The Walgreen's building in downtown Palo Alto should be razed because the four-alarm fire that engulfed it July 1 caused excessive damage, city officials said last week.

"It seems to be beyond repair," said Larry Perlin, Palo Alto's chief building official.

During the fire, the building's roof collapsed and is now "basically gone," he said. Only portions of the second floor remain intact, holding the exterior walls together, Perlin said.

The city's building staff issued a letter Thursday afternoon ordering the property owner to demolish the building at 310 University Ave. Bureau of Alcohol, Tobacco, Firearms and Explosives investigators and Palo Alto police have determined the fire was set by arsonists, but have no suspects.

Perlin said the building's owners will be allowed to make a case for salvaging the building, but he doubts they will bother.

"At least tentatively, the indications are that they will be applying for a demolition permit," said Perlin, adding that he expects the process to move quickly.

Property manager Jim Baer of Premier Management said the building's owner, a local family, is still deciding what to do next.

"We're evaluating whether demolition is the right choice. Right now it seems that it is," Baer said. He said a final decision will be made within a couple weeks.

In addition to a Walgreen's, the building contained a Subway sandwich shop on the first floor. Upstairs is office space that Liberate Technologies and the Mercury News' Peninsula bureau used to occupy.

Perlin said the building was most severely damaged in the rear, second-story area. Though the building initially was constructed in an "L" shape, another section was added, ultimately creating a square-shaped building. That area farthest from the corner of University Avenue and Bryant Street is where most of the fire damage occurred, Perlin said.

None of the neighboring buildings suffered any structural damage during the blaze, he said.

The fire was a blow to employees of the building's business tenants, some of whom now find themselves out of work.

Amos Wu, owner of the Subway sandwich store, said he had to lay off six or seven employees, at least for the time being.

But all Walgreen's employees were immediately relocated to other stores, spokeswoman Carol Hively said.

Walgreen's will maintain its presence in Palo Alto, Hively said.
"We are committed to having a store downtown, so we will eventually reopen," she said.

Meanwhile, police officers are continuing to investigate the arson.
Sgt. Sandra Brown said police are reviewing video footage submitted Wednesday by freelancers and residents. Among others, firefighters at the scene filmed the blaze for training purposes so investigators could later "follow the track of the fire on the roof," she said.