Palo Alto’s downtowns have been reshaped by a seires of parklet installations and car‑free street sections that began as pandemic‑era emergency measures in 2020. by March 2026, the once‑contested spaces host diners, students and families, while the city reports a sharp drop in retail vacancies. Yet the transformation has also ignited legal challenges and vocal opposition from some property owners.

Retail vacancy fell to 13.4% on University Avenue after parklet permanence

The city’s spokesperson Meghan Horrigan‑Taylor said the retail vacancy rate on University Avenue fell to 13.4% in 2025, down from a decade‑high of 17.4% at the start of 2024. This improvement coincides with the council’s decision in March 2025 to make the car‑free zone permanent and add planters , bollards and bike‑lane markings. The data suggests that the pedestrian‑focused redesign has attracted new tenants, including high‑end bakeries Arsicault and Croissancé slated to open later this year.

California Avenue’s vacancy slashed to 5.4% after extended car‑free period

On California Avenue,the vacancy rate dropped to 5.4% in 2025 from 10% a year earlier, according to the same city official. The avenue remained closed to cars after a series of short‑term extensions that began in the summer of 2020, when the city first closed portions of University and California Avenues to help restaurants pivot outdoors. The sustained closure appears to have spurred a wave of new openings such as Auntea and La Corneta, reinforcing the avenue’s emerging reputation as a vibrant dining corridor.

Litigation threatens a Ramona Street parklet operated by Coupa Cafe

Not all stakeholders share the city’s optimism. Downtown property owner Elizabeth Wong has filed a lawsuit seeking more than $600,000 in damages and a court order to dismantle the parklet on Ramona Street, where a half‑block is also car‑free. The suit, reported by local news, alleges that the parklet infringes on her property rights and reduces parking for her tenants. The case underscores the tension between private property interests and the public‑benefit narrative championed by Vice Mayor Greer Stone.

Vice Mayor Greer Stone credits community engagement for a “middle ground”

Vice Mayor Greer Stone, a longtime advocate of the parklet program, told reporters that extensive community outreach helped the city find a balance that “activates Palo Alto in ways we haven’t seen in the past.” She noted that early pandemic closures created logistical challenges for commuters and emergency responders, but iterative feedback from residents, businesses and patrons guiedd the eventual permanent design. Stone’s remarks reflect the city’s effort to frame the parklets as a collaborative solution rather than a top‑down mandate.

What remains unresolved: the long‑term sustainability of car‑free zones

While vacancy numbers are promising, two key questions linger. First, can the reduced vacancy rates be sustained if online shopping continues to erode brick‑and‑mortar sales, a trend the source notes has pressured many local retailers. Second, the outcome of Wong’s lawsuit could set a precedent for future parklet projects across the Bay Area, potentially limiting the city’s ability to expand pedestrian spaces. As the legal battle proceeds, the broader Bay‑Area community watches to see whether Palo Alto’s model will be replicated or curtailed.