BY JOHN McNELLIS
Once upon a time University Avenue was the main entrance to Stanford University.
Not today. Our City Council shut the avenue a year ago in an effort to save its struggling mom & pop restaurants. That small bistros are the cuddly polar bear of the pandemic’s economic climate change is indisputable. Helping them without destroying their ecosystem is, as it turns out, rather tricky.
Initially, the council allowed the eateries to build parklets on, say, the two parking spaces directly in front of their stores.
Then the parklets somehow expanded, blocking the adjacent merchants’ visibility. Finally, the cafes seized the avenue itself. Restaurants with five tables inside their premises suddenly had 20 in the middle of the street. While a godsend for the bistros, turning the street into a six-block-long food court came at a price: the loss of its access, visibility and parking. Because these are critical ingredients for the success of almost every merchant, many of the avenue’s other retailers are failing and shuttering their shops for good.
Given this, it may be fair to ask whether saving the polar bears by knocking off the walruses is anyone’s idea of a win-win.Whether the council’s closing University Avenue has contributed to the street’s decline may be debatable. Its decline is not.
Pre-pandemic, the avenue was fully leased to hip chains and well-established local tenants. Today, its retail vacancy is staggering, at an all-time high. Today, the stagnant street is attracting ever more homeless and its better retailers are hiring top-end security firms to protect themselves from the proliferating “grab-and-go” robberies.
Sadly, it seems some landlords have despaired of finding replacement tenants; many long-vacant storefronts have no “For Lease” signs. Walk University’s seven blocks from Alma to Webster streets and decide for yourself whether we have more empty storefronts or homeless squatters.
Loss of daytime population
A central contributor to the avenue’s woes is the loss of our daytime population: the swarm of office workers who’ve been shut out for the last 18 months. Until the Delta variant stormed the barricades, offices were set to reopen just after Labor Day. Now, Google, Facebook and Twitter have all announced delays, with Google saying its earliest return will be Oct. 18.
Even when our office workers do return, even when our council quietly recognizes the folly of deeding University to its restaurants, the street’s vacancies will persist. Just as the kingdoms of Westeros were too busy warring among themselves to recognize the White Walkers’ existential threat, Palo Alto is dinking around with parklets and walking streets and free public parking while failing to recognize that large swaths of retail are simply gone.
Ask yourself what you now buy exclusively on the net and then draw a chalk body outline around your local stores selling those items. True, many bricks-and-mortar stores will survive e-commerce’s onslaught — certainly as long as the Boomers are ambulatory — but likely only the top merchants in each retail field. The net is plowing under the also-rans. Today, we have Walgreens, CVS, and Rite Aid; tomorrow, the home delivery pharmacies like Now Rx will snap one of those chains.
Sadly, the city itself is the biggest obstacle confronting the revival of our challenged shopping districts. By failing to recognize that the hat shops of today are crumpling into extinction, our council is deluding itself into clinging to antiquated zoning.
Our retail zoning is particularly restrictive. Palo Alto limits uses in its retail shopping districts to those who sell stuff: hard goods like lamps or soft like dresses and sweaters. Shockingly, the city won’t allow banks, a terrific retail use. To repeat a prior observation: Mandating only “true retailers” in a shopping district is like building a bird house for passenger pigeons. Won’t matter how pretty it is, they’re still extinct.
To return University Avenue to its pre-pandemic health, Palo Alto needs to shrink the boundaries of its downtown shopping district, thereby allowing other uses to occupy the woebegone retail space on its fringes.
At the same time, the city must expand our definition of retail to include every public-serving business imaginable: any use with a customer, a patient, a client, a student, or any sort of visitor at all. Why? You can’t visit a chiropractor on the net. Visitors equal vitality. Palo Alto needs to drop its prohibition against financial services, and allow dentists, travel agents, gyms, yoga studios, doctors — even brokerage offices — to occupy those otherwise unfillable retail storefronts.
The Old School retailers aren’t coming back. Department store sales have dropped nearly 75% in the last 30 years. They are on their way to Elysium, to join the hundreds of other retailers whose time has come and gone. Until our city leaders recognize this, until they recognize that retail is now more about services than sales — until they lift their archaic zoning — our downtown will suffer.
John McNellis is a principal at Mc-Nellis Partners in Palo Alto, a commercial real estate development company, and has 40 years of experience in the retail sector.