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While the city awaits the new Springline mixed-used development, Menlo Park released a study that examines the economic state of downtown Menlo Park and what the city could do to make Santa Cruz Avenue a more attractive retail strip.
The recommendations include continuing the street closures on the 600 and 800 blocks of Santa Cruz Avenue, using vacant stores for “pop-up” businesses and building more mixed-use development with residential units.
The study was conducted over several months last year by HdL, an economic consultant agency. HdL looked at Menlo Park’s demographics and previous citywide measures, compared surrounding downtowns on the Peninsula, examined consumer demand and market supply data, and conducted a few focus group meetings in July and August with business owners, commercial real estate brokers and other stakeholders.
The overall takeaway from the 30-page report is that the city’s downtown is healthy, and that Menlo Park has been proactive in enlivening the area with the street closures, the renovation of The Guild Theatre, the midweek French-themed street market “Bon Marché,” and approving developments with residential units in the downtown area. Since the adoption of the Downtown Specific Plan in 2012, the city has approved 489 new residential units for the downtown area as of March 2019.
The city has also welcomed new businesses during the pandemic, including Pedego Electric Bikes, 360 Fitness Superstore, Main Gallery, The Mandarin, Farmhouse Kitchen Thai Cuisine, Rug Center and Philz Coffee, the study said. But the city can do more.
“Downtown Menlo Park, with its strategic location, should be well positioned for new retail and restaurant possibilities,” the study said, adding that it “has a solid foundation” that it can build upon, enabling it to better compete with the downtown areas in Redwood City, Palo Alto, Mountain View, Los Altos and other cities on the Peninsula.
The study defines Menlo Park’s downtown as the six-block strip of 222 retail stores and other services bordered by University Drive, El Camino Real, Oak Grove and Menlo avenues, with Santa Cruz Avenue being the “main corridor” of the retail hub.
Pulling supply and demand data from the U.S. Census and Bureau of Labor Statistics, HdL calculated the “consumer demand/market supply index” which scores how well the area is meeting the market demand of its residents and found that the downtown performs well.
“Downtown Menlo Park retailers and restaurants are doing a good job of pulling in consumers from the adjacent communities to spend their dollars in Menlo Park,” the study said, giving the downtown a score of 80. A result above 100 means that the demand is not being met and residents are doing their shopping outside of the area.
In addition, based on the city’s “sales dollars per capita,” or SDPC, which shows whether residents are shopping outside of their locale or if outside visitors are coming into the “local retail market,” Menlo Park had an SDPC score two to three times higher than San Mateo County in the “business & industry” and “restaurants & hotels” categories.
The city’s overall average SDPC value was lower than the county by 11% between 2014 and 2020, but the study highlighted that “non-residents and visitors were staying in Menlo Park to fulfill much of their shopping and dining.”
At the same time, the downtown isn’t meeting the full demand potential in every retail category the city has “the greatest opportunities,” the study found. HdL calculates that there’s a $31.6 million consumer demand in clothing stores, and the city only met 60% of that demand. It was the same case for “building material/supplies dealers.”
Menlo Park met 0% of the city’s demand for bars but that may be due to the barriers of obtaining the required permits, the study said.
The pandemic and its health restrictions decreased the city’s sales tax revenue from businesses by 24% in 2020, after the city saw several years of growth since 2016. The study said that this was a trend seen statewide.
In spite of the new businesses in the area, the report also noted that the downtown has 11 vacancies on Santa Cruz Avenue as of October 2021. Among them was Ann’s Coffee Shop at 772 Santa Cruz Ave., which due to the pandemic, closed after 75 years in business.
Fran Dehn, president and CEO of the Menlo Park Chamber of Commerce, clarified in a brief interview that five of those vacancies include buildings that are not up for lease, because the property recently changed hands and the new owners are determining what to do with them. This includes Ann’s Coffee Shop and the Menlo Bazaar flea market next door, she said.
In other cases, the businesses relocated nearby, such as the Flegels Design furniture store, or the owners retired.
“Sometimes it’s a matter of retirement, not necessarily the business was closed because the business wasn’t wasn’t viable in Menlo Park,” Dehn said. “So it’s a combination of things.”
Dehn couldn’t immediately speak about businesses that may have left since October 2021.
Recommended changes for downtown
The study looks at several traits that make a “successful downtown” and compared competing retail hubs in Redwood City, Palo Alto, Mountain View and Los Altos to make some of its recommendations.
In its examination, a few common areas were highlighted. One was that Redwood City, Palo Alto and Mountain View had downtowns that supported businesses staying open until 10 p.m. or later.
In looking at Redwood City’s retail strip, the study also suggests that bringing in more residential units can encourage a vibrant nightlife.
“Incorporating significant new residential units into downtown Redwood City has helped extend the environment of downtown Redwood City to more of a 15- to 18-hour downtown, as many more restaurants have located in the downtown area and extended hours to 10 p.m. or later,” the study said, hoping that new residential units will do the same for Menlo Park.
The report also pointed to mixed-use development in Redwood City, Mountain View and Los Altos as another key trait for a healthy downtown.
Some recommendations from the study will take “light effort” and can be executed in the next six months. This includes establishing consistent design standards for street barricades for the Santa Cruz Avenue Street Cafe parklet program, creating more special events such as concerts and farmers markets, and embarking on a “shop local” marketing campaign. Installing more bike racks and considering handicap and senior parking accommodations were other “near-term” recommendations.
Other steps are considered “moderate” to “high-effort” and may take one to two years. The recommendations range from attracting “pop up” or temporary businesses for vacant spaces to adding more mixed-used development in the downtown area with residential units. The study also recommends developing parking structures on city-operated parking plazas and a comprehensive review and update to the city’s Downtown Specific Plan.
Dehn declined to say what she thought of the overall assessment of the study until the City Council discusses it in March, but said there were several suggestions she agreed with, such as upgrading the parking plazas and putting up signs that can help with wayfinding.
“There are many things that are in this study that we have known for a long time,” Dehn said. “Now, the question is, are we willing to act on them or not?”
Read the report along with the full list of recommendations here.
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