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Market Assessment and Fiscal Impact Analysis of the Pleasanton Gateway Business Park Report 3/31/10 The commercial portion of the Project is expected to break ground as the first construction phase in spring or summer 2010 (year 0), with the grocery store and other retail occupied in September 2011 (year 1) and occupancy of the office component during FY 2014 -2015 (year 4). FY 2015 -2016, assumed as year 5 in the analysis, is the first full year of operation and thus the first year in which the full impact of the Project will materialize. The Project description at year 5 is shown in Table 1 and annual phasing assumptions are shown in Table 2. The analysis does not attempt to identify specific establishments or centers that will be affected. The actual impacts will depend on how individual establishments are currently positioned or reposition themselves in the market; the financial resources and performance of property owners and tenants, including business and contractual relationships (e.g., lease terms, outstanding mortgage); and a variety of other factors that cannot be predicted with certainty at this time. Consequently, the market assessment provided herein focuses on how the Project relates to citywide conditions and trends in the retail sector. Summary of Findings 1. The retail market in Pleasanton has historically been characterized by strong fundamentals compared to other Alameda County cities. Pleasanton has experienced a strong retail performance because of the high disposable income of its residents, a well- diversified employment base, and central location along the I -680 corridor and Interstate 580 (I -580). 2. Despite an overall strong retail presence, the City appears to have experienced a net outflow of consumer spending by its residents to other jurisdictions ( "retail leakage") in a number of retail categories. The estimated demand by Pleasanton residents for food stores, restaurants, and service stations exceeds the supply of these retailers in the City. However, the City appears to be experiencing a net inflow of consumer spending from the residents of other jurisdictions ( "retail capture ") in a number of other retail categories, including apparel, auto dealers and supplies, building materials and construction, and general merchandise. Overall, the City has experienced an estimated net retail capture of 136 percent, which means that as a whole, local establishments sold 36 percent more than would be expected from the purchases of local residents alone. 3. The retail portion of the Project will benefit from attracting tenants that would reduce the City's "retail leakage." These store and restaurant tenants could include a number of local and national businesses that would complement the lifestyle- format Safeway and surrounding office uses. This analysis assumes that 20 percent of the grocery store sales will be net new, while 45 percent of other retail sales will be net new to the City. 2 While the Project is assumed to be completed during year 4, the analysis extends to year 5 to capture the first full year of operation after buildout. 3 Includes eating and drinking places. Economic & Planning Systems, Inc. 3 P: 18000Sp6101PIeasantn Report1191RLpt8doc