PROPOSED SAFEWAY GASOLINE FUELING STATION Bowie Marketplace Bowie MD

NEED ANAL YSS

Prepared For

Safeway Inc Real Estate Department 4551 Forbes Boulevard Lanham MD 20706

Submitted by

Lipman Frizzell 8 Mitchell LLC 8815 Centre Park Drive Suite 200 Columbia Maryland 21045

February 15 2008 LIPMAN FRIZZELL MITCHELL LLc REAL ESTATE CONSULTANTS

Three Centre Park Joseph M Cronyn Partner 8815 Centre Park Drive Direct 410 4232372 Suite 200 Email jcronyn@Ifmvalue com Columbia Maryland 21045 Voice 410 4232300 Fax 410 4232410

February 15 2008

Ms Renee Montgomery Safeway Inc Real Estate Department 4551 Forbes Boulevard Lanham MD 20706

SUBJECT PROPOSED SAFEWAY GASOLINE FUELING STATION NEED ANALYSIS

Dear Ms Montgomery

Enclosed please find Lipman Frizzell Mitchells analysis of the need for a gasoline fueling facility proposed for the expanded Safeway supermarket at the renovated Bowie Marketplace shopping center in connection with Safeways petition fora special exception The property is located in the City of Bowie Prince Georges County Maryland

LFM finds that there is need for the proposed fueling station based on evidence that it will be reasonably convenient and useful to the public serving in particular the customers of the Safeway supermarket The enclosed report summarizes our reasoning process

It has been a pleasure working with you on this project Please call me at 410 423 2372 should you have any questions or comments

Sincerely LIPMAN FRIZZELL MITCHELL LLC

Joseph M Cronyn Partner SAFEWAY GASOLINE FUELING STATION NEED ANALYSIS

EXECUTIVE SUMMARY

Lipman Frizzell Mitchell LLC LFM has been engaged by Safeway Inc Safeway in connection with its petition to the Zoning Hearing Examiner for a special exception permitting the operation of a gasoline fueling station on the Bowie Marketplace shopping center property located in the City of Bowie Prince Georges County

The proposed Safeway gasoline fueling station is planned as containing only the following elements six multiproduct dispensers MPDs with 12 fueling positions and a small service kiosk of less than 500 sqft The subject will be open to the general public but will offer a discount typically 0035 on gasoline to Safeway customers only

LFM has been engaged to examine evidence of the public need for a gasoline fueling station at this location Presentation of sufficient evidence of public need for the use is required before a special exception for that use can be granted

LFM finds that the subject has ample market support In summary our reasoning is as follows

Location The subject is offered as an auxiliary service to Safeway supermarket customers within Bowie Marketplace a major redeveloping shopping center Consistent with its auxiliary function the fueling station is appropriately located within the shopping center and in relationship to Annapolis Road Its location access signage and marketing are not appropriate for a standard highwayoriented gasoline service station

Customer Convenience The Safeway gasoline fueling operation offers only limited service during supermarket operating hours Though the station is open to the public only Safeway customers are offered a small discount off the price of their gasoline

Bowie Main Street The station is an important component of the expansion of the Safeway supermarket within the Bowie Marketplace It aims to offer one additional service to the supermarkets customers An improved Safeway and Bowie Marketplace are critical to the realization of the Bowie Main Street vision

Safeway Customer Base The expanded Safeway supermarket is projected to capture over twofifths of the trade areas supermarket consumers

Page 1 Competitive Supply LFM finds that there are six gas stations located within the defined trade area The trade area stations are typically older have not been updated to contemporary standards have a repairorientation rather than a pumping emphasis with smallish sites congested with vehicles to be repaired We estimate that their total annual pumping volume for trade area consumers is in the range of 720 to 864 million gallons per year

Trade Area Demand LFM has estimated total trade area demand for gasoline in the range of 992 to 1091 million gallons per year

Unmet Demand LFM quantifies unmet trade area demand need in the range of approximately 128 to 371 million gallons per year based on a comparison of trade area consumption with the estimated gallonage pumped for the area by its six service stations

Safeway Capture The Safeway fueling stations projected production represents only approximately oneseventh of the total supply of fuel services available in the defined trade area The subject captures an estimated 145 of total trade area demand and only about onethird 336 of even its own residential consumers gasoline purchases

The proposed Safeway gasoline fueling station is positioned as a convenient service to the supermarketsconsumers and not a typical service station operation The subject will serve consumers in the North Bowie trade area That area is currently underserved by its existing six stations which are typically older and somewhat obsolete regarding contemporary consumer expectations

LFM has considered public need to mean expedient or reasonably convenient and useful to the public as defined in Lucky Stores Inc v Board of Appeals and convenient useful appropriate suitable proper or conducive to the public in the surrounding area as defined in Baltimore County Licensed Beverage Association need Inc v Kwon We find that the proposed fueling station satisfies the public because it meets the demand of Safeway shoppers for fuel service as demonstrated by

Safeway Patrons Safeway patrons represent a strong segment more than two fifths of residential households in the supermarketsdefined trade area

Expedient or Reasonably Convenient There will be a high propensity for a large segment of Safeway members to combine their shopping trip at the supermarket with a fueling stop at the onsite fueling station

Useful Safeway customers will find the competitive fuel pricing available to them at the subject fueling station to be advantageous though probably not sufficient to merit an extra trip to the store

Page 2 In addition we have quantified the unmet need gasoline within the Safeway trade area at 128 to 371 million gallons annually The Safeway fueling station can satisfy some of that need for the supermarketscustomers

LFM therefore finds that there is sufficient evidence of public need for the proposed gasoline fueling station

Page 3 I INTRODUCTION

A PURPOSE OF ASSIGNMENT

The proposed Safeway gasoline fueling station subject is planned as containing only the following elements six multiproduct dispensers MPDs with 12 fueling positions and a small service kiosk of less than 500 sqft

For purposes of this analysis we have considered public need to mean expedient or reasonably convenient and useful to the public as defined in Lucky Stores Inc v Board of Appeals and convenient useful appropriate suitable proper or conducive to the public in the surrounding area as defined in Baltimore County Licensed Beverage Association Inc v Kwon In addition in this case we consider an automobile fueling station to be accommodating to the public need when it meets the demand of the Safeway supermarketscustomer base for fuel service and when there is evidence of sufficient unmet demand for fuel service in its trade area as analyzed according to standard market research methodologies

LFM recognizes the nature of the subject as a fueling station facility which primarily serves the needs of its supermarket patrons This niche market fueling facility does not therefore compete directly against standard service stationsas is clear in its location within the shopping center signage and marketing LFM therefore departs somewhat from our methodology typical in an analysis of public need In particular the standard methodology involves more attention to passby commuter traffic in front of a station than is appropriate here since the Safeway supermarket operation already captures and delivers its food shopper customers to the fueling station facility

In this analysis LFM focuses on the key issue of whether the proposed fueling station provides a service which is desired by the Safeway customer base We also analyze competitive supply factors within the subjectsimmediate Bowie trade area

Page 4 B SCOPE OF WORK

In conducting this analysis LFM has accomplished the following tasks

Inspected the subject site and trade area Reviewed Safeway Inc national sales statistics 2006 Annual Report Reviewed trade area household and income statistics developed by ESRI Business Information Solutions Inc ESRI a recognized national demographic research firm Reviewed numerous standard reference texts concerning retail supply and demand most particularly the US Census Consumer Expenditure Survey CES and 2002 Economic Census Retail Trade National Petroleum News and its Market Facts publication the Urban Land Institutes Dollars and Cents of Shopping Centers Reviewed the Preliminary Master Plan and Proposed Sectional Map Amendment for Bowie and Vicinity April 2005 Determined the geographic area from within which the subject typically will draw the majority of its customers Consulted State Highway Administration and private traffic volume maps and analyses to determine traffic volumes in the Bowie area Surveyed nearby service stations to develop information on their location operational characteristics and other factors Referred to the Maryland Department of Assessment Taxation records to confirm the number of gasoline service stations located within the trade area Calculated demand and market share statistics relevant to the proposed fueling station use and arrived at certain conclusions

C ORGANIZATION OF REPORT

Following this Section I LFMs report is organized in four sections as follows Section II site and location analysis Section III public need analysis Section IV other issues Section V summary and conclusions

D QUALIFICATIONS OF CONSULTANT

Lipman Frizzell Mitchell is amultifaceted real estate consulting and appraisal firm serving the MidAtlantic since 1977 LFM is the largest real estate advisory firm headquartered in the Region with 25 professionals in our Columbia MD offices Joseph M Cronyn Partner is the principal in charge of this assignment

A brief description of the firm and Cronyns resume are found in Appendix A at the end of this study

Page 5 II SITE LOCATION ANALYSIS

In this section LFM describes the subjects Bowie Marketplace location its access and surroundings in order to establish its positioning within the competitive environment

A SITE DESCRIPTION

The subject is located within the Bowie Marketplace shopping center The shopping center is now under redevelopment and is planned to contain approximately 200000 sqft of commercial space upon completion including 161000 sqft of retail space and 30000 sqft of office space The existing Safeway supermarket will be significantly expanded from 43000 sqft currently to approximately 58000 sqftan increment of 349 Total parking within the shopping center is approximately 1100 spaces

The shopping center property totals approximately 20 acres located on the south side of Annapolis Road MD Route 450 at its intersection with Superior Lane The center will have primary access points on Annapolis Road and Superior Lane with secondary access available from Stonybrook Drive and Sage Lane There is a signalized intersection at Annapolis Road and Superior Lane

B FUELING STATION OPERATION

The fueling station operation is proposed to be located in the northern portion of the shopping center separated from the Safeway supermarket by a distance of approximately 300 feet across the centers parking field The fueling station canopy and kiosk will be located approximately 60 feet south of Annapolis Road at its nearest point but with only circuitous entry to the station possible from the road This siting is not consistent with typical gasoline retailing strategies which emphasize maximum visibility and proximity to the traffic flow The siting is appropriate to a niche market station however where usage is driven by the Safeway supermarket and not by passby traffic

The fueling is planned as having six multiproduct dispensers MPDs with 12 fueling positions and a small service kiosk of less than 500 sqft

The fueling station will be used primarily by Safeway customers who alone receive a modest typically 0035 per gallon discount off of the market price of gasoline when they use their Safeway cards The station is planned to be open from 500 amtill 12 Midnightthe same hours as the Safeway supermarket All credit cards and cash will be accepted There will always be one attendant on duty to assist customers The station offers three grades gasoline but no diesel fuel A limited selection of convenience items will be available for sale in the small kiosk cigarettes coffee sodas and snacks No auto services other than gasoline will be offered

Page 6 C SITE ACCESS

Bowie Marketplace property will have its primary entrances on Annapolis Road and Superior Lane The former is a rightinout entrance located just west of the Annapolis Roads signalized intersection with Superior Lane There are four lanes of through traffic on Annapolis Road at this point The latter is afullmovement entrance from Superior Lane located just south of the Annapolis Road intersection Secondary entrances can be accessed from Superior Lane Stonybrook Drive and Sage Lane

Annapolis Road is a collector road serving adjoining Bowie neighborhoods and carrying traffic between Crain Highway on the east and LaurelBowie Road MD Route 197 on the west The function of Annapolis Road within the highway hierarchy can be inferred from the relatively smaller volume of traffic it carries as compared to other Bowie highways according to the State Highway Administrations 2006 Traffic Volume Maps by County

Location AnnAvgDaily Trips

Annapolis Road west of Belair Drive 18200 Crain Highway north of US Route 50 77791 LaurelBowie Road north of Annapolis Road 28570 John Hanson Highway east of MD Route 197 105940

Annapolis Road offers good access to Bowie Marketplace from adjoining residential neighborhoods in the City of Bowie including Bowie Forest Somerset Park Meadowbrook Chapel Forge Belair Town Old Chapel Estates Rockledge Whitehall Overbrook Yorktown Idlewild Buckingham Derbyshire Kenilworth Fox Hill Tulip Grove Somerset Forest Hills

D SURROUNDING LAND USES

LFM has surveyed the subjects immediate Annapolis Road neighborhood We find existing commercialretail Free State Mall and Hilltop Plaza shopping centers institutional Bowie High School Bowie Center for the Performing Arts Saint Pius X Catholic School and recreation Archer Park White Marsh Park uses predominating Residential neighborhoods lie to the north and south removed from the traffic on Annapolis Road

Page 7 Preliminary Master Plan

The Preliminary Master Plan and Proposed Sectional Map Amendment for Bowie and Vicinit April 2005 envisions Bowie Marketplace as an important component in the redevelopment of the Annapolis Road corridor between Race Track Road and Stonybrook Drive The master plan calls the area Bowie Main Street and calls for redevelopment with a mix of retail office and mediumdensity residential uses The plan also traces some of the disinvestment in the immediate area to competition from Bowie Town Center and other retail centers which have drawn away a significant portion of the population that once patronized the businesses of Main Street It envisions Bowie Main Street asserting an identity separate from that of Bowie Town Center in order to attract new visitors from both within and beyond the surrounding area

The subject therefore is located within the redeveloping Bowie Marketplace shopping center in the Bowie Main Street area whose longterm health is important to the City of Bowie and Prince GeorgesCounty In particular the Main Street area has experienced difficulties in recent years as some of its market has been taken by Bowie Town Center and other retail centers

E SUMMARY

In summary the subject is offered as an auxiliary service to Safeway supermarket customers in Bowie Marketplace a major redeveloping shopping center Consistent with its function the fueling station is appropriately located within the shopping center and in relationship to Annapolis Road Its location access signage and marketing are not appropriate for a standard highwayoriented gasoline service station

The Safeway gasoline fueling operation offers only limited service during supermarket operating hours Though the station is open to the public only Safeway customers are offered a small discount off the price of their gasoline

The station is an important component of the expansion of the Safeway supermarket within the Bowie Marketplace It aims to offer one additional service to the supermarkets customers An improved Safeway and Bowie Marketplace are critical to the realization of the Bowie Main Street vision

Page 8 II1 PUBLIC NEED ANALYSIS

In this section LFM reviews certain factors which are determinative of the subject fueling stations ability to accommodate the public need We describe the Safeway business model estimate total demand for gasoline within the subjects trade area examine the proposed stores consumer characteristics and estimate the subject fueling stations usage then draw conclusions regarding accommodation of public need

A SAFEWAY INC

Safeway Inc is one of the largest food and drug retailers in North America As of September 8 2007 the company operated 1738 stores in the Western Southwestern Rocky Mountain and MidAtlantic regions of the United States and in western Canada Approximately 75 stores are located in Maryland In support of its stores Safeway has an extensive network of distribution manufacturing and food processing facilities

Safeways new store format is referred to as the Lifestyle store and is approximately 55000 square feet The Lifestyle store showcases the Companys commitment to quality particularly in the perishables departments The Lifestyle store has an earth toned decor package subdued lighting custom flooring unique display fixtures and other special features that impart a warm ambience that the Company believes significantly enhances the shopping experience At yearend 2006 751 stores or 43 of the store base were remodeled to this format By the end of 2009 the Company expects that the Lifestyle rollout will be largely complete

As of December 2006 340 Safeway stores 19 had fuel service operations Fuel sales were a significant contributor to samestore sales increases in the 20042006 period

B SAFEWAY SUPERMARKET TRADE AREA

LFM has defined the subject fueling stations trade area as the area served by its Safeway supermarket The trade area has the following boundaries Anne Arundel County line on the north and east US Route 50 on the south LaurelBowie Road MD Route 197 on the west The area is comprised of the following Transportation Analysis Zones TAZs 902 903 904 905 906 907 908 909 910 All TAZs are located within Traffic Analysis District TAD 111 The trade area is depicted on the map on the following page

LFM has defined the trade area based on three principal factors

Page 9 Location of Nearest Safeway Stores The two most proximate Safeway stores are located at 12410 Fairwood Parkway in the Fairway Green shopping center and at 4101 Northview Drive in the Bowie Town Center shopping center Their locations effectively cut off the subjects trade area to the west and south at boundaries more or less halfway between the subject and its sister stores

Highway Network Annapolis Road is a collector highway fed by the Bowie local street network from the north and south LaurelBowie Road on the west is a reasonable boundary since it is a major collector funneling traffic north and south functioning more or less like a Bowie bypass road and orienting residents to its west more towards Fairway Green and commercial development along Annapolis Road to the west John Hanson Highway US Route 50 is a major barrier to the south cutting off any direct northsouth linkages within the Bowie street grid Crain Highway is not a barrier within the defined trade area the relatively few households to the east of Crain Highway can easily access the subject via Annapolis Road

Geography The subject is centrally located within the trade area The Patuxent River presents a logical physical barrier defining the northern and eastern edge of the market area Households on the Anne Arundel side of the river are more likely to shop on that side of the jurisdictional boundary

The defined trade area therefore could be referred to as North Bowie

Using the Planning Departments Round 71 Cooperative Forecast statistics LFM calculates the trade areas population household and employment counts as follows

Bowie Market lace Safewa Trade Area 2000 2005 2010 2015 Population 21139 21076 20572 20755 Households 7588 7666 7598 7819 Employment 2943 3091 3185 3311 Source Round 71 Cooperative Forecast Prince GeorgesPlanning Dept

Supplementing that information with data obtained from Environmental Systems Research Institute Inc ESRI a respected national demographic and economic research firm LFM describes additional socioeconomic characteristics of the trade area population as follows

Average Household Income 2007 101580 Average Household SizePersons 2000 275 Average OwnerOccupied Home Value 2007 417015 Estimated Homeownership Rate 2007 921 Average Vehicles per Household 2000 21 Workers Driving AloneCarpooling to Work 2000 883 Average Travel Time to Work in Minutes 2000 338 Travel Time to Work 3590minutes 2000 365

Page 10 The trade area is populous and stable due to its relatively builtout status The areas estimated 7600 households in 2007 are affluent A high average income of 101580 enables a very solid 921 homeownership rate with homes being valued at an average of 417051 in 2007 There was an average of 21 vehicles per household in 2000 The vast majority of workers either drove alone 802 or carpooled 81 to work Over onethird of workers commuted more than 35 minutes to work with more than onequarter 261 requiring more than 45 minutes for their commute

The trade areas aggregate income is calculated as 772008000 in 2007

7600 households x 101580 average income aggregate income

Residential Gasoline Demand

LFM estimates that aggregate market area residential demand for gasoline in 2007 is approximately 992 million gallons This estimate assumes that each of the estimated 7600 households in 2007 is purchasing approximately the same number of gallons as in 2006

7600 households x 1305 gallons per year 992 million gallons

For 2006 the Bureau of Labor Statistics Consumer Expenditure Survey reported that higher income 8000099999 consumer households spent 356 of annual gross income for gasoline but gasoline was selling at an average of 2692 per gallon It is LFMs judgment that though the price of gasoline has been increasingly volatile in the past few years rising to over 300 per gallon a number of times and increased to a national US City average for all types of gasoline of 312 in November 2007 driving behavior has not changed substantially Demand for gasoline being relatively inelastic LFM estimates that market area households are now buying an average of 1305 gallons of gasoline per yearthe same volume as they might have consumed in 2006 This estimate is based on 2006 household income 98676 average and consumption data

98676 average income x 356 consumption 2692 per gallon 1305 gallons per household consumption

LFM finds these estimates to make sense from a practical point of view If the average household is purchasing approximately 1305 gallons of gas annually that equates to 25 gallons per weekabout two fillups for typical automobiles We note that the average number of vehicles per household in the market area is 21 that many of the residents are longerdistance commuters and that many of the vehicles are likely to be SUVs Understanding all of those factors LFM judges the estimates to be realistic

Page 11 Other Demand Factors

Commercial Demand

LFM takes note of the fact that fuel is purchased at gasoline stations by more than residential consumers Market Facts for example states that in 2005 the number of Maryland registrations for trucks and buses was 172 million as compared to 260 million automobiles The publication also states that nationally in 2005 the amount of gasoline consumed by all personal passenger vehicles cars and motorcycles was 741 billion gallons as compared to 6643 billion gallons by commercial vehicles buses trucks etc

Though we are not aware of any empirical data concerning the proportion of typical service station gas sales which are made to commercial vehicles we have certainly observed those vehicles fueling up with some regularity We assume that small businesses in particular are most likely to use typical gasoline stations since larger construction companies trucking companies etc more often will have their own fueling facilities LFM estimates this source of demand to constitute approximately 10 of total sales in the market area We have therefore adjusted the upper boundary of estimated trade area demand upward by 10

992 million gallons x 110 1091 million gallons

Commuter Demand

Given the relatively tight Safeway trade area and the niche marketing strategy of the supermarket for gasoline sales LFM is of the opinion that any commuter demand for gasoline captured within the trade area from households residing outside the area will more than offset any resident household demand lost to the trade area through sales leakage We will therefore make an adjustment to our supply estimates in Section IV in order to take this reality into account

Total Demand

LFM estimates that total trade area demand for gasoline from residential and commercial sources is in the range of 992 1091 million gallons per year

C SAFEWAY CONSUMER BASE

LFM has made the assumption that the overwhelming majority of the subjects gasoline purchasers are regular Safeway supermarket customers Based on sales performance data from the Urban Land Institutes ULI Dollars and Cents of Shopping Centers 2006 as well as 2002 Economic Census Consumer Expenditure Survey and ESRI data concerning household expenditures and incomes we can estimate the number of households in the trade area who are likely to be regular Safeway customers

Page 12 LFM estimates the annual gross sales revenue of the expanded Safeway supermarket at approximately 22736000 based on the 392 per sqft sales performance figure stated by the ULI for supermarkets located in community shopping centers Discussions with Safeway management and comparisons to the Safeway Inc annual report also indicate that that is a reasonable figure

The 2002 Census of Retail Trade the most recent available calculates that 732 of sales within a supermarket or other grocery store NAILS 44511 are in product lines defined as Groceries and other food items for human consumption off the premises including bottled canned or packaged soft drinks candy gum packaged snacks etc LFM therefore estimates that consumers will purchase approximately 16642752 in food and snack product lines

58000 sqft x 392 per sqft sales x 732groceries 1664million grocery sales

The 2006 Consumer Expenditure Survey has also calculated that high income households such as those in the trade area spent an average of 50 of their gross incomes on the Food at Home survey category which most closely approximates the Census of Retail Trade Groceries product line above This means that trade area households are spending an estimated 38600400 annually on groceriesof which the Safeway is capturing 431 or 1664 million

1664 million Safeway grocery sales 38600400 trade area consumer grocery purchases 431

Again these estimates seem to make sense from a practical point of view Aggregate annual trade area spending on groceries of 386 million equates to approximately 98 per week per household a reasonable amount especially considering the areas average household size of 275 persons

386 million 52 weeks per year 7600 households 98 per week

The expanded Safeway is expected to capture a little more than twofifths of all supermarket purchases in the trade area This is a reasonable estimate understanding a Giant supermarket its primary trade area competitor is located immediately across Annapolis Road in the Free State Mall

Many Safeway customers will of course also shop at the Giant or other supermarkets outside the trade area Nonetheless we can estimate the Bowie Marketplace Safeways core trade area consumer base at approximately 3276 households with demand for an estimated 428 million gallons of gasoline annually

7600 trade area households x 431grocery capture 3276 Safeway consumers 3276 Safeway consumers x 1305 gallons 428 million gallons per year

Using the Planning Departments average countywide perstation pumping volume of 120000 gallons per month 144 million gallons per year as our norm LFM finds that

Page 13 the subject would capture only about onethird 336 of even the Safeway customer bases total demand for gasoline

144 million gallons 428 million gallons 336capture rate

We find this capture rate to be reasonable given the many competitive alternatives which present themselves to the Safeway consumer households in the course of their week

D SUMMARY AND CONCLUSION

LFM has considered public need to mean expedient or reasonably convenient and useful to the public as defined in Lucky Stores Inc v Board of Appeals and convenient useful appropriate suitable proper or conducive to the public in the surrounding area as defined in Baltimore County Licensed Beverage Association Inc v Kwon We find that the proposed fueling station satisfies the public need because it meets the demand of Safeway shoppers for fuel service as demonstrated by

Safeway Patrons Safeway patrons represent a strong segment more than two fifths of residential households in the supermarketsdefined trade area

Useful Members will find the competitive fuel pricing available to Safeway cardholders at the subject fueling station to be advantageous though probably not sufficient to merit an extra trip to the store

In addition LFM has quantified total gasoline demand within the subjects defined trade area from residential and commercial sources as in the range of 992 1091 million gallons per year We find that though Safeway customers represent total demand for approximately 428 million gallons of gasoline annually the subject is likely to capture only an estimated onethird of their total gasoline purchases

We assume that the expansion of the supermarket the enhancement of its shopping experience with Safeways Lifestyle format improvements and the addition of discount fuel purchases for Safeway cardholdersall will work together to expand the Safeway supermarkets customer base and improve the stores productivityvalue Such a synergy will go a long way to helping the City of Bowie and Prince Georges County to achieve their Bowie Main Street vision The stores success will be further evidence that it serves the publics need

Page 14 IV OTHER SUPPLYDEMAND ISSUES

In this section LFM reviews other issues in the competitive marketplace for gasoline service stations which might be considered relevant to the case at hand We examine the likely demand of Safeway patrons for the subject station in the context of competition within its North Bowie trade area

A TRADE AREA FUEL SERVICE STATIONS

LFM has determined that there are six gasoline service operations located within the subjects North Bowie trade area Traditional gas stations are included as well as convenience stores and other stores which offer fuel services We describe them in greater detail as follows

1 Shell 15651 Annapolis Road adjacent to Bowie Marketplace Four MPDs 8 fueling positions 3 service bays convenience store kero pump

2 Sunoco 3233 Stonybrook Drive adjacent to Bowie Marketplace Five MPDs 10 fueling positions 2 diesel pumps car wash 3 service bays convenience store

3 Sunoco 6801 LaurelBowie Road at Old Chapel Road Four MPDs 8 fueling positions 4 service bays small convenience store

4 Shell 7111 Crain Highway at Annapolis Road Three MPDs six fueling positions 2 service bays small convenience store

5 Chevron 7110 Crain Highway at Annapolis Road Seven MPDs 14 fueling positions 2 diesel pumps 3 service bays small convenience store UHaul rentals

6 Citgo 15300 Old Chapel Road Three MPDs six fueling positions 2 service bays small convenience store

Using Planning Department statistics if we conservatively estimate that each of those locations pumps an average of 120000 gallons per month 144 million gallons per year their total volume is estimated at a maximum of 8640000 gallons per year

LFM is of the opinion that this estimate overstates the actual amount of gasoline pumped by the six stations since the majority of the stations are older have not been updated to contemporary standards and have a repairorientation rather than a pumping emphasis with smallish sites congested with vehicles to be repaired Also given their location on Crain Highway it is reasonable to assume that stations 4 and

Page 15 5 pump a high proportion perhaps the majority of their gasoline for commuters passing through the trade area and not residing in it Making adjustments for those factors LFM judges that the six stations pumping volume for trade area residents and commercial customers are closer to 72 million gallons per year

B NEARBY SERVICE STATIONS

LFM also notes that there are a number of gasoline service stations at the periphery of the defined trade area Those stations include

BP 6021 High Bridge Road High Bridge Village Market Safeway 12400 Fairwood Parkway Fairwood Green Shopping Center BP Annapolis Road at Bell Station Road Chesapeake Market Exxon 16450 Harbour Way Bowie Gateway Center Shell 7000 LaurelBowie Road Whitehall Shell Sunoco 16501 Ballpark Road BJs Wholesale Club 16520 Ballpark Road Xtra Fuel 3711 Crain Highway Shell 13811 Annapolis Road

LFM finds that as a group the nearby stations are typically newer and have more contemporary formats larger convenience store carwash only two offering repairs than the trade area stations These stations are most typically located onnear major thoroughfares with high traffic volumes and are oriented toward capturing a high proportion of their sales from commuters The exceptions to that rule are the BJs membersonly drawing customers from a 125 mile market area and Safeway locationsfor which gas services are an added benefit to their customers

C SUMMARY

In evaluating the Safeway fueling stations positioning within its trade areas competitive marketplace LFMfinds the following

Competitive Supply LFM finds that there are six gas stations located within the defined trade area The trade area stations are typically older have not been updated to contemporary standards have a repairorientation rather than a pumping emphasis with smallish sites congested with vehicles to be repaired We estimate that their total annual pumping volume for trade area consumers is in the range of 720 to 864 million gallons per year

Trade Area Demand LFM has estimated total trade area demand for gasoline in the range of 992 to 1091 million gallons per year

Page 16 Unmet Demand LFM quantifies unmet trade area demand need in the range of approximately 128 to 371 million gallons per year based on a comparison of trade area consumption with the estimated gallonage pumped for the area by its six service stations

In summary the proposed Safeway gasoline fueling station is positioned as a convenient service to the supermarkets consumers and not a typical service station operation The subject will serve consumers in the North Bowie trade area That area is currently underserved by its existing six stations which are typically older and somewhat obsolete regarding contemporary consumer expectations

Page 17 V SUMMARY CONCLUSIONS

In this section LFM summarizes our findings and draws conclusions regarding the proposed gasoline fueling station at the Bowie Marketplace Safeway supermarket

LFM finds that the subject has ample market support In summary our reasoning is as follows

Safeway Customer Base The expanded Safeway supermarket is projected to capture over twofifths of the trade areas supermarket consumers

Trade Area Demand LFM has estimated total trade area demand for gasoline in the range of 992 to 1091 million gallons per year

Page 18 Safeway Capture The Safeway fueling stations projected production represents only approximately oneseventh of the total supply of fuel services available in the defined trade area The subject captures an estimated 145 of total trade area demand and only about onethird 336 of even its own residential consumers gasoline purchasese

The proposed Safeway gasoline fueling station is positioned as a convenient service to the supermarkets consumers and not a typical service station operation The subject will serve consumers in the North Bowie trade area That area is currently underserved by its existing six stations which are typically older and somewhat obsolete regarding contemporary consumer expectations

LFM has considered public need to mean expedient or reasonably convenient and useful to the public as defined in Lucky Stores Inc v Board of Appeals and convenient useful appropriate suitable proper or conducive to the public in the surrounding area as defined in Baltimore County Licensed Beverage Association Inc v Kwon We find that the proposed fueling station satisfies the public need because it meets the demand of Safeway shoppers for fuel service as demonstrated by

Safeway Patrons Safeway patrons represent a strong segment more than two fifths of residential households in the supermarkets defined trade area

Useful Safeway customers will find the competitive fuel pricing available to them at the subject fueling station to be advantageous though probably not sufficient to merit an extra trip to the store

In addition we have quantified the unmet need gasoline within the Safeway trade area at 128 to 371 million gallons annually The Safeway fueling station can satisfy some of that need for the supermarkets customers

LFM therefore finds that there is sufficient evidence of public need for the proposed gasoline fueling station

Page 19 M

APPENDIX A Consultant Qualifications

Lipman Frizzell Mitchell LLC

Lipman Frizzell Mitchell is amultifaceted real estate consulting and appraisal firm serving the MidAtlantic since 1977 LFM is the Regions largest real estate advisory firm with 25 professionals in our Columbia MD headquarters The firm offers advisory services including appraisalportfolio valuation litigation supportexpert testimony feasibility assessment economic and fiscal analysis transaction consulting

Joseph M Cronyn

Joseph M Cronyn is the senior consultant who completed this assignment Mr Cronyn has a broad professional background in real estate acquired over 30 years in the industry including research sales and marketing development financing and appraisal His advisory assignments have encompassed market and financial feasibility analyses of major real estate projects land acquisition and marketing for residential development taxmotivated and conventional financing for single family and multifamily residential projects and advising public nonprofit and private clients concerning real estate decisionmaking

Mr Cronyn is qualified in analyzing the multitude of issues relating to residential and commercial real estate development including demographic and economic trends financial analysis and property valuation economic and fiscal impacts

Mr Cronyn has often conducted real estate feasibility analyses in Prince Georges County He has testified before administrative bodies concerning the public need for various kinds of commercial facilities and other planning issues in most of the jurisdictions in the WashingtonBaltimore region

Page 20 QUALIFICATIONS OF CONSULTANT JOSEPH M CRONYN

Cronyn has over 30 years of professional experience in real estate research sales and marketing development public policy financing and appraisal His experience includes market and financial feasibility analyses of major real estate projects land acquisition and marketing for commercial and residential development planning for mixed use development including historic preservation concerns taxmotivated and conventional financing for single family and multifamily residential projects and advising public nonprofit and private clients concerning economic and community development strategies

PROFESSIONAL EXPERIENCE

Lipman Frizzell 8 Mitchell LLC Columbia MD 2003 present Partner 1997 2003 Senior Associate Legg Mason Realty Group Inc Baltimore MD 19891997 Vice President Financial Associates of Maryland Baltimore MD 19871989 Vice President Baltimore Federal Financial FSA Baltimore MD 19821987 Sr Vice President Neighborhood Reinvestment Corporation Washington DC 19781982 Asst Director Baltimore Federal Savings 8 Loan Baltimore MD 19761978 Mortgage Underwriter

EDUCATION

Master of Business Administration Loyola College Executive Program 1986 BachelorsDegree English Philosophy Boston College 1969

AFFILIATIONS

Neighborhood Housing Services of Baltimore Chairman of the Board emeritus Citizens Planning and Housing Association Member National Trust for Historic Preservation Member Maryland Economic Development Association MEDA Member Lambda Alpha International Land Economics Society Baltimore Chapter Board of Directors

PROFESSIONAL LICENSES

State of Maryland Real Estate Agents License

QUALIFIED AS EXPERT WITNESS

Before public administrative bodies zoning hearing examiners andor boards of appeals Anne Arundel County Baltimore County Carroll County Charles County Frederick County Harford County Howard County Prince Georges County

Page 21