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2. RETAIL MARKET ASSESSMENT This chapter presents a market overview for retail uses in Pleasanton and ties it to citywide trends to determine the potential impact of retail uses proposed as part of the Pleasanton Gateway Business Park Project. The potential impact of the proposed retail uses on existing businesses in the City is also evaluated to provide input to the fiscal analysis and additional criteria for framing appropriate policy. Citywide Overview Pleasanton is located at the crossing of two busy freeways, I -680 and I -580, and has a population of 70,000 residents and nearly 56,000 jobs. The City has a significant amount of regional- serving retail located along the freeways, around Stoneridge Mall, and in the Downtown. The largest retailers include Stoneridge Mall (with Macy's, Nordstrom, etc.) and Walmart. Safeway is the highest employer in the City because of its corporate headquarters location, although a large proportion of the jobs are in an office rather than a retail setting. Pleasanton competes for sales directly with Dublin and Livermore and indirectly with many other cities along the I -680 corridor. By the end of 2009, the City's vacancy was estimated at 3.0 percent, a healthy vacancy rate below most other cities in Alameda County. To better illustrate the types of retail offered in Pleasanton relative to the purchases of local residents, Table 3 lists the major retail categories and the amounts supplied based on 2007 sales data from The HdL Companies as provided to EPS by the City. These calculations illustrate the concept of "retail leakage" and "retail capture" by showing how much of a particular category is in demand based on the income and demographic characteristics of local residents and whether the City's retail sector is meeting this demand. Despite a strong retail presence in Pleasanton overall, the City is experiencing a retail leakage in some categories. This can be attributed to the high disposable income of Pleasanton residents generating a high demand for retail goods, combined with a substantial amount of direct competition in nearby jurisdictions (e.g., Dublin, Livermore, and Walnut Creek). As shown in Table 3, out of the seven major retail categories, the City has experienced a leakage of sales in three categories: food stores, restaurants, and service stations. The total retail leakage in these categories combined for $249.9 million in 2007. However, this leakage was more than offset by capture in apparel, auto dealers and supplies, building materials and construction, and general merchandise sales resulting in a capture of $551.2 million. These estimates result in a net retail inflow of about $301..3 million. The leakage in food stores and restaurants is a reflection of strong regional competition. For example, cities like Dublin, Livermore, and Walnut Creek have strong retail sectors that capture demand from Pleasanton residents. With the possible exception of food stores, this analysis suggests that additional capacity exists for new retail uses in these categories because the citywide demand is not met by existing retail supply. 4 Terranomics, Retail Shopping Centers Report based on shopping centers of at least 50,000 square feet. Economic & Planning Systems, Inc. 7 P: us000s118ID1P /easanton \Report1u8l0ryta.doc