Fremont Market Analysis and Retail Strategy
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Fremont Market Analysis and Retail Strategy September 2008 prepared for: City of Fremont TABLE OF CONTENTS I. INTRODUCTION ....................................................................................... 1 Background ......................................................................................................................... 1 II. HOW FREMONT GOT ITS RETAIL: WHY THE CITY’S HISTORY SHAPES CURRENT RETAIL CONDITIONS .................................................................. 3 Why History Isn’t Old News .................................................................................................. 3 Fremont’s Previous Retail Revitalization Efforts and Progess to date ............................................. 7 III. EVALUATING RETAIL SUPPLY AND PERFORMANCE .................................. 10 Retail Supply Inventory ........................................................................................................ 10 Shopping Clusters by Retail Category ................................................................................... 15 Existing Competitive Supply Outside Fremont ......................................................................... 24 Retail Sales Performance ..................................................................................................... 27 Other Performance Indicators ............................................................................................... 36 Retail Supply Summary ........................................................................................................ 38 IV. EVALUATING EXISTING RETAIL DEMAND ................................................. 39 Defining Trade Areas .......................................................................................................... 39 Fremont’s Demographic Profile ............................................................................................. 40 Fremont’s Psychographic Profile ............................................................................................ 46 Retail Leakage Analysis ....................................................................................................... 52 Retail Demand Summary ..................................................................................................... 53 V. RETAIL MARKET STUDY CONCLUSIONS ................................................... 56 VI. RETAIL CASE STUDIES ............................................................................. 58 Introduction ........................................................................................................................ 58 Mixed-use Development ....................................................................................................... 58 Retail Condominiums .......................................................................................................... 67 VII. RETAIL STRATEGY - RECOMMENDATIONS ................................................ 70 Strategy Goals and Existing Context ..................................................................................... 70 1. Policy-Based Strategies ................................................................................................... 71 2. Place-Based Strategies .................................................................................................... 76 3. Program-Based Strategies ............................................................................................... 79 VIII. APPENDICES .......................................................................................... 82 i I. INTRODUCTION BACKGROUND Fremont is the fourth largest city in the San Francisco Bay Area and has strong retail demographics including a median household income of over $90,000. At the same time, Fremont lacks the retail shopping opportunities typically associated with a community of its size and prosperity. For many years this absence went unnoticed as the City’s total sales tax revenue expanded. However, with recent changes in the retail industry, consumer preferences have evolved towards shopping in lifestyle and main street oriented centers. As a result, the lack and variety of retail offerings has become even more apparent, especially when measured by retail sales outflow (i.e., sales tax leakage). Although this leakage has been abated somewhat in recent years with the opening of the Pacific Commons retail center, residents continue to leave Fremont for other shopping facilities in the surrounding communities across the Peninsula, in the South Bay, and in the Tri-Valley region. As the Fremont community continues to mature and grow, the City is experiencing a renewed interest in its retail offerings and wants to articulate a retail vision to address two primary issues. This first is that retail sales tax provides a critical source of income for the City, so if the community is not capitalizing on opportunities to generate more local sales, it is losing an opportunity to support critical public services. The second reason is that Fremont places a high priority on creating a great quality of life for its residents. Although many factors go into defining “quality of life,” one major component is to create a community where residents can shop for a wide variety of goods and services in a vibrant and dynamic retail environment. Prior studies and City or Redevelopment Agency sponsored development proposals have either focused on only one district (i.e., the Central Business District, Centerville, etc.) or studied overall City retail performance (Retail Market Assessment & Downtown Retail Strategy Study by Thomas Consultants, September 2002). This report is a comprehensive three part study that takes a more holistic approach to Fremont’s retail offerings. It simultaneously evaluates the City’s retail supply and demand by sales category and location. It accomplishes this by looking at the physical options and opportunities created within Fremont and by Fremont’s location within the region. Further, the report examines the competitive supply outside of Fremont and its surrounding trade area. Finally it considers some of the larger demographic and market trends so strategic recommendations can be made to improve the City’s retail offerings and increase sales tax. Specifically, Part 1 of this report presents an analysis of the basic market trends and conditions shaping Fremont’s retail environment. Part 2 addresses two specific topic areas -- retail condominiums and mixed-use development-- that pose key challenges and opportunities for which the City will need to formulate specific public policy. Part 3 provides a Retail Strategic Plan, which is comprised of key strategies the City can undertake to reshape its retail environment and is intended to be incorporated in the update of Fremont’s General Plan. It also addresses three key goals articulated by the City as part of its economic strategy: 1. Provide a full range of retail goods and shopping opportunities within the City to meet community needs that establishes a better retail mix and fills the retail void; 2. Promote retail environments with place making; and 3. Recapture and curtail retail sales outflow. -1- These goals are in line with the City’s General Plan which listed Fundamental Goals including: Fundamental Goal 5: A vibrant, well defined, visually distinctive central business district as the focus of the city’s governmental, cultural and commercial activity. Fundamental Goal 6: A unified city with thriving districts and emerging communities, each with its own identity. Fundamental Goal 8: A diversity of residential, recreational, cultural, employment and shopping opportunities. Fundamental Goal 9: A large, diversified industrial and commercial base to meet the employment needs of the City’s present and future workforce. Translated into economic terms, the Fundamental Goals led to the following three goals in the Local Economy section of the 1991 General Plan: Local Economy Goal 1: Increased job opportunities in Fremont for Fremont residents Local Economy Goal 2: A strong municipal tax base Local Economy Goal 3: A hierarchy of well-defined, vital commercial areas meeting the retail shopping, entertainment and service needs of Fremont residents -2- II. HOW FREMONT GOT ITS RETAIL: WHY THE CITY’S HISTORY SHAPES CURRENT RETAIL CONDITIONS Although it is not always readily apparent, current development activity in any given city is shaped, at least in part, by historical development patterns. These patterns are composed not just of buildings, but also of streets, parks, open space and the locations where community residents work and live. Retail trends and conditions in the City of Fremont today are no exception. The existing retail centers and their performance, as well as the City’s options for future retail activity, have all been shaped by the City’s history and its previous efforts at planning and development. This context also provides an important foundation for developing a new and cohesive Retail Strategy for the City. Specifically, this section provides a brief overview of the City’s history to show how the current retail development pattern evolved, and considers the various planning efforts that have been undertaken to revitalize and enhance key geographical areas or districts. WHY HISTORY ISN’T OLD NEWS Fremont’s agricultural roots Washington Township, the jurisdiction created by Alameda County in 1853 to include all of the land that is now Fremont, Newark, and Union City, was primarily