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Retail Mixed Use Market Study Update 1 January 6, 2010 BUYING POWER ANALYSIS This section provides an estimate of retail demand generated by those who live and work around Hacienda. Employee and residential demand are calculated separately, to account for the different spending patterns of each consumer group. Buying power findings are then aggregated in the Retail Demand Summary, which includes estimates for future demand generated by low growth and high growth employment and residential scenarios. Employee Buying Power This analysis estimates the retail demand generated by the approximately 15,900 office, research and development (R &D) and flex employees working in Hacienda, and predicts the potential demand generated under two future employment growth scenarios. In addition to office, R &D and flex employees, there are approximately 1,900 employees in Hacienda working in retail jobs. The spending of these employees is not analyzed, due to a lack of comparable information on retail employee spending patterns. However, it can be assumed that these employees will generate some additional retail demand. Office Worker Buying Power Methodology For this report, the retail demand model used in the 2005 study was updated to reflect inflation and 2009 employment and occupancy rates. This model estimates the gross square feet of retail space that can be supported by Hacienda office, R &D and flex employees. First, the annual retail demand generated by park employees is derived from employee spending pattern data and current employment figures. Demand is estimated by retail category, within the umbrella categories of "Prepared Food" and "Retail Before /During /After Work." The "Retail Before /During/After Work" category includes retail spending throughout the work day, in addition to immediately before and after work. In ordcr to translate demand into actual supportable square feet of retail space, annual expenditures are divided by typical annual sales per square foot per type of retail outlet. This same model is used to assess the potential retail demand generated by two additional employment scenarios. This section describes the assumptions, employment scenarios and retail categories used in this analysis. Office Worker Spending Patterns The office worker spending information used in this report was obtained from Office Worker Spending Patterns 2004, published by the Intemational Council of Shopping Centers. For this study, the most recent of its kind, the ICSC conducted a survey of 1,500 suburban and downtown office workers regarding their workday expenditures during the week prior to a phone interview in October of 2003. Figures used in this analysis are based upon the interviews conducted with the "suburban" sample; 500 suburban office workers from around the country. This information is inclusive of employees at different wage levels, and is therefore applied to office, R &D and flex workers. For the 2009 analysis, the 2004 estimates of employee spending are adjusted to account for inflation. Sales Data Assumptions regarding sales per square foot by type of retail establishment and overall square footage per establishment are based on information from several sources: 2009 -2010 Retail Store Taxable Sales Estimates, prepared for the City of Pleasanton by the HDL Companies; the Dollars and Cents of Shopping Centers; the Intemational Association of Shopping Centers; and Strategic Economics professional experience. Employment Scenarios Three different employment scenarios (Table 1) are analyzed to reflect three different levels of park employment: 1) mid -2009 employment (reflecting an occupancy rate of 79 percent), 2) current built -15-