIlV les~ than SIX) /1t'}W On.I~S ate built each year nat;oll.
wice.
The ABAG retail tfO(ld .. stl)<'1f (:(lru.::lvdos thAt the B,i." Region underwent 8 s.ignlt\c",n~
9fOwth in the numbs! ot 1etail outlets duflng the decadf) Q~ ttl" 80's. auf ,rlls
increase was accompanied bV a significant a"wnward shift in The (i~r'<;lOr(j sa!e~
f61/61'\UeS. Fo~ (!Xt\mple, the Be .... Ar<el\ (;O\"IH~I"(llj 3,723 8(JpHrel stores If) '980, 6'1
1990, thare WerO 5,719 apparel stortl5 in the 9-counry region. 'ThiS 5;-'.6 percent
inCCEl6SQ in the number o( 8Poarel stores, howe-IIe(, W<tS 6.cCcmpaniad bv a. , 9
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;~~ percent declease in the average annual sales (In 1989 ciollars), The average salel
per 1980 apparel Store was $473,000 but, in 1990. this ave(age hed declined to
$383,000 (both in 1989 dollars). This same pattern was identified for BEtting BI,d
drinking places and specialty stores sales. The number of eating and drinking
establishments increased hy 29.9 percent, while the average annual sales deolined
by 9,0 percent. The number of speciaity stores increased by 141 I:mrcent, while
sales decreased by 38,6 percont from 1980 to 1990,2
Given the projected slowdOwn in rotall e;.-"onditures, the spate of additional retail
out/ets is not likely to continua to escaloW in the 90's as it did in the BO's, As
dynemic new fEttailers anter the market, the less enterprising well-!ocated Hnd
flnat"1ced of the existing merch,mts are likely to be forced Out.
RECENT RETAIL SALES 'TRENDS IN PALO ALTO
Before going on in the slJbsequent chapters o! this I-eport to discuss the specif,c
Commerc,a! Sreas we hilve anaIYi:6d, we will rOVieW briefly tho (a Cent history of all
retail sales in Palo Alto. In the light of the changing retail environment Wij have
discussed above, Hnd the rar.ession, this history is not surprising. But, taken
together, the sales history and thtl future environment for retail activity, H policy of
proactivelv building competitive strength in t~lose locatiON. thet hOVEl the
charHcteristics that would make tl1em "iallie (;omj)et:tlo~ wou(d be sound pubiic
pOlicy,
~nqes in {tie C~ Sales la~ Patt~rns~.l9--Bli~_2Q
Isble 4 presents ct)anges i" the City of Palo Alto taxau!~~ sales bV ml:l\or r(ltail store
Category for the rBCe,'t 3-year 1988-1990 timo pO'lad. The figures presenff)d flrEl in
reporred dollars and have not been adjustea for InflatIOn. While the City experienced
almost H 19 parcent increase ifl total salas (rofer to tne la~'t row in Table 1), almost
1iA. '~ ~ 0 •• , •••• _,~, 22
"fABLE 4
City of Palo Alto Taxable Sales
bY RMii' Sal~!ttQ!Zfv; '985·1990
.... I<XI~I\
Type of Cnange, '.:1\8nOl",
fulJlOUi llaO. JJUlJl lW TI].Q J..I!Jl:>cUllQ .1~88-,g1Q
$ , $ $ " • .,.,
Apparel 69,996 65,488 74,835 72,804 4.0 7,Jlb '1.2
Gynefal M.rCh .... diSe 174,000 211,895 211,&59 246,709 41.:1 34,814 16,4
Orug Smuts '1,046 7,8f;t6 8,058 10,01)8 42.9 2,182 :'7.J
Food Storus 22,084 22,564 25,372 27,982 26,7 5,418 24_0
rackfJge Liquor Stores 4,621 3,694 3,&22 3,105 ·31.S -529 ·14.3
Eating & Drinkir)g 95,387 , 12,966 109,132 n1,671 17,1 -1,295 -1_'
Place!>
Home FUrr'lishmgs 23,046 31,358 36,469 36,178 57,0 4,820 15_4-
Bfld APOliMCe'i
Building Materials 11.241 13,163 12,016 10.111.0 ·9.1 -3,015 -n.'oJ
and Supplies
Auto Dealers and iOG,138 103,900 , 12,046 83,008 21.:l ·20,392 -19,6
SUDpliu!>
Servict1 St8~ionli 32,21!;1 26,380 76, 9~B 28,428 ,11.8 2,048 'J 6
01her Retail Store.'!' 112,601 119,(;78 137,422 135,720 20.5 16,O3} ') .'1
RETAil SALE5 6!i8,381 718,~J22 75/,419 116,381 11,8 17,4!>9 1_4
tOtALS
All Other Outlets l 375,438 350,332 427,2e€ 535,323 4]_3 1'-14,991 51_B
TOTAL ALL 1,0:13,819 1,0()9,Z54 1,184,705 1,271,704 23,0 202.450 183
OUTLETS
IFI",,'"'' h"ve nol b .. "" f1<1i'_,,,I,,d I,,, i~IIBhorJ
111'l'llud" •• uoh il.,nB "" buill. ahd "'~Iol ~\,ci,,. ,,'II"., ~I"I. "m] K"lloal B',,'phu. iI,itB .• rl "uodl .nd ""~.II ••• ,
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hat.II/""u.I., b •• u!y/ll",ller IhopI, ."'u~Bm""1 P"''' •.• I~
$a\l,,,"II' T,.~lfblll ~"'"5 ttl C""flJl"''' {SltilH .nd Us. T.~J. C.I,lo,,,,. 5HII.
Bu",.,i al E'lU"i, .. IIQ". 1'.111'.', 1'.111l}, l(leg .''0 l'.1'.1Q: GI"." (i""I" + A .... "I.! ...
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eU of the net increase js Bttribyted to the "all other outlets" category rather than to
the {.tojl salos totals categQa, The all other outlets category include£ thO!'lB tIXable
50108 associated with bu~iness and personal sotviCds, rnanufactuto($ and
m8nuf6ctu(er~' factory outlets, wholesalers, hotels/motels. beauty/barbor shops, etc,
Salas of elf;lctronic equipment, for example. is 8 major contributor to this "all other
outlots" Ciltegc.ry, As shown in Table 4. (atei! sales incrassed by oflly e.1 7,459,000.
Of 2.4 percent. betwoen 1988 and 1990, while all other outlets increased by
$184,991. or by 52.8 percent. If CPI inc(Oa98s wero vectored in, the City would
have actually experienced about e 7.2 percent (lCCrHase in their 1988-1990 retail
sales tax total.)
One factor bahiM thiS small 2.4 increase in the nominal retail SHies totul relates to
the actual $20 + million decline in the auto d8slers and suppliers category. The
drama~lc slowdowr"l in 1990 automobile 9(11es can be directly attributed to the
down{ufn in the national economy. The slowdown in construcf,on activities that
also took place in 1290 can bo credited with the 1990 declil1e in building materials
Rnd supplies sales. Tht'! geners! lTlen:hRl'1d!se and other reHlil ~tofe5 cstflgc(iflS
showfld large increases In taxablo saies with tho former experienCing an almost $35
mllliOr"1 and the latt8r a $16 million rncreaso 10 1,axable ~ahJs betwaert the end of
1988 and the end of 1990, The other retail slores category include, such Items a5
boats and mO{Ofcycles, oif,c{l, store ('lnd school supplies, gifts. art {loads and
novelties, sporting good!>, flOfists, etc.
REC.ENT ~EIAIL SALES TRENOS IN SANTA CLARA COUNTY
Table 5 presents the taxable sales by retail sales categories in Santa Clara County
for the same time period, 1985-1990. The last two columns in Table S show the
percentage change for 1985 through '990 and 1988 through 1990, SEtveral
catogories that were shown individuallv tor the City's taxable salas, SUI:h as food
and packaged liquors, gonorsl merchandise l:Ind all other outlets, auto dealers ane!
J 1h8 cumul8tlY8 chlnge In 11'1" tJj::. ;"'" ,,'W,"" 19" "od 1990 ~ "'-,'~ '" ... ~
CPl fur tflll 8an Fr':lncilr.<I. Oakilln<1 lind Sari JIlIIII '''''II waH 8.8
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per$ooal &eTvict! category is shown as a distinct cat~go(v (rom aU other outlets In
Teble 5 but are grouped together in Table 4 intO one ell Otl'161 outlets ctltegory,
Despite these slight differences in the grouping of categories, the following primary
conClusions can nonetheless be drawn.
In botn the ",o(e .e)l;te"ded <, 985-' 990) aCId mOte recent ('988-'990) tima period,
the County showed healthisr growth than did thll City in the apparel, osting and
drinking place~ and 6UtO dealers Bnd puta supplIes categories. Pltla Alto experienced
more dynamic grOwth in The following categories: general merchAndise; home
furnishings; Bod 8H othe( outlets, Though the County aiso realiztid Its greatest dollar
increase in the nonrauil bu~iness and porsof"lEt\ smvices end 8\\ other O\.Itlet &
C8togories. the COWnt'{'5 1980-90 increase in these nonratai,; goods categorias did
not march that of the City. Because tha all other olItlsts categories is SI.JC~1 a major
contributor to the City'S total taxablo retai! salos base, It explains why the City was
able to increase it:'! ptOpoftlonSi sher~ of the COl,.lnty·s ,mal taxable base from 6.7
percent In 1980 tu 1.1 percent in 1990, while not being able to hold (10 to its
ptoportional share of the County's retail sales t!.lX total.
~~,_O,_"._ 26
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CHAPTER III
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INTRODUCTION
CHAPTER III
THE El CAMINO REAL, CALIFORNIA AVENUf
DUSINESS OISTRICT AND TOWN &. COUNTRY
COMMERCIAL AREAS
This chap,ef of thH report ~aJmminizes the (ijsearr,;h and flndiogs of th'J (~tl!oi\ 81..1(111
cOl'1ceming three unique commercial or5'3& In Palo Alto· the portion of the EI Can",.,o
Rsal trom Stanford Avenue to thu Mountain VI\jW City Limits, the Cutifornia Avenue
Business District, and the I;Jwn & Country Center. TsblQ 6 pI'€Isent~ a. $ummarv 01
taxahle retail Selles in 1988 and 1990 that permits COm(MlislJns af sales Hends and
shifts in proportion of sales within the ragian fOf all of th~ coo"une/Cldl arMS stueied.
tho City, I;md Santa Clara Cour,ty, Starting With a diSCUSSIon of the [I Camino Real
study 8te3. we review, below, tho presant and likely future mark;et condition3 .lind
investor behaviof in each of tho aredS Aft~f each of the tllree areas has been
conside(tld, thiS chapter er"'lds With a review of the IInpl!cations of the situation tm
planning polic'Y,
ihe policy implications pmsel1ted below are based on consideration of appi(Cdble rea.l
estate eConomiCS in the light of the forecast !narka! cOfldltlOns Hnd alternMlve
plSnnM\g policies. The Aj)pendD( to thiS report contains toltlles. rmd a diSCUSSion (1f
the economic relfltl'Jnship.s that apply to retail, reSidential and office deve!upment in
the study a(eas. "rho "umbers presented In cha tilbles of the Appendi .. represent
generic situ&\\ons under identltied and, W'i"! believ~ comparablQ, tiss\Jmptlon ..
concerning costs and c(lnfiguratiOns. Tho real estate eConon'l:c relationships
presented in the APpendix werO drawn upon to (each the policy COl"'lciUSIQr)S
presented at the sod of this and the subsequent chaphlfs of '{hI!> report.
27
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TABLE 6
The Study Area's Share of
the City's Total Taxable Revenues lind the
the City's Share of lhe County's Tot&1 TB',(§hle $ole$; 1988-199Q
Poteent
of
City
-~ Jilim.. jllQ
$ % $
City of Palo Alto 1,069,254,000 100.0 1,271,704,000
Study Areas:
EI Camino Relll , 19,244,700 11 ., 103,710,300
California AvenUB 44,108,200 4.1 46,109,600
Town & Country 20,686,900 1.9 19.367,900
Stanford ShOPPing 306,730,200 28,7 320.358,000
ContsT
ThroH Neighbor-, 4,468,200 1.3 14.158,600
hood Cenlerg·
Percent
of
County
~
%
Santa Clara , 6.020,805,000 100.0 17.914,404.000
County
City of Palo 1.069,254.000 6.7 1,271.704.000
Alto Shote of
County Sa:es
-rh¥ Aim". ChllfllllltOfl .. nd fdllBwuud Sh,W""'U Cllro!~rs.
Soure •• · M'HlIC'PBI R\I"lIoJ'~. CUfl5L[Usroll; Tlul CRli"~fn'" SIs' ..
B<lBrd lit Ea ... aIi16I1u~ •• Gru .. n GruBIl • AflfmdBtu.
~ 0--0"· ._ ••••
28
Percent
of
City
~
%
100.0
8.1
3.6
, .6
25.2
1.1
Percent
of
County
..:ililmL
%
100.0
7.1
Difference
lllIl!:.U! 90
%
18.9
-13.0
4.5
-3.9
4.4
-:2.1
11.8
THE EL CAMINO RfAL
From tho inception uf the study. we were instrur.tE'd to COnC8f1tr,te OUf efforts in
antJlyzing the future of the EI Camino Real as 8 vlabie commercial district. Some of
the significant policy iSsues 8SS0cI8ted with the EI Camino include:
1. ReHtI'l8nting problems aa'mciated with 1993 being !ho
target year ir> whir,;-h many of t"e nonconforming uses
(primarily auto repair facilitissl will have to ceaSI:! their
Operation.
2. Pllrc(;l'lizHtion problems that make it difficult to ag9rega'e
suffiCient Hcreage to facilltsts laroer-scllie
developments.
3. The number (,1f older/obsolete rIlJtel/mote! facilities elotlQ
the (I Camino And tn/3 lik,(!lihood that thf; peci/il hotel
ovurlay zoning Will encoulHge trls upgrading of elllsting
f~cilitles or the devalopment 01 new hotel 'aeiittles.
4.
5.
The increaSing comUatltion orrgl116til1g from Menlo Park
and MO\..Jntain View 85 these C(lmmUnitles upgrade thlm
COmmerCial uses along EI CamIno R.eal. ihe Sart
AntoniO Center In Mountain View is being upgraded II1IQ
e power center. while Menlo Park has a com.entrBtlOfl Of
autumobile-re!ated uses near 10 the Pula Alto
jurisdictionvl boundary.
The nOftd to find suitable rt}locatiQr"\ site~ Within the CIty
of Palo Alw for ::>Ome of the nonconlo(lning service
uses.
Gruun Gruen + AssOC'tIIt.8
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6, The impact of City height. FAR, parking Dnd other
regulatory re!ltnctions upon tho feasibility of proptJrty
owners respondino tl) the above issues with the reu'!l'!
and densific8tion of existing properties.
THE HISTORICAL fVOlUTION OF EL CAMINO REAL
Many of the physical problems such 6S inadequlJte parking end difficult accessibility
of the older properties alanQ EI Camino Real stem from the wic1eli~('Ig of what Mad
been B two-Ians road which cut away thtl1rof"lt of existing development, 'The ability
to provide parking to the rear of properties 13 constramed, As one driV'os further
south, because the amount of area in the rear decraases on the west sioe ot the
stre~t end is already very narrow on the east side of tha shea!. The level and speed
of the traffic is such that EI Camino offers only {I limited "billboard" effect for those
driving by tha man'll outlets located on both ~Ides of the righwav.
In our walking as well as drive-by tour of thOSH sections of the EI Citmino located in
our 5h1dy area we found the hodgepodge uses that anA as,ociates With many (I1der
striP developments. There are examples of successful converSions of
nonconforming uses '(ILJCh 6s il garage that t1ad been converted to a nur.$(':ry, There
are other examples of successtul eXhHior remode!lng jobs of both individual and sets
of stores. But there ere al50 examlJles of smal! unkept vaCant lots that, in the
absence of the ability to readily create larger paresis, are likeiy to remain unused and
unk.ept for many years to come. We also saw an example of a new high-denSity
residential devolopment which had recently displaced some obSOlete and
nonconforming co.nmerciai uSOs.
@}J "--,,, .. _".' 30
CHA'IIGI:.S IN THr: STUDY AREA's RETAil BASE
AND A COM~ARISON OF THE STUDY AREA'S SHARE
OF THE CITY'S TAXABLE SALES
EI Camino Real ~xperiencod a 13.0 percent decr68se in tHxable 5alll1$, or 8 docreBse
of about $15.000,000 betwaen 1988 (lnd the end of 1990. TOwn & Country'S
taxable sales dflcreosed by about GBOO.OOO, or 3.9 percent. while togf.tther the t!'lrBe
neighborhood shopping conters resli2:ed tI soveral hundred thousand dollar ,sin avor
this 38me !l-voor period. Californio A .... onue end the Stanford Shopping Center dRch
had I'In over fOur percent inCrease in taxabla Stiles. Th's translated Into a $2 milium
gain for California AvenU'1 and a $13.6 million InCleaS-ft in taxable sales iOr the
Stanford Shopping Center. It IS ImlJortaM to point out that, as ot '1990, tht.<
Stanford Shopping Center still con(duutAd one-fourth of the City's total tsxablp
sales. In ~ubseQuent sectio"s ot this chapter. mort) detailed taxable sa)!}S
b(eakdowns for each of t'le Study ar~as ere presented.
The City eJiperienced a slight increllse (from 6.7 percent to 7.1 perCl'int) In their
share of tho CountY's total taxable sales Nttw~en 19fi8 and 1990. 'Thl'i increase
rolata~ to tha fact thl;lt Palo Aito total tflxHble base inuaO'jed by almost 19 percont,
while the COI;nty's increased by (loprmcimarely 12 percen', during thiS same 3-veor
time ince(V61.
A r.ompanson of sales tax revenues ger)erated from total retl.lIl SHies With thCJso
genereted from nonrmail outlets is shown !or two of the retail study areas· the Ei
Camino Reel and California Avenue -and IS Dr~sented in Table 7. Tn~ date In Teble
7 was dmived from saies tax revenue print-outs prOVided to us by Munitipal
Resource ConSl'ltonts (MRC). GG + A rBcat~gorl;z['d the individual r61a,1 codes ,nto
primarily reteil store and nonretail store c~tegor,e"l. The retail stores ca1egory
includes the following; rf'ltail sales and ~poc:alty foods; food end beverage excluding
restaurants: restaurants inciuding notlll and bowling vlley food service operatll.)ns;
pharmacy and nonstore retailers; home furnishings. 8IJpliances and sHond·h6nd
furniture; nursery end building matenals; Auto {'nd auto supplies and Service stations.
NOnretail includes 8uto rentals Bnd vehicular repair, DOIsor"lal s'::!rvices, husine'iS
r
Gruel'1 GrUfln + Au,ocillllf1s
, ,
~.~.
'" ,
,"il'
.~r>
;f'
~ l:;:~;,\
TABLE 7
A 1986-1990 Comparison of Sales Tax Revenuas
Generated from Retail Stores and Nonret8il Outlets for City
of palo Alto, and the EI Camjno ReBl a~~O AVenue Stydy AcQ..Wt
EI Camino Rsal:
Total Reta;1 Sal~s 1
All Other Outlsts'
California Avenue;
Total Retail Salas'
All Other Outlets"
City of Palo Alto:
Iota I Retail Sales
All Other Outlets
.l.R!!
$
95.131.800
24.112,900
20.603.300
23,504,900
718,922,000
350,332,000
~
I
82.695.400
21.01 4 .900
21.613.700
24.495,900
736,381.000
535,323,000
Percent
Change.
1988-1990
%
-13.1
-12.8
4.9
'.2
2.4
52.8
Include. lallawlng ratllil dorY ~lIllIgC"U, rijlB,; aflles IIOct IIP"'~lllity foodl, food ""d b"verllul IxcH.tdil'lll
,.lllIurllnls; .""llIu • .,"I(I. including hnU;ll/bowl<n\l 1II1HY, el;::, ultlbiilil'lmlintg, phllrmll"v/nonllOrl ffillil., .. ; haml
!u,m.hloge, ,PP:lllnCII nnd &IIco"ti 1-111"'-' lun"lure; nUr5<lry Imd oUlldmu maT8r1!1j~; BUlu oml lIuta luppll,' lind
I"IVI,,' .tehoo •.
Includl. 'ollo"",il'lll nometell eel"lIowlS 111.1111 '1"1111111; vehicu!a. '8~1I", plt'''lmBI IIr>'iclIlI; bUlllnltn .,r\lic .. I;
IhhltrOni" equipm.nl; hili II Indust.y; lind III! ;;'1~lr.,
Sour"". MUlll".p.1 A",o\ln:1I Conn.j!"",., ~I.III 01 Cllilform. STilI.
601l..t uf E(lU'II'l"llon, Grcj~" GI(j~rI '" Auoclllln,
C9J-o-""~-32
servioes. elacHonic equipment, hght industry. and a variety I)f smillier categories
such as nonprofits,
As 5hown in Table 7, £::1 Camino hBS experiencad a ~omewh8t less than $13 million
decrease in its total retail salee Bnd 8 .$3 miUlon dfOcrease in its :;::Jxable ra\fen\le~
from all other outlets. CalifomiR Avenue had about .8 one mililon dollar gain il"l
t8)(ablo sales rav~nues from irs retail outlet~ and almost another milliof'\ in taxAble
5sles originating from its nonratail outlets,
An Ar.alytJs of the Type of Business
Activity In the EI Comino~t.ti.&.t
The 1986-1990 change In tl1l] amount of sal os tax r8Vfmues by major type of
business activity located within tha EI CBmino shopping dl"tricl 15 shClwn in Table 8,
rho underlying data in Table g were derived from print-outs provided to us by MRC,
Except for B v~ry few large cat~gories 5uch ;;is personal dnd business. Servlce~ a"d
electrcnic eQuipmam, rnost clltegories were grouped tl)gether With like categories,
For e;(arnple, home furnistNlgs was g(uuped With a;;.ollaf'lC~s and second-hilf'ld
furniture end retail saies was grouped with ')110Cialty stores. in r)O Instance does a
category contain fewer t'Hln thretl firms and, In nil but One or two tnstallCes, the
cl:.itegories contain more thilP SIX outlets,
Tho Huta sales/HulO suppllflsfgasoline station category accouflts tOt the 13rgl;)51
significant 1988-1990 decrease in salus tax !Ol{el"lues. 'This ~ln9le category
experienced It $11,5 milhon. or 25 LIOrcent, decrease between 1988 and th~ end of
1990, Much of this 1990 dE.>cnmse In auto sales and r~!.;ited serVICAS categ,)ry 1:\
due to nation-wide reCOSSlOnary pressures, The light 'Industry category
(-$3,108.900), the combined fotail stiles and sot)cialtv store$ cetegc,ry
(-$1,'676,400). and the bU:')lness service category (-$747,200) also e)(perlenced
tex revenue dacr(:ltlS6S during this sarnA time inlArval.
33
G'uen Gruen + Associatt)&
"
. I
\
,.
I· ,
" ~'." . '!
.1, -
TA8LE 6
Change in EI Camino Sale9 Tax Revenues by Major
Type af Busine.ll.~ilYi...-.W~
:!.9M
$
lll!ll ~ ~hange 198~
Hetail Sales and
Specialty Stores
8,226,50Q
Food and Beveroge 2,988.300
Excluding Restaur",ntS
Rest8urants 30,860,900
tncludin{l Hotel and
BOWling Alley
Establishments
Pha.rrnacy/Nonstore i 68,800
Retailers
Home Furnishings! 4,603,100
Appliances and
Second Hand
NUfS6ryand 2,277,100
Buildlr.g Materials
New and Used 46,005,400
Ca( Salas/Auto
Suppli8s/G;:Isoli n e
Stations
Auto Rentals
VehiclJla( Repair
Personal SOfviCes
Bu~iness Se(i{ices
Elecvonic
EqUIpment
light Industry
All OthO(s
TOTAL
4.510.000
2.830.900
1,659.300
2,264,100
7,905.600
4.415,200
527,200
119.244,700
$ $ $
7,592.600 6,550,100 ·1,676,400
3.050.000 2.920,600 67.700
31,044.400 31.506,700 645.600
89.600 i 11.100 ·57,700
5.354,500 5,291,800 683,200
2,356,200 1,922,100 '355,000
59,458,700 34,439,500 ~11!565,9OO
4,795.400 4.473.700 -36,300
3,193,500 2,888,700 57,300
2,043,600 n.B.
1,"38,400 1.517.500 -747.200
12.049,400 , 0,282,200 2.376.600
2,121.400 1.306.300 .3.108.900
530.900 546,500 -15,600
136,218,600 103,710,300 -'5,534.400
riA. S"",o", MUn>Clp81 RIIB[]Ur~~ Clln.ulttlnt~; Gn,B" GrUBn + AUOCi.lllflH
~ G'uen G'u.n + As""« .... 34
%
-20.4
-2.3
.02
-34.2
14.8
-15.6
·25.1
-.008
.02
-33.0
30.1
-70.4
-2.9
-13.0
The biggest salas tax tevenue increase was experienced by the electronic .(Juiprn'!nt
outleb. The 1990 tox revenues for ,his C8tfJg(lry increased O\l~r $2 millio,",. or by 30
petcent, over what they were in 1988. The two other categones making si\lnific&nt
dollar gain, include the home furnishings. appliances and second-hand stores and
food and beverage outlet~ excluding reSU~~lrants. Both of :~ese categon~!1
8xpefienced greater than $600.000 in inCreased taxable (Elvenue, wh:ch ttS.,Sl8fcd
into an almost 15 perCl3nt increase for the formet home fumishings and a very small
.02 ptlrc~nt gain for the food and bevar6ge Cutegory.
THE El CA'"/IINO REAL HOTEL/MOTEL MARKET
RickV's Hyatt is the dominant hot~llocated on the EJ Camino, 1"hero ore numerous
smaller viSItor facilities, SOInB: of which have undergone recent palm jobs, But there
are few s'lgns of major physicallmprovaments.
The primary ovr;rnlght EJ Cammo RBal visitO( IS the buslnes.5 Ot COrporate transient
who. for the mOst part, is associated WIth ont' of the high·ttlch industrie_'i located in
Palo Alto or nearby communi(ias. The recent downturn In the general f;fconOI"nY and
these high-tech induStfies in particular have had en adverse impact on ttlS EI Camino
visitor accommpdation mark~t. Curfe"t room night rates ere very competItive
Some of the smaller EI Camino facilities offer $35.00 single and $60.00 double
occupancy rates. Ricky's. the most up-scalo facil)v on Et CaminQ, :$ abie to obtain
room (ates that average in the hIgh $80'5. Year-rounc1 occupanr-y rates also reflect
the current competitIve enVlrQllmont. It would appesr that many establishments fail
to meet e 65 percent year-round average that is typically ,eqUlf~d II facilities 8r~ 10
maintain their profitability.
There seems to l:1e th(ee distinct hot~i/motel markets in the c'1Y, The downtown
mark,at. which is the location of the Holidav Inn. Thi~ lOcation is cond\,Jcive to
handling social an.j community events such as th& Black & White Bell, As p(evlou'SIV
indicated, the EI Cemino serves the locitl high-tech business Community, while the
St&r1ford Medical Center provides a -yea(·(ound market for the many out-of-the'eraa
.15
Gruel' Gruen + Associa'sa
.~
"
','\
-*1··· €" ,.~f
~;~-,
, , ~ pationts and thei, families, The top (3 hotel end motel facilitius 0,233 rooms) within
Polo Alto grossed $2.3 million in 1987-88 tox ravenues end an epptoximately $2.6
milliOn in fiscal yesr 1989-90, Over this two-year potlOd. tnese six facilities
generated 8 six pOfoont increase in tax revenues at a rate which almost kept paoe
with inflation. Although promotional efforts have been attempted, it 8eems that Palo
Alto has been unable to attract 8 true visitor merket or viaitots who wish to stay in
Palo Alto to primarily tak6 advantay6 of the community's cultural, (eertlBtionel and
ahopping opportunities.
According to t~le manager of RiCkY'S, the oWIlors had in the last several yeers
prepared a master plan for rehabilitating their twO properti~s (the low-rise RickV's
end the mid-rise Palo Alto). ihese two facilitieS together account for approximately
540 rooms. About 10 yoars ago, management had thouQht of adding 100 additional
rooms, but this is no longer the case, If managemant were to underteko 8
remodeling effort today, it is uniikely that they would Increase their rOom count.
Given the generai state 01 the hotel Industry, which has not oniv been adversely
affected by the overbuilding in hotel rOoms but also by the demand-dampenrng
Impacts originating from the 1990-1 991 raceSSlon, construction of new facilities is
expected 10 be constrained until 1I1e latter part of this decade, Tnis situation
psrtiatiy explains the fact tl,flt neither of the hotel managers with whorn we spoke
wore aware of the City's overlay zone. But even after this OVBriay lone WI1S
explained, both managers concluded that tho inCentive was far too limited to
encourage major rehabHltat;,)n Or nf'W construction at their (l;o;istlng sites. Even the
once-pfOposed .75 FA~ was considefoa far below what was neoded to serve 8S sn
actual incentiVO. II the City were to offef a sufficionty increased FAR which would
serve 8S an inducement. the type 01 new faciliMs most likl'lly to be developed would
be the 500 + -room confarence centor that would nOt only be able to servo the
nearby Stanfofd Research Pdrk, but also City-wide functions requiring Quality
banQueting and conferencing tacillties.
«OJ "'.'=-'-~ 36
Without 8 C!hanga in City policies, the most likely future ftv these EI Camino visitor
8cco mrnodation$ is thy continued existence of too many I(\wer-queliw 10wer-COllit
rool'ns_ There is 8 g&norat consenSuS that it will be many years before the hotel
industry is out of the current do!drllms. Many in the real 6stat"l industry belie-va rhat
it will take until 1997-98 for the oversupply in hotel fUOmS to be absorbed. Umil
that time, finel1ciog can be expected to be very difliCult to cbtaln,
If the City wants to er,cDurage the r.onstructlon or rehabilitation 01 .. fjrst·c!ass
facility that can also accommodate local and regior,al conforenCf1S or meeting~ ot'! EI
Camino Real, they will eithflr have to significantly increase me 6ilowsble FAR or help
subsidize the venture by other mOre direct rne;\n!i. A 1: 1 rAP. wOuid Derrnit & first
class 350-room hotEtI with limited conltllenclng facilities. A 500-tlJ 700-room
fftcility with intense retailing developmenr and the Rblhty to handle regiol"la! meetlnQ~
might require up to a 2: 1 FAR. In the ",bsenco of the abov8. it IS ·nkfl·IY that mdny of
the e;o;i~tinQ smaller f{tc:ilities Will have tU compete through prH~8·· and quallty
lowering strategiCjs. while the larger hotels are likely to be eventually bought out hnc
convefted to some othflr nonhotol USH. If EI CaITIIf'\o's major facili!ies ar(> COf'\vel'ted
tf) other uses, the smaller fer:,iltles will no longer lla ab!o to benefit from th& spillover
demand originating from group o. business conferences. Or'! the other r,and, thiS
deCrease in spillover demand is likely to be balanCed by fln increase In thr3t portion at
thEt nongroup bUSiness thtlt would have booked a room ,rl one uf the 1'3rger
~stablishments.
NONCONFORMING USES
In 1969 und January 01 1990, the City evaluated their records Blld condu(;{ed field
surveys to verify the (lumber arJd Status of nonconfoHning uses, many of which are
located on the EI Camino, Some of these use!; h"d long bp.en cons.uared
nonconforming, whIle others wme so designated In the Ciry-wide L.md U!i(! ifl)d
Tran!;portatiofl Study. Two of these uses PIl!O Alto Ll,rnOflr Bnd European AI.ltO
DetBiling • are located Con the TroynfJr-Hill property. These uses have already been
Converted to a 50-~~nit town~louse project
Gruen Gruen + Aijl5oGlwle& 37
v..,
, ,
"
. '.~)~
J
1
I
!
The greatest 'lumber of nonconforming uses, identified by the City and sCheduled fot
termination in 1993. wero created in 1978 when a new zoning ordinance end map
were approved to cnable the zoning to be consistent with Palo Alto's ComprehtJllsjll8
Plan. Many of these uses were automotive ftsrvice bu!;inesses IOC8tlltd on EI CalTlino
Real. Since 1993 is just around the corner. it will be important for the City to
identify 8 receiving location if the permanent 1083 of these auto service uses is to be
forestalled. One possible and proximate 8(88 that could serve to hOUSA these uses is
the Potrero 1)( Portage 8'8a that is located on Lambert off of the EI Camino. Bur tho
City would have to facilitate asseMblage in order to create sufficient space in which
to relocate these auto-related services,
At the !ime of the Cit.,..'s April 12. 1990 report to the Council, therB wers 21
nonconforming uses subject to termination on the EI Camino (refer to Map 2, page
39), Of these, 15 had a '993 termination date and 11 were in auto-refated USGS,
Other nonconforming uses include animal boarding and veterinary establishments,
restaurants IJnd clubs and personal ser .... ice establishments, In addition, there were
seven forrner nonconforming uses 1I1ong the f) Camino rhal ,"laya 8J/08dy been
changed to in conforming uSes, These now conforming uses include (\ retail flower
operation, an awning company, an eiectronics store, officBS, an extendad care
facility anrJ tWO Llses that were made conformino by establishing nelghhorhood
service use In 8 eN zono,
Therefore, the structures are often obsolete, particularly for uses other than those
that become illegal in 1993. Unfortunately, man.,.. of these proportias do not
conform to currant parking and Other plannmg requirer'llent5 but am "gl"andfslhe,ed"
so long as no siQniflcant changes are made in tho sthlctures, This has the effect of
dJSCDuraginu redevelopment lind major f8modoling thar would enhance the functlonef
and aesthetic Quality of the properties.
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! ~~ ~'~~~~~~-~.~
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., ",0:<=>0 0 ".,,0 =:-~::.;;: ~ ~"".:.~!=!:.~
~~i:L·'·t'~~~!~ u "' ... .,. ... ''-' ........ LJU .... :;':';.~2': ~-j .... ,.... __ .....
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..,<;>_000...,0 .... .,,"',..
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OPTIONS OPEN TO EL CAMINO PROPERTY OWNERS
There are four primOry Options open to existing property ownefS, Over tima, it ill
liktlly that property owners, particularly those with nonconforming USBS, will:
,. MIII~ •• ~ altempt to agglomerate uses by altering thair
ph ... ,.cat pOSitioning or by ecquiring additional properties
"~J 1h.J~ fr.Hie can pull in lind p8rk directly in front of
cOfTItTI .. ,c •• 1 facilities offerjng convenience goods or
2,
3.
4
""rlrICt'I
S~f'1I. to convert their presont uses or vacant properties
HI h'lt~ Clunslty residential.
lJtd'll' !'.ome of the larger parcels, including the possit.le
bu",'n~ Out of some of the B)(lstlng hotel faciilties. '111
cede' to dp.velop a modern larger-siled communlly
center, Such a center is likely to have H slJper or
megamarket to serve 8S their anchor.
Cut mamtenance costs to the bone and permit their
properly to continue to deteriorate in order to wring out
wh'Heller income is still Jeft.
It is Qui,e likely that many ownors will seek a sale but wlil be unhappy in the offering
price. As a consequence, some of these owners will seek to obtain decreeses in
their property taxes as they come to the full reeliz8tlOfl that their property is not
worth as much as they had thowght or hoped.
It is unrealistic for the CIty to e.wect that the DHl~londerance of tho nonconforming
u~es can be co .... vened to neighborhood-serving commerciaL 90th the acces!libiiity
and parking configurations make it difflcu!t for shoppers to "conveniontly" shOp the
~ ,--,-_ ...... 40
I
t
j
I
I
i
EI Cemino. Unless the assemblage of proPfJrtles into largor p8rl.:el.~ cnpabJo of
efficiently servifl~ as sitfJS for new uses is er'\l.nurag&d by tho City, it is likely that
optiOn number 4 will be selected by en incrst'lsing (Jumber of (I Camino property
owners.
CALIFORNIA AVEI\IIJE BUSINESS DISTRICT
The primary issuas ,elating to the Cdlifornie Ayen_Js Business District Me the synergy
between this district and the Stanford Research Perk and to identify what 5tr&'-0('185
could be token to irnllrove the COmmorcial viebility of this business dlst(H.'t. The
California Avenue Business District c:ur(sntiy has the highest permitted fAR (2.0 to
11 in the City of Palo Alto.
At the time California Aver,ue served as a major north/south axis, this dlstl ict WllS
primarily in reteil usa. While retail and rpstaurent space is still rho dominant s,jround
floor LIse, the amount of mid·(isfJ of1ice structure5 has increased significantly Over
the last twO decades. Hetail snace in this district typically loases 1m $ r .00 to $1.50
per ~quare foot, white office is able to generate somewhat higl~er rents In the
neighborhood of $2.00 per square foot.
Between 1988 and 1990, Calitornia Avenul) B'Jsiness District ta;ll;dhle 'iales increa~ad
by 4.5 percent. Had tho th(~o to four porcem annual inflatIOn rate hlJen vectored In.
the District wDuld have 'eflected an actual decrease In Its total faxat>le dQliar:-.
California Avenue's share of the City'S total taxable ~aJflS dacre8sed hom 4.1
pefcant in '986 to 3.6 percf]:nt in 1990 (refer tQ 'fable 9, pago 42).
California Avenue Business DistrlC, includes a diverSity of rot!:!iJ and bUSlnA$~ flflC
personal service ,onancies. Table 9 broaks down tha California Avenue BUSlne'Ss
District bV major type of business activity for the' 988·1990 time perion.
California Avenue relatl and specialty store5 rOd)tzed an almos~ idefl1ical dollar i'tnd
perCentage decrease In sales tax revenues to th;:wt which Occurred in the Et Camino
41
Gruen Gruen + Anociates
>;1
',-
I ' ,
"',',!,', ";,3
"
. "'1
";1
'n i
TABLE 9
Change in Cahfornia Avenue Sales Tax Revenues
by Major Type of Busjness Acti'll1~:..laaQ
.l.JW. llM ~ Change 198~
I • • • %
Retail and 8,366,800 8,533,000 6,632,800 -1,734,000 -20,7
Specialty Storea
Office Equip-B,090,700 9,559,800 7,721,600 -369,100 -4.6
ment Stores
Food & Beverage 3,402,000 5,188,300 5,108,100 1,706,100 50,1
excluding Restaufants
Restaurants In-4,562,100 5,106,800 5,221,300 659,;'.00 14.1
eluding Hotel &
Bowling Alley
Establlshm8m;s
PharmacyINonsto(e ',011,' 00 1,000.400 983,600 27,500 2.7
Retailers
Home Furnishtngsl 1,779.400 2.123,300 2,038.500 259.100 14.6
,...ppliances and
Second Hand
Nursev. Hardware 1,481,900 1,590,800 1,629.400 147,500 9.9
& BUilding Supplies
Personal Services 8,223,200 8,955,000 9,977,800 1,154,600 21,3
Including Photography
Eiectroni-::: 1,2'3,300 96,200' 1,811.300 59B,OOO 49.3
EQUipment
Business Services 3,664.400 3,266,600 3,766,900 102,500 2.8
Heavy & Light '1,503.900 -544,400 2
Industry
534,700 -969.200 -64.4
All Otll6rs 809.400 758,800 683.600 -125,800 -15,5
TOTAL 44.108.200 45,634,600 46,109,600 2,001.400 4,5
o lOne of Ih", "orll8 f,eo" "'<;IfI,f""101 0.011 but Ih. lutill lor Inin Clll.O'~ry Wilt p".,tivII,
ZThll "".gorv 18 nllglllivII bflC"u" 01 a .ignil'cflnt Ullb".
SolJrOII~ MuniCipal RtlMOurCI Co;lnll"llantll; GW'ln Grlla" -I-""ollillt .. ",
42
~
I
1
1
i ~
studyaree. Salos tax revenue for this categl)ry deCleased by $1.7 million, or by
almost 21 percent . Toe combined heavy and light indu6try category olso
exp~rienced 8 significant 64 porcent decrease of over $900,000. Major salas tax
U!V9ntJe increases Were experienced by the personal s('IrViCes including photography
((11,754,600) and food and bevarege excluding reStaurant~ categOry ($ 1.706.1 OOi.
Iha formar had a 21 percent, while the latter a 50 percent inCrf;,ASe in their 1990
over their 1988 sales Ht'o;: revenues. Other irnportant gaing were in lhe restaurdllts
($659,200) aod electronic equipment ($598.000) categories.
According to OUf interviews, the SY(lefgy between the p((lximity of ttla Stanford
Resoarch Park and the California Allen\JS BUSiness DiStrict is refl'lcted In the
apprQximat(!ly $1.3 million I 98e·90 incrollse in taj(abJI'l sales IfS3IJcleted with food
and beverage and restaurants categories. Thl::; synel·gi.stiC panern also hOlds true far
those EI Camino Segments that provide ready accessibilIty to the Park. StanfOfd
University is in the pfocass 01 conSidering whether to ask tho City for permiSSion to
provide restaurants wfthln the Research Par~. Should 'Such on-sit8 Businf.l§§ Pa,rk
facilities tIe creatl)d. bottl the California Av.;nue BUSiness District and EI r::atnlno can
expect to have rBduced lood and bevorllge and mstaurant 3alas.
Some of the more successful CAlilorn,a Allenue BuslI"Iess District merch<!nts ~(lcu$
their efforts in Attracting 6 regional mark.et. These merchants direct their advertislllg
and marketing activitios W null in Cu"tornefs from an extended reqion <i5i well as by
providing unique services and broadEn IIlv6f'1torias. 10 capture thase markets.
It is an American truism that wherever the l'.ilad agglomeration. Or the ~fTlount 01
placement of tho parking, lack uf sufficient parking is almost aiwaY5 the number ono
IlllJrchant complaint. But tha California Avenuo Business District does appear '(0
have B genuine porking problem that will need to be dealt wiHl if the DIStfict IS to
maintain itself as a viable businoss district· particularly given the fact that California
Avenue's direct nonharly aCCess IS now cut off.
43
Gruen Gruen + AsmocititH
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;.:t,l .. ,~" In December, the City Council approved, in principal, and directed steff 10 proceed
with the necessary steps leading to: (a) the construction 01 a sinQle level parking
deck structure that will provide 98 additional parking spaces; 8J'1d (b) the formatiOn
of B parking IJS5e8sment district to fund such 8 prOject, on City perking lot 3, on
C.umbridge Avenue, in the California Avenue Business District,
The project will now proceed through the de5ign development stage, tollowed by 0
period of time for the formation of en .t!558ssmant dil'Juict ond the 5aliJ of bonds,
prior to the Bctual start of construction, "rhe City Council will hlWO to Approve ~
budget amendment to plIy the de!!ign costS (approx'imately $200,000 of General
FI,md mania!!) which would !lubsaquently be paid back if end when an essessment
district is actuelly formed. Under the assumption that the process moves along
smoothly and without excessive delays, the earliest completion date for thil new
parking struCture is late 1993 or early 1994,
ihB new assessment district would utilize tho assessment formula previously
developed as part of the 1983-84 Caiifor"ia Avenue Study and first applied in
conjunction with the purchase of the Keystone parking Lvt in 1986. This new
formula differs f~om the more simplified formula utilized in earllor assessments whic;,
basically placed un assessment 01) all Improved find occupied f',oor arOil loss credit
for on,slte parkin~l,
The now assessment formula, by nature of tho faCt that it inCludes both 8 land
component (25 percent) as well a5 an improvement componont 05 percont), results
in some aSSessment to ~ven vacant land. ihe formula &Iso incorporates
consideration of the length of time over which properties have beBn paying into the
District.
THE 1"OWN & COUNTRY SHOPPING CENTER
The Town &. Country Shopping Center has been losing ground with respect to both
its total taxoblp. sales and its 1988· 1 990 share of the City'S total taxable sales, as is
~J ~"o'"."' -~. ..
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'·1
shown in Table 6. In 1988, the Ctlnter's total ta.-;able ~~'es was approximately
$20.7 million. By 1990, total taxable Stiles decreased by 3.~ percent to about
$19.9 million. Towl') &. Country'S share of the CltY'!i total ta.xBble sales dacr£'i!I${'Id
from' ,9 perCent to 1 6 percsnt during this sptme 3-YB!U {ime inttlrvuL The TOwn &
Country Cems, hdl approximately 100,000 squarl't fee~ of retail spaco. Under \"e
(lSsumptlOn thill 1'"'" 'pace is fUlly occupied in , 986, tMe Center III e.sti.nated to haVE!
gener8ted $20700 Clef Sq\JHre foot. By 1939, per-square-foot salm, IS es.tlmated to
have incroase" to ,~~O but, by the end of 1990 had fallen tc' $199, or a 3.8
parennt decreul' frorn 1988. O.,Ce again, the 1990 decrease IS most ilkely to be
attributable to nllllon Wide and region-wlrf~ rl:lcesslonary pressure.'ij rather than lO
chara~toristiC$ of ttlt' C(lnter it~elt. Between 1988 t;jl')d 1990, tho Town & Country
Center appealed tu hold its own in tho restaurant and fast food category,
experienced 8 s'vn,I".~ltnl IOcrf:(I~l' in its specialty stores tdxable sales and in the,r
business and pelsonal serVices C<t!.l'yorias, uutl<lrge decreases in their apparel, shoe,
home furnishings and arts and gifts taxable sales catelJories Table ~ 0 shows the
'1988-1990 change In (he Town &. COunHY'" sales tal( revcnue~ by major type o~
busines:l actl\fltv The cawgories or business ActiVitieS that reflact the largest
decreases !Ire tho<;e tf)<.It have been harde~t hit by the 199C-1991 rece'Ssion.
;hlj TOwll & Country Cel"'lter IS LJeginnl"Q to show its age but there would appeAr to
be little the Cit\, can clo ..... 'Itt) resJject to B chl'nge in ,ts policies Or Idnd u .. e
rl3gu!ations to Imp'Ovp thiS Center'S physical condition, On tt--e othf'r hand, it ttln
Town & Country management tied a strategic retonanllng plOgram to upgracin~ thE'
Center's physical space, thiS Conter Should be able tQ at least maintain ami per hans
improva its revenue-generatin\j atlility. If It wishes to maintain its long-run 'lIability,
tho Centor ShOllld play to its strangths [)nd seek. thOSp. tenancies that will cater to
the demaJld 01 the 90's· indudlng thQSO tl::lnancies that oHer entertainment lind
perticlpatory activities to tho·~" consumers seek.ing e:"plOriences (I!> w~1I ;:;s gooJs.
45
Gruen GruEm + AsSOCiates
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l' ABLE 10
Change in lawn & Country Sale! T 8;)1:
HntI!WtlJZL.Major Typo pI Sus;n,., Actlylty· ] 98B·' 990
-.lJ!llll.. ~
$ $
Apparel' 37.726 33.199
Shoe StorM B,587 4,519
Ar1s & Gifts 16,309 8,534
SplJdalty SlOrnl 47,550 56,394-
SOljcialty Food. Su".'m.,II."t.\; 13,841 12,721
Fast Food/RestoJu'.lIu 40, ]85 42,588
Home Fl,rn,stlln~' A'-'I.I!, .. nl;:~S 26,082 21,357
Personill Sery,c!!, 4,754 6,071
Business ServlI::~l' 7,096 3,414
Ught !ndustry/All Other .. ' 11,739 9,B82
rOTAL TAXABLE SAlES 206,669 198,679
, At'II.,.1 m£lud ...... " ... n. ",.,,'1 ~k w8il U l.m,lv .1'11,,,"1 .ta,u
Change,
lJlll~
%
·12.0
·31.4
-.t.-7.7
lB.6
·8.1
6.0
·18.1
27.7
62.9
·15.8
·3.9
, Sple,.lIv II", .. 'n~f"",", ,,,,,'11, U"w.,"_ bO<l .... nd !ow.ltv at w .. 1 i. 1~lIi£Gilv·£.!IO<lflJ"d Ip.cj~ilv '10' •• luch
... 1'-"¢I'I"nw., •• 'lIl c.'lIl' •• ""pi
1 Ott, .. , , .. ,.,11'" ,,,,,l..a •• *><14 .... ,.'" »1 <l\I\\1It. 'mlluOloIl18 ... nll 8"d '81)." I\".,p •.
~OV'.'" Mun,£,po! RIllIOUTC. C"n .. uItAnl~: uruln G,,,.~ .. Anomeili.
~"-'-'--46
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POLICY IMPLICATIONS
Two of the threa eras!!; discussad in this chapter. tha California AvenU@. Busine3s
District and the Town & Country Cent6t, 8re viable properties that appear capt'ble of
adjusting to the anticipAted changes in the cusine$$ environment. As indicated
above, 8 solution to the parking shortage In the California Avenue ausiness Oistrict
has been identifi6d bV tho City, which is (eking appropriate action. Pla'lnlng
regulBtions that apply to the California Avenue 8usiness Olstrict ~eern to m!:ll-:e it
feasiblo fer property owners to make the inve~tments needed to kesD the a(tlIJ
competitive in the face of changmg nlarkel conditions in rhe foreseeable futurOiJ. Tho
need to koep these regulations, which aliow relativelY high ~Ar1's, in place 81"'.0 tl)
continue to uee the parking district to Hugme,"It thtJ parking 5upply would bacomt!
perticulady important If retail and restaurant uses iHe eJl:panded within the StaMord
industrial ares.
Ihe situ~tion along the EI Cilnw-lO Raal study aroa IS not nearly as salutary. In filct.
we are re(flinded of the problems. thal, yljar~ ago, faced the property around
downtown Paio Aito thM huJ been placed In the old f,re zone (listric1 where pro pert y
owners were allowing residential usos to deteriOrate because they anticipated beirlg
allowed 10 chljnge existing rasidential uses to oHictf or convnercial uses. In that
case, since the regulatior""l',S were changed (0 allow tne SWitch to commercial under
dsmond conditions thin made it tea~ib\e \0 do so, lh~ plub\em was sO\VOG over lime
But 9)o;isting phy~ical and market cond!,ions in conjunction wi~h pre:senf. planmng
regulations will (flake it very diiflCUIt for many of the prO(lertles along the fl Cammo
to adapt to market changes lind remain healthy. As indicated above, a SignIficanT
number of the property owners arfl likalv to respond by cost-cutting
undermsintenance th8t Will, ovor time, worsen the present situation.
SOme existing retSil propertl~" Will, of course, be (E'l1l10delcd to make them more
IHt(ftctivB. One examplo of such 8 "f8celift" rpmodeling of 6)o;isting properties is
provided by a set af stores at the corner at EI Camino Real a,ld Curtner Avenue.
While we h~ve not researCrltld the speCifiCS of that remodeling of stores With parking (9J _0_._.0_ '7
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available in the roaf, it appes,s to be the type of remodeling indicated a~ being
sufficiently remunerative (by tho first ponion of Table A-' jn the Appendix) to
preclude moro dramatic roctevelopment or conversion to other U:f8S. However. 8S
indicated above, many of the properties along EI Camino Aonl are too small to make
eVlln such ftdativaly minor reinvDstrner'1t in remodeling payoff unless they coo
8cQ~,i(Q adjoini(tg lots at prices thet rnako radevelopment feasible -this will not be
easy or frequently done.
Conversion to residential is desirable becl)use the amount of retail GP~ce that now
6,1(15t5 in the study aree exceeds what cen be supported by tha dernand for the kind
of stores that can operate in strip devoiopment. But, es indicated III Tatlle A-2. such
conversions are not likeiY to btl feasible except at high pdces and densities,
InterViews with developers that havo converted to residential uses along EI Camino
indicated that the totality of planning regulations and approval HlQviremems make it
very unlikely that the appr(lvals could be obtained at densities as high as the' 5-to
the-acre maximum of the CN zone, or ;30-to-the-<lcre of the CS lOne. Thetefore,
unless the regulations are changed to r:,creasE' the cf#rtai.n1Y.Jl.~k!ili'rJ.Q.~.f
.d..e.n..s.ilie.UQJ!.w , 5-30 fjlJl.Jl.§:, it is llnlikely thfit very much conversion to re$idential
use along the EI Camino Will take I'll<lCe in the foreseeable future. One step to
encouraging such Conversions would be to dowrzone the shallow parcels from CN
to RM15 or flM-30. However, in Ill! likolihooO, stf(lr"lger willingness to respond
affirmatively to wett-thought-out redevelopment proposais will h~VI) to bf) signalled
by the City.
The office market is not strong enough to sustain on',' siyniflcilnt conversions to that
USB in the study area iJt tho r(ll"lts Table A-'!. indl';ates would Oe required to make
such converSIOns more dosirilble lhar1 t"'o status quo. Givt)r1 the Cost of modern
hote! rooms which. on a per-square-foot baSiS, exceod those 01 office space of
comparable Size, it IS cleer thfJt the amount of Cp.l'lsi1y allowed by tho hotel overlay
zoning is not sufficient to encotJrage the {edeVBlon\n~l""\t of nl}te\ IJses lor a site 8ft
large ~s the Rici<y's Hyatt property. Also, it should be recognized that in the
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conteMpOtary environment, low-density units such as thos(t that 6xist on the Ricky',
propert\-' are not lii<aly to be built.
BecauSe of the la(g~ elnOunt of space along El Caml(lo that will tend to be
undermaintained and generate reiativel.,. low (evenUeS for both their OWr)ers and the
City. it wOuld be desirable to croate s-.tveral large land-absorbiny new uses at
appropriate $pots alony EI Cdmino. Given the relatr'./ely small nu,nbor of ret8il
agglomerations in Palo Aho that attract customers ftorn outsrde the City, it would btl
desirable if such new development wo((I region-serving. One ob ..... iOus ~pot for 8
major hotel/office development that wOllld be region-serving IS the ,nor.ecty e:t El
Camino and Page Mill Road. Unfortunatelv, develQpm€flt on that site wou\c not
rernow older obsolete properties in the EI Camino "rea we studied thollgn m~)I
stimu!ato some rehabilitatIOn and reuse in neighbOring blocks.
We behove that a ptoactlve str[1tegy fot tl",O study area ~hould encovrl'lge creatlvo
conversion to res-identlill usu~ incllJdi\1g semor facilities. This ..... rll require:
1.
2.
A regulatory pr·:)c~!>s that permits denSities in the 15-30·
units-to-tho·acro to be wasQnably Certilin.
The ~nCuuragernf'nt of parcel as"t'rnb!ages.
A way in which tho City Ciln encourage percel (I.ssernblage wc ... id be to (f~ar t~le.se
property owners and would-be assembler~ rnore tlexibly wi!~ respect to densi!'1
constraints such as FAR's and parkrng requlr~ments.
Because of the additional SlJpply of space ~+'at would exr~t wht'ln the nonconforming
usas are removed ir. 1993, t.he perceived or e;ll;pected prleo ot some oropSrlles may
drop. This may creato OPP(1rtunlties for some creative retail redl3'vejopmen~ that thtl
City rn~y want to encourage by responding to the catts tor more flaxihle SigH~Og and
parking policies that were of some concern to mJr1y of U16 merchants find p10partv
owners with whom we conducted Inte(view~. While the sp(Jcrflc type uf unlqua
49
Gruen Gru~n + Associl1lefj
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I'&tail developments that ctln be attfllcted if the prices of SOrTla EI Camino sito.
decline ere hard to predict. we believe some will arise from the competitive but
dynamic retail/entertainment environment of the 90's. If Palo Alto would like to
stam the tide of future obsolescence, we recommend thet the City of Polo Alto teke
8 proactive Stone!} in order to encourago would·be dsvelopers of now retail and
residential complexes.
If the City wishes to retoin tne nonconforming primarily auto-related uses within
their jurisdictional borders, it wIll Mavo to de!.ignaH~ potentia! rscoiving 8(08(5). Such
locationjs) would hHVe to be buffeted from residential and commercial usas 8S well
85 to be accessible to local r(~sidants. rhe City may wish to encourage slich uses bV
Introducing sutomotive service zoning but such 10;1ing should not e,.;clude other light
indu8tfial and/ur incubator uses. One potential location is the Urban lane are8 but
this, as well as other potential locat(ons, are worthy 01 additional flnfllysis prior to
the deSIgnatIOn of a speclf(c receIVIng ereals).
~.""-.--50
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CHAPTER IV
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CHAPTER IV
NEIGHBORHOOO CENTERS
THE NEIGH~ORHOOO 1;H(lPPlNG CENTER ISSU"S
The policV i$sl.Ias to be addressed in evaluating the three neighborhood cent.rs we
were asked to evaluate (Alma Ple1.:8. Edgewood Plaza, end the Chsrlaston Ctlnterl
include:
1. The uffect of 51/8 caps 6nd other restrictIOns impO~IJl1
by current I"no use (89uI8tion5;
2, 'fhe likelihood that multi-family housing or some other
use would. over tlm,e, be mo(o econolmcal thl;Jn the
presef'ltlV'p9rminarl ratail and commefci~l \.I,e~; and
3. Toe likelihood that underground p8r~jn9 development
would be feasible to permit higherTdenslty $I(e uses.
The location of these three Centers can be found on Map 1 (page 11),
In ordor to mspond to these QueStions, we have fitst studIed axisting mall',lSt
conditions 8."ld by considering likely changes in demand, fl)recast lhe con(jltions
likely to Axist in tho futuro. In order to predict tho future of the areas under ~)(istmg
policy and reach conclusiOnS abOut the impact of alt~(nBtiye proect,vo changes 111
policy, the forecast fulure market (:ondit,or'ls wef3 viowed ir. the light of the (('B!
9state economics that apply to thl] area. The ~.ection on policy tmplic;stiQn."; bot the
conclusion of t;'IS chapter slJmmarizQ our fmding concer(li(lg t!'J" effect of present
and possible future pollcu~s on neighborhood cents(s.
51
Gruen Gruen + Asaocl"tes
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THE ALMA PLAZA CENTER
TI'\e 4,26-8cre Alma Plaza Center, which is IOC8tltd between Alma and Ramona
Street, ha6 8 floor are8 of about 55.500 square faet and a site area of 185.566
I!iquBlfe feet. The Center shows its age and the effects of vnder~mllintenanca. lila
vislll;lJ aspoct (If the Center is not helped by the fenced·off area that formerly housed
8 Q88 station at the Almll Stmet entfy. The lavout of the Center is poor with limited
visibility f(om its Alma points of er'1try, rhe primarY tenant is an older Lucky Store.
A site visit of this Lucky revealed emn!Y shelves in the refrigeralio n area and 8 less
than-optimum shopping environmenl.
Other Ct!I1ter tenancies include B.J. Bull's Restfl\,.Irant, Marge's AltBrotions. a shoe
repair, Mandarin CuiSine, Aoundtaoie Pina, liquors, Ganers' Pro Bikes, fI. sewing end
vacuum outlet, Videoscope. 0 dryclear,ars, P.A. TrophY, l','on Express, 8ob's
Donuts, a travel agency, ,;Il"ld tl s.'I1an otticl3 bu (ling hOUSing a gnostic centBr,
IntetViews with soma 01 the CemeT's tenanls suggest tho Cet'\tel \5 CBt61i i 'lg to one
Qf 1WQ wpes of ou\lets: 'tnose outletS tn<:t DIe ge1),ed to serving a felv\)vely limited
volume orlgi!"l8tinQ from \he immediate ne-ighbo,t\Clod l'>r"ld thoSe 11"13' serve B more
e~tl,}!'\ded cna(ket but are less dependent upon locf\tion tlecause tflay prlmaflly utilize
advf3{(1sing to re;:tch their ClJstorM( base, The City'S signing policy W85 a big tSSU'l
to Hie Alma Plaza merchant5 with whQm we spoke beCaU'iB of this. Ce.[\t6r'~ poor
visibility.
The Center'$ size, iayoul and location mal<.e It a very poor candidate for a major
rehabi:ltation effort. Incre~sin9Iy, neighborhood Centers with undarsiled and
obsolAt6 grocery anchors cannot successfully comot3te with now centers anchored
by the 65.000-sQuHre-foot supormarket. While curront City po!icy has I{ept .!Iuch
!'IIJpermerketS ovt of Palo Alto, neighboring communities such 85 Menlo Park. end
Mountain VIew welcome these rneg,;lmerktlts beGause of the high volumes they ere
ab!e to generate,
({9J ".'-'--52
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500081 ot lateT pressures are likely to build up within the Cit-.. fOl retaIl
ftQglom8f8tions anchored by tho 55-60,OOO-square-foot supermarket anchor, Should
~uch an eggtoml!l,ation a.t soms h)~Ule j)oint in time locate on £1 Cemi(lo withir, II S
mile radil)S of a fHlighbothoO\1 ~'d-nter such a, Alma Plaza, the potential impact on
Utis smnller obsolete centef i!i lik.i!!v to be extremel)' deleteriOUs_ Even without such
noarby competition, Alma Plazij is ha'/lng aiHic:ult'l keeping up theil Sttles tax
revenues, 115 shown in lable 11, Between ye.ar-end 1985 DrlC Ve8HH .... d 1990,
taxable s.alu volume decreased bv 19 percent and S"Il's-per-SQuaro-foot by e!«\os'
23 percent, Tabla 11 indicates a $92.00-p~H-Squara-1oot average lor the Cents( as eo
who!ll, though this average eLso includes vacant 0, curr8f)t1y unleased space.
According to t,e 1990 Urban Land Institute's Dolli.lfS ;wd Cems f)l ShoppIng
Centsrs, which is based on 1989 survli!y data, thE' 8verBQt3 20-'Year'old and oidef
neighborhood Center gtJr)erates S189 in salp.s, while thosll ir, the lower dec.iie
generated e60 anrJ thosa in the upper decile $297 pet squara foot. Alma Plaza
eJppeBrs to be OperiJting somewhert; between the lOwest and second lowest OecliA In
the 20 + -year ntlighlJorhood ShOPPir)g center category, It is. ul'lpOf{ant. thereforfo, to
~oint out that the median per'square·toot sales value for superstore grocery
operations is $322, according to thiS 1990 OO'''JfS i1lld C,mte{$ 01 Shopping Centt!fs
report.
Oni'l possible solution tor the long'run ViabIlIty of tr)iS Cemer IS to tear down the
0xistir.g Centef snu creaTe new retail space fronting Alma. Thi<; fI:po..,itlonlng of the
retail soaCa would femOve one oi thIs. Center'!> .. urrent handicaps, whn;h is 115 limiteo
visibility from Alma. The. back of thiS 4.26-/)crc SIte Gould then be pur Int(l high
density rO:lidantiel. If elthcar SHucturud Ot paniaiiy unoerground p{Hklng IS c(ea\~d,
such pa,king could be supported by both \he IOsioOntil,ll and U·,e nc)W retail. ~or
example, each reSidential unit could be guaranteed one 2.4-hour parking Spa,;:e.
Additional perking could be sha.red SQ that dUfing the-h()urs 01 the Center's operation
priority WOlJld be given to customllrs, but i" (lon-operat.i(l9 hOUfS ,hose space.!! cou1o
be utilized by residants and/or thei( guests_
53
Gruen GruBn ~ Associates
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CHARLESTON CENTER
Tho 4.57~lIcte Charleston Center is located 8t Charloston and Middlefield. This
Centsr has 41,600 !ll1uare feet of floor area and its si1e area coversgfl i'1199.069
square feet. lhis square footage is located in 2 blilldings. Building A with
approximately 35,200 square feet, af'ld Building B 6.600 squ('fe teet. lne We\I'!
Fargo Bank building, with about 7,000 square feet, has bee" 'vocent for ove' 6
vasrs. In eMltion to the vacant bank building, there is en additiol\8.1 4.800 !!.QLJ8(O
fellt of space that We$ vacant at the time of the study,
Tho Cel"lter's primary 3nchof IS thl] Park. Merced Foods speCI~ltv market. Th~8
sPBcialty market subleases to a deli that also offefs catering pnd wilich BursetS 8
luncheon usda from Sun Sy~tems which is located nBarby, Other tel"lancies include
a card and photo shop. a vidao and liQuor store. a cyciery shop, a harriware store, 8
barber shop, StBte Fa(m InSllram::o. the Feng Yuan Restau(~nt, a florist 8(1d IJ
drycleaners on the corner,
Despite some v~cancies, tho e)(istinq rnercl"la(ltS appear to be relatively busy. The
volume and per-square-foot sales shown in Table 11 understate the Cel'lter's
revenues bacau5a {he per-squarp·forl estimates irl Table l' lI"Iclud(>s vncont as well
es leesad space.
In conversations with local merchants, most of the Center's customers originated
within e five·milo radius, The Center attracts some walk-in trade from nearby
residences. The Center aiso attracts a large number of senior citll6;1S Wl10 (eside at
nearby retirement homos,
The Centtlr, which was developed III the 60's, h<JS both traffic and parking layout
problems that have been causttd by the larger tr(jffic volume that has bean building
up over the year . .,. of thiS Center's operation, Several merchants identifiea the need
to deal with these traftic ConCems lhat <tre partlcwlafly acute dWlng the shopping
center's businoss l1ours,
(9J ,,-"-"._-54
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Year-end
J.!taD_ ,
Edgewood Pfaza 6,657,600
Chl1tleston 2,093.1I00
Centfl(
TABLE 11
ChanQet In Sales T 8)( RevenlJ"lI
fJL( Three Neighborhood Csm~[h...ljJ.aa:tw.Q
SQhls Sales Sales
po. Year-end P" Year·end p"
~ ~-~ --1JML ~&..: • • , $ ,
120 7.706,700 139 1,361,300 133
50 1.996,200 4B 2,142,000 51
Chi'""e,
~liM~Q..
; %
703.700 10,6
48,200 2,3
AJmn Plaza 5,716.800 113 5,916,000 117 .1.655,000 9~ '1,061,800 '18.G
Th.l:dlle\'j{,od Pilla he5 A floo, A,a~ Ivlol ot 1i6,519 A~IJ.'" tut, ,h. ChH';.'''i'' "'I.n 41,1100 .QUII'. ' •• 1, ."" Almo PI.,. ~(),fit>O _QU.'.
t"", of 1100, •• e •• p""., Th. CilV "I PAl" Aile> o,ovidod 110011",,, ., •• esl,m.tu I". In ••• Ihr •• "B"l~' •• nd IhB" 1100' .'U .. "me, .. _".,.;0
(JIOru.t. Imn,Bllj1 a. ".111\ III ,.1.,1 ap"uw, 'Th.,,,IMA, Ih. fIlII", Bllouh,l ba caullf,'lN 11',.1 U., ... 1,,-p.'-.4u .. ,.,loo, •• UmAla. """'v U"",.,,I.,.
Ih" he.I'h 11 1 1.,. fltlail "lll;llI. ,,-.,i. " p •• ticul".I ... h~ItIV 10 II. lro. "00., 10' Ih~ Ch~,ln'"'' LII'\I.,
SQU,,,U, ~ur'~'I>.1 Il.~u"'c~ C .. " .... II.nls: G'"a" G ........ "'''''C'At ...
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The present parking ratios 8t Cnerleston will limit the t'rTlount of new space that cen
be added to the Center, All new use~ combined cannot exceed 48 additional cars at
the present (atios, '(here is presently a ;l7-car defici1 for the-llll,t\rft shopping centee.
It would tlPpe8f that some 01 the existing parkif'lg re,tios mBy be on the high sid/'),
For example, 6 spaces are required pGr 1,000 sql,.lsre feot of fetall space, while 4.5
SPBCOS per 1,000 square feet is the more typical nation·wide standard for such a
use. Frequently, cities look to practices of other cornmvnities before setting their
perio:ing regulations rather than to em pineal studie, prepared by organIzations such
(IS The Urban Land Institute,'
The testriping of the existing parking lots is unlikely to obtain many addhmnai spaces
since the existing stalls are eight feet Wide. Compact spaces require 7Yl teet. while
C\.lfrent standafd parKing requiremeots are Bt 8'h feet. Submerged pe.fk.ing IS. not
Ilk-ell' tu be fesslhle.
EDGEWOOD PLAZA
The 4.65-acre Edgewood Plaza Shoppi(lg Cemer, located at the corner of
Embarcadero Road Bnd St. Francis Orive, has a floor area ratio of 50,660 square faet
and a 202,554,sQu8ra·foot ';;;te area. The Center has difficult access bnc8use by the
time an unknowledgeable shopper sees the Center they are likely to drive paSit the
Center and find themsOlvo!; on tM Ireeway on-ramp. Bayshore, at the corner of
Ed99wood end Chamvng, pwvides a second 6f"1d more hfl8.vi i y·used 60WH'CI3.
A Luck"; marKet anchors the EdQewood Center. While tho LuckV is an older store, it
did appear cieanE'lr, airier and better stocked than the Alma Plaza Lucky market. The
LUCky representative With whom we spoke indic;)ted a not inconsequential portion ot
their bUSiness origi(lBteS from East Palo A.!to but th~t (heir Store also attracted
shoppers from the surrounding neighborhood!!! as well a5 from Menlo Pari( end
1'4.0 "p""". plr 1.000 'oJl.I~re te"l "f gro .. I"uble Ife. IGlA) lor cenlt1rll ,",avil'lQ .. aLA 01 25,000
rg CtI(HtN'& SUrJVrlf!ry R .. cnm.fI<wdlltlOfIS lind R .. ulIrch Srudy R"pllrf U.b .. n lena In~mut", 1 (Ie 1 ~o 400,000 IIqUII ... t .. t F'IIQII;2 Summar.,. 'lloommlndflll0nll, P.rk!!1Q fI~Q,,'r.men!fi for Shopping
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Mountain View, According to thjJ9; Sl:tme individt.t$l, the nurnbef ooe C:.J!flomet
request is for e :Rlpor stor~, Formico's Resta"t8(lt & Pizzeria also appears to be ,II
m6jor Center drew &ttrncting both lOcal resident.s 8S Wdlr as workers. Thl:}
restaurant OPerates Monday through Friday trom 11 a.m. to 11 p.m. Qno from 11
a.m. to 1 :00 8,rn. on Saturday, Tha Center also contains two clesrn:Hs, 0 liquor and
video stOre. 8 pToduce outlet, a shoe rep91t, lJ laundromat, a delicatessen and a hair
'l!elon.
Tho sito also cOlltains en offico building which hOllse5 an adveftlsing agf.1ocy e.f'd 8
recn,li{rTI{mt firm, Ne)f.t to ttl;;! office building 15 8 gas ~tatrOrt whiCh OC"CUPIt\'3. apac.@
all the way to tha corner of St, Francis 610llg the Embarcadero, N8Ithar at these
structure!t ilre Integri;\\erJ with the retail component of the Center.
Of the three neighborhood shopping centors Included in {lur study, Edgl.lwoc.d Plaza
is generating the higher sales tax revenues per ~qlJfHe foot (ft!fer to Table 11 J. While
both the year-eod end saI6s-per-squ&te·foot vl'lh.m~ decreased between' 989 al'\(J
19.90, this Center Stllll.})o;perienced i3. 10.6 pefc6nt increase in sal~5 tax revenue ~nd
a 1().8 percAnt increAse in saJe· .. ·P6r·sQu3re-foot between 1985 aoti 1990.
While EdgeWOOd Plaza would 8(mear to be th~ ieast problematic ... anter tocay -With
r~spect to its ability to generate higher taxabl~) revenues than tt"le other two
neighborhood comers -without a rn~jor anchor like £\ super store, the Centf'r's tong
fun viability is tat from Bssi.Jred.
!he Ct\oter's location is likely to oreclujje the relait component bo' ... g convArted to
residenti~1 uses. In addition, f:dgewOQd P!al{) otfel s \he most viable rettullng
oppo(tunltios to tnostl resldants IIviny in E8S1.. Po.lo Alto. Th(l. rQ';\lictlve covenef11
that precludes the establishment of fI, Super store m~y also pf@(.:iIJOO the. Cel'\t~r'~
long-run viability.
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POLICY IMPllC"~IONS
TO va1Ving d&gre~s aU three (Jt tM centers, studied 10 gs,if'l p6(!pectivlJ on how
planning ctlguhHiol'\s ('lffecr: l18:ighbarhooo c~mers io Pela At(o, .snl vuil'lefllbltl to the
competitiv l3 pr&ssUtes the tuhJf& wi!! br1ng. 'More to 'IDf1 pti,,'\t ~t t.ru'll. etv4v.
cmwDs'U>tWn 1:)1 1M uo.nomic fEl16ti<J(\sh<(l5 skatchf1d out in tM apP<ll'ldix tl] this
ret'ort suggest that cur~6nt planrcing po\icill's &18 1)01 'imC<3U{-6S~n~ tt'Pfl jci,,,,tj of actiOns
~het can make the centol.1(S mCJw wsistant to 1he Of'\S6t of iocteasioQlv competitive
CoM(tian'1. Thllt is, cuwlnt pjvnninQ poiicy rertds to (fit-8(ac~ with n.&tjc_rHd tax laws
and investot i(l&f'liB '\:I) imphdrh' 61\COufege, 'Or 8: le6st nQt d)SCOUfB91!, insctiQI"I Of {he
teking or Bctlons ((10 mild to 'Nerd aff economic obso!&scenc~.
As 6 backg(C/u~d to cOm',idelat)On of the l';ftects that p!s(!(l.ing policul's h~YO', it is
importa",t to Jecogni19 SOfrl't< 01 the othel" t~(ces t~1at tOM \0 motiv,ati\ ft)r the status
quo and thef6t1y mak~ !{ j:,)Jl(ti~\.darly d!HlclJlt for p!&nnInG PDJiC'I' to be successkdly
proactIve in its affect. Whilo$ Wit do not know tho fji)~f)r:ial posjtiM ol the OWrl6f5 Qf
ttwsolt ~ c.Bmw~, l~ lY hX&$V that 1,1';.1\1' h~ve owr<6'(J t!l1!m f-l3( QlJ!t~ ,somfl time,
Tho/afore, if thoy sa-ll the. p~operty to 6 developer who \NaIAd changlt thit \.l:$'i' of the
ceote' Of di'(Jffi03tit:8Hy altar It, th~l'{ wou!ij nrobab~v have 1[1 pay t.I jilrga Cllpitl'll gai(\s
ta\::o O~ tM ottV.1( MCl:d, it. ;$ flke!\I lhat bV now 1hn p(opi}rtii~5 8(£1 nOl U(ldM t.'he
control of a sifl9!tJ inoividval but held In est<'ltf'5 N o(h~r i!mmgemer;ts invo!v-ing
muI1J-oWI1&lsh1P, When this haPpens It IS na(d to get tI\lrum6llt 01'1 loajor
rernorl~h))Q or HHJ$e invBst(th1\1ts that would ourde(l th~ incomes of ail parties in the
f\.,lWfU, To(la'l, .given the credit C(l!nz;h, it is poOlnicljlmiy ditflcuit to gut agruvment
from ell the ~d(ti€:S neooe4 M obt.:t,;'" 1irof'.ICh"q to! ~il)! ''''')J"WD!.tm8nf5..
!n terms of tI'W COr'>Q)tiOf)$ that ex)st too'ay <'1M thHt Wf!, Gfle in th9 hJtufe, illl of {~65e
cMteJ'$ 0'0 \JndSfsitec. 1'hU$, tile tendency for iC~ilct!or. motivated by hu«la~ intl(tia
and the twa h.~ct{J(s meflti(lt'!tJd .aQOl/lJ is Lk{!iy to tlJsult if'l J} c(tntinuous w"ltake(ling of
the centers' ability to compe-tn with Di(lIJEH and new») l;enWIS offering tht,;. mix end
5Ctl~& oi n~t2!i\ $ti)l'l'.'S 1t;at will \'I~Q'fl h'i)'i'i', :0 ffi'0f"e 'f}xt'i31'1sh,\'0 ti&~i1'j)t',h: 1)1'ea. !ouch
j')JQe '~tJlil magnets WI!! M(;<,)y~ag€ customers to Qnva by older obsolete eXIsting
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cetttdf'5, ASl'IlJllOb-5teo by ounsideration (jf Tabla A·1 i(l the Aposn.ch)", undef presef'lt
parking \'equirenl6nt$ it is ve.y unlikely Ihm it would bEl fe8siblo to solve the size
problam with lItl{,letQfoond or even structured psrking in 8 neighborhood or
commlJnit'f~$c.e:le t;;cntsr.
If{)m triO Course ot f(lf3re,y
if he rebUJI('ls hl5 center ~o
C005iidlif the SitU8tiofl of an owner who dOIJ.!I f)st::J'mw
ftiffi-c.tl-e.fuj-g thb buildings he owns to "SPfiJC6 {ham up".
that it is ap/-'lualing enough to get ne~ r~flt,S of $1.40 per month. or $16.80 per
.sqwr-& foot {J6r V66(, ho still cannot afford to pel' Muft",! thElI"I 1$.6.00 par ~Quare foot
of land Q'iven the CitY's f{'Iquirement of 1 parkmg Spl:tJ;IJ tor eVQfY 150 square f8~t.
That is, he <;00110t i;itfO(d ta pay more than $2, 'jOO for 11 350·S~\Jt\rf;l.,·flJot pc.rk,II"'.';}
spaCij . wtlll below tho Cost of eith.l)1 uoderground Qt struf:tulad park .. ~g. CVdr'l if th~
CIty wora to l!ltar its regIJ!\jtions to reQUi(h only 1 cal p~H 250 square feet of space,
the own!}! of thlJ center COu!d only afford to pay $/.,$00 far each parkmg $lot, which
15 still well belOW the CQst of c/Mting the !>flare neeJJrd by tJ Center thrOVG~
underQrOlJf"Id or stru':tvf.ed parking.
)N'hlla "Nfl do nut bei;eve thar parkln9 ft:quIH:m(mt5 sJ'ouJIj 136 lowered enough to
makf1 tit'ucturad Of undl3rgrount) parking feasi~le, lh'3 pH'sent PfI,i.:;ing rtlQulreme,'ts
do :seem Vn !')ffC6SS8fily high. 1.t.J$ the 'H"Isin!;u!i.~remMl.....'~&U..b!:-.J.~! area 191m
~QLttlJ).U:l.i(rent~ct 9:> th~ mVjvf re!J~~1.nlluelJ£~~!lY. Glv/;!n tr'tfl
cun(Jf'It parking r-equirJ)ments for 1 sPdca pet 1 SO So.U~lfa feM '-If m(nc tor r~t;"I! \,)'~es,
it 15 not likely that any Centel Will ~chiove the permltt~d floor ratj .... of 40 percenL
While W(J, obviol.Jsly, havQ {',Ot done il p;JriJJng sWay, H does l1PP8&( rhar all of rhtJ
C0J"Iter!;l we -studied would benefit fn{")(fl: hom the ll,ghf'!r'oenslty, a 16ss.sffenV~)Us
parking: ruQ\jiramenr would peurHt, [han they would suffer bocauo;.f1 01 the \f"lcra~sorj
fJwk.~ C~$tKm {htl( would resuil on p~el.; shQDPlflg (.lays. An evell more
fll)QutivJ) eHect Qf existinp (6gultHlOnz on cantB, viability, which is related to the
parking n:.gl.llatioo!J. is the (uquiremom that sup~mn~r).;ets blJ Jimlt8d to .20,000
Sqvtlra fast. Tills size cap has. tnt: eff-ect ot If\~SlM,f\g obsolesct:flce evan in 1;hOSe
cases; when it would be possible to give consumen. the larger sIJp9rmarkftts that
Gruen 1)tV«} + AS80elAt"" s~
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meny preler end will seek to p!ttronile even if they are teQuired to travel to ""'8rby
communities to do 90.
A teview 01 the relatlonships suggested by rabies A-1 and A·2 in the APpendix
indicates that the option of converting the entire Center to residential use IS likely to
be selected only if:
• The Center's ubilily to compete has detenorated to the
point whefe averege obtainable fents tire well below $9.00
per square foot per yeat ($,75 por month) dl.le to I,igh
vacancies end low fents from the space tMat is occupied.
'rha location i~1 n'tla1ively desirAble fof hOUSing 50 that
obtaintlbla condominium priCfl'i or rents are relativoly high.
Achmv<lb\e and allOVl/able densities are at least 15 unitS ta
the acre j,lnd probably I'!onsiderabl,y higher.
iha high net returns that can flow to an existing canter t.hat need only rel1woel to
maintsin occupanCies because its acquisition and developlnent costs h~ve been paid
and are depreciatod (Pan 1, Table A·1 remodeling) create thO Inertia that, os
Indicated by the second part o~ Tables A-' and A-;;', reqUite the potential of
con,iderebly lucrative redevelopment or residential opportunities to I)vetcome.
Therefo(e, os suggested above in tbe sec.tlOn of thiS chapter deticribing market
conditions, properties ~uch as tl,e Alma Plaza may best adopt to the conditions that
prevail in the markBtplace by a combination of dawnsilil"lg te a convenience c<)nter
with high-density residential on the less-accessible portio()5 of the site.
The Charleston Cemer is planning B mejor upgrading which we believe would be
benefitted If parking reqllm'lrnents 'Nero lowered so that the Center could
simultaneously increase its deng,ity. All neighborhood center"!, and this would
include the Edgewood Plaza Centet, would be much better able to adopt to the
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contumporary environment 8nd the added competition they will tac" in the future If
size caps On supermarkuts were removed,
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CHAPTER V
STANFORD SHOPPING CENTER IS5US:S
Of the five study Meas we reviewed, the StanfNd Shoppirlg center is tha largest
single contributor to the City of Pi'lio Alto's tax base, In 1988, the Stanford
Shopping Center genetated about $306,7 million in taxable sales and accounted for
28.7 percent of the City's total sales. By 1990, Stanford Shopping CenTlJr taxable
tiales increased to $320.3 million and accounted for 25.2 percent of the City's total
taxable sales far that year.
The Stanford ShOPPing Center contains apprOllimately 1,333,200 square feet of
gross leosable area, of which 938,500 sQuafe feet. or 70 percent, is accounted for
by major anchors. Undcr the assurnption that 100 percent 01 this space was fully
leased -an unrealistl~ as~umpt;on Since eviln astClblished tegional center~, typically
experience a 5 percent to 10 percent vacancy at 8fly one point in time -in 1988, the
Center would have generated $236.00-per·square·toot sales. By 1989, this per
s~u8re·foot sales estimate had increased to $24~ but, by, 1990, is tlSlimated to
have oacfeased to $241. The latter 1989·90 decroase 10 s8i6!J p6r square foot can
be atttibuted to the genera! downturn in t~le economy which sHongly impacted the
tetail sector from mid-' 990.
The City's concerns vis· A-vis the Stanford Shoppi .... g Cer1ter were threefold:
1.
z.
To what extent does thl] City'S presan: 65,OOO-square
foot eJlpansion growth cap limit the Stanford ShOPPing
Center's ability to retain its long-run competitive
strength?
10 what extent does the Cefltflf's access problems -
particularly with respect to the lack. of & Send Hill Road
<9J 0,.,,_., __ • 61
eJltenSlon -limi: the Stanford Shopping Center's long
run mobIlIty? and
3. lo what elilitent will the upgredlflU of the San Antonio
C."ll!f In MO\lntain View infringe upon the future saloe,
or ttw Stanford Shopping Center?
Given the amOufll ot th~ City's total to.abla sHle'i, accounted for bV rOVe"1ues
genenJtsd fit thf) St."tOl'd Shopping Center, the respons~s to these threa questions
8r8 of concern to H'l' C'ly'S future lisca: health,
In ordar to obla,n ,n~''OJhl s to respond to the above Questions, 0 telephone interview
W8!l conduCted V.II~ Mr Dilvid longbine, tho individual respoosiltle for makrng
man8gement deC's,on~. mcl~Jding tho~e that involve the upgrading endlor eXpanslon
of shopping Center space. 11 is Clear that the first two Issues, the requirement for an
e)(panded growth C;JP lind tht; need to extend Sand Hill Road, .m'! Interrelated. Until
tile SaM Hill Aoed f>llh.·nSIOn is Implemen{erl, the creation (II major new space would
be prohibited, Th,s IS b(-'c<luse, Hccordiflg to Mr. LOflgbine, the only logical locu!:o for
oxpansion would be to close the road separating Nordstrom's from Neiman's rn order
to put 8 building pad on tOp and PM king underneeth. But such a road closure would
exacerbate what IS alread~' ir1adequate access to thtl center. Without the Sand Hrl!
Road extension, It would be infeesiblfi to create this additiona: sp;;tca.
With respect to the 65,QOO-SfJU8te-foot cap, the Center has already util,:<.'od 20,000
~Quar8 feet by the constructron of additional mOtzamne space for tI}I;istlng rnA!]
tenants. Stanford Shoppir"g Center is undtlrmalled with ruSpect to the r£IA l lon5,l"lIp
betweel1 anchor stores and ro6!/ tenanCies.
Currently, the Centor is anchorea With SIX department stores elnd Would 1;1(6 to be in
the positron to be 8ble to attract a seventh anchol in order to SOlidify the;r position
89 the strongest regional shopping center within the Bay Region, While, ot this pOrnt
in tima, thay do not know which rJep<lrtment store Of speCialty chain they would III(e
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to hove locate in their center, they want to keep the possibility open of signing .&
Bloomingdele's, iii Barnlty's, or 0 unique Europthln or Pacific Rim depQrtlnant store in
order to help assure thell ,e9ionlill dominance for years to como.
Some have questIoned whether a seventh anchor is likely to be 8 reality giv~n that
ono or twO 01 the C."ler's existing anchors are known to bo in ndotivoly weak
financial positlOl"\. w"h The Emporium coming st(ongly to mind, The questIon was
posed to Mr, l.or.gblN as to what he might do if en snchor such 85 'he :::mporium
would be fornd to \lecete their space, Mr. longbine cited the names of twO
anchors, who hdvf' a!,udy spoken w.th him concerning the possibility of their taking
over an eXlstmg 510'f' ~hould one become availablo. Both of these are IItrong mark.et
enttles that v"o""ld " .... (0 move Into the Bay Region at e high-image location,
Although space fa' All additional anchor or specialty cannot be contempleted until
thlH pOifU In tlm~ 1M e.tens;on of the Sand Hill Road ex;tension is at lea!it imminent,
the Center has lhe need tor an immediate incre<lse in the 65,OOQ·square-foot cap in
order to provide ada'tlonal ~pe.;ialty and entorta.nml.mt space.
The 45,000 SQUA'e feet remllil"lil'lg frOrn the existing cap would, fur example, be
insuffiCiel"lt to ettr8ct the typically-sized SO,OOO-squate-foot Limited complex, The
limited, aiong With under-sarna-ownership specialty tenancies like Victoria Secrets,
seek a largAr space \In the 60,OOO·SQuare-foot range) to showcase ell of their stores.
ThiS locational mode! permIts rhe Limited stores to be considered a hlghly·desirable
specialTY anchor tenant. Tho Cuftel"lt cap of 45,000 remaining square feet would
als<. flot permit Stanford to add a major mUltiplex movie thflotre. A 14-to , 6~ple)(
thsatre, for example, requires about 50,000 square feet of spece, Tna demand for
SUCh entertelOment complexes has been on the increase in recent years,
Entertamment uses sllch as a multiplex movie theatre are not as likely to produce the
type of adverse traffiC and parking impacts as would th0ge anchors thet primarily
attract daytnne tnps to the Center. This is because nighttime activities do not
eMUict witn the high traffic commute time and tha fact that regional :J.hQPping
ceflters offer 8xceilent shared parking opportunitIes,
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It is clear that if Stnnford Shopping Center IS to prosper in the future 8S it has in the
past, end if the City is to reep the fiscal benefits from such growth in rovenues. then
there ..... ill b9 a need for both thlt City end Stanford Unlvetsity to take a ptoactiv&
stf'nce on improving aCcess to the Center. Significant Improvement cannot be
achievod without widening Sand Hill Aoed.
It is important to remember thot the primary mark.et area for the Stanforo ShOPPing
Center is the entire peninsula !rom which 63 percent of thrtir CuStomer oase {Ire
derived, ApprOXimately 15 percent of thAir customer base originate from IJthor Bay
Area locations and ~ho remaining 20 perce", ot thBlr customers coml'J from outs,dA
the Elay Region. Thus, Palo Aito is i(npOftil1g a Significant prOportion uf their taxilbltj
!'iales dollars from treyol'ld the City borders
S·,anford's primaty competitors are Union Squaro in San Francisco and Voliey Fait 11'1
San Jose. As the San Franl.:lSclJ commute and other urban-related Ills make \)nivn
Square a less-commodious locmion to Shop, the Stcmford Shopping Contel has and
will continue to b~mefit as IOtlQ os it has tl";8 fle:>llllility to rernain compelltlve by
addressing its own acr:ass. and F.I)(pSflsiol"1 needs.. On t,""lt' Other hand, the thIrd issue
posed llt the beginn:ng Of thiS chapter, th& fl,nlJ"'i:ll,on and retel:anting 01 the
Mountain View center, is unitkely to impact Stanfor(.)'s future sal!:!s re\le(\UI'!~'.
According to Longbine, tl"18 San AntoniO Crlllter IS, ~o be (;ol'l",erleu into a
discount/power Center that Will feature such tflnancles ilS Trad~; ~ioo's a"d
NOrdstrom's Rack, While it is conceivable the S3n·l~ customer will occaslona!lv
patronizo both, it IS unlikAly tr"le two cent~rs will attract the same froquency of tflpS
from tre same ml)(kllt ·'iegments.
If the San Ant;onio Center cornpetes With City of ra!o Alto sales, thIS competition I"
not likely to (a1o;e place directly with the Stanford Shopping Cent~r. If, on tl"3 Other
hand, Stanford Shopping Center is to maintain Its regie1n')l ClOf'nillancp well into trle
future -particularly for the type of up-sef;.]!') Mchors end specialty fenancies upon
which it has built its reputation as well os to havo the possibility 01 addlflg an
(¢J, ... -.. -~, 65
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APPENDIX
THE REAl ESTATE ECONOMICS OF ALTERNATIVE DEVelOPMENT
PURPOSE
The objective 0; t~ .,,,,IYSiS Summarized in this report was 10 evaluste the eftttct that
Genoral Plan pol·C-.' have been Ilclving Bnd BfB likely to ~a\le ir"l the future on
commercial 8r~8\ ,,, Palo Alto. The bulk of the resflarch conducted by GG+A in the
COIJrse of this 'WOtIl was ain'lPd at gaining an underst8(lding of the market conditions
thfit apply to each t),De of commerCial Hr6H end w~re likel\l to apply to them in the
future, Plann.ng Dvr.clcs affb'ct land uses by constrlfining the responses thet the
owners of propeft", wIthin each of the commercial <Heas can make tl) the market
conditions thev tact' While market conditions, the (",Osts 01 res~ondjn~ oivfln whet l!o
allowed, t10(j the pt'!ysH:al circumstanCe_,] 01 aach area do vary what they t~nd to have
in Common IS (he mot ..... iUlOn of property owners_ ThDt moljllallon, Ollflr time tend~ trJ
be 10r Ine ownelS Of th~ property to seek to improve and benefit, if not maximize, the,r
own economic w(,>lI-be'ng. Thus, It is important to bit able to understand the t0a!
estate economics that apply to the situations under study so as to be able to make BrJ
6stimate of how th(l policies of the City 3re lIffectll"ly fhe property development lind
maintenance deCISions of owners fac'ng the market conditions idtmtitied as existing
within each of the commercial area'S studied,
lHE YARDSTICK UTILIZED FOR THE PUflPOSES OF ANALYSIS
I" Older to develop reference POints tht\t wuuld enilble us to o'itim"'te how the p()licle~
were effecting the economic decisions of property owners in the cOmmercial areas, we
needed A single yard stick that would 'Suggest the type of actIOns likely to ne t{'ken by
proper!,y owners sHeking to mHXlmlZU the return from their inllestments. The var(.l stich;
we chose was' SUPPoftalJlo lund values, That is, we develop,)d, l.'sing very simplified
and generalized ar.sumptions, a set of tables to indicate land \la!u~s under alternative
conditions, SWICff, by maximiZing hiS land value, the InvestOrlownr~r IS likely to be
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maximizing the return ftom his rnve~tment, thi::! measure permlt5 uS to compare what
land values are likely 10 be under alternative uses end conditiOns so 8S to help IJS make
inferences conct'rrllng why certain actions have been taken in 1t1e past end whet
actions are lik.ely to be taken in the future.
LAND USES AND e.RCUNlST ANCES CONSIDERED
The res I estate econOrfllC5 of situations VH!'Y 'hom location to location end from time
to tIme. What .... t' hit ... " done in Tables A-' through A-3 IS described the resuhs of the
aet of simplilled 8UuJl'pt,ons taken t(om our 1I1terviows with k.nowledgeable. PelQ Alto
bUSinessmen er'uJ If'lj .... ,duals familiar with cost conditIons. Not 5urprisingly. no
individusls we Intl!r ..... 'l!wed looked at the economics of aiterna1iva uses in nxe.ctl)l the
same way or 08.., .... S Identical responses to questions about rents, pflces, and
Nevertheless, lIVe ware ebie to draw trom our interviews ovtnhead factor!. a~~umlltlons tJ1i1t ~("t'med re8~on<tbly comparabis. Since the purpose ot the analysis
was to cornp<1'tl 8Cl,on5 among a given sst of choices, Wfl bulieve that it is this
cQn'\oafablh(y amonQ the ilssumptlons used that is ilnportallt. Table A,' estilnates the
supportable land value 10' an existing and new ,etail development. When estimating
the Cif{;IJmMences hlclrvJ tna owoer of an existing developnlent j we have assumed that
he ignores any mOr(gage payments he may have iolt or the costs of his (udS1ing
property. We are 61:5.0 Qorng to aSsume that he Ignores capital gems thM wovld be
chergEld should he sell hiS property llithough, obvi(Jus!y, aU these factors do infh.Janca
a specific situation We further assume that in order to continue to attract customers
to hiS faCilities the ,nveStor will need to remodel eXistmq spaCS. Based 0(1 informBtion
received from ~eve'al sources those remode!if1\J costs are likely to approximate $35,00
per square foot. Agarn. ignoring a ... arrety Of complexities, we have assumod that the
cost of new development WIll be approximately $'30.00 per square foot and then
'Show the suppmt.able land value implications undH alte(native assumptIons about
obtaInable rents and reqUired park,ng.
Table A-2 estimates the effect on land values per square foot of alternative residential
densit165 and condominium prIces. Not directly considBmd herB is the possibility tlf
~ 0.-0,"-'--
A-Z
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TABLE A·'
Estimate of Land Ve.lve Supportable By
AemfJdeled Bnd New Retsil Spf'ce Under
A1ternative Rents find P8rki~~.ena:
Remode\ Existing Spaca
Costing
$35 DO Ogr S.IlltiI~..QQl
Nltw Development
Costing
$130,00 per Square c'\91
Net Rent per Month $ ,75 • .00 $ 1.40 $ 1.00 $ '.40
Land yalues pe~J~ EQQ.t
Required Pllrk1n.g:
1 per 80 squartl feet
, per' 50 square fefit
1 per 250 Sl'juare teet
1 per 500 square feat
A!:st .. Jfnptions:
{'14.00
23,00
32.00
46,00
$21.00 $33,00 ~ 4.00
34.00 5200 6,00
48,00 73.00 8.00
68.00 102.00 12,OG
• New space costs. $SS.OC tor C~lnstrucnon + $35.00 for 'enant
Improvement + $10.00 for Site Improvement ..... ith profit. finanCing.
ol"d vverheed t"KIUd\ to 30. pRfC8nt for Total Cost per leasable square
lelo!t of $130.00.
Remodeled Space Costs Of11y $35.00 assuming 011 other space paid fOr
with no opportunity cost (owner vi{t ..... ~ his sunk cost as irrelflvant).
Parking slot equals 350 squafe feet.
Capitl1lization rato equal 8 percent.
Base property ta)o., insurance, and administration ignored.
-flotl"d.d to neerut dllltll!
$15.\')0
24.01'\
33,00
4700
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TABLE A-2
Estimated Effect on lond Value of Alternative
Residootlal p!!!ngjtie~ end Condominium Prices
Density per Acre
B
'3
15'
30'
Assumptiuns:
Solos Price per Sau~!.e...£2il1
.150.00 .200.00 ~250.00
Lond Yalues per Square f...22l
$ $ $
6.00 15.25 24.40
9.85 24.75 39.70
11 .35 2B.58 45.80
22.70 57.15 9' .60
Prototypical Unit 8U11t over Garages Costing $75.00 par square
foot for COl1struction and $15.00 per squMtt foot of Building for
Site Developmellt find 30 percent for Builder Profit. Financing.
and Overhead so that Total Cost per square foot is $117.
• Average Size unit IS 1 000 square feet,
M •• im!.lm 10f eN lonll
-. M.'umufTI for CS lonlll.
~ GtvAn Gruen + AssociatM
A-4
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TABLE A-3
Estimato of land Values Th~t Could Be Suppo~ed
By Two-story Office Building
~ternatiye Rents and Parls!!.i.Q....fillilUkD.!!!.1U:!l.S.
Rflquired Parking:
1 P6( 250 SQLn~(e feet
1 pBr 500 square feet
, per 1,000 par square feet
None
Assumptions:
~~e[ Square f2.Q1
$1'5 $'8 $24
laam.LY'_al.!J,!:.S per Sgua!JLf..2.21
$ .52 $ 20.00 • 60.00
.84 32.00 94.00
i .18 45.00 , 33.00
2.00 7700 227.00
Hard cost of Construction per ref1tablf,? squure loot {>50.00 + $=~5.00
tor Tenant Improvemonts + ~10.00 pfi!( square foot for Sita
Improvement with OverhefllJ praflt <lnlj fin<lncin~ equal to 30 l"'Iefcp.nt ~o
Tote! COst"" $136.50.
Expanse'. 'taxHs, ins\Jf(tnce, admlf1istr<ltiQfI, etc, $4.00 per 5Qua(~
foof.
Capitalization rate is 8 parcant.
Parking spacft equals 350 square feet.
,~ Gruen Gruen + Associ4ttt5
A-S
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building renttlillnits, Because of difference$ in design und quality for rentsl units the
construction costs of such units would btl somewhat less than whtU i5 8ssumed in
Table A-2, However. in talking to developers of both rental and condominilJm units
and Bssl,Iming that rentl1 ara in the $1.50 per square fOGt renQe, the (flsults achieved
in Tuble A-2 under the 8ssumptions that the price per ",Quare foot of condominium
space was approximately $150,00 per square foot are somewhat higher than what
would be the case for rtlntal units,
Table A-3 est:mates land values achievable fOf 0 two-story office building !;liven
alternative parking requirements. In an cases, we have usee the am()Un, oi Hlqutced
parking spar;I)S rather than maximum floor area ratiOS to indicate the effect of
Hlt6fr1stlve dcmsitles. Thi:-j is because in virtually all of the prototypical development
and remodeling examples we reviewod parking reQuifemems, not floor area t8tios,
wQfS the determinants of density.
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Gruen Gtuafl + A'$Ocliltes lGG + A} is os ~irm of
~conomists and market analvsts providing land use policy
(esearch and consUhing. Since its founding in 1970,
GG+A has pioneered tho use of economic, SOCial and
fiscal impact analysis. GG + A impact studies Ciccurate~y
and comprdht~nsively !lOrtrB,' the effects of publiC ~nd
private (eal estate developments, land use plans,
regulations, annexatiOns and ;js!'essments on the affecwd
treasuries, taxpayers, consumers, other (2sldents afld
property owners.
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