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The Menlo Park City Council approved a package of zoning changes on June 23 that will allow more types of businesses to open on Santa Cruz Avenue as part of the city’s efforts to address a growing vacancy problem.
The changes stem from an application filed by Windy Hill Ventures, the owner of 870 Santa Cruz Ave., which argued that existing zoning rules have made it difficult to attract tenants and contributed to persistent vacancies along the city’s main commercial corridor.
City officials and property owners for years have pointed to a retail vacancy problem downtown, with large storefronts sitting empty and rents outpacing what many retailers can afford. The city’s El Camino Real/Downtown Specific Plan, adopted in 2012, imposed strict limits on uses along Santa Cruz Avenue and in downtown in order to cultivate a retail-focused streetscape.
“The specific plan has been almost a complete failure as it relates to actually revitalizing Santa Cruz Avenue. The projects there have been few and far between,” Councilmember Drew Combs said at the June 23 meeting.
The council unanimously approved a scaled-back version of the proposal recommended by the Planning Commission. Under the changes, spas, salons and similar personal service businesses will now be allowed to operate on the ground floor without a conditional use permit; previously, those uses were generally restricted to upper floors.
Other newly permitted uses will still require discretionary approval. Businesses classified as small-scale recreation, including gyms and arcades, may now apply for use permits to open on Santa Cruz Avenue after previously being prohibited. Those permits must be reviewed by the Planning Commission, which retains authority to approve or deny individual projects.
The council also agreed to allow financial institutions to seek permits to open along Santa Cruz Avenue, but added caps. Banks and similar uses will be limited to a total of 30,000 square feet on the street, with no individual business exceeding 5,000 square feet. Existing financial institutions already account for roughly 28,000 square feet.
The council kept tighter restrictions on massage businesses, limiting them to areas outside the downtown core and requiring a permit.
Beyond Santa Cruz Avenue, the changes loosen rules across the broader downtown and El Camino Real plan areas. Most types of spas and wellness services will now be allowed without a conditional permit after the council reclassified newer aesthetic services that were previously grouped with “restricted” uses. Many existing businesses had been allowed to operate only because they predated the 2012 plan and were grandfathered in.
The council also approved allowing limited office use in the rear portions of ground-floor retail spaces, subject to Planning Commission approval and payment of community benefit fees. The change is intended to make large retail spaces more viable by allowing tenants to reduce their storefront footprint while activating underused back areas.
Windy Hill Ventures, which recently renovated 870 Santa Cruz Ave., said the flexibility is needed to fill large, expensive spaces and encourage investment downtown. As the project applicant, the company is responsible for covering the city’s staff costs associated with processing the proposal.
Records obtained through a Public Records Act request show Windy Hill paid the city at least $57,658 in staff time between November 2024, when the application was submitted, and the end of March 2025. The city did not provide billing records beyond that date.
The city did not disclose staff billing rates and did not provide a justification for withholding them in response to a Public Records Act request.
The downtown changes go into effect immediately.
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