The vacant Midtown parcel at 3191 Middlefield Road, once home to Philz Coffee, Bill’s Cafe, AJ’s Dry Cleaners and Palo Alto Fine Wine & Spirits, is back on the market, and Palo Alto officials are leaning hard toward bringing back street‑level shops rather than watching the block turn into another housing‑heavy project. The burned storefronts were leveled after a three‑alarm fire in early February 2023, and the lot now sits fenced and overgrown. The asking price and the way the site is being marketed have reopened old arguments about how Midtown should rebuild its small‑business core.
What’s for Sale
The roughly one‑acre parcel at 3191 Middlefield Road is listed at $12 million, according to LoopNet. The commercial listing describes about 1.13 acres and pitches the property as a mixed‑use redevelopment opportunity handled by Douglas Sharpe of NAI Northern California. That mixed‑use framing, along with the price tag, has city leaders worried that the ground floor could be built out with little or no retail, just when Midtown says it needs shops the most.
City Leaders Push for Shops
At a recent Economic Development Committee meeting, council members urged the city to use whatever leverage it has to preserve ground‑floor retail in Midtown, as reported by the Palo Alto Daily Post. Councilman George Lu said he contacted the broker to ask whether the city could un‑blight the site, while Councilman Greer Stone warned that state housing laws can have the unintended loss of neighborhood retail. Councilman Keith Reckdahl said apartments above retail would be wonderful, but he does not want to lose the shops that make Midtown vibrant. Their comments highlight a familiar Peninsula tension over how to add housing without hollowing out neighborhood services.
Fire That Started It All
The strip was hit by a three‑alarm blaze in early February 2023 that gutted AJ’s and Bill’s Cafe and damaged adjacent storefronts, and investigators said burn patterns pointed to a dryer room at the laundromat, according to contemporaneous coverage. Fire crews spent hours on the scene, and neighbors described the loss as a significant blow to Midtown’s resident‑serving businesses.
Rules and the Redevelopment Squeeze
Although the burned structure has been removed and the site is now fenced and weedy, the city’s zoning and state housing rules leave a murky path forward, the Daily Post reports. City planning consultant Jean Eisberg told the committee that one local rule appears to bar housing while another allows residential units above ground‑floor retail, and City Attorney Chris Jensen cautioned that officials would need to evaluate any development application and that state housing law could permit waiving ground‑floor retail use. Property records cited by the Daily Post list Norrie and Robert Cavallero as the owners of the former shopping center.
What Developers and Neighbors Expect
Because the listing is framed as mixed‑use and priced for redevelopment, some developers may favor apartments with little or no retail on the ground floor, a marketing stance visible on the LoopNet listing. Midtown residents who lost long‑standing businesses during the pandemic and after the fire say they want local shops to return to the stretch instead of more housing. Local reporting has repeatedly noted Midtown vacancy and business loss as a neighborhood concern during the post‑pandemic recovery.
Next Steps
Any prospective buyer will need to file a development application and secure city approvals, at which point planners and council members will weigh housing mandates against the neighborhood’s retail needs. For now the lot remains quiet, the listing is active and Midtown’s small‑business watchers are keeping a close eye on what comes next.
