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extremely healthy and very stable retail base throughout the city. The retail market in Dublin is not as strong as in Pleasanton, but is still operating within healthy parameters. Dublin retail vacancy peaked at 14.7% in the 3'd quarter of 2009, but dropped by 2011 to below 10.0%. Since then, vacancy was lowest in 1" quarter 2015, at 3.9%, which is an extremely low vacancy rate. The vacancy rate as of 4'" quarter 2015 was slightly higher at 5.9%, but still relatively low by commercial market standards. These favorable retail vacancy rates in Pleasanton and Dublin bode well for the market area with respect to any potential increases in vacancy attributable to potential Project impacts resulting in store closures. Retail vacancies in Pleasanton and Dublin are finding new tenants. At least 35 retail leases were executed in Pleasanton over the one-year time frame from approximately mid-January 2015 to mid-January 2016, totaling approximately 72,000 square feet. Comparable figures in Dublin over the same time frame were 44 leases totaling over 140,000 square feet. These lease transactions ranged in size, up to 19,500 square feet. Over a longer period of time the Pleasanton market alone has demonstrated the ability to backfill even larger spaces, including spaces vacated by grocery stores.' Field observation indicates that properties that are not immediately backfilled and remain vacant are in generally good condition and do not exhibit signs of urban decay. These factors suggest that retail vacancies that might occur in the Project's market area as a result of Project or cumulative project economic impacts will be well-maintained during any period of vacancy and will not contribute to conditions of urban decay or deterioration. Urban Decay Conclusion ALH Economics focused on determining whether or not physical deterioration in existing retail centers and area hotels would likely result from the opening of the Project and other cumulative retail or hotel developments in reaching a conclusion about economic impacts contributing to or leading to urban decay. The conclusion is based on consideration of current market conditions, findings regarding diverted sales, and regulatory controls. Highlights of these findings are as follows: Current Market Conditions: The fieldwork and market research indicated that retail market conditions are moderate to very strong in the market area's core commercial areas, with low to moderate retail vacancy rates. Retail leasing activity is strong and existing vacancies are well maintained. Sales and Vacancy Impacts: The findings suggest the Project's Phase I development could potentially result in the closure of one grocery store and that at Full Buildout the cumulative project impacts (including the Project) could result in a modest increase in the market area's vacancy rate, as new market area demand will not be sufficient to support all the competitive retail space. While the grocery store closure is deemed unlikely, due to factors such as the anticipated distribution of impacts and the lack of variety and bulk orientation of goods available at club retail stores, even if the modest amount of vacancy occurs, the resulting vacancy rate increment will be nominal, with the resulting vacancy rate well within the range indicative of a healthy retail market. Moreover, the market's demonstrated retail absorption, including backfilling of larger retail spaces, coupled with the strong to ' Backfilling refers to re-tenanting of vacant retail spaces. Johnson Drive EDZ Urban Decay 8 ALH Urban & Regional Economics