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JDEDZ PROJECT REVIEW SEPTEMBER 2017 (estimated by ALH at just $681,000 per year). Including the category in a study of retail again serves to dilute the apparent impact of Costco. In future years, the JDEDZ is likely to include any number of eating and drinking establishments. This category, however, is generally analyzed separately from conventional retail with very good reason: food and beverage service is a service, not a retail sector, and operates in a market very different from storefront retail. As depicted in the Figure 7, restaurants have far outperformed retailers in recent years, while brick and mortar retailers have lost ground as a share of overall retail and even relative to population growth. As a result, mixing restaurants and bars into a retail dataset masks negative trends impacting retail stores. Because the food and beverage sector is growing, it is of little concern that the JDEDZ might introduce additional restaurant Source: US Census Bureau, Economic Census locations. And, as with smaller retail locations, restaurants could be developed in the EDZ without the expenditure of millions in infrastructure improvements. Figure 7 RETAIL vs RESTAURANT MARKET CHANGES, 1997-2012 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% Li I Establishments Sales (Inflation Adjusted) Employees ■ Brick and Mortar Retail ■AII Retail ■ Restaurants and Bars Future Demand Projections Ignore Current Retail Trends Having established an inflated retail demand estimate of 25% of household income, ALH carries that forward among all new households projected in the market area. Beyond the overstatement of household retail demand demonstrated above, Civic Economics questions the projection that any rate of household retail demand will be flat into the future, at least in regard to storefront retail demand. The ALH Economic Impact Study makes no reference to the rise of online retailing and its impact on the market for bricks and mortar retailers, ignoring the most discussed and studied aspect of retail economics of the last few years. Online retail is made up of non -store retailers like Amazon, as well as the online efforts of traditional retailers like Macy's and Home Depot. These sales generate little demand for local retail square footage, which is what the ALH study seeks to forecast. As Figure 8 reveals, forecasts of the market for local storefront retail must account for the ever-increasing diversion of sales from shops to distribution centers. Civic Economics 15 P14-0852 and PUD -105, JDEDZ - Public Comments Provided for October 11, 2017 Planning Commission Meeting 53