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Home My WebLink AboutStaff Report 2607-6548CITY OF PALO ALTO Retail Committee Regular Meeting Wednesday, August 26, 2026 4:30 PM Agenda Item 2.Economic Development Activity Report August 2026 Staff Presentation Economic Development Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: August 26, 2026 Report #:2607-6548 TITLE Economic Development Activity Report August 2026 RECOMMENDATION Staff recommend that the Economic Development Committee receive this Economic Development Activity Report for the month of August 2026. EXECUTIVE SUMMARY This August 2026 Economic Development Activity Report presents information on the City’s retail landscape, recent business openings, Palo Alto Labor Force/Unemployment statistics, and other economic development updates. BACKGROUND The Economic Development Committee, established in 2024 (under the name Retail Committee) and continued in 2025, is a Council Ad Hoc committee that follows the California Brown Act. The Committee provides a regular forum for business and community stakeholders to engage with Council members on implementation of the City’s economic development initiatives. The Economic Development Committee makes recommendations to the City Council on economic development and business vibrancy efforts, such as additional business support, proposed University and California Avenue improvements, and citywide retail zoning code changes, to name a few work plan efforts. At the January 24, 2026, Council Retreat meeting on values and priorities the City Council reached consensus on adopting a 2026 Economic Development priority titled, “Enhance Business Vibrancy” and renamed the Retail Ad Hoc Committee to the Economic Development Ad Hoc Committee, reflecting a broader focus on supporting business districts in Palo Alto. This priority emphasizes continued engagement with business districts and the hospitality sector through proactive outreach, collaboration, and partnership to strengthen the City’s overall business environment. ANALYSIS CoStar Information University Avenue Business District Approximately 86,704 square feet of retail space was available in the University Avenue California Avenue Business District Business Openings Through a separate report, staff are also able to track all businesses that apply for a Certificate of Use and Occupancy. This report allows Economic Development staff to connect with businesses as they begin navigating the development process. This includes upcoming openings like Gavin Piemsomboon (3939 El Camino Real) and Herman Miller (180 El Camino Real). In addition, staff have identified other notable business activity. Bistro Demiya hosted their grand opening on June 27, 2026, at 407 Lytton Ave. CardVault Palo Alto is expected to have their grand opening August 15, 2026, at 855 El Camino Real Ste #125. Marufuku Ramen at 374 University Ave hosted their opening on July 25, 2026. Finally, Hauser & Wirth is expected to have their opening on October 3 at 201 Hamilton Ave. Labor Force/Unemployment As more businesses open in the City of Palo Alto, employment opportunities grow, creating more jobs strengthening the local economy. The chart below presents data from the Employment Development Department's Monthly Labor Force Report released June 2026. According to the report, Palo Alto ranks sixth among Santa Clara County cities for largest employment. Area Name Labor Force Employment Unemployment Census Ratios Number Rate Empy Unemp Palo Alto 33,300 32,000 1,300 3.8% N/A N/A Full report can be found in the Employment Development Departments website1. Economic Development Updates Partnerships/Events Through a partnership between the City and the Chamber of Commerce, and feedback from local hotel representatives, a Destination Marketing website is currently under development to promote Palo Alto as a visitor destination. The website will showcase a variety of businesses and experiences, providing visitors with resources to explore and discover what the city has to offer. The Destination Marketing website is expected to be launched in Q4 2026. The Festival of the Arts returns for its 43rd year on Aug. 22–23, 2026, transforming nine blocks of downtown's tree-lined University Avenue into an outdoor arts festival from 10 a.m. to 6 p.m. 1 EDD Report: https://labormarketinfo.edd.ca.gov/data/labor-force-and-unemployment-for-cities-and-census- areas.html#CCD each day. Community members should expect street closures and detour routes in the area throughout the event. California Avenue 3, which includes the Outdoor Dining Guidelines and Pre-Approved Parklet designs for the car-free portion of California Avenue. Economic Development and Public Works staff are engaging interested businesses in parklets and café-style seating and guiding them on the appropriate permit process. On June 15, the City Council also approved funding for the repaving of the closed portion of California Avenue4. During the June merchant meeting, staff presented to the California Ave merchants outlining the implementation timeline for the approved guidelines, and street repaving. Aligning the implementation with the repaving project is intended to minimize disruptions for businesses. The anticipated repaving completion date is October 10, 2026. FISCAL/RESOURCE IMPACT 3 Outdoor Dining Program Motion: https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=18728&compileOutputType =1 4 June 15th Council Meeting Action Minutes: https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=18740&compileOutputType =1 City’s Economic Development and Retail Vibrancy efforts may result in changes to revenues, STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW APPROVED BY: August 26, 2026 Ruth Carias Economic Development Specialist Economic DevelopmentActivityReportAugust 2026 Economic Development Committee www.PaloAlto.gov/business 1 August 26, 2026 Business Updates www.PaloAlto.gov/Business General Updates: •Destination Marketing •Festival of the Arts •BTS Concert California Ave •Thursday Live •Entertainment Zone Activation •Next Thursday Live event: Thursday, August 27 at 5PM •California Avenue Outdoor Dining Program Implementation 2 August 26, 2026 Business Openings & Labor Force/Unemployment www.PaloAlto.gov/Business 3 Labor Force/Unemployment Business Openings •Bistro Demiya (407 Lytton Ave) •CardVault (855 El Camino Real) •Marufuku Ramen (374 University Ave) •Hauser & Wirth (201 Hamilton Ave) •Maison Saigon (611 Emerson St) Year Labor Force Employment Unemployment Number Rate June 2025 33,600 32,300 1,400 4.0% June 2026 33,300 32,000 1,300 3.8% August 26, 2026 Retail Property Metrics Q2 2026 •Average Annual Asking Retail Rent $84.22/sf (or ~$7.02/mo), an increase from a year ago •Current Retail Vacancy Rate is 12.3% as of Q2 2026, a minor decrease from a year ago •Approximately 86,704 sf of retail available, down from 89,085 from a year ago •9,599 square feet of Net Absorption over past 12 months Downtown University Ave All data provided by CoStar www.PaloAlto.gov/business •Average Annual Asking Retail Rent not available on the Costar platform •Current Retail Vacancy Rate is 5.4% as of Q2 2026, a decrease from a year ago •Approximately 17,493 sf of retail available, down from 22,458 from a year ago •137 square feet of Net Absorption over past 12 months California Avenue 4 Thank you! Ruth Carias Economic Development Specialist Ruth.Carias@PaloAlto.gov 5