News

Menlo Park: The price of doing business

Rent, parking and a lack of amenities make downtown business retention a challenge

"Business has quadrupled," said Karla Oliveira, the proprietor of the Build It Again Lego store she opened briefly in Menlo Park last fall before packing up shop for a new location in Los Altos within months.

Why? In Menlo Park, the rent cost $6,059 a month, with no parking and no storage space included. Down the road in Los Altos, she's paying $3,900 a month. And the new location comes with more foot traffic.

"(Los Altos) has everything here -- a restaurant that kids can play in while you eat, a bakery, a hobby store, a museum, a new bookstore centered around kids," Ms. Oliveira said. "It's known as a mecca for people with kids."

Menlo Park, on the other hand: "There's not enough other activities to draw kids downtown," she said. Build It Again, thanks to classes, parties and allowing parents to drop children off, did find a crowd of regulars in Menlo Park that Ms. Oliveira misses, but that wasn't enough to offset the difference in rent.

The city doesn't seem to have trouble attracting business: According to its latest economic report, Menlo Park's retail vacancy rates hover around 1.3 percent, lower than San Mateo County's average of 1.7 percent.

But sometimes, as the experiences of Ms. Oliveira and other proprietors demonstrate, keeping business can be a bigger challenge. During the past year, Lisa's Tea Treasures and Pendleton Woolen Mills also relocated to Los Altos. The iBar eyebrow-threading business moved to Palo Alto. While the restaurants Refuge and Borrone MarketBar opened, Menlo Hub shut down.

Menlo Park has seen its retail vacancy rate drop a lot in the last year, pointed out Jim Cogan, the city's Economic Development Manager, but there's a lack of data on retention. Individual business models play a role in differentiating retailers that leave from ones, such as Cheeky Monkey and Flegel's Home Furnishings, that stay. "Our rents are high not as high as Palo Alto or the Stanford Shopping Center, but up around $5 per square foot per month," Mr. Cogan said. "That can be a tough nut to cover for a lot of retail."

Some of the newer retailers, for example, Menlo Hardwood, told Mr. Cogan that they love the market, but aren't convinced there's enough foot traffic downtown to support them.

Amenities

The retention challenge isn't limited to retail. Menlo Park's office space vacancy rate -- 10.9 percent -- remains almost double that of some neighbors, including Mountain View and Palo Alto, although it is below the county's 13.9 percent, and has dropped this year, according to data from the city.

One factor is the type of office space available: Cities with space near public transit and downtown amenities are seeing skyrocketing demand. Menlo Park, on the other hand, is short on exactly that type of space.

Chris Andrews moved his financial planning business from downtown Menlo Park to Redwood Shores in September. For nearly identical square footage, he told the Almanac, he pays $50,000 less each year for rent now. And he is in a location with amenities such as an employee gym, picnic areas and a free shuttle to Caltrain -- "all good things for office culture," he said -- as well as abundant free parking with no time limit.

"The parking was an increasingly annoying concern in Menlo Park due to the lack of available spots for clients, the short time frame for parking along Santa Cruz Avenue, and the rigorous enforcement of the spots by the ticketing authorities," Mr. Andrews said. "It is very difficult to condense a financial planning meeting into exactly 60 minutes with clients."

He racked up numerous tickets and described them as the secret cost of living and doing business in downtown Menlo Park. "In the case of our office, I paid a handful of tickets, but my clients paid a lot more."

Mr. Andrews suggested converting most of the downtown parking to two-hour slots, while reserving a handful of spaces along Santa Cruz Avenue for 15- to 30-minute spaces for errands.

"I think this will go a long way toward supporting local businesses like ours that aren't simply storefront (or) retail-based," he said. "Restaurants will love it too, because their clients will almost always want to spend one hour plus at lunch and dinner."

Menlo Park did change its downtown parking layout nearly three years ago, adding pay-by-the-hour meters to Plaza 1, off El Camino Real and Oak Grove Avenue, and Plaza 5, off Crane Street and Santa Cruz Avenue. The first two hours of parking are free, with the option to buy up to seven more hours. The city limited spaces on Santa Cruz Avenue and some side streets to one hour, and created some 15-minute drop-off zones.

The city staff recently said a review showed the changes were working as planned. But after looking at the data, the council questioned whether parking enforcement is too aggressive: Menlo Park overall averages 5.9 tickets per parking space annually. Santa Cruz Avenue is nearly twice as high, with 11 tickets per one-hour space each year.

Los Altos averages 1.21 and Redwood City, which has a parking garage downtown, averages 5.31. Only Burlingame, with 12.5 tickets per space per year, ranked higher than Menlo Park out of the five Peninsula cities considered.

Strategy

In many ways, Los Altos embodies what Menlo Park aspires to be. The two cities have about the same population, and both rezoned areas to revitalize their downtown districts, but in Los Altos, the changes are creating an inviting, bustling ambience.

Several years ago, Los Altos eliminated some of the floor-area-ratio and height restrictions to allow a wider range of mixed-use projects downtown. Commercial buildings in the downtown core may be 30 feet in height, while those on the perimeter could go up to 45 feet. It invested in wider sidewalks, new landscaping and street furniture. Investors spruced up building facades, and kid-oriented businesses, such as an arcade for teenagers and a restaurant with a play area, popped up.

"I think it's starting to blossom," said Los Altos City Manager Marcia Somers. A larger Safeway will debut in July, followed by an 18-room boutique hotel at the other end of downtown in September.

A 48-unit condominium complex is also in the works, and in early 2015, a 31,000-square-foot office and retail development on a 0.9-acre lot will open. The city expects those retail slots to fill quickly, based on the number of inquiries from prospective tenants, and also anticipates more restaurants and other businesses arriving as the condos bring more residents to downtown.

"People are starting to say, hmm, what's happening in Los Altos?" Ms. Somers said.

Parking in downtown Los Altos consists of two-hour spaces on the street and three-hour slots in the plazas in an attempt to strike a balance between encouraging customer turnover and giving people enough time to dine and shop during the same trip.

Ironically, in this case, Los Altos may be looking to Menlo Park for inspiration, according to Menlo Park's transportation staff, which reported that Los Altos only sends a parking officer out when someone complains of a violation, and business owners there are arguing that police should make enforcement a higher priority.

Menlo Park revamped its zoning with the downtown/El Camino Real specific plan, but the ballot initiative looming over the November election has thrown some cold water on the enthusiasm that Jim Cogan heard from potential investors last year.

"The critical mass that the (Stanford and Greenheart projects) would create is what people base their risk-taking on," Mr. Cogan said. "The cost of land is so high -- the Applewood site, which is small and has no parking, was on the market for $3.2 million. So for an investor to take a risk on buying a similar property, they need to be sure the critical mass is there and that they can get through (the development) process in this economic cycle. If those two things aren't there, it's a bad investment."

That said, investors remain interested, according to Mr. Cogan, including two hoteliers with proposals that could pencil out financially with or without the Stanford and Greenheart mixed-use developments in place, although "they're definitely excited about the prospect of having the jobs that those two projects would bring. It makes sense to have hotels near employers."

Menlo Park's reputation as one of the three cities forming the hub of Silicon Valley and its proximity to Stanford University are huge competitive advantages, according to Mr. Cogan. "If the specific plan is built out even at the base level, it will create the job opportunities and housing that the next generation of folks is looking for, and Menlo Park will retain that mantle. Without that, it's a little unclear."

The city is also revitalizing downtown from a consumer perspective. Menlo Park has had annual events such as the block party and the Connoisseur's Marketplace for a while now, but the city's been expanding its slate of programming to see whether more events equals more customers.

Off the Grid, a weekly food truck event, launched in February over the protests of some downtown merchants. It's already paid off. The city's latest economic report estimated that the event draws 900 to 1,000 visitors each week. Khephra Molloy, who manages Left Bank Brasserie, confirmed that the restaurant has added another server on Wednesday nights to handle the bump in business on food truck nights.

The monthly 100OCT Cars & Croissants show, a pop-up art gallery on the now-vacant Tesla lot, a pilot program to expand outdoor dining along Santa Cruz Avenue, and a new quarterly small business roundtable are other recent attempts to bolster the downtown economy. Also on the horizon: local restaurateur Rob Fischer's renovation of the landmark BBC at 1090 El Camino Real.

People may be asking what's happening in Los Altos, but Menlo Park is catching some buzz, too. "You gotta come see this," one guy commented during a phone conversation at the May 3 car show, Mr. Cogan said, which is the kind of attention that gets retailers excited.

He's already planning some new events, perhaps one with a fitness theme, and another focused on home decor at the suggestion of local merchants.

"Anything that brings new customers into town, I think, is great. I am happy to try anything, and I'm all about making new and exciting mistakes," he said.

Comments

Posted by Shelly, a resident of Menlo Park: other
on Jun 6, 2014 at 10:28 am

Downtown Menlo Park definitely needs some refreshing. It is a lovely exclusive little town, but needs some shops and restaurants to draw more people. With the number of school children that walk downtown after school throughout the week, it would be nice if there were a few more places that catered to them. The children may not spend the same amounts of money as their parents, but they do spend money. They would enjoy having a place to spend money and hang out on the weekends. Downtown Menlo is a bit stuffy and shabby compared to Los Altos. Change is good.


Posted by Mary, a resident of Menlo Park: Sharon Heights
on Jun 6, 2014 at 12:26 pm

There's definitely a new verve and excitement that's emerged in downtown Los Altos. There's something for everyone! It would be great if Menlo Park gets its mojo.

I agree that the parking issue continues to be a problem. 1 hour parking is too brief. Make it 2 and 3 hours free parking to make it more user friendly - it encourages more money being spent in restaurants, good and services!


Posted by Steve, a resident of Menlo Park: Central Menlo Park
on Jun 6, 2014 at 3:34 pm

I still think a parking structure behind Flegel's would be a boon for downtown and for the residents of the city. It would allow free parking for 3-4 hours and parking wouldn't be an issue at all. Palo Alto's four parking garages adjacent to University Ave. seem to have paid off for that city. Business is booming to the point that they're having to consider more parking. Menlo Park has yet to construct even one parking structure. What is the downside here that I'm missing?


Posted by shoppers?, a resident of Menlo Park: Central Menlo Park
on Jun 6, 2014 at 5:25 pm

We need more shoppers to support stores and restaurants. The downtown plan was supposed to bring more transit oriented housing. Now it looks like big offices are going to be built instead. They don't do much for evening and weekend vibrancy, or to bring the kinds of stores residents want so we don't have to go elsewhere.


Posted by Menlo Voter, a resident of Menlo Park: other
on Jun 6, 2014 at 5:28 pm

Menlo Voter is a registered user.

Steve:

a parking structure has been brought up multiple times in the past. A couple problems with it as far as the objectors are concerned.

1. it wasn't consistent with our "village character" (sound familiar?)
2. It costs a lot of money and no one wants to pay for it. Yes, it could end up paying for itself, but there is an initial investment that no one wants to come up with.


Posted by Mike Keenly, a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 6, 2014 at 10:18 pm


I don't have any difficulty finding parking for shopping in downtown Menlo Park, so a parking structure would do nothing to encourage more people to shop in Menlo Park since there is plenty of parking available for this purpose already.

If we're instead talking about employees who work in downtown, a parking structure could be built in a parking assessment district similar to what is done in downtown Palo Alto. Employees could then purchase daily, weekly, or monthly passes to park all day.

In that way, the parking could actually "pay for itself" without having to unnecessarily burden the City or its taxpaying residents.


Posted by Long Time Menlo Man, a resident of Menlo Park: Downtown
on Jun 7, 2014 at 7:37 am

To Mary: Downtown business owners are the ones who requested the current parking plan. Two years ago, at the request of downtown business owners, the city council directed the city staff to change the downtown parking times, rates, and asked for more vigorous enforcement. City staff recommended against the current plan, for all the reasons people are complaining about today. If downtown business owners are not happy, simply ask to have it changed again.
To Steve: Even though money is the main reason there is no parking structure today, Flegel was the main obstructionist AGAINST the parking structure. I believe his quote was "Listen to those of us who are important." There is more than enough money in the city reserve account to pay for the structure and STILL have twice the state recommended reserve amount in the account. City staff recommended the parking structure partly to address the complaints heard today AND the bottom level of the structure was to be used for a farmer's market and other community activities to draw people to downtown.


Posted by shoppers?, a resident of Menlo Park: Central Menlo Park
on Jun 7, 2014 at 8:10 am

Wasn't Flegel's concern more about the location of the parking lot? I thought the downtown merchants supported a different, more central location.

LTM - pls point to where it was discussed to put the farmers market in a parking garage. I don't remember that at all. That would take away the fun of the market, not to mention its ambience! And how would cars needing to park on higher levels get to them? The current location for the market is great.


Posted by Concerned, a resident of Menlo Park: Central Menlo Park
on Jun 7, 2014 at 12:03 pm

Why has the city agreed to give 100OCT exclusive Santa Cruz Avenue use for the entire morning one saturday a month for its car related marketing. This commercial endeavor blocks traffic to local business and prevents residents and consumers from accessing them. Not only does this consume all Santa Cruz, but those putting on the show, park adjacent to Santa cruz prohibiting normal business customers. The Drug Store, Hardware store, stationary store, bakery, shops, and dry cleaners and laundrys all seem badly hurt by this obstruction. 100OCT advertises(www.100OCt.com) it is sponsored by Maserati Silicon valley who will display cars and 100OCT hopes attendees will consider them for their next car purchase.

100Oct says they will be using santa cruz one Saturday a month for the next 8 months, through December 2014. Its bad enough for Stanford to keep its car lots vacant while it pursues construction of office space and residents, but why turn Santa Cruz into a Car Lot. I value our local business and would like to visit them without this unwelcome intrusion on saturday mornings.


Posted by shoppers?, a resident of Menlo Park: Central Menlo Park
on Jun 7, 2014 at 3:01 pm

Will Maserati contribute some revenue to the city for this?

There should be an analysis of the impacts on local businesses that need all the support they can get.


Posted by Mike Keenly, a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 8, 2014 at 9:26 pm

I'm all in favor of doing a variety of different things to get people to come to downtown Menlo Park, including the food trucks on Wednesday evening, and this event on Saturday mornings once a month. I'm glad that 100|OCT chose Menlo Park for it's Peninsula event. They could have chosen another city, but they didn't.


Posted by shoppers?, a resident of Menlo Park: Central Menlo Park
on Jun 9, 2014 at 10:03 am

Let's be sure someone is measuring the impact on local businesses. If it's good, let's continue. If not, let's not.


Posted by Bill, a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Jun 9, 2014 at 2:14 pm

As I suggested to the City Counsel when it started the new master plan process four (5?) years ago - copy what Palo Alto did with University Avenue over the past 30 years: parking structures, and three and four story mixed use buildings. Los Altos sounds like it understands.

Menlo Park will continue to have a "cute", expensive, fading downtown as long as it thinks of itself as a village, instead of a suburb competing with other suburbs. As it is, we rarely eat in Menlo, and are more likely to go to Redwood City or Palo Alto. Other than TJs, Peet's, or the Guild, we spend little in Menlo Park.

It didn't have to be this way.


Posted by Downtowner, a resident of Menlo Park: Central Menlo Park
on Jun 9, 2014 at 3:21 pm

Los Altos' triangular downtown geography is quite a bit bigger than ours and doesn't have El Camino Real or train tracks cutting through it. It's therefore less accessible to transients and doesn't have PA's looming office buildings. Sunday mornings in LA are less congested & more leisurely as there is no downtown church with attendees competing for parking. Los Altos hasn't been "transit friendly" for 50 years.


Posted by Old MP, a resident of Menlo Park: Central Menlo Park
on Jun 11, 2014 at 6:38 pm

Back in the day... The Pacific Electric street car line ran up and down the (now) Foothill Expressway right of way. As a HS student (circa 1918), my grandfather would catch a street car in Los Altos, ride north, take the Page Mill spur and end up at Palo Alto HS.

Too bad they eliminated the street car line instead of keeping it and building the expressway around it.


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