Council to vote on locking in office space development restrictions

BY ALLISON LEVITSKY
Daily Post Staff Writer

Palo Alto City Council on Monday (April 30) will be discussing whether to permanently limit office development in some parts of town to 50,000 square feet per year — a cap that supporters say limits the traffic, parking and housing impacts brought by new employees and detractors say raises rent for businesses.

The office cap would permanently extend a temporary limit that was set to end after June 30. It was first established in 2015 and would have expired in November had council not voted in September to extend.

The ban applies in three parts of the city: downtown, the California Avenue area and the El Camino Real corridor.

That notably leaves out new development at the 700-acre Stanford Research Park, which is home to more than 100 companies, allowing for relatively unhindered
expansion.

Small projects are exempted: only office developments larger than 2,000 square feet and medical office or deed-restricted nonprofit developments larger than
5,000 square feet count toward the total.

City office space doesn’t count, and neither do self-mitigating projects that provide both rental housing for more workers than would be employed in the project and “substantial” transportation demand management strategies to improve the current parking and traffic conditions. And if a development replaces an old office building, that square footage is subtracted from the net new office area.

Unused square footage can roll over to the next year, but must be used by the end of that year. The office cap also specifically prevents the limit from ever exceeding 100,000 square feet.

The current rule requires a competitive process when developers submit applications for more than 50,000 square feet of office space. The planning director would have to rank the eligible projects for City Council’s final approval.

But this process hasn’t been tested because the city hasn’t exceeded the 50,000-square-foot limit since implementing the office cap in 2015. In fact, no applicable
office projects at all were approved last year.

According to the Planning Division, the city’s average annual development rate in the three areas limited by the office cap is 39,459 square feet. Citywide, it’s 29,695 square feet, but without Stanford Research Park, it’s 5,926 square feet.

In 2016, a total of 40,863 square feet of office and research and development were approved, including a three-story research and development building at 2747 Park Blvd., a mixed-use project at 3225 El Camino Real and a three-story mixed-use building at 2585 El Camino Real.

As of March 30, just 16,790 square feet of office space has been approved for 2018, including a two-story research and development building at 3045 Park Blvd., a three-story mixed-use building at 3585 El Camino Real and the conversion of a ground-floor space at 400 Emerson St. from a financial services space to an office.