Midtown shopping center site up for sale; city officials hope for retail

BY BRADEN CARTWRIGHT
Daily Post Staff Writer

A shopping center in Midtown Palo Alto that was destroyed in a fire is up for sale, and council members are trying to make sure it’s redeveloped with new retail and not just housing. But state law may get in the way.

The one-acre property at 3191 Middlefield Road is listed for $12 million. The property was home to Philz Coffee, Bill’s Cafe, AJ’s Dry Cleaners and Palo Alto Fine Wine and Spirits until a fire hit on Feb. 2, 2023. 

The burned building was demolished in August, and the site is now fenced off with dirt and weeds.

Councilman George Lu said he called broker Douglas Sharpe to see if the city could do anything to un-blight the site with new retail. But Sharpe didn’t reply to Lu and hasn’t returned the Post’s phone calls either.

The city has conflicting rules for the Midtown Shopping Center. One rule says housing isn’t allowed, and another rule says housing can go above retail on the ground floor, Planning Consultant Jean Eisberg told the Economic Development Committee on June 3.

“It’s kind of muddy,” she said.

City Attorney Chris Jensen said the city would need to evaluate a development application when it comes in.

“As long as residential is allowed, there is the possibility of waiving any ground-floor retail use,” he said, referring to state housing law.

Retail at issue

Councilman Keith Reckdahl said apartments on the second or third story would be “wonderful,” but he doesn’t want to lose the retail.

“This is one of my frustrations with these state housing laws,” Councilman Greer Stone said. “It’d be great for us to be able to expand housing opportunities, and yet we’re concerned about unintended consequences of actually then losing the retail that makes these neighborhoods really vibrant and special.”

Lu said he believes the most likely outcome is that little or no retail is built on the vacant site, given the listing’s price and status as a mixed-use property.

“The city still has levers, and I’ve been trying to advance conversations quickly and sensitively,” Lu said in an email on Monday.

Cause wasn’t determined

The 10,000-square-foot building is owned by Norrie and Robert Cavallero, 70, of Sausalito, property records show.

Firefighters couldn’t determine the cause of the fire because of structural damage and toxic air, but the burn pattern pointed to a room of dryers at AJ’s Dry Cleaners, fire inspector Brent White said in a report.