Menlo Park’s economy is showing signs of recovery — sales taxes from local businesses are up, commercial vacancy rates are low and its ambitious plan for downtown is underway, according to Jim Cogan, the city’s economic development manager.
The increasing sales-tax revenue is enough evidence to support a “cautious optimism” in Menlo Park’s strengthening economy, with electronic equipment sales and restaurants leading the way, according to city documents. The increase in sales-tax revenue is slightly above the county average.
The top sales-tax generator was Acclarent — a company that develops medical technologies — which was followed by Al’s Roofing Supply and the Automatic Rain Company, an irrigation equipment distributor.
The city is taking advantage of the recovering economy and is in the middle of rolling out a plan to add 1,300 new jobs and 680 homes to downtown, building up a critical mass of customers who can support “destination” retail outlets.
“People want more cool things to do,” Cogan said.
Like other cities on the Peninsula, Menlo Park is undergoing a generational shift as younger workers and tech companies want to be closer to transit and other commute options that don’t require cars. More than half of the millennial generation said they have made a deliberate effort to reduce their driving, according to a recent study.
“They need to be within skateboarding distance of where they work,” Cogan said.
At the moment there are 37 large projects in the pipeline, which amounts to about 1 million square feet of office space overall in the city. Vacancy rates in Menlo Park for office and retail spaces are well below the county’s average, according to city documents.
Menlo Park’s long-term plan to increase downtown retail, office and housing density has led some residents to raise concerns over traffic problems — both in terms of safety issues and road congestion.
But Cogan pointed out that there is scholarly evidence that suggests increased traffic is actually a signal that the economy is strong.
“Every 10 percent increase in traffic delay per person was associated with a 3.4 percent increase in per capita GDP,” Cogan wrote in a report.
But, like many other cities in Silicon Valley, Menlo Park has an economy divided between regular businesses and the tech industry’s massive capital flows.
“There are literally billions and billions of dollars moving through the town,” Cogan said. “The city does not measure those capital flows.”
There are 71 venture capital firms within city limits, and together those firms control 1,200 separate funds that are used to conduct investment activity, Cogan said.
Many of the venture capital firms have offices along Sand Hill Road — made famous during the first dot-com boom for the world’s most expensive commercial real estate. In 2013, Sand Hill Road remains the most expensive street in the U.S. for commercial property, ahead even of pricey Fifth Avenue in New York City.