So I’m a little worried for Downtown Palo Alto
Lytton Park has recently become overwhelmed with homeless and marijuana is everywhere in the air
Blue Bottle and Hana House closed
No one has still taken the old Apple Store or much of the Palantir space, Vans + retail empty and…
— Jason ✨👾SaaStr 2025 is May 13-15✨ Lemkin (@jasonlk) October 11, 2024
So for those of us who having been doing SaaS for a long time, downtown Palo Alto often still holds a special place in our hearts.
Downtown SF was the HQ of SaaS at least from 2012-2020. It may be today, as well. I think it is, even if it’s smaller and different.
But when the web finally came back after the “Dot Com” era, it came back in large part in Palo Alto actually at first.
Before that, Google and HP started in downtown Palo Alto, and then outgrew it. Steve Jobs had an office there. And Facebook moved there from Boston to scale, eventually taking over every single office in downtown (and blowing up housing rents). Before Facebook left, downtown Palo Alto was its campus. I personally walked down the street to close our first contract with them. It was a crazy time. Everyone sat on bean bags, Windows was banned, and there was an informal ban on anyone over 30 working there. Crazy times, indeed.
Even when Facebook left, it designed its Menlo Park campus to look like downtown Palo Alto. And when Facebook outgrew downtown Palo Alto, it was OK — Palantir moved it. And it was determined to stay. Palantir leased up every larger space, and turned downtown Palo Alto again into its own campus.
Had March 2020 never hit, Palantir likely would have stayed. And we’d have a $100B market cap SaaS leader in downtown Palo Alto. But Covid hit, and Palantir never came back, and most of its spaces remain empty. Palantir may still be paying some of the rents (not sure), but their old offices are mostly empty.
Still, it’s a special place. Coupa Coffee was the heart of the Web in 2005, and it’s become a special place again, as Ramona street has remained mostly pedestrian-only since lockdown. It’s vibrant there all the time.
In the past few weeks at Coupa, I’ve seen Tim Cook, CEO of Apple. The President of OpenAI. A dozen leading VCs, and a dozen more SaaS CEOs. Come by, you may see me there 😉
Yes, SF is far, far bigger and Palo Alto likely will never again be the center of the web, even if it’s just a walk from Stanford campus. But it’s still one of those special places in tech. Why not pick up your laptop if you’re a Stanford student, walk down the street, and … start-up?
The past few weeks though, it may have begun to quietly cross into Urban Decay. I hope it doesn’t, but for the first time it seems close. I can see it starting to take on elements of other previously vibrant areas like Third Street in Santa Monica, like both Lincoln and Collins shopping in Miami Beach, like Abbot Kinney, that just never … came back:
- The main park in the center of the town has over the past weeks has become overridden with homeless, marijuana, cars parking with doors open and blaring music — and in general is unsafe. Everyone walks around and avoids it. I’ve never seen downtown Palo Alto feel unsafe before. This is new.
- Retail has almost entirely left for the Stanford Mall. Restoration Hardware, Lulelemon, Vans may have been chains. But when they left, no retail replaced them. There is almost no retail anymore at all other than the Apple store. But even the old Apple space remains empty after years.
- All the gyms are gone and their buildings are simply empty now. This may seem minor, but it’s a big miss. Folks don’t want to work in a town with zero gyms. Both buildings are simply vacant now.
- The closing of Hana Haus and Blue Bottle may push the vacancies to a “too high” level. Office and retail vacancies are still at record levels. Now one of the biggest spaces in downturn, and one of the top gathering places — is locked up with ugly chain doors.
- Rents remain insanely high — 2x-3x that of SF. OK in perfect times, but … Office rents are as high as ever. Retail rents are at unprofitable levels. Landlords would all rather leave their spaces empty. That’s their choice, but it’s bad for downtown itself. If Palo Alto is beautiful and perfect, some folks will stay pay up. VCs can afford it, well-funded start-ups can too for a while. But that’s a thin market. It can depart if the quality isn’t there.
We’ve seen tough times in downtown Palo Alto during the GFC. Retail was shut down, in some cases for years, from 2008-2011 or so. But it never had an element of urban decay.
It’s not too late. At least I hope not. Downtown Palo Alto is still just a walk from Stanford, and the area itself is still where so many tech leaders live, and a subset work. Many founders still love the vibe. I do, we do. Our office is there and it’s still in a great spot.
But for the first time, I can see it maybe crossing the line to a place I don’t want to work. It’s not there yet. But I could see it quickly decaying faster.
I hope someone comes in and makes downtown Palo Alto its tech campus again.
A related post here:
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Jason Lemkin, Khareem Sudlow
