An aerial overview of business and retail shops in Palm Desert. (Photo: Shutterstock/Matt Gush)
Palm Desert's retail sector showed strong performance in 2025 with a diverse mix of new businesses opening and vacancy rates below regional averages, according to an Economic Development Department update presented to the City Council during a recent study session.
The city welcomed 12 notable retail openings in 2025, including Love Sac on El Paseo, 85°C Bakery Cafe at Desert Gateway, J.Crew Factory at Town Center and Murasaki Kakurega on Cook Street. Two additional businesses, Birrieria Sinaloa at Monterey Crossings and Winston Pies on El Paseo, are scheduled to open by the end of this month.
Another 10 businesses are slated to open in 2026, including Retail Hardware on El Paseo, H&H Bagel at Monterey and Country Club, Woof Gang Bakery & Grooming at Deep Canyon and Highway 111, and El Paseo Chophouse at Highway 111 and El Paseo.
While the Coachella Valley averaged 8.1% and Riverside County averaged 6.9%, Palm Desert's citywide retail vacancy rate stood at 8.3% in the fourth quarter of 2025, according to data presented during the study session. The Shops at Palm Desert showed a 9% vacancy rate.
"I'm really surprised at the young professionals that are here, the families that are here, the year round residents that are here, and I think that there's a great opportunity to enhance our services and the retail opportunities to meet that demographic profile."
El Paseo significantly outperformed all comparison areas with a vacancy rate of just 6.1%, well below Palm Desert's citywide rate and regional averages.
Economic Development Manager Jill Mendoza, who started with the city in November, outlined a three-priority retail development strategy for 2026 focusing on data analysis, enhanced marketing and improved business support.
"We're going to create parcel level data to really understand our retail real estate inventory so we can prioritize sites and respond quickly to prospects," Mendoza said. "Second, we're going to strengthen our Palm Desert economic development branding and marketing visibility so that we show up competitively with investors, tenant reps and site selectors."
The third priority focuses on improving the experience for businesses and investors to make it easier to open and expand businesses in Palm Desert, according to Mendoza.
During the first quarter of 2026, the department plans to acquire recruitment tools to understand market intelligence and data, secure branding and marketing support to develop consistent messaging, launch a retail brand campaign and prepare for the ICSC retail recruitment conference in Las Vegas in May.
"We're really going to try to hit on those key advantages," Mendoza said, referring to Palm Desert's year-round residents and younger demographic. "We have unique opportunity to expand upon the market that we have here."
Development Coordinator Vanessa Mager highlighted several strategic advantages that distinguish Palm Desert in the regional retail market. Palm Desert continues to be the regional leader in retail sales tax and maintains what she described as an "unmatched luxury cluster" on El Paseo that visitors recognize as the retail hub in the Coachella Valley.
The department identified several barriers to retail recruitment, including large legacy big box formats resulting from national tenant closures, market perception challenges and infrastructure constraints in older buildings that can require costly upgrades to bring up to code.
Vacancy rates in Palm Desert during the most recent three-month period, as supplied by CoStar to the city.
"Coachella Valley, along with Palm Desert, is no longer a sleepy town," Mager said. "We are a year round community, and have lots of folks that are constantly visiting 12 months out of the year now and that the demographic itself has also changed."
Mendoza expressed surprise at discovering the city's year-round population and demographic diversity after coming from an outside perspective.
"I did feel like it was a vacation destination and a tourism destination, and certainly our team does a great job of attracting that demographic," Mendoza said.
"But I'm really surprised at the young professionals that are here, the families that are here, the year round residents that are here, and I think that there's a great opportunity to enhance our services and the retail opportunities to meet that demographic profile."
The economic development team plans to tell stories about successful businesses already operating in Palm Desert, including recent strong sales results from retailers like Vuori, which has exceeded expectations according to discussions with Chartwell.
"There's so many stories here of legacy businesses that have been here for a long time," Mendoza said. "I think that that is a good blend. We've got some a good blend of corporate businesses, but then also locally owned businesses, which is a really nice balance."
The department will launch a branding campaign in the third quarter of 2026 to actively promote Palm Desert's retail opportunities through storytelling about businesses and market advantages, with the goal of attracting investment interest and building credibility with site selectors and retail brokers.