The former Office Depot space has sat vacant for five years due to restrictive CC&Rs blocking popular tenants and difficult amendment rules—stalling redevelopment despite city plans for a vibrant, mixed-use district in East Palo Alto.

A question I often hear—both during public comments at City Council meetings and in conversations with East Palo Alto residents—is why the former Office Depot space at Ravenswood 101 Shopping Center has sat vacant for the past five years. I recently had the opportunity to sit down with several people involved - including the property owner - and I wanted to write this blog post to share what I learned. I agreed not to share any specific figures, names, or other confidential information.

Reasons for Vacancy

Reason 1: Rented But Empty

The public has seen 1761 E Bayshore sit unused for the last 5 years, but what you may not know is that the previous tenant was actually paying rent for 4 out of those 5 years, fulfilling the obligations of their long-term contract.

Reason 2: Hidden Rules: Popular Tenants Can't Move In

The Ravenswood 101 Shopping Center's CC&Rs (Covenants, Conditions, and Restrictions) prohibit entertainment uses, secondhand clothing stores, and recreational facilities. Restaurants are also prohibited on all parcels except for those that contain Taco Bell, McDonald's, and Panda Express.

For those who may not be aware, CC&Rs are a set of recorded legal documents - often part of a reciprocal easement agreement (REA) - that govern how the property can be used, maintained, and developed. They're essentially private rules between the property owners, meant to protect the shopping center's overall value, appearance, and tenant mix. Cities may have their own zoning and planning rules, but CC&Rs can be stricter than city regulations.

The property owner actually had a very interested tenant, but because it did not align with the CC&Rs the space could not be rented to that tenant. As an example of prohibited uses, this means that if an entertainment company such as a movie theater or trampoline park wants to sign a lease, they can't because the CC&Rs prohibit them.

Reason 3: CC&Rs are Difficult to Change

Amending the CC&Rs requires unanimous approval from all Major Owners. Additionally, any Owner who would be adversely affected must also consent, which makes the process difficult if even one party is unresponsive or resistant to change. It can be very difficult to find and contact all 7 major owners due to the property-specific LLCs, trusts, and generic email inboxes. Property owners and the property management company have not been able to contact all owners within the shopping center.

The general public - East Palo Alto residents - do not have a direct say in the CC&Rs. The City is one of the major owners, but the City's say alone cannot change the CC&Rs.

Contradictions in Land Use Policy

I have observed some major contradictions between the City's Gateway / 101 Corridor Specific Plan, the City's most recent Vista 2035 General Plan, and the Ravenswood 101 Shopping Center's CC&Rs. While the specific plan and general plan allow entertainment uses and recreational facilities (e.g. health/fitness facilities), the shopping center's CC&Rs prohibit entertainment uses and recreational facilities.

To add more context on this jargon, the general plan is the city's long-term vision. The specific plan is an overlay of the long-term vision for a smaller, targeted area; it's often much more detailed than the General Plan and can include zoning standards, building heights, signage, infrastructure improvements, and even design guidelines.

The Gateway / 101 Corridor Specific Plan (1993) states that General Commercial - the area that the shopping center was originally zoned for - "accommodates a range of regional- and community-serving retail, entertainment, and service uses. Within the Promotional Retail Center the emphasis is on "large box" discount retail outlets, with a complement of smaller ancillary service and entertainment uses (e.g. restaurants, banks, movie theater, etc.) that enhance the shopping environment." In fact, the original specific plan even planned for a multi-plex cinema across the street from the promotional retailer center: "In addition to the promotion retail center, the only other area designated for General Commercial is a 6.9 acre site on the east side of Clark Avenue, north of the Light Tree Apartments. The site is proposed for a multi-plex cinema" (page 4-12). For whatever reason, the multi-plex cinema never materialized, and the entire Gateway / 101 Corridor specific plan area never received an entertainment use.

The City's Vista 2035 General Plan (2016) states in Goal LU-11 (page 4-32): "Intent: to create a vibrant walkable mixed-use office and retail district that increases city revenue, provides a dynamic entertainment and shopping location for East Palo Alto residents, and provides new office space that capitalizes on the Gateway's proximity to Highway 101 and Silicon Valley technology companies." This is why our zoning code designates the northern half of the shopping center as mixed-use high. Section 18.12.020 of the East Palo Alto municipal code outlines the allowable uses for MUH, including:

• Offices (business, medical and dental, professional), prescription pharmacies (when in connection with medical offices) are all allowed by right
• Bars, lounges, night clubs require a conditional use permit; they are not prohibited though.
• Hotels, motels, and time shares require a conditional use permit
• Charitable organizations and institutions require a conditional use permit
• Health/fitness facilities are permitted if less than 2,000 sq ft. Larger ones require an administrative use permit.
• Alcohol retail sales require a conditional use permit.

The shopping center's CC&Rs, on the other hand, state: "8.3 Prohibition of Incompatible Uses: ...an entertainment or recreational facility...the phrase 'entertainment or recreational facility' shall include, without limitation, a theater, fitness center, workout facility, health spa or gym, bowling alley, skating rink, studio, dance hall, billiard or pool hall, massage parlor, game parlor or video arcade, computer game room or Game Center, comedy club, night club, adult entertainment facility, store, or other place of public amusement."

How to Rewrite the CC&Rs

The City has already allowed for entertainment and recreational facility uses in its general plan and specific plan. Now, all 7 major property owners need to get together and agree on updating the CC&Rs to allow for entertainment and recreational facilities. It's easier said than done because according to the property manager, they're lucky to get even 2 retailers at their quarterly retailer meeting. The lack of participation by owners might be a reason why the last amendment to the CC&Rs was over 20 years ago.

Because there is no HOA in the shopping center - only CC&Rs - one property owner will likely need to drive the process by hiring a lawyer to draft proposed changes and working with the property manager to send it out to all major parcel owners for review. After that, all signatures will be notarized and the CC&R changes will be recorded with San Mateo County.

Conclusion

I think the 5-year vacancy of the former Office Depot building is a sign of the changing times. Compared to when the Ravenswood 101 Shopping Center opened in 1998, today big box retail is a lot less commercially viable. In addition to the cut through competition from e-commerce, retail theft is also a big problem for promotional retail. As a result, many traditional anchor-department stores have been replaced by interactive experiences like cinemas, gyms, speakeasies, arcade-bowling, grocery stores (with experiential food halls and restaurants). That is, if they haven't been entirely demolished and replaced with higher density mixed use developments with more housing and retail.

Compared to other promotional retail centers, the Ravenswood 101 Shopping Center is in a fortunate position in that the City has already proactively approved a vision of higher density mixed use in the northern portion of the shopping center; the City allows for up to 8 stories or 100 feet (Municipal Code 18.12). In addition to amending the CC&Rs to allow for entertainment and recreational facilities, I think the owners should consider wide sweeping CC&R amendments to align with the City's general plan. Not only will this create a "vibrant walkable mixed-use office and retail district that increases city revenue" and "provide a dynamic entertainment and shopping location for East Palo Alto residents" (General Plan Goal LU-11), but it will also net the owners more property value. That's a win-win.