Palo Alto in the 2000s

The 2000s in Palo Alto open with a hangover. The startups that had paid record rents downtown in 2000 were gone or shrinking by 2002. By the end of that year a quarter of the city's office space sat empty. Then a new wave arrived. Facebook moved into a downtown house in 2004. Palantir set up a few blocks away. By the end of the decade an electric carmaker had leased a former HP plant in the research park, just as the worst financial crisis in generations hit.

The census tells a story of steady growth underneath the swings: 58,598 residents in 2000 and 64,403 in 2010. This page covers the decade theme by theme. Our dot-com era page has the fuller account of the boom and the bust.

The bust

The Nasdaq Composite peaked at 5,048.62 on March 10, 2000. Tech stocks fell for two and a half years and bottomed in October 2002, down close to 80 percent. Palo Alto felt it directly. The broker Cornish and Carey, as reported by Metro Silicon Valley, put the city's office vacancy at about 12 percent in early 2001 and 25 percent at the end of 2002. Downtown rents that had reached $11 or $12 a square foot per month at the 2000 peak fell to about $3 to $4 by early 2003.

The companies of the late 1990s moved on. Google had already left 165 University Avenue for Mountain View in 1999. Confinity and X.com merged on March 30, 2000. The combined company took the name PayPal, Inc. in February 2001 and that year listed its headquarters at 1840 Embarcadero Road. In August 2001 it signed a lease in Mountain View and eBay announced its purchase on July 8, 2002. Agilent, the HP spinoff, kept its headquarters at 395 Page Mill Road until 2006.

The end of an HP era

Bill Hewlett died in Palo Alto on January 12, 2001, at 87. That May the Hewlett Foundation pledged $400 million to Stanford, then reported as the largest gift ever to a university. In 2002 chief executive Carly Fiorina merged HP with Compaq, a deal many observers treat as the end of the HP Way. The company had bought the Addison Avenue property in 2000 and restored the garage. It joined the National Register on April 20, 2007. Our page on Hewlett and Packard covers the founders' last years and our historic landmarks page covers the garage.

A new wave downtown

Cheap space after the bust made downtown attractive to small teams again. The new arrivals included several that would become very large:

• Palantir was founded in Palo Alto in 2003 and spread across downtown offices. Alex Karp became chief executive in 2004.
• Facebook arrived in the summer of 2004. A marker on 471 Emerson Street records its lease there under the name The Face Book from January 10, 2005, to July 30, 2006. By 2009 it occupied about ten downtown buildings.
• Ning, a platform for building social networks, began development in October 2004 and launched in October 2005. Its founders were Marc Andreessen and Gina Bianchini.
• Better Place, an electric car charging venture, launched publicly on October 29, 2007, as Project Better Place.

In May 2009 Facebook gathered nearly 900 local employees from those scattered offices into one building at 1601 California Avenue in Stanford Research Park. Our page on Palo Alto in the 2010s picks up its move to Menlo Park.

Tesla and the crisis

Tesla Motors was founded on July 1, 2003, in San Carlos. Elon Musk led its February 2004 funding round and became chairman. The company was still in San Carlos when the 2008 financial crisis hit. It struggled to raise money while launching its first car, the Roadster. By 2009 it was short of space and wanted to bring offices and powertrain engineering under one roof. On August 17, 2009, it announced a lease of a former Hewlett-Packard and Agilent plant at 3500 Deer Creek Road in Stanford Research Park. It became the company's headquarters in 2010.

The crisis reached City Hall too. In 2009 the city faced what Palo Alto Online described as a structural budget gap of at least $10 million. In November 2009 voters rejected a proposed business license tax, meant to raise about $3 million a year, with 56.43 percent voting no.

Libraries, schools and landmarks

Voters were more generous with bonds for buildings. On June 3, 2008, school district voters approved Measure A, a $378 million bond, with 77.59 percent in favor. That November city voters approved Measure N, a $76 million bond to rebuild and renovate the libraries. It paid for the new Mitchell Park Library, which opened in 2014. The Children's Library had already been renovated from December 2005 to September 29, 2007, adding two wings.

Schools kept growing. Terman Middle School reopened in 2001 as the district's third middle school. Our school district history covers the enrollment rebound.

The city honored its past in other ways. In 2002 the council named the Bryant Street route the Ellen Fletcher Bicycle Boulevard, after the council member who championed it. See our Ellen Fletcher page. On July 28, 2005, Greenmeadow and Green Gables joined the National Register as historic districts. Our Eichler homes page explains what that means for owners.

Stanford, books and neighbors

In 2000 Santa Clara County approved the Stanford Community Plan and a general use permit that has governed campus building ever since. Our page on Stanford and the city explains why Palo Alto comments on campus growth but does not approve it.

Kepler's Books in Menlo Park, a fixture since 1955, closed on August 31, 2005. It reopened that October with money and work from the community. Our Kepler's Books page tells the story. Across the creek, the Four Seasons hotel opened in East Palo Alto in January 2006 on the former Whiskey Gulch site. In Palo Alto, the former Sun Microsystems building on Fabian Way became the Taube Koret Campus for Jewish Life, which opened on September 1, 2009.

Commuting changed as well. Caltrain's Baby Bullet expresses began in June 2004 and stopped at only a handful of stations, Palo Alto among them. The local press shifted too. In May 2008 the founders of the Daily News launched a new free paper, the Palo Alto Daily Post. Our newspapers page follows the shifting mastheads.

2000s timeline

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