Retail Market Study Watson Road Commercial District Crestwood, Missouri

RETAIL MARKET STUDY WATSON ROAD COMMERCIAL DISTRICT CRESTWOOD, MISSOURI

Prepared For: City of Crestwood, Missouri August 2005

TABLE OF CONTENTS

Section Number Title Page Number

I. ASSIGNMENT 1 Study Assumptions 1

II. EXECUTIVE SUMMARY 5 General Findings 5 Conclusions 6 Watson Road Commercial District Consumer Expenditure Potential and Market Penetration 16 Alternative Redevelopment Scenarios – Watson Road Commercial District 21 Recommendations 23 Retail Sales Potential – Watson Road Commercial District Following Implementation 27 Watson Road Land Use Needs Discussion 31

III. METHODOLOGY AND DEFINITIONS 34 Methodology 34 Definitions 37

IV. GENERAL MARKET CONDITIONS 40

V. WATSON ROAD COMMERCIAL DISTRICT 46 Watson Road Land Use Needs 50

VI. RETAIL MARKET ANALYSIS 53 Trade Area Delineation 61 Retail Expenditures 75 Watson Road Commercial District Consumer Expenditure Potential and Market Penetration 78 Alternative Redevelopment Scenarios – Watson Road Commercial District 83 Recommendations 85 Retail Sales Potential – Watson Road Commercial District Following Implementation 89 Watson Road Land Use Needs Discussion 93

Melaniphy & Associates, Inc. Experience Addenda

LIST OF TABLES

Number Title Page Number

2.1 Primary Trade Area Zip Code Demographics 9

2.2 Secondary Trade Area Zip Codes Demographics 10

2.3 Driving Time Analysis 12

2.4 Annual Average Daily Traffic Volumes – 2002 13

2.5 Watson Road Commercial District – Total Retail Potential Expenditures, 18 Estimated Market Penetration and District Sales by Trade Area Segment – 2004

2.6 Entertainment Expenditures, Primary and Secondary Trade Area Segments Watson Road Commercial District – 2004 20

2.7 Suggested Target Retailers Watson Road Commercial District 24

2.8 Watson Road Commercial District – Total Retail Potential Expenditures, Estimated Market Penetration and District Sales by Trade Area Segment 2009 and 2014 29

4.1 Demographic Changes, St. Louis Metropolitan Area, City of St. Louis, and Its Components 41

4.2 City of St. Louis Population Change – 1980, 1990, 2000, 2004, and 2009 42

4.3 25 Major Employers – St. Louis Metropolitan Area – 2004 43

4.4 Labor Force, Employment, Unemployment, and Unemployment Rates St. Louis Region by County – 2004 44

4.5 20 Fastest Growing Industries – St. Louis Metropolitan Area – 2000 to 2010 45

5.1 Existing Property Uses – Watson Road Commercial District 2005 49

6.1 Driving Time Analysis – 5, 10, and 15 Minutes 56

6.2 Annual Average Daily Traffic Volumes – 2002 59

6.3 Primary Trade Area Zip Code Demographics 64

6.4 Secondary Trade Area Zip Codes Demographics 65

6.5 Market Support Factors – Primary and Secondary Trade Area 2004 66

LIST OF TABLES (Continued)

Number Title Page Number

6.6 Competitive Retail Inventory 71

6.7 Economic Census: Retail Trade and Foodservices – St. Louis Metropolitan Area – 1997 76

6.8 Estimated Per Capita Retail Expenditures by Retail Category for 2004, 2009, and 2014 77

6.9 Watson Road Commercial District – Total Retail Potential Expenditures, Estimated Market Penetration and District Sales by Trade Area Segment – 2004 79

6.10 Entertainment Expenditures, Primary and Secondary Trade Area Segments Watson Road Commercial District, 2004, 2009, and 2014 82

6.11 Suggested Target Retailers Watson Road Commercial District 86

6.11 Watson Road Commercial District – Total Retail Potential Expenditures, Estimated Market Penetration and District Sales by Trade Area Segment 2009 and 2014 91

6.12 Watson Road Commercial District, Total Retail Expenditure Potential and Market Penetration by Trade Area Segment, 2009 and 2014 92

LIST OF FIGURES

Figure Page Number Description Number

1.A Aerial Map – Watson Road Commercial District 3

1.B Crestwood Mall Site Plan 4

2.A Primary and Secondary Trade Area Map 8

2.B Driving Time Analysis 11

2.C Competitive Inventory Map 14

2.D Watson Road Commercial District Uses 32

5.A Watson Road Commercial District Property Uses 47

5.B Overlapping Trade Areas Map 48

6.A Location Map –Crestwood, Missouri 54

6.B Driving Time Analysis 57

6.C Missouri Department of Transportation Traffic Count Map 58

6.D Primary and Secondary Trade Area – Watson Road 62

6.E Primary Trade Area – Watson Road Commercial District 63

6.F Competitive Inventory Map 70

Market Feasibility Analysis – Watson Road Commercial District Page 1

SECTION I

ASSIGNMENT

Our assignment has been to undertake a retail and entertainment market study of the Watson Road Commercial District, including Westfield Crestwood Center (hereafter referred to as Westfield Crestwood Center), to evaluate the Crestwood area market, analyze trends, and determine the market for redevelopment of the District. Specifically, we were focused upon the market potential within the trade area, evaluated strength and weaknesses, determined current market penetration, studied the existing tenant mix, analyzed the impact of existing and proposed competition, determined the market for new retailers, and defined alternative redevelopment scenarios.

The study focused upon the 2004 District performance and a projection to 2009 and 2014. For these years, demographics were forecast, Personal Consumption Expenditures determined, Entertainment potential analyzed and projected, the District’s market penetration computed and forecast, and alternative redevelopment scenarios determined. Finally, the actions necessary to implement the recommendations were identified. Figure 1.A is an aerial map of the Watson Road Commercial District in Crestwood. Figure 1.B is as site plan of Westfield Crestwood Center, the largest retail concentration in the Watson Road Commercial District.

STUDY ASSUMPTIONS

The project was carried out under the following assumptions:

1. No major malls, shopping centers, or major big box competitors, other than the Sunset Hills Manor Redevelopment and others identified in this report will be constructed within the Primary or Secondary portions of the Trade Area. Any such development would require a reassessment of the conclusions and recommendations contained herein.

2. The economy of the United States will not experience another major recession or any significant adjustment in consumer spending objectives or attitude. Furthermore, gasoline prices will not exceed $3.00 per gallon. If this occurs, significant changes may occur in shopping patterns.

3. The United States will not expand the current war on terrorism or escalate military operations overseas, nor will the United States experience any major catastrophe or terrorist act that would interrupt shopping, driving, mail delivery, or spending patterns.

4. A considerable amount of data has been gathered, sorted, and analyzed. Much of the data has come from agencies of federal, state, county, and the city of St. Louis, along with local real estate companies. Additionally, secondary sources have been utilized, where pertinent. Where possible, our staff has examined the information for its validity and authenticity. Since we have no way of controlling the development of these data sources, we take no responsibility for any inaccuracy. During the course of the study program we have utilized standard statistical techniques involving both subjective and objective judgments in order to arrive at the conclusions and recommendations.

5. We assume that the properties in the District will be available, buildable, and that there are no environmental or subsurface conditions that would prohibit development or redevelopment.

6. Both Famous-Barr and Sears will exercise their lease options and remain in Westfield Crestwood Center. Nonetheless, there are a number of external forces that could prevent redevelopment of the

Market Feasibility Analysis – Watson Road Commercial District Page 2

center and improvement of Watson Road. First, Federated-May and Sears-Kmart are reassessing their stores and store strategies following their mergers. Should either take the drastic action of closing a Westfield Crestwood Center store, the Center and the District would be negatively impacted. Moreover, the action of one department store might initiate a similar action by the other. Should this happen, the Center would require additional redevelopment strategies. We have assumed that these department stores will continue to be an important part of the Westfield Crestwood Center.

7. We certify that we have no present or prospective interest in the properties in the St. Louis area that are the subject of this report and we have no personal interest or bias with respect to the parties involved. Our compensation is not contingent upon any action or event resulting from this analysis, opinions, or conclusions, in or use of this report.

N Westfield Corporation, Inc. 33823 ^ ORYNOXK HR] J 0 34ZN LRUUX RUY GTMKRKY I G0 >2247/396= *532+ 69=/6678

Nov 05, 2004

SITE PLAN 32> I XKYZ^ UUJ VRGaG I XKYZ^ UUJ. S U 85348 *536+ >84/45>7 S Market Feasibility Analysis – Watson Road Commercial District Page 5

SECTION II

EXECUTIVE SUMMARY

This section of report provides an Executive Summary of the Watson Road Commercial District Study findings, conclusions, recommendations, and comments including Westfield Crestwood Center. This report was prepared for the City of Crestwood, Missouri and ownership of Westfield Crestwood Center.

GENERAL FINDINGS

1. The St. Louis Metropolitan Area Population

The St. Louis Metropolitan Statistical Area (MSA) includes the City of St. Louis, St. Louis County, St Charles (part), Jefferson (part), Franklin, Lincoln, and Warren counties in Missouri and St. Clair, Monroe, Madison Clinton, and Jersey counties in Illinois. The 2000 Census data indicates the St. Louis MSA population amounted to 2,603,607 persons, an increase of 4.5 percent between 1990 and 2000. The 2004 population of the St. Louis Metropolitan Area was estimated at approximately 2,735,900 persons, according to the St. Louis Chamber & Growth Association.

2. The City of St. Louis Population

The city of St. Louis 2000 population amounted to 348,189 persons according to the US Census. The city witnessed a population decline of 48,496 persons or a -12.20 percent decrease since 1990. St. Louis’ 1990 population was 396,685 persons. Population in 2004 was estimated at 343,279 persons according to the Census Bureau’s American Fact-Finder, or a decrease of 1.41 percent.

3. City of Crestwood Population

According to the U.S. Census Bureau, the population in Crestwood amounted to 11,234 persons in 1990 and increased to 11,863 persons according in 2000. Current Crestwood population is estimated by the Census Bureau at 11,757 persons.

4. St. Louis Metropolitan Area’s Retail Sales

The St. Louis Metropolitan Area's retail sales amounted to approximately $30.6 billion in 2002, an increase of 14.2 percent over the 1997 sales figure of $26.8 billion according to the U.S. Department of Commerce, Bureau of Census, Economic Census of Retail Trade. Retail sales growth has primarily occurred in the suburbs with little in the city of St. Louis.

5. Watson Road Commercial District

Retail sales in the Watson Road Commercial District are currently estimated by us at approximately $340,000,000, including Westfield Crestwood Center and total Automobile Dealers sales. According to the Crestwood City Administrator, only automobile sales to Crestwood residents are included. Thus, reported total retail sales covered by sales tax revenues amount to approximately $290,000,000. Unfortunately, retail sales have been declining as a result of the development of big box retail faculties, principally on Lindbergh Boulevard, Westfield South County Center, and the redevelopment of Westfield West County Center. The City of Crestwood has been addressing this issue through a series of redevelopment projects in the Watson Road Commercial District.

Market Feasibility Analysis – Watson Road Commercial District Page 6

CONCLUSIONS

The conclusions and recommendations arrived at during this analysis are described in detail throughout this report. Our report conclusions are summarized below.

1. Westfield Crestwood Center Customer Intercept Survey

A Customer Intercept Survey was conducted at Westfield Crestwood Center between October 23 and 31, 2004 with 200 randomly selected customers exiting the Center. The Westfield Crestwood Center owners, have permitted us to present and discuss the findings. The data disclosed customer characteristics and profile of Center customers. The data generally indicated the following:

Both the demographics of the Trade Area and the demographics of the Westfield Crestwood Center shopper have become older. This situation is common to many older malls and communities throughout the country.

Most shoppers are employed either full or part time.

Almost 75 percent of Westfield Crestwood Center shoppers considered the Center to be their primary place to shop. They also shop at Westfield South County Center, Westfield West County Center, the St. Louis Galleria, Gravois Bluffs, and the numerous big box retailers located throughout the trade area.

Westfield Crestwood Center enjoys a large trade area, principally due to the major department stores in the Center.

“Convenience” was the main reason for shopping at Westfield Crestwood Center vs. other malls.

Time spent in the Center is comparable to the national mall average.

Westfield Crestwood Center shoppers visited department stores slightly above the national average.

“Clean and attractive atmosphere, safe and secure environment, and availability of reasonably priced stores were ranked high by Center shoppers. “Food court selection” ranked lowest.

Changes have occurred principally due to the increased resident orientation to big box retailers such as Wal-Mart, Target, and Kohl’s.

2. Crestwood Focus Group Surveys

Westfield engaged a Focus Group which conducted a survey in December 2004. The focus group program included four focus groups with a total of 39 respondents. Half of the participants were from within seven miles of the Center and shop frequently there, and the other half, who also reside within seven miles, did not consider Westfield Crestwood Center their primary shopping area. All respondents were females between the ages of 35 and 54. The relevant findings are as follows:

There was general agreement that Westfield Crestwood Center needs a facelift.

Market Feasibility Analysis – Watson Road Commercial District Page 7

Mom’s with young children were the most satisfied Crestwood shoppers.

Westfield Crestwood Center is perceived as average, familiar, and convenient.

The Food Court needs to be changed and selection improved.

The selection of restaurants needs to be improved.

The parking situation was faulted primarily by infrequent shoppers.

With improvements, respondents indicated that they would shop at the Center more often.

Westfield West County Center is seen as an upscale, trendy, fashion center.

Westfield South County Center is seen as similar to Westfield Crestwood Center with the exception of J.C. Penney.

Respondents want a new food court, better apparel, home shops, kitchen goods, more restaurants, improved parking, and a new major anchor.

3. Watson Road Commercial District Trade Area

Watson Road Commercial District’s (including Westfield Crestwood Center) Trade Area has been delineated on the basis of the Center’s Customer Intercept Survey, the Center’s department store’s credit card zip code distribution, the road network, the driving time analysis, the existing types of retailers and entertainment facilities located on Watson Road, existing and proposed competition, planned and proposed shopping complexes, and our over 40 years experience in evaluating shopping centers around the world.

We have divided the Trade Area into two segments. The first, and most important, is the Primary Trade Area. The Primary Trade Area is the segment where the most frequent Mall shoppers reside. Figure 2.A on the following page depicts the Primary and Secondary Trade Area segments.

Primary Trade Area

Table 2.1 Indicates that the Primary Trade Area had a 2004 population of 437,906 persons in 189,410 households. Average household incomes range from a low of $36,779 in Zip Code 63116 in St. Louis to a high of $94,498 in Zip Code 63127. According to our estimates, Zip Code 63126 which includes Crestwood has an estimated 2004 average household income of $61,532. The median age of the nearby population is in the 40’s.

By 2009, the population and households are expected to rise to an estimated 441,355 and 195,589, respectively. Average household incomes are forecast to range from a low of $40,760 in Zip Code 63116 in St. Louis to a high of $103,915 in Zip Code 63127, Sunset Hills. The Crestwood Zip Code, 63126 has an estimated 2009 average household income of $69,604.

Market Feasibility Analysis – Watson Road Commercial District Page 9

Table 2.1 Primary Trade Area Zip Codes Watson Road Commercial District Crestwood, Missouri 2004 and Forecast 2009 Demographics

Average Average Household Median Household Population Households Income Age Population Households Income ZIP (2004) (2004) 2004 (2004) (2009) (2009) (2009) 63021 55,782 21,160 $79,837 35.4 56,644 22,303 $89,908 63026 43,463 16,264 $66,730 34.5 46,066 17,919 $75,276 63049 15,480 5,596 $64,783 34.7 16,634 6,198 $72,949 63088 8,772 4,024 $49,294 32 9,980 4,838 $56,231 63109 28,978 14,288 $46,455 37.1 28,382 14,516 $51,822 63116 45,963 19,764 $36,779 34.1 41,709 19,273 $40,760 63119 34,179 15,301 $69,880 40.2 33,948 15,987 $77,659 63122 38,427 16,549 $86,903 41.7 38,217 16,368 $94,999 63123 49,062 22,820 $49,339 41.3 48,140 22,601 $55,864 63126 14,961 6,657 $61,532 44.3 14,795 6,912 $69,604 63127 4,757 2,019 $94,498 48.3 4,818 2,142 $103,915 63128 29,061 12,449 $70,961 45.2 28,803 12,980 $79,495 63129 51,637 20,115 $65,280 37.9 52,057 21,272 $74,603 63139 23,005 12,087 $40,448 36.8 21,162 12,280 $45,064 Totals 437,906 189,410 441,355 195,589 Source: Census of Population, 2000; Tactician, Inc., 2005, and Melaniphy & Associates, Inc., 2005

Secondary Trade Area

The Secondary Trade Area is that part of the Trade Area where less frequent visitors originate. The Secondary Trade Area extends from the edge of the Primary Trade Area including zip codes that provide customers and expenditure dollars to the Watson Road Commercial District. The Secondary Trade Area is presented in Table 2.2 reflecting the zip codes that have been delineated. The data indicate that the Secondary Trade Area had a 2004 population of 325,801 persons in 130,236 households. By 2009, the population is forecast to rise to 329,294 persons and households are estimated at 137,538.

Market Feasibility Analysis – Watson Road Commercial District Page 10

Table 2.2 Secondary Trade Area Watson Road Commercial District Zip Codes Crestwood, Missouri 2004 and Forecast 2009 Demographics

2004 2009 Average Average 2004 2004 Household 2009 2009 Household Zip Code Population Households Income Zip Code Population Households Income 63077 10,950 4,246 $42,843 63077 11,224 4,441 $60,998 63080 12,333 4,833 $38,175 63080 12,855 5,127 $54,884 63084 15,322 5,744 $45,410 63084 16,461 6,295 $65,351 63072 3,489 1,227 $52,929 63072 3,658 1,313 $73,307 63089 6,268 2,307 $48,681 63089 6,676 2,507 $67,115 63015 1,997 727 $50,171 63015 2,068 770 $64,703 63016 8,728 3,100 $51,249 63016 9,587 3,493 $77,098 63039 835 300 $55,499 63039 907 333 $72,667 63090 21,547 8,250 $51,726 63090 22,677 8,842 $72,603 63050 14,281 5,122 $50,756 63050 15,256 5,612 $73,455 63055 2,520 920 $60,670 63055 2,763 1,030 $88,249 63069 15,278 5,346 $53,603 63069 15,552 5,587 $76,229 63051 14,261 5,150 $48,992 63051 15,542 5,757 $69,424 63025 11,540 3,957 $79,185 63025 12,024 4,312 $99,468 63052 22,683 8,017 $58,085 63052 24,629 8,927 $77,550 63010 35,522 13,370 $53,889 63010 36,344 14,043 $73,750 63125 32,560 14,571 $41,091 63125 31,885 15,008 $49,676 63143 10,462 5,590 $32,615 63143 10,045 5,681 $40,177 63111 20,042 9,087 $25,504 63111 18,434 9,222 $33,610 63110 18,693 8,145 $30,044 63110 17,302 8,320 $41,714 63118 28,311 11,610 $25,127 63118 26,073 11,827 $35,896 63104 18,179 8,617 $32,174 63104 17,332 9,091 $49,027 Totals 325,801 130,236 Totals 329,294 137,538 Source: Census of Population, 2000; Tactician, Inc., 2005, and Melaniphy & Associates, Inc., 2005. Note: There are some zip codes in a Tertiary Trade Area that are not include above because of the very limited sale derived.

The Total Trade Area Population in the Total Trade Area (combined Primary and Secondary Trade Areas) in 2004 amounted to 763,707 persons and 319,646 households. By 2009, population and households are expected to rise to 770,649 and 333,127 respectively.

4. Driving Time Analysis

A Detailed Driving Time Analysis was conducted during normal shopping periods at normal driving speeds for 15 minutes and recorded at 5-minute intervals from Westfield Crestwood Center as the center of the Watson Road Commercial District.. While we conducted the driving time analysis for 30 minutes in most directions, the 15 minute driving time is the most crucial. Figure 2.B depicts the results. Table 2.3 lists the traffic arteries that can be reached in five minute intervals driving from Westfield Crestwood Center during normal daytime and evening traffic during non-peak rush hour

Market Feasibility Analysis – Watson Road Commercial District Page 11

periods. These data along with competition, the Westfield Crestwood Center Customer Intercept Survey, existing and proposed competition, demographics, and other factors were essential to the Trade Area delineation.

Figure 2B Driving Time Analysis 5, 10, & 15Minutes Westfield Crestwood Center Crestwood, Missouri

Source: Tactician Corp and Melaniphy & Associates, Inc. 2005

The five minute driving time analysis indicates that driving from Westfield Crestwood Center for five minutes during non-rush hour, one can reach the major big boxes on Lindbergh Boulevard in Kirkwood Commons, including Wal-Mart, Target, Lowe’s, and others. Eastbound on Watson Road, in 15 minutes one can usually reach the new Target under construction at the Hampton Village Shopping Center at January Avenue. Also, within approximately 15 minutes, the consumer can reach Westfield South County Center and Westfield West County Center, and the retail facilities concentrated nearby. Finally, within 10 to 12 minutes depending upon traffic, the consumer can reach the Gravois Bluffs big box concentration.

The significant distances that can be reached both east and west in 15 minutes are the result of Interstate 64 and the ease with which it can be accessed from Westfield Crestwood Center. This is also true of Interstate 270 west of Westfield Crestwood Center.

Market Feasibility Analysis – Watson Road Commercial District Page 12

Table 2.3 Driving Time Analysis Watson Road & Sappington Road April 2005

Watson Road – Westbound to Lindbergh Boulevard –North on Lindbergh Boulevard 3.5 minute interval - Lindbergh Boulevard 5.0 minute interval - Kirkwood Commons Shopping Center 10 minute interval - Adams Avenue – Downtown Kirkwood 15 minute interval - Manchester Road in Kirkwood

Watson Road Eastbound 5 minute interval - Burlington Northern RR in Shrewsbury 10 minute interval - Bancroft Avenue in St. Louis 15 minute interval - January Avenue in St. Louis

Interstate 44 - Westbound 5 minute interval - Interstate 270 via Sappington & Big Bend 10 minute interval - Slightly west of Missouri 141 near Gravois Bluffs 15 minute interval - Eureka, Missouri

Sappington Road North to Big Bend Then East to Interstate 44 5 minute interval - Selma Avenue 10 minute interval - Kingshighway 15 minute interval Mississippi River (Downtown St. Louis)

Sappington Road to Gravois Road Traveling South 5 minute interval - Hadley Road in Sunset Hills 10 minute interval - Missouri Highway 141 near Gravois Bluffs 15 minute interval - Dillon Road

Source: Melaniphy & Associates, Inc. - April 2005

5. Accessibility

The primary traffic arteries serving the Watson Road Commercial District are Watson Road, Sappington Road, and Interstate 44. Watson Road is Missouri Highway 366. These roads junction with Lindbergh Boulevard, Interstate 270, and most of the major north-south traffic arteries. Table 2.4 presents 24-hour average annual traffic counts from the Missouri Department of Transportation. Average 2002 daily traffic counts for Interstate 44 amounted to 104,480 vehicles east of Lindbergh Boulevard. West of Lindbergh Boulevard, the 24 hour traffic counts in 2002 amounted to 106,401 vehicles. Watson Road east of Sappington Road carried 19,577 vehicles, while west of Sappington Road, Watson Road carried 21,165 vehicles within a 24 hour period.

Market Feasibility Analysis – Watson Road Commercial District Page 13

Table 2.4

Annual Average Daily Traffic Volumes - 2002 Selected Arterials Selected Arterials Traffic Count

Interstate 44 Interstate 44 - East of Lindbergh Boulevard 104,480 Interstate 44 – West of Lindbergh Boulevard 106,401

Watson Road Watson Road – Eastbound from Interstate 44 50,545 Watson Road – East of Sappington Road 19,577 Watson Road – West of Sappington Road 21,165

Interstate 270 Interstate 270 – North of Interstate 44 144,355 Interstate 270 - South of Interstate 44 134,687

Lindbergh Boulevard Lindbergh Road North of Watson Road 29,748 Lindbergh Road South of Watson Road 31,628 Source: Missouri Department of Transportation, 2005

Local road improvements include: • Rte. 366 (Watson Rd.) at Sappington Rd. – Improve intersection. Spring 2005-Late 2005.

6. Principal Competitors and Proposed New Competition

Competition to the Watson Road Commercial District is significant. The principal competitors to the Watson Road Commercial District include Westfield South County Center, St. Louis Galleria, Plaza Frontenac, Plaza of Sunset Hills, Shoppes at Sunset Hills, Kirkwood Commons, Kirkwood Shopping Center, South County Marketplace, Gravois Bluffs, Westfield West County Center, and others with more major big boxes. Figure 2.C provides a map of the competitive facilities to the Watson Road Commercial District. A discussion of the major malls is presented below. The balance of the competitive facilities are listed and discussed in Section VI – Retail Market Analysis.

1. Saint Louis Galleria – 1,200,000 Square Feet This upscale two level mall is located in the northwest quadrant of Interstate 64 and Brentwood Boulevard west of Interstate 170. Major stores include Famous-Barr, Dillard’s, Lord & Taylor and Mark Shale. Restaurants include Cheesecake Factory, Houlihan’s, California Pizza Kitchen, Charley’s Steakery, and Cajun Café & Grill. The Galleria contains approximately 135 specialty stores, including Galleria 6 Cinemas.

Market Feasibility Analysis – Watson Road Commercial District Page 14

Market Feasibility Analysis – Watson Road Commercial District Page 15

2. Plaza Frontenac – 600,000 Square Feet Plaza Frontenac, a two level mall, is located in the southwest quadrant of Lindbergh Boulevard and Interstate 64. This upscale mall contains department stores operated by Neiman Marcus and Saks Fifth Avenue, along with approximately 40 specialty stores, a cinema, and restaurants. Restaurants include Brio! Tuscan Grill, Canyon Café, Fleming’s Prime Steakhouse & Wine Bar, and others.

3. Westfield West County Center – 1,267,700 Square Feet Westfield West County Center, located in the southwest quadrant of Interstate 270 and Manchester Road, is the closest major mall to Westfield Crestwood Center. Situated on two levels, the Center has department stores operated by Nordstrom, Famous-Barr, Lord & Taylor, and J.C. Penney. Dick’s Sporting Goods (formerly Galyan’s) is also located in the Center. In addition, the Center has approximately 150 specialty stores and restaurants. The Center was redeveloped with the addition of Nordstrom’s. While the Center does not have a cinema, the Des Peres 14 Cinema is located nearby on Manchester Road west of Interstate 270.

4. Westfield Crestwood Center – 1,026,000 Westfield Crestwood Center is part of the Watson Road Commercial District

5. Westfield South County Center – 1,020,300 Square Feet Westfield South County Center, located in the northeast quadrant of Interstate 270 (Interstate 255) and Interstate 55 along Lindbergh Boulevard (U.S. 67-61), is a two level facility. Major stores include Dillard’s, Famous-Barr, J.C. Penney, and Sears. The Center also contains over 130 stores. Ronnie’s 20 Cinema is located nearby on Lindbergh Boulevard.

Proposed Shopping Centers

In addition to the shopping center inventory, there are two proposed or under construction shopping centers in the St. Louis Metropolitan Area that will have some degree of negative impact upon the Watson Road Commercial District. The most significant is the proposed Sunset Manor Redevelopment Area in adjacent Sunset Hills. A brief description of each of the proposed facilities is presented below:

Sunset Manor Redevelopment Area The most significant proposed competitive project to the District is the Sunset Hills Novus Development planned at the northwest quadrant of Lindbergh Boulevard and Watson Road near Interstate 44. The project requires the acquisition of a large number of homes to provide an adequate site. The development anticipates the development of approximately 800,000 square feet of retail and office facilities. Moreover, the retail component is proposed to contain a major anchor store of approximately 200,000 square feet along with approximately 585,000 square feet of retail, restaurants, a cinema, and office uses. The plan calls for the development of approximately 10 restaurants. According to a report prepared by Peckham Guyton Albers & Viets, Inc. (PGAV), the proposed complex is expected to generate annual sales amounting to over $200,000,000. The city of Sunset Hills approved the development project recently, which includes $42 million in TIF assistance.

New Target – 175,000 Square Feet The new two-story Target is under construction on Chippewa Street in the City of St. Louis in the Hampton Village Shopping Center.

Market Feasibility Analysis – Watson Road Commercial District Page 16

WATSON ROAD COMMERCIAL DISTRICT CONSUMER EXPENDITURE POTENTIAL AND MARKET PENETRATON

We have evaluated the demographic and Personal Consumption Expenditures of the Total Trade Area (Primary and Secondary Trade Area portions), and specifically, the per capita income and expenditure levels. Table 2.5 presents the application of the per capita expenditures by retail categories to the population of both the Primary and Secondary Trade Area for 2004. The following is a discussion of the estimated Personal Consumption Expenditures by retail category for the Watson Road Commercial District’s Primary and Secondary Trade Areas.

General Merchandise Category In the Trade Area, the General Merchandise category, including department stores and big box discounters, currently represents approximately $1,866,387,800 in retail expenditure potential. By 2009, the retail expenditure potential in this category is forecast to reach an estimated $2,184,690,750. We estimate that the District is capturing approximately $94,800,000 in sales in this category. Thus, market penetration in the General Merchandise category amounts to approximately 5.1 percent. Market penetration in the Primary Trade Area is estimated at 7.0 percent. The penetration data means that in the Primary Trade Area, the Watson Road Commercial District is capturing 7.0 percent of the available General Merchandise expenditures. Normally, we expect this to be between 10 and 15 percent, thus, there is amply room for growth in this category.

Apparel and Accessories Category The 2004 Apparel & Accessories category currently represents approximately $859,893,200 in Total Trade Area retail expenditure potential. By 2009, the total retail expenditure potential in this category is forecast to reach approximately $1,003,115,200 and by 2014 to $1,117,005,400. The District’s current market penetration in this category is estimated at approximately 3.6 percent. The Primary Trade Area is capturing an estimated 5.0 percent.

The Food Stores Category Current expenditures in this category are estimated for 2004 in the Primary Trade Area at $1,404,802,500. Major Supermarkets will only serve the Primary Trade Area because of significant competition in all segments of the southwest St. Louis market. By 2009, the Food Category is expected to see its expenditures rise to approximately $1,642,405,500 and by 2014 to $1,916,687,300. We estimate that in the Primary Trade Area, the Watson Road Commercial District is capturing approximately 1.5 percent market penetration.

The Drug Store Category In the Primary Trade Area, the 2004 expenditures in this category amounted to $276,756,600, which is expected to rise to $323,566,200 in 2009 and $377,601,700 in 2014. Current market penetration in this category is estimated in 2004 at 4 percent in the Primary Trade Area.

Furniture & Home Furnishings Category The Furniture & Home Furnishings category represents 2004 Total Trade Area retail expenditures of an estimated $354,461,600. By 2009, the retail expenditure potential in this category is forecast to rise to an estimated $414,916,100 within the Total Trade Area, and to $463,336,000 in 2014. Current market penetration in this category is estimated at 4.4 percent within the Primary Trade Area.

Market Feasibility Analysis – Watson Road Commercial District Page 17

2014. Market penetration in 2004 in this category in the Total Trade Area amounted to an estimated 6.0 percent

Tires, Batteries & Accessories Category The After-Car market generates demand for tires, new batteries, muffler replacement, and other automobile parts. In the Total Trade Area, we estimate that a total of $84,333,600 was spent in 2004. In 2009, we estimate that sales in this category will increase to approximately $98,716,700 and by 2014 to $110,241,700. Current market penetration in this category amounts to approximately 7.0 percent.

Eating Places Category The Eating and Drinking Places category currently offers $848,366,400 in retail expenditure potential within the Total Trade Area. The retail expenditure potential is forecast to increase to an estimated $993,051,600 within the Total Trade Area by 2009 and $1,109,194,000 by 2014. Within the Primary Trade Area, the 2004 market penetration is estimated at 4.0 percent and 2.7 percent within the Total Trade Area.

Miscellaneous Retail Stores Category The 2004 expenditures within the Total Trade Area of the Watson Road Commercial District in this category were estimated at $757,057,800. The current market penetration for the District is estimated at approximately 5.9 percent. Total Miscellaneous Retail Stores Expenditures are estimated at 903,677,900 for 2009 and $1,010,415,200 in 2014.

Watson Road Commercial District Market Penetration The District is currently competing for a Total Trade Area Expenditure of $8,960,710,800 in total category expenditures (excluding Automobiles and Gasoline Service Stations). The Districts sales in 2004 (excluding the Automobile and Gasoline Service Station’s category), has been estimated at $283,002,100. Thus, the District’s Primary Trade Area market penetration for 2004 was approximately 7.0 percent. The Secondary Trade Area market penetration was found to be 2.0 percent. Thus, the Total Trade Area market penetration was computed at 3.1 percent. This is low for a major shopping district containing a major mall. Again, the data indicate that there is amply room for growth.

Market Feasibility Analysis – Watson Road Commercial District Page 18

Table 2.5 Watson Road Commercial District Total Retail Expenditure Potential And Estimated Market Penetration, and District Sales By Trade Area Segment 2004 Estimated Watson Road Personal Market Commercial Consumption Penetration District Store Category Expenditures 2004 Sales 2004 (Percent) 2004 General Merchandise Primary $1,069,804,400 7.0% $74,886,000 Secondary $796,583,400 2.5% $19,915,000 Total $1,866,387,800 5.1% $94,801,000 Food Stores Primary $1,404,802,500 1.5% $21,072,000 Secondary $1,042,889,000 0.7% $7,300,000 Total $2,447,691,500 1.2% $28,372,000 Drug Stores Primary $276,756,600 4.0% $11,070,000 Secondary $206,557,800 1.0% $2,066,000 Total $483,314,400 2.7% $13,136,000 Furniture & Home Furnishings Primary $263,181,500 6.0% $15,791,000 Secondary $180,493,800 2.0% $3,610,000 Total $443,675,300 4.4% $19,401,000 Radio, TV, Computers, & Music Primary $281,573,600 8.0% $22,526,000 Secondary $194,829,000 3.0% $5,845,000 Total $476,402,600 6.0% $28,371,000 Apparel & Accessories Primary $465,932,000 5.0% $23,297,000 Secondary $390,961,200 2.5% $9,774,000 Total $856,893,200 3.6% $33,071,000

Market Feasibility Analysis – Watson Road Commercial District Page 19

Table 2.5 (Continued) Watson Road Commercial District Total Retail Expenditure Potential And Estimated Market Penetration, and District Sales By Trade Area Segment 2004 Estimated Watson Road Personal Market Commercial Consumption Penetration District Store Category Expenditures 2004 Sales 2004 (Percent) 2004

Tires, Batteries & Accessories Primary $48,169,700 10.0% $4,817,000 Secondary $36,163,900 3.0% $1,085,000 Total $84,333,600 7.0% $5,902,000 Eating Places Primary $486,075,700 4.0% $19,443,000 Secondary $362,290,700 1.0% $3,623,000 Total $848,366,400 2.7% $23,066,000 Miscellaneous Retail Primary $434,840,700 7.0% $30,439,000 Secondary $322,217,200 2.0% $6,444,000 Total $757,057,900 5.9% $36,883,000

TOTAL $9,154,951,700 3.1% $283,002,000

Source: U.S. Department of Commerce, Census of Economic Trade, 1997 and 2002, City of Crestwood, Westfield, and Melaniphy & Associates, Inc. 2005 Note: the data have been rounded to the nearest thousand.

Entertainment Expenditures

Entertainment is not included in Retail Trade Expenditures. Therefore, we have obtained and analyzed past entertainment expenditures for the St. Louis Metropolitan area, starting with the 1997 Economic Census. In 1997, the St. Louis had receipts (taxable and Exempt) for Arts, Entertainment, and Recreation amounting to $1,467,000,000. This included all of the performing arts, sporting events, gambling venues, museums, amusement parks, cinemas, and other art, entertainment, and recreational uses. However, our definition of entertainment is much narrower. In 2002, revenues in these categories amounted to $1,631,759,000. The categories that are included in entertainment venues that might be included in the Watson Road Commercial District had revenues of approximately $220,000,000 in 1997. Our estimates indicate that today per capita expenditures for entertainment and paid recreation amount to nearly $600. Thus, our estimates of Entertainment Expenditures for 2009 and 2014 are presented in Table 2.6.

Market Feasibility Analysis – Watson Road Commercial District Page 20

Table 2.6 Entertainment Expenditures Primary, Secondary, and Total Trade Area Segments Watson Road Commercial District 2004, 2009, and 2014

Demographics 2004 2009 2014 Primary Trade Area 437,906 432,930 505,229 Secondary Trade Area 325,801 329,294 384,286 Total Trade Area 765,712 764,233 891,529

Per Capita Entertainment Expenditures Per Capita Entertainment Expenditures Primary Trade Area $598 $694 $798 Secondary Trade Area $565 $633 $709 Total Trade Area $582 $666 $758

Expenditures Entertainment Expenditures Primary Trade Area $251,009,000 $300,315,000 $403,038,000 Secondary Trade Area $187,132,000 $208,377,000 $272,357,000 Total Trade Area $438,141,000 $508,692,000 $675,395,000

Watson Road Commercial District Share Primary Trade Area $15,814,000 $19,521,000 $26,200,000 Secondary Trade Area $4,678,000 $6,251,000 $8,200,000 Total Trade Area $20,492,000 $25,772,000 $34,400,000 Source: Economic Census, Arts, Entertainment, and Recreation, 1997 and Melaniphy & Associates, Inc. 2005 Note: the data have been rounded to the nearest thousand.

The Primary Trade Area has current entertainment market potential of an estimated $251,009,000. The Secondary Trade Area has Entertainment expenditures estimated at approximately $187,132,000. In total, the Watson Road Commercial District is competing for a total of approximately $438,141,000. Entertainment potential is forecast to increase to over $508,000,000 in 2009 and to over $675,000,000 in 2014. In our opinion, the Watson Road Commercial District should be able to initially capture approximately $20,000,000, rising to $25,000,000 by 2009 and $34,400,000 by 2014.

The total Watson Road retail sales potential amounts to an estimated $283,002,100 in retail sales and an estimated $20,500,000 in entertainment sales, or a total of approximately $303,494,000.

Market Feasibility Analysis – Watson Road Commercial District Page 21

ALTERNATIVE REDEVELOPMENT SCENARIOS WATSON ROAD COMMERCIAL DISTRICT

The Watson Road Commercial District, including Westfield Crestwood Center, is a major retail destination in the southwest portion of the St. Louis area. Thus, improvements to Westfield Crestwood Center will have a positive impact upon the entire District. It should be pointed out that the city of Sunset Hills has approved the Sunset Manor Redevelopment Project. The project envisions a development of approximately 821,000 square feet of retail restaurants, and office space, including a major anchor big box store of approximately 200,000 square feet. According to PGAV, the project consultant, the proposed complex is expected to generate annual sales amounting to over $200,000,000. Development of this project can have a major negative impact upon the Watson Road Commercial District redevelopment, unless Crestwood and Westfield make their own District improvements. If the Sunset Manor Redevelopment Project is developed as indicated, the Watson Road Commercial District’s sales might decline by between $20,000,000 and $30,000,000. The degree of the impact depends upon the improvements in District and Westfield Crestwood Center

Recommendations for the Watson Road Commercial District outside of the Center are discussed following the discussion of the Center’s various alternative redevelopment scenarios. We have examined a number of alternatives, each of which is discussed below.

Alternative 1 – Do Nothing

Should neither the City of Crestwood nor Westfield take any action to improve the Watson Road Commercial District, sales will continue to decline and vacancies will rise. These changes will have a negative impact upon property values, as well as declining sale tax revenues. This is especially true if the Sunset Manor Redevelopment Project is developed as proposed. It is possible that if nothing is done the department stores will not renew their leases at the expiration dates, thus adversely affecting the desirability of the Center for specialty stores. For the future of Watson Road, “do nothing” is not, in our opinion, an acceptable alternative. Under this alternative, the Watson Road Commercial District’s sales could decline to under $200,000,000.

Alternative II – Add a Major Department Store to Westfield Crestwood Center to Replace Dillard’s and Make Other Major Changes

The department store industry, for the most part, is in a state of flux due to mergers and lackluster sales. Based upon the changes in the industry, it is unlikely that a conventional department store can be found to replace Dillard’s. Federated department stores recently merged with the May Companies basically becoming the largest of the conventional mid-scale (and somewhat upscale) department store company. Famous-Barr is now part of the Federated-May Company. We have assumed in this study that Famous- Barr and Sears will renew their leases when they reach expiration. Both have lease options that will generally extend their leases for 10 to 20 years.

A possible replacement is Von Maur department stores from Iowa. They currently are operating stores in the Chicago Metropolitan Area and have been successful in a very competitive market. They are essentially a junior Nordstrom. The Dillard’s store is probably too large for them, however they should be contacted and encouraged to consider the St. Louis market. Unfortunately, in today’s environment it is extremely difficult to find and add a department store economically that will perform above $250 a square foot and add over 30 percent in sales increases to the Mall.

Should it be possible to secure an acceptable major department store with acceptable economics, we recommend that other major changes be made including:

Market Feasibility Analysis – Watson Road Commercial District Page 22

Renovate both the exterior and interior of the Center.

Relocate the Food Court to the main level near the East Center Entrance.

Improve parking utilization in both grade parking and the parking deck through the use of better signing and circulation routes.

Improved security perception on the part of the customers needs to be implemented. While the interview results do not indicate a problem, in our opinion, the higher than normal incidence of young males at the east end of the Center does affect parking patterns.

New restaurants and entertainment venues should be added to the East Center Entrance area.

Alternative III – Add Major Big Boxes Should Dillard’s Decide to Vacate the Center

Should Dillard’s decide to vacate the Center, a possible replacement may be a major big box retailer, such as Cabela’s, Costco, or Meijer’s. If that is not possible because of lack of interest or poor economics, we recommend a mix of junior big box anchors such as Barnes & Noble, Nordstrom Rack, Dick’s Sporting Goods, Gander Mountain, Ross Dress for Less, DSW Shoes, Stein Mart, Steve & Barry’s University Sportswear, Jos. A Banks, Burlington Cost Factory, or a major supermarket. Regardless, it will be necessary to make other major changes, which include the following:

Renovate both the exterior and interior of the Center.

Relocate the Food Court to the main level near the east Center entrance.

Improve parking utilization in both grade parking and the parking deck through the use of better signing and circulation routes.

New restaurants and entertainment venues should be added to the east end of the renovated Center.

Alternative IV – Add Retail, Restaurant, and Entertainment Uses at the East-end of the Center

Today, lifestyle and entertainment components are replacing department stores as major generators. In some cases, this might also include housing and hotels. The weakest part of the Westfield Crestwood Center is the eastern end of the Center near Dillard’s department store. Based upon our analysis of retail, entertainment, and restaurants, this alternative considers creating a major new generative entertainment, dining, and retail concentration in a new East Center Entrance. This should also include relocating the Food Court from the lower-level to the new East Center Entrance area. Next, a new cinema might be built at the front of the new redeveloped East Center Entrance creating more excitement. In addition a major entertainment venue might replace the existing cinema location. Finally, new restaurant spaces should be added at the revitalized East Center Entrance, along with other retail specialty stores and other entertainment venues. Finally, in the future should Dillard’s decide to vacate their space, the building could be divided for several junior anchors such as a major book store, apparel store, or more entertainment venues.

Market Feasibility Analysis – Watson Road Commercial District Page 23

Revitalizing the East Center Entrance will have a positive impact on the Center and the District, by generating new customers and increasing the frequency of existing customers. This alternative will be directly competitive with the Sunset Manor Redevelopment Project plans. Nonetheless, Westfield Crestwood Center already has the critical mass to continue attracting substantial customers and space that can be retrofitted for additional generative facilities such as restaurants, retail, and entertainment venues. Finally, this alternative can be accomplished more economically, in our opinion, than the other alternatives.

In addition to a redeveloped Cinema, restaurants, the new Food Court, retail, and entertainment venues, it will be necessary to make other major changes. These would include the following:

Renovate both the exterior and interior of the Center.

Improve parking utilization in both grade parking and the parking deck through the use of better signing and circulation routes.

RECOMMENDATIONS

Following the market evaluation of the opportunities for the Watson Road Commercial District, we have arrived at the following recommendations.

Recommended Entertainment, Restaurant, Retail, and Residential Scenario

Westfield has sound redevelopment plans. We recommend that Alternative IV, Entertainment, Restaurants, and Retail facilities, be implemented in the Center’s East Entrance. This alternative includes the redevelopment of the East Center Entrance area with a relocated food court, a new cinema, major entertainment venues, new restaurants, and other specialty retail stores. The market will support this alternative. Moreover, this alternative appears to be the most economic scenario. If possible, housing should be added to the extreme east-end of the Center and office space might be added above the retail and entertainment space. Finally, this alternative will create a whole new dynamic at the Center’s East Entrance. This will reverse sales declines in the District and add significant new sales to the Watson Road Commercial District.

Possible new candidates for the Center and the District are listed below in Table 2.7:

Market Feasibility Analysis – Watson Road Commercial District Page 24

Table 2.7 Suggested Target Retailers Watson Road Commercial District

General Merchandise AJ Wright Belk Burlington Coat Factory Blaine’s Farm & Fleet Costco Family Dollar Meijer Nordstrom Rack Sears Essentials Sears Grand Stein Mart Von Maur Wal-Mart Supercenter

Building Materials & Hardware Menards Ace Hardware

Sporting Goods Cabela’s Dick’s Sporting Goods Gander Mountain REI

Apparel Stores Ann Taylor Loft Anchor Blue Big Dog Sportswear H&M Jos. A Banks Lerner New York Maurices Rue 21 Rainbow Ross Dress for Less Steve & Barry’s University Sportswear

Shoes DSW Shoes Famous Footwear Red Wing Shoes Shoe Carnival

Market Feasibility Analysis – Watson Road Commercial District Page 25

Table 2.7 (Continued)

Suggested Target Retailers Watson Road Commercial District

Grocery Stores and Supermarkets Cub Foods Dierberg’s Food 4 Less Trader Joe’s Whole Foods Market Wild Oats Market

Home Furnishings, Electronics & Appliances ABT Appliance - Chicago Ashley Furniture Big Lots Furniture Fry’s Electronics Garden Ridge Haverty’s Furniture Wickes Furniture Jo-Ann Fabrics Superstore Le Gourmet Chef Room Store Furniture Staples

Bookstores Barnes & Noble – Relocation – New two Story store Books-A-Million Half Price Books

Miscellaneous Retail Stores Vitamin Shoppe

Restaurants Claim Jumper Champps Claddagh Irish Pub Hooter’s Joe’s Crabshack Johnny Rockets Max & Erma’s Portillo’s Red Robin Romano’s Macaroni Grill Culver’s

Market Feasibility Analysis – Watson Road Commercial District Page 26

Table 2.7 (Continued)

Suggested Target Retailers Watson Road Commercial District

Quick Service Restaurants Alterra Coffee Buffalo Wild Wings Caribou Coffee Cold Stone Creamery Dunkin Donuts Maggie Moo’s Ice Cream Potbelly Sandwich Works St. Louis Bread Company Panera Bread QDoba Mexican Grill Starbuck’s Coffee

Entertainment Comedy Club Dave & Busters Jillian’s Theater (New) Chuck E Cheese’s Strike + Spare Bowling Pin Up Bowl Laser Tag Pin City Build A Bear

Automobiles and Automotive Automobile Dealerships Advance Auto Parts Auto Zone Murray’s Auto Parts Pep Boys

Non-Retail Curves for Men Lifetime Fitness Xsport Fitness Multi-Family Residential Office Space Banks Hotel Banquet Facilities University, College, or School - Satellite Location Federal, State, County, and City services

Market Feasibility Analysis – Watson Road Commercial District Page 27

RETAIL SALES AND ENTERTAINMENT FORECASTS WATSON ROAD COMMERCIAL DISTRICT FOLLOWING CENTER RENOVATION

The implementation of the above recommendations will have varying sales impacts depending upon which major retailer or entertainment venues are obtained. Table 2.8 depicts our estimates for the District for retail and entertainment uses for 2009 and 2014.

General Merchandise Category Sales in this category will depend upon the Center’s actions, the actions of the Center department stores, and actions of the other general merchandise retailers in the District. We have assumed that all general merchandise and department stores will stay in place with the possible exception of Dillard’s. We expect them to be replaced some time in the future with either another department store such as Von Maur. Otherwise, Dillard’s, should they decide to vacate the Center, might be replaced with a major big box store with significant attraction such as Cabela’s or Costco.

We estimate that the Watson Road Commercial District in 2004 was capturing approximately $94,800,900 in sales. With the Westfield Crestwood Center’s improvement, the sales in this category are forecast to increase to between $106,000,000 and $125,000,000. By 2014, sales in this category under this scenario are forecast to range between $115,000,000 and $132,000,000.

The addition of a major big box such as Cabela’s or Meijer would initially add between $75,000,000 and $115,000,000. Therefore, the total sales in this category in 2009 would amount to between $160,000,000 and $200,000,000. By 2014, sales in this category under this scenario are forecast to $230,000,000 and $250,000,000. Meijer’s has a major food component. Nonetheless, we have included all of their sales in this category. The economics of this type of replacement will be difficult.

Apparel and Accessories Category The 2009 Apparel & Accessories category currently assumes that positive actions will be taken at the Westfield Crestwood Center and in the District. We expect with Center improvements that the entire District will experience some benefits. Furthermore, we expect that the Center will add some additional apparel stores and replace others to meet the new attraction. Watson Plaza is attempting to add a major family apparel store and a national fabrics retailer. This should be encouraged. Finally, we estimate that 2009 sales in the District in this category will amount to between $40,000,000 and $45,000,000. By 2014, sales in this category are forecast to rise to $60,000,000 and $65,000,000.

The Food Stores Category Assuming District redevelopment, in 2009, we expect sales in the Food Stores category to increase to between $45,000,000 and $50,000,000. The new Aldi store should add to the sales in this category. The growth will be toward the higher end if Costco is not located in the District. By 2014, we expect sales to rise to between $50,000,000 and $60,000,000. This indicates that there will be a market for another major supermarket operation on Watson Road.

The Drug Store Category Walgreen's is currently being relocated to the front pad of Watson Plaza. Assuming implementation of the District redevelopment project, we estimate that sales in this category in 2009 will amount to between $15,000,000 and $18,000,000. By 2014, we estimate that sales will increase to between $18,000,000 and $21,000,000. With the increased activity, we expect that an additional drug store operation will seek a location on Watson Road.

Market Feasibility Analysis – Watson Road Commercial District Page 28

Furniture & Home Furnishings Category There will be a market for a furniture store of at least 25,000 square feet capturing sales of $7,000,000 to $10,000,000. The District’s total sales in this category are estimated at approximately $25,000,000. We recommend that any new store be encouraged to locate in one of the vacancies in the existing centers in the District. By 2014, sales are estimated at between $29,000,000 to $32,000,000.

Radio, TV, Computers, & Music Category Sales in this category in 2004 in the District were estimated at approximately $28,000,000. By 2009, we estimate that the market potential will support stores capturing sales of between $35,000,000 and $39,000,000. By 2014, we estimate that sales can increase to between $40,000,000 and $45,000,000.

Tires, Batteries, & Accessories Category There are numerous stores in this category in the District. It represents the automobile after market, where 2004 sales were estimated at between $4,000,000 and $6,000,000, excluding department and general merchandise stores. By 2009, we estimate that sales demand should rise and generate sales of between $7,000,000 and $8,000,000, and by 2014 to between $8,500,000 and $9,500,000.

Eating Places Category Total sales in this category in the District for 2004 were estimated at between $17,000,000 and $23,000,000. Assuming the redevelopment of the Center and District, we expect sales in this category to rise to between $24,000,000 and $27,500,000. This will necessitate adding restaurants to the Center and the development of several food service facilities in the District. By 2014, we estimate that the sales will rise to between $35,000,000 and $38,500,000.

Miscellaneous Retail Stores Category Sales in 2004 in this category in the District are estimated at between $40,000,000 and $45,000,000. Given the Center and District redevelopment improvement, we estimate that sales in this category will rise to between $55,000,000 and $60,000,000 in 2009. By 2014, the sales should increase to between $65,000,000 and $70,000,000.

Entertainment Venues The Primary Trade Area has Entertainment market potential of an estimated $251,000,000. The Secondary Trade Area has Entertainment expenditures estimated at $187,000,000. In total, the Watson Road Commercial District is competing for a total of $438,000,000. We estimate that by 2009 the Entertainment potential will amount to an estimated $508,700,000 and by 2014 is forecast to $675,400,000. Initially, we estimate that the District can capture an estimated $20,000,000 in entertainment sales. In 2009, Entertainment potential in the District is estimated at between $23,000,000 and $26,000,000. By 2014, we estimate that Watson Road Commercial District entertainment revenues are forecast to between $30,000,000 and $35,000,000.

The Total Watson Road Commercial District Sales Retail sales in the District for 2004 were estimated at $340,000,000 including total Automobile and Gasoline Service store sales. Sales that were attributed to sales taxes for the City were based upon sales of $290,000,000. In 2009, assuming the Center and District redevelopment, total sales including automobiles and gasoline are forecast to increase to between $380,000,000 and $400,000,000. By 2014, sales are estimated to increase to between $450,000,000 and $470,000,000. This would give the District a market penetration of approximately 4.3 percent. With Entertainment potential added, the 2009 total District sales are estimated at between $400,000,000 and 415,000,000. By 2014, total District sales including Entertainment are estimated at between $475,000,000 and $500,000,000.

Market Feasibility Analysis – Watson Road Commercial District Page 29

These recommendations will require public incentives to encourage new major retailers to participate in the Watson Road Commercial District redevelopment. Otherwise, it will be difficult to redevelop the Center and the vacant stores in the District. Westfield Crestwood Center is the “Crown Jewel” of the city of Crestwood and the Watson Road Commercial District. The future tax base of the City is tied directly to the health of the Center and the District. We also suggest that new multi-family housing development be encouraged to improve the nearby residential population. While we have not conducted a housing market analysis, having evaluated the area demographics, it appears to us that the opportunity exists, especially for condominium housing for older residents of Crestwood who would like to sell their homes, but remain in the community.

TABLE 2.8 Watson Road Commercial District Total Retail Expenditure Potential And Estimated Market Penetration By Trade Area Segment 2009 & 2014

Expenditure Potential Penetration Estimated Retail Sales Store Category 2009 2014 2009 2014 2009 2014

General Merchandise Primary $1,250,747,100 $1,459,621,900 8.0% 8.0% $100,059,800 $116,769,800 Secondary $933,943,600 $980,640,800 1.5% 1.5% $14,009,200 $14,709,600 Total $2,184,690,700 $2,440,262,700 6.0% 6.2% $114,069,000 $131,479,400 Food Stores Primary $1,642,405,500 $1,916,687,300 3.0% 3.0% $49,272,200 $57,500,600 Secondary $1,222,721,300 $1,283,857,400 0.1% 0.1% $1,222,700 $1,283,900 Total $2,865,126,800 $3,200,544,700 1.8% 1.8% $50,494,900 $58,784,500 Drug Stores Primary $323,566,200 $377,601,700 5.0% 5.0% $16,178,300 $18,880,100 Secondary $242,176,000 $254,284,800 1.0% 1.0% $2,421,800 $2,542,800 Total $565,742,200 $631,886,500 3.3% 3.4% $18,600,100 $21,422,900 Furniture & Home Furnishings Primary $307,695,100 $359,080,100 7.0% 7.5% $21,538,700 $26,931,000 Secondary $211,617,500 $222,198,400 2.0% 2.0% $4,232,300 $4,444,000 Total $519,312,600 $581,278,500 5.0% 5.1% $25,771,000 $31,375,000 Radio, TV, Computers, & Music Primary $329,197,900 $384,173,900 10.0% 10.0% $32,919,800 $38,417,400 Secondary $228,424,700 $239,845,900 3.0% 3.0% $6,852,700 $7,195,400 Total $557,622,600 $624,019,800 7.1% 7.3% $39,772,500 $45,612,800 Apparel & Accessories Primary $544,738,000 $635,709,200 6.5% 7.5% $35,408,000 $47,678,200 Secondary $458,377,200 $481,296,100 2.0% 3.0% $9,167,500 $14,438,900 Total $1,003,115,200 $1,117,005,300 4.2% 4.3% $44,575,500 $62,117,100

Market Feasibility Analysis – Watson Road Commercial District Page 30

Table 2.8 (Continued) Watson Road Commercial District Total Retail Potential Expenditure Potential And Estimated Market Penetration By Trade Area Segment 2009, & 2014

Expenditure Potential Penetration Estimated Retail Sales Store Category 2009 2014 2009 2014 2009 2014

Tires, Batteries & Accessories Primary $56,317,000 $65,721,800 11.0% 11.0% $6,194,900 $7,229,400 Secondary $42,399,900 $44,519,900 4.0% 4.0% $1,696,000 $1,780,800 Total $98,716,900 $110,241,700 8.0% 8.2% $7,890,900 $9,010,200 Eating Places Primary $568,288,700 $663,192,900 4.0% 5.0% $22,731,600 $33,159,700 Secondary $424,762,900 $446,001,100 1.0% 1.0% $4,247,600 $4,460,000 Total $993,051,600 $1,109,194,000 2.7% 3.4% $26,979,200 $37,619,700 Miscellaneous Retail Primary $525,918,600 $613,747,000 8.0% 8.0% $42,073,500 $49,099,800 Secondary $377,779,300 $396,668,200 4.0% 4.0% $15,111,200 $15,866,700 Total $903,697,900 $1,010,415,200 6.5% 6.6% $57,184,700 $64,966,500 Entertainment Potential Primary $300,314,900 $403,037,600 6.5% 6.5% $19,521,000 $26,200,000 Secondary $208,377,200 $272,357,400 3.0% 3.0% $6,251,000 $8,200,000 Total $508,692,100 $675,395,000 5.1% 5.1% $25,772,000 $34,400,000

TOTAL $9,691,076,400 $10,824,848,400 4.2% 4.6% $411,109,600 $496,788,00

Source: Melaniphy & Associates, Inc. 200. Note: All millions are rounded to the nearest thousand.

Study Note: The sales forecast’s indicated above are a guide to market opportunity. Sales for individual retailers will vary depending upon their merchandising and competitiveness. Thus, some mix of stores will exceed the indicated projections, while others may be below our expectations. Nonetheless, they serve as guide to show the extent that the market can support future demand.

Market Feasibility Analysis – Watson Road Commercial District Page 31

WATSON ROAD LAND USE NEEDS DISCUSSION

As a part of this study, we have visited and determined the existing uses on Watson Road in the District. In addition, we have considered actions that may be necessary to improve their competitiveness. Figure 2.D depicts Watson Road uses. Several overall observations include:

Beautification is an important part of Watson Road. However, while trees add beauty to an area, as they grow larger they obscure retailer’s signs and buildings. Much of retailing and eating out sales are impulse decisions which take place enroute to the Center. Thus, these obstructions are reducing potential sales. We recommend that future consideration should be given to both beauty and visibility. Retailers need to be seen; especially those that are more parasitical than generative.

Access between Kohl’s and Watson Plaza will benefit both properties and Watson Road traffic because it permits consumers to move between the two properties without using the streets, thereby reducing traffic movements.

Topographical elevation changes have affected the retail viability of some properties. For example, Westfield Crestwood Center, in our opinion, probably cannot economically expand its stores or parking to the north because of the significant elevation change between it and the Watson Industrial Park.

Watson Road and its importance to Crestwood needs better identification. Since it is the face of Crestwood, we recommend that consideration be given to providing better identification, such as a “Gateway” at both ends.

Access behind the commercial properties on the south side of Watson Road might improve ingress and egress from some segments. The properties generally have greater depth on the south side of Watson Road. This would require reciprocal agreements between property owners to facilitate access, particularly to streets intersecting with Watson Road. In addition to overcoming the linking problems, there are also some significant elevation changes.

Successfully redeveloping the Westfield Crestwood Center will have a positive impact upon the whole District and reduce the overall impact of the proposed Sunset Hills Redevelopment Project.

Specific Discussion of Watson Road Uses The following is a discussion of the various parts of the Watson Road Commercial District. Almost all can benefit from a stronger Center, additional major retailers on Watson Road, and reduced vacancy.

Between Starling Drive and Sturdy Drive (Traffic Light) The properties on the north side of Watson Road have limited depth. The stores here are occupied and the facilities look acceptable. Watson Road simply needs more business generated by the Center.

Between Sturdy Drive and Crestwood Center Plaza The uses are occupied and nothing appears negative.

Crestwood Center Plaza Office Max, Office Furniture Max, Lone Star Steak House, Harbor Freight Tools are the principal tenants. There is some vacant space. Shopping center ownership should be approached regarding some redevelopment or exterior improvement.

Market Feasibility Analysis – Watson Road Commercial District Page 32

Lindburg Cadillac is located on the north side of Watson Road between Crestwood Center Plaza and Watson Plaza. The City should work to retain Lindburg Cadillac and Jim Butler Chevrolet (south side of Watson Road), if they have any needs, because of its sales tax revenue generation. While the revenue is small, each transition is larger than most other retailers.

Crestwood Bowl, Red Lobster, and Sweet Tomatoes are located on the south side of Watson Road across from Lindburg Cadillac. The restaurants all appear to be active at both lunch and dinner. Bowling is staging a comeback, especially with young people, and also should get better with the community’s aging. Their principal needs are more traffic on Watson Road.

Watson Plaza and Kohl’s Watson Plaza is a City of Crestwood redevelopment project. The center has had considerable vacancy and is currently addressing the problem. Walgreen's will relocate from its current location to the former restaurant site in front of the center. The Walgreen space will then be available for rental. Plans call for linking Watson Plaza to Kohl’s next door to the east. This will permit traffic to move between the properties without accessing Watson Road or Sappington Road. We have been told that negotiations are continuing between Watson Plaza ownership and a major family apparel big box and a large fabric store. The addition of these stores will assist in filling the remaining vacancies in the Plaza.

Kohl’s operates a new store on the northwest corner of Watson Road and Sappington Road. Kohl’s activity is lower than normally, but improving. Redevelopment of the Center will also assist Kohl’s.

Southside of Watson Road between Crestwood Bowl and Sappington Road This area is composed principally of banks, office space, small retailers, a health club, and service oriented facilities. Some of the facilities need to address their appearance. Here again, some of these uses would like to see more activity on Watson Road.

Westfield Crestwood Center has been addressed separately

From Sappington Road east to Schnucks on the south side of Watson Road This area includes Barnes and Noble, a gas station, office space, Imo’s Pizza, a traffic light, Mienke Muffler, several residences, and some vacancies. This area appears to be satisfactory and would benefit from additional Center business and other major uses.

Schnucks, Gordmans, and the balance of the Vacant Big Box Store These uses simply need more customers. Gordmans is not doing as well as the Gordmans at Gravois Bluffs. Part of the problem is the older age of the resident population. Gordmans needs to be more focused on the needs of the Primary Trade Area population. With the Center improvement, the space next to Gordmans should become leasable to another big box retailer.

South Side of Watson Road Between Pier One Imports to Coldwell Banker Real Estate Office This area is directly across from the Center and appears to be competitive.

Shopping Center on the South Side of Watson Road Across From the Center with a New Aldi (Formerly known as the Circuit City Center). The shopping center has some vacancies but appears to be finding tenants. Aldi’s activity should help with the leasing activity.

Market Feasibility Analysis – Watson Road Commercial District Page 33

Both Sides of Watson Road Between the Center and Watson Industrial Park Road The north side of Watson Road is composed of offices and the Guitar Center, while the south side of Watson Road is offices and a bank. These appear adequate and appropriate.

The Watson Industrial Park The industrial park, behind Westfield Crestwood Center, has a significant elevation difference. The industrial area is primarily occupied but does have some vacancies. There are offices along the north side of Watson Road along the frontage near the industrial park. This is also true of the south side of Watson Road along with a bank and auto parts store.

Crestwood Square and Applebee’s Crestwood Square has two major vacancies where Sports Authority and Office Depot were located. Applebee’s is located on an outlot in front of the center. While the stores are vacant, apparently the companies continue to pay rent on the existing leases. Eventually, this property should be reused for either big boxes or residential.

Uses from Crestwood Square to Value City On the north side of Watson Road there is the American Automobile Association and a church. On the south of Watson Road are offices and a beauty salon. All appear to be adequate.

Value City Value City has a major general merchandise store here on the eastern edge of the District. There is a strip of stores extending away from Value City that are predominately vacant. They are setback a considerable distance from Watson Road, and therefore, have limited visibility. These vacant stores are directly related to the number of customers that Value City generates to the area. Value City needs to improve its customer attraction.

Value City to Rock Hill Road This stretch of properties has fast food, offices, vacancies, apartments, and auto care. The properties are generally small. Improvement of the District will assist in filling up the vacancies.

In summary, the City of Crestwood is addressing the larger properties to bring about more retail attraction which will help the smaller properties. Improving the Center will have the greatest positive impact upon the entire District. The City of Crestwood should strengthen the public/private partnership with Westfield Corporation and the other commercial owners in the District to improve tenancy, access, linkages, building facades, aesthetics, lighting, signage, gateways, and parking. The City must become aggressive, along with Westfield and other property owners with incentives to enhance the long term viability of the Watson Road Commercial District.

Some communities have encouraged residents to shop locally in their own communities. Some of the other retail marketing tools which others have tried include:

Shop Crestwood Program Frequent Shopper Programs Frequent Diner Programs Tenant Incubator Programs Sidewalk Sales

Market Feasibility Analysis – Watson Road Commercial District Page 34

SECTION III

METHODOLOGY & DEFINITIONS

METHODOLOGY

The basic approach to the assignment has been to identify the market forces which either directly or indirectly affect the retail and entertainment market potential of the Watson Road Commercial District, including Westfield Crestwood Center. For the purposes of this study the Watson Road Commercial District extends from approximately Starling Drive on the west to approximately Rock Hill Road on the east.

The market forces include: population, population growth, age structure, household income, shopping and entertainment habits and patterns, shopping orientation, employment growth, competitive facilities, locations, accessibility, rental rates, absorption, occupancy, vacancy, and finally, the share of the market which the Watson Road Commercial District can expect to capture in contrast to competitive properties.

The determination of the market potential of the Commercial District required that we carry out a number of research steps. They are as follows:

A search was conducted of published and unpublished data via our library, the internet, in persons, and others regarding population, housing, employment, income, competitive facilities, proposed facilities, and other data pertinent to this analysis. Sources included:

♦ United States Department of Commerce; Bureau of the Census, 1980, 1990 and 2000; Census of Population. ♦ United States Department of Commerce; Economic Census of Retail Trade 1997. ♦ United States Department of Commerce, Economic Census of Retail Trade 2002. ♦ United States Department of Commerce; Economic Census–Arts, Entertainment, and Recreation, 1997 and 2002. ♦ U. S. Department of Labor ♦ Missouri Department of Transportation ♦ Missouri Economic Research and Information Center ♦ Missouri Department of Economic Development ♦ St. Louis Regional Chamber of Commerce ♦ St. Louis County Department of Highways and Traffic ♦ St. Louis County Economic Council ♦ St. Louis County Planning Department ♦ St. Louis County Department of Revenue ♦ St. Louis County Economic Development Council ♦ St. Louis County Workforce Information System ♦ South County Chamber of Commerce ♦ City of St. Louis - Department of Economic Development (DCD) ♦ City of Crestwood - Office of the City Administrator ♦ NRB Shopping Center Directory ♦ International Council of Shopping Centers (ICSC) ♦ Various real estate companies such as Pace Properties, Incorporated and the Grewe Company. ♦ Various local city planners and economic development officials

Market Feasibility Analysis – Watson Road Commercial District Page 35

The specific elements of the data analysis are as follows:

A. Market Forces We have gathered data and evaluated the market forces which either directly or indirectly affect the retail market potential of the Watson Road Commercial District.

B. International, National, Regional and Local Trends We continue to gather data regarding international, national, regional and local trends regarding retailing, entertainment, and the Internet. We have focused our trend research on the specific issues affecting the current and future situations of the Watson Road Commercial District. One of the more recent trends has been the development of lifestyle centers. We have conducted research regarding lifestyle centers around the country including their sizes, layout, architectural design, tenant mix, sales performance, construction costs, and consumer patronage, among other pertinent factors.

A Lifestyle Center is defined as a shopping center generally between 150,000 and 500,000 square feet catering to the retail needs and lifestyle pursuits of their upscale customers. Lifestyle Centers are developed in affluent areas of the country and are typically open-air with a “Main Street” atmosphere. The centers often feature a village square, attractive landscaping, fountains, skating rinks, benches, gazebos, and two story facades. They generally include at least 50,000 square feet of space devoted to upscale national chain specialty stores. There is also space devoted to theme restaurants and entertainment venues. Some of the most common tenants include Ann Taylor, Banana Republic, Barnes & Noble, Bath & Body Works, Gap, Gap Kids, Pottery Barn, Talbot’s, Victoria’s Secret, and Williams-Sonoma, among others. On average, there are just over 50 stores in a Lifestyle Center.

C. General Market Conditions The socioeconomic characteristics of the St. Louis Metropolitan Area as well as in Crestwood were evaluated and the changes which have taken place, determined. The 2000 Census of Population was thoroughly evaluated and forecast to 2004 and 2009. The socioeconomic characteristics include: population, population growth, age structure, household characteristics, income dynamics, ethnic mix, employment, employment change, housing values, retail expenditure potential, and retail sales trends.

D. Trade Area Delineation We have delineated the Trade Area for the Watson Road Commercial District based upon the information generated from the Westfield Crestwood Center Intercept Survey, Focus Group findings, department store geographic customer distributions, competition, accessibility, the road network, physical and psychological barriers, a detailed driving time analysis, consumer orientation, and our over 40 years of experience in evaluating projects throughout the world. The Trade Area has been divided into Primary and Secondary segments for analysis.

E. Demographics Once the Trade Area was delineated, we evaluated and forecast the demographics of the Trade Area by its subsectors (i.e., Primary and Secondary). Demographics include population, age structure, population growth, households, household size, household income, and other pertinent elements. These data were forecast for 2004 and 2009. We also evaluated age and changes that may occur in the future. We have also reviewed psychographic data for the Trade Area to analyze the income levels and spending patterns of the residents.

Market Feasibility Analysis – Watson Road Commercial District Page 36

F. Income Dynamics Income is key to expenditure dynamics. We have evaluated the current household income, along with the changes which have taken place since the 1990 and 2000 Census. Moreover, we have forecast household income for 2004 and 2009.

G. Retail Sales Trends Retail sales data and entertainment expenditures were obtained and studied. The data included the Census of Retail Trade for the St. Louis Metropolitan Area and the Crestwood area 1992, 1997, and 2002. Also, included were the1997 and 2002 Census data for the Arts, Entertainment, and Recreation revenues were obtained. These data were then forecast to 2004. This process permitted us to identify retail categories which are overbuilt and those which represent a future development opportunity in the Watson Road Commercial District.

H. Westfield Crestwood Center Customer Intercept Survey Westfield provided us with their latest Westfield Crestwood Center Customer Intercept Survey (2004). A total of 200 customers were interviewed in November 2004.

I. Focus Group Survey As a part of the Crestwood Mall customer analysis, Westfield initiated a series of Focus Groups to gain insight into customer actions and desires. A total of four groups including 20 Westfield Crestwood Center shoppers and 20 non-Westfield Crestwood Center shoppers were included.

J. Inventory of Competitive Facilities Members of the Crestwood Economic Development Department staff inventoried the existing and proposed competitive retail facilities in and around the Crestwood area. The competitive inventory included location, names of retailers, sizes, and occupancy. They also identified what new retail facilities are proposed within the trade area of the Watson Road Commercial District.

K. Personal Consumption Expenditures We calculated the Trade Area resident's Personal Consumption Expenditures by retail store category and the entertainment expenditures. These data were forecast for 2004, 2009, and 2014. Personal Consumption Expenditures were analyzed by retail category (i.e., food stores, department stores, women’s apparel, men’s apparel, furniture, electronics, etc.) and represent the dollars spent by Trade Area residents in retail facilities in and around the St. Louis Metropolitan Area.

L. Westfield Crestwood Center’s Sales History The historical sales data of Crestwood Mall was evaluated. The sales data were analyzed by specific retail category.

M. Market Penetration The Watson Road Commercial District’s market penetration was computed by retail category, as well as for the Mall as a whole. The District’s estimated sales by individual retail category were compared to the retail market potential within each category to determine the market share which the Watson Road Commercial District is capturing.

N. Retail Space Requirements Based upon the potential expenditures for 2004 and the market penetration of the commercial facilities located in the Commercial District, we prepared sales projections 2004, 2009, and 2014. The sales projections assist in determining the amount of square footage required to meet market demand. The analysis included the overall benefit of redeveloping retail space at Westfield Crestwood Center

Market Feasibility Analysis – Watson Road Commercial District Page 37

and along the Watson Road Commercial District. Finally, the analysis focused upon the types of stores which should be added to the District to increase the Center’s and the Corridor's market penetration.

O. Watson Road Commercial District’s Competitive Position The primary objective of the Watson Road Commercial District Study was to identify the actions necessary to enhance the market penetration of the District including Westfield Crestwood Center and protect the retail and entertainment concentration’s competitive position over the next five to ten years. These actions will insure the health and vitality of the area.

P. The Watson Road Commercial District - Strategic Redevelopment Plan The City of Crestwood and Westfield Crestwood Center ownership have formed a public/private partnership to address both the needs opportunities of the District including the Mall. The City of Crestwood has been addressing redevelopment projects in the District and has been assisting property owners to improve their properties and their retail occupancy.

Finally, we utilized our over 40 years of experience in evaluating commercial projects of all sizes throughout the world.

DEFINITIONS

The following definitions have been gathered from the International Council of Shopping Centers, the National Retail Federation, The Selection of Retail Locations, Market Research for Shopping Centers, Restaurant and Fast Food Site Selection, Urban Land Institute, The Dollars and Cents of Shopping Centers, ICSC’s Dictionary of Shopping Center Terms, and from our own experience over the past 40 years of evaluating markets for retailers and shopping center developers.

A Major Mall or Center can be either open or enclosed and contains at least two department stores anchoring the addition of numerous specialty stores. Malls usually range in size between 400,000 and 1,500,000.

A Super Regional Mall or Center usually range between 1,500,000 and 1,750,000 square feet with four or more department stores with over 150 specialty stores, food court operators, and restaurants.

Lifestyle Centers usually are a collection of apparel, home, accessory, entertainment, and other specialty stores located in upper middle or upper income areas along with both quick service and full service restaurants ranging in size from 200,000 to 800,000 square feet. Most do not contain department stores.

Community Centers are usually older centers with an old Kmart or some other major retail generator along with a mix of retail stores and service shops. They range in size from 100,000 to 350,000 square feet. Many however have either been converted to Power Centers or have considerable vacancies.

Power Centers or Power Towns are usually a collection of Big Box retailers including discounters, home improvement, book stores, appliance stores, pet stores, supermarkets, warehouse and club stores, linen stores, sporting goods, computer stores, restaurants, and other box retailers. Stores in this category include Wal-Mart, Target, Meijer’s, Kohl’s, Home Depot, Lowe’s, Menards, Best Buy, Circuit City, Fry’s Electronics, Barnes & Noble, Borders Books, Bed Bath & Beyond, Linens ‘n Things, Ross Dress for Less, The Sports Authority, Dick’s Sporting Goods, Big Kmart, and others. They can range from approximately 300,000 to 1,000,000 square feet.

Market Feasibility Analysis – Watson Road Commercial District Page 38

Outlet Centers usually are a combination of manufacturing company stores and off-price retailers normally located at an Interstate interchange usually on a highway which connects vacation concentrations with urban areas. There are some very large examples of Outlet Centers on the edge of major metropolitan areas.

Big Box Retailers include almost any large retailer such as Wal-Mart, Target, Kohl’s, Home Depot, Lowe’s, Rooms to Go, Best Buy, Circuit City, Barnes & Noble, Border’s Books, Bed Bath & Beyond, Linens ‘n Things, Ross Dress for Less, The Sports Authority, Dick’s Sporting Goods, Kmart, Food Lion, Farm Fresh, Harris Teeter, Kroger, Walgreens, CVS, Rite-Aid, Office Max, Office Depot, Staples, Theaters, and others. They can be either part of a power center or freestanding. They normally range in size from 20,000 square feet to over 200,000 square feet. Super Big Box retailers include Cabela’s and Ikea, generate a significant customer base from wide area attraction and operate stores ranging from 200,000 to over 400,000 square feet.

Neighborhood Convenience Centers are usually anchored by a supermarket, a supermarket combination unit with a drug store, or a major drug store, along with a collection of convenience and service oriented stores, ranging in size from 30,000 square feet up to 150,000 square feet.

Downtown is usually an older part of an urban area where the city first started to grow. It usually contains a concentration of office, financial, retail, government, and civic uses surrounded by a combination of residential and industrial uses.

Strip Service Centers are very small shopping centers typically with a convenience food mart and other convenience and service shops ranging in size between 7,000 to 20,000 square feet.

Convenience Goods and Service Stores are stores directed toward the convenience of the shoppers. These include supermarkets, food marts, drug stores, hardware, stores, liquor shops, video shop, meat markets, fish markets, fast food shops, restaurants, cleaners, laundry, currency exchange, and other shops serving a narrow market. These stores are shopped on a highly frequent basis to meet local everyday needs.

Shopper Goods Stores are stores selling durable goods such as apparel for every member of the family, shoes, accessories, jewelry, appliances, furniture, home furnishings, toys, books, bedding, office goods, and others durable goods.

Entertainment includes cinemas, comedy clubs, family entertainment centers, bowling, laser tag, electronic games, electronic sports, and other indoor entertainment venues.

A Trade Area represents that portion of a market area where a retailer or retail concentration can expect to capture between 80 and 90 percent of its customers. Because of driving patterns, visitors, employment, and infrequent shopping visitors, it is difficult, if not impractical, to define a Trade Area more precisely. As more distance is added, the area covered grows geometrically making the assessment beyond 90 percent usually uneconomic.

o Primary Convenience Trade Area is that area from which the most frequent customers to convenience goods stores originate.

o Primary Shoppers Trade Area is that area from which the most frequent customers originate to purchase shoppers goods items.

Market Feasibility Analysis – Watson Road Commercial District Page 39

o Secondary Trade Area is generally the area from which less frequent customers originate to make purchases.

o Tertiary Trade Area is used with very large and dynamic projects which attract customers from a very wide area. The Tertiary Trade Area usually defines the area from which very infrequent customers will originate.

Market Penetration, sometimes referred to as “Market Share,” is the percentage of capture that a retailer, shopping center, or retail complex has of the potential expenditures within its respective Trade Area.

Personal Consumption Expenditures represent the dollars available for the purchase of goods and services during a year. They usually represent approximately 30 to 40 percent of a household’s income.

Travel or Driving Time Analysis represents the distance that one can drive at five-minute intervals during normal shopping periods following either posted speed limits or keeping up with traffic. Driving times are usually conducted for 15 minutes in each direction from an area of interest.

Market Feasibility Analysis – Watson Road Commercial District Page 40

SECTION IV

GENERAL MARKET CONDITIONS

Crestwood, a southwestern suburb of the St. Louis Metropolitan Area, is home to the approximate 2.0 million square feet of retail space primarily located in the Watson Road Commercial District, including the Westfield Crestwood Center. The Center is anchored by Famous-Barr (a May Company store), Sears, and Dillard’s. Kohl’s, a free-standing unit, is located on the northeast corner of Sappington Road and Watson Road across Sappington Road from the Center. Also, included in the District are major big boxes operated by Value City and Gordman’s. The Watson Road Commercial District extends both east and west from the Mall, offering a wide mix of national name-brand and independent retailers, restaurants, quick service food operations, banks, entertainment, office buildings as well as, unique local merchants and services. The Mall has been the catalyst for commercial development in the corridor. The Watson Road Commercial District extends from approximately Kathy Street on the west to Grant Road on the east.

Population and Population Change

The St. Louis Metropolitan Statistical Area, the 18th largest in the United States (population: 2,603,607), includes the independent City of St. Louis, St. Louis County (which does not include the City of St. Louis), the Missouri counties of Saint Charles, Jefferson, Franklin, Lincoln and Warren, and the Illinois counties of Madison, Saint Clair, Clinton, Monroe and Jersey.

Table 4.1 on the following page presents the population for the St. Louis Metropolitan Area and the City of St. Louis in 1980, 1990, 2000, and estimates for 2004. The table also includes the county components of the Metropolitan Area and their estimated 2004 and 2009 population and households.

The data indicate that the St. Louis Metropolitan Area has increased from 2,415,008 in 1980 to an estimated 2,651,207 in 2004. Population is expected to rise to 2,707,900 by 2009. Households increased during the same period from 857,931 to an estimated 1,071,356 in 2004. Unfortunately, the City of St. Louis has decreased from the 1980 population of 452,921 to an estimated 327,502 in 2004. Moreover, population is forecast to continue to decline to 304,800 by 2009. It should be pointed out that there are many initiatives that may change this forecast. Around the country there is a move back to the vicinity of the downtown area to reduce travel time to and from work. St. Louis City government is optimistic that the declining trend will reverse itself. Only time and effort will tell.

The population in Crestwood amounted to 15,913 persons in 1990 but declined to 11,863 persons according to the 2000 Census of Population. This represents a decline of 5.20 percent.

Market Feasibility Analysis – Watson Road Commercial District Page 41

Table 4.1 Demographic Changes St. Louis Metropolitan Area, the City of St. Louis, and Components

Population Percent Household Percent Description Number Change Number Change 1980 Census 2,415,008 857,931 1990 Census 2,492,533 3.20% 942,121 9.80% 2000 Census 2,603,607 4.50% 1,012,419 7.50% 2004 Projection 2,651,200 1.80% 1,071,400 5.80% 2009 Projection 2,707,900 2.10% 1,140,700 6.50%

City of St. Louis 1980 Census 452,921 178,033 1990 Census 396,685 -12.40% 164,931 -7.40% 2000 Census 348,189 -12.20% 147,076 -10.80% 2004 Projection 327,500 -5.90% 151,000 2.60% 2009 Projection 304,800 -6.90% 155,500 3.00%

Components Population Households Area Name State County 2004 2004 Missouri St. Louis city MO 29510 327,502 150,947 St. Louis County MO 29189 1,012,010 419,881 Jefferson County MO 29099 209,444 77,416 Franklin County MO 29071 97,849 37,096 Lincoln County MO 29113 45,856 16,337 St. Charles Count MO 29183 319,977 118,558 Warren County MO 29219 27,570 10,486 Illinois Clinton County IL 17027 36,327 13,383 Jersey County IL 17083 22,361 8,513 Madison County IL 17119 262,550 106,177 Monroe County IL 17133 30,375 11,402 St. Clair County IL 17163 259,386 101,160

Total 2004 2,651,207 1,071,356 Source: United States Department of Commerce; Bureau of the Census, 1970, 1980, 1999, 2000, and Tactician, Inc. 2004.

The City of St. Louis had a 2000 Census population of 327,502, down from 396,685 in 1990. Table 4.2 depicts the changes in both population and housing from 1980 to 2000, along with projections for 2004 and 2009. The data indicate that the number of households has fared better than the population numbers. Households stood at 147,078 in 2000, down from 164,931 in 2000, or a decline of -10.80 percent. During this period, population declined by -12.40 percent. Current population is estimated at approximately 327,502 and households at 150,947. This represents a decline of -5.90 percent and -2.60 percent

Market Feasibility Analysis – Watson Road Commercial District Page 42

respectively. By 2009, we estimate that the City’s population will continue to decline to approximately 305,000 persons in 155,500 households.

Table 4.2

City of St. Louis - Population Change Percent Number Change 1980 Census 452,921 1990 Census 396,685 -12.40% 2000 Census 348,189 -12.20% 2004 Projection 327,502 -5.90% 2009 Projection 305,000 -6.90%

Households Change 1980 Census 178,033 1990 Census 164,931 -7.40% 2000 Census 147,076 -10.80% 2004 Projection 150,947 2.60% 2009 Projection 155,500 3.00% Source: Tactician, Inc. and Melaniphy & Associates, Inc., 2005

Income Characteristics

The median household income within the St. Louis MSA in 1999 (2000 Census) amounted to $45,901. In 2004, median household income was estimated at $48,287 and forecast to $53,905 in 2009. Average household income in 2000 was $57,595. In 2004, average household income was estimated at $63,243 and by 2009 to amount to an estimated $70,763.

The city of St. Louis had a median household income of $27,283 in 2000. In 2004, the median household income was estimated at $28,949 and by 2009 it is estimated at $31,348. The average household income in 2000 (1999 dollars) was $37,415. In 2004, the average household income was estimated at $37,817. By 2009, average household income is estimated at $41,059.

Employment

Table 4.3 lists the top 25 employers in the St. Louis Metropolitan Area. BJC Healthcare, Boeing, Scott Air Force Base, Washington University, Wal-Mart, SSM Healthcare, the United State Postal Services, and Schnuck Markets are the largest employers with over 10,000 to almost 22,000 employees.

Market Feasibility Analysis – Watson Road Commercial District Page 43

Table 4.3 25 Major Employers St. Louis Metropolitan Area 2004

St. Louis Area Employees Company Employees Companywide Business Type BJC HealthCare 21,468 25,606 Healthcare Boeing Integrated Defense Systems 15,500 80,600 Integrated Defense Systems Scott Air Force Base 12,600 12,600 U.S. Military Base Washington University in St. Louis 12,324 12,324 University Wal-Mart Stores 12 250 1,500,000 Retailer SSM Health Care 11,951 22,995 Healthcare United States Postal Service 11,447 729,035 Public Mail Service Schnuck Markets Inc. 10,800 15,800 Grocery Stores SBC Communications 9,250 168,950 Telecommunications St. John's Mercy Health Care 8,402 8,402 Health Care City of St. Louis 7,895 7,895 Municipal Government Saint Louis University 7,268 7,488 University McDonald's 7,000 1,500,000 Fast Food Restaurant St. Louis Public Schools 6,200 6,200 Public Schools Daimler Chrysler N. & S. assembly 6,100 374,000 Truck Manufacturing plants The May Department Stores Co. 6,000 110,000 Retail Department Stores Special School District of St. Louis 5,796 5,796 Public Schools Annheuser-Busch Cos. Inc. 5,500 23,176 Brewery, Entertainment Tenet St. Louis 5,061 108,625 Healthcare AG Edwards & Sons Inc. 5,029 15,895 Full Service Brokerage Dierbergs Markets 5,000 5,000 Retail Grocer St. Louis County Government 4,265 4,265 Local Government Rockwood School District 3,877 3,877 Public Schools U.S. Bancorp 3,850 53,000 Full Service Banking Ameren Corp. 3,831 7,625 Energy Utility Source: St. Louis Regional Economic Development, 2005

Market Feasibility Analysis – Watson Road Commercial District Page 44

Labor Force

Table 4.4 depicts the St. Louis Region’s labor force, number employed, unemployment, and unemployment rate for 2004.

Table 4.4

Labor Force, Employment, Unemployment, and Unemployment Rates St. Louis Region by County 2004 County Labor Force Employment Unemployed Unemployment Rate Bond County, IL 9,336 8,868 468 5.00% Calhoun County, IL 2,979 2,811 168 5.60% Clinton County, IL 17,067 16,099 968 5.70% Jersey County, IL 10,522 9,866 656 6.20% Macoupin County, IL 23,934 22,456 1,478 6.20% Madison County, IL 128,801 120,311 8,490 6.60% Monroe County, IL 14,966 14,286 680 4.50% St. Clair County, IL 114,029 105,048 8,981 7.90% Franklin County, MO 50,687 47,528 3,159 6.20% Jefferson County, MO 110,935 104,239 6,696 6.00% Lincoln County, MO 21,680 20,342 1,338 6.20% St. Charles County, MO 177,535 170,242 7,293 4.10% St. Louis City, MO 163,352 146,431 16,921 10.40% St. Louis County, MO 583,561 553,080 30,481 5.20% Warren County, MO 13,570 12,783 787 5.80% Washington County, MO 10,613 9,701 912 8.60% St. Louis Region 1,444,122 1,358,065 86,057 6.00% Source: St. Louis Regional Chamber & Growth Association, 2005

St. Louis County has the largest labor force with 583,561 persons, of which 553,080 are employed and 86,057 are unemployed. The unemployment rate in 2004 stood at approximately 6.0 percent. St. Charles County was next in total labor force with 177,535 persons. Employment in this county stood at 170,242 persons and unemployment at 7,293 persons. Unemployment was estimated at 4.10 percent. The City of St. Louis had a labor force of 163,352 persons and employment of 146,431. Unemployment stood at 16,921, or 10.4 percent.

Fastest Growing Industries

The list provided below in Table 4.5 indicated the fastest growing industries in the St. Louis Metropolitan Area.

Market Feasibility Analysis – Watson Road Commercial District Page 45

Table 4.5 20 Fastest Growing Industries St. Louis, Missouri Metropolitan Area 2000 to 2010

Industry Title 2000 2010 Job % Growth Growth 1 Computer and Mathematical 32,640 42,780 10,140 31.10% 2 Community and Social Services 17,560 21,620 4,060 23.10% 3 Legal 9,610 11,310 1,700 17.70% 4 Healthcare Support 33,470 39,210 5,740 17.20% 5 Education, Training, and Library Occupations 77,940 90,920 12,980 16.70% 6 Construction and Extraction 71,050 82,810 11,760 16.60% 7 Healthcare Practitioners and Technical Occupations 72,810 83,480 10,670 14.70% 8 Food Preparation and Serving 108,700 123,440 14,740 13.60% 9 Building and Grounds Cleaning and Maintenance 47,200 53,420 6,220 13.20% 10 Protective Services 26,440 29,360 2,920 11.00% 11 Arts, Design, Entertainment, Sports, and Media 19,820 21,920 2,100 10.60% 12 Farming, Fishing, and Forestry 1,060 1,160 100 9.40% 13 Management Occupations 91,690 99,970 8,280 9.00% 14 Personal Care and Service 35,040 38,100 3,060 8.70% 15 Physical and Social Sciences 7,880 8,560 680 8.60% 16 Business and Financial Operations 53,790 57,700 3,910 7.30% 17 Sales and Related Occupations 149,040 158,850 9,810 6.60% 18 Transportation and Material Moving 96,730 101,850 5,120 5.30% 19 Installation, Maintenance, and Repair 58,160 61,150 2,990 5.10% 20 Architecture and Engineering 25,410 25,980 570 2.20%

The table indicates that the number one industry in growth is the Computer and Mathematical industry which had 32,640 persons in 2000 and is expected to rise to 42,780 by 2010, for a 31.1 percent growth rate. The largest group in terms of numbers is the Sales and Related Occupations. This group had a total of 149,040 persons in 2000, which by 2010 is expected to rise to 158,850 for a growth of 6.6 percent. Food Preparation and Serving group had 108,700 persons in 2000, and is expected to rise to 123,440 persons by 2010, for a growth of 13.6 percent. Transportation and Material Moving had 96,730 persons in 2000. This is expected to rise to 101,850 persons by 2010, for a growth of 5.3 percent. Construction and Extraction had a 2000 total of 71,050 which is expected to rise to 82,810 by 2010. This would be an increase of 16.7 percent.

Market Feasibility Analysis – Watson Road Commercial District Page 46

SECTION V

WATSON ROAD COMMERCIAL DISTRICT

The Watson Road Commercial District extends along Watson Road from approximately Starling Drive on the west to approximately Rock Hill Road (Elm Avenue to the north) on the east. Figure 5A depicts the Watson Road Commercial District and the uses currently contained within the defined area. The largest retail concentration is the Westfield Crestwood Center with over 1,000,000 square feet. The entire Watson Road Commercial District contains over 2,000,000 square feet. There are approximately 95 properties and over 200 occupants.

Westfield Crestwood Center and the Watson Road Commercial District have department stores operated by Famous-Barr, Sears, and Dillard’s in the Center, and Kohl’s, Gordmans, and Value City in the District. The District also contains Barnes and Noble, Best Buy, Aldi’s, Walgreens, restaurants, and numerous convenience good and shoppers good stores, along with service stores and facilities.

Westfield Crestwood Center’s major department stores include Sears with 221,378 square feet, Famous- Barr with 156,600 square feet, and Dillard’s with 200,000 square feet. The balance of the Mall contains specialty stores, restaurants, a food court, and a cinema.

The north side of Watson Road has limited lot depth, while properties on the south side of Watson have significant lot depth. In some cases there are uses behind those uses fronting on Watson Road. Thus, there is often more flexibility in addressing possible changes on the south side of the street where more land is available.

The principal competition to the District includes the major malls, big boxes along Lindbergh Road, Gravois Bluffs, and the newly proposed Sunset Manor Redevelopment Project.

Sunset Hills Proposed Redevelopment We have examined the proposed Sunset Manor Redevelopment Area and the plans to develop approximately 585,000 square feet of retail, restaurant space, and a cinema, along with a major two-story big box store of approximately 200,000. The development is also proposed to contain approximately 174,000 square feet of office space. According to a report prepared by Peckham Guyton Albers & Viets, Inc. (PGAV), the proposed complex is expected to generate annual sales amounting to over $200,000,000. This is in contrast to estimated 2004 retail sales in the Watson Commercial District, including Westfield Crestwood Center of an estimated $290,000,000. Moreover, retail sales in the District have been declining by approximately 8 to 10 percent annually. It has been approved by the Sunset Hills Board of Alderman, along with $42 million in TIF assistance.

Regardless, it is unlikely that a true lifestyle center can be developed on the Sunset Manor site because of the existing placement of “lifestyle-type” retail stores in Westfield West County and Westfield South County Center’s, Plaza Frontenac, and the St. Louis Galleria. Furthermore, the number of planned restaurants is excessive. Nevertheless, the largest anchor proposed to contain 200,000 square feet if built should generate well over $60,000,000 in sales. We estimate that if the Sunset Manor Retail redevelopment project is built as proposed, the Watson Road Commercial District will see its sales decline by between $20,000,000 and $30,000,000, if the District does not take significant action to improve its competitiveness.

Market Feasibility Analysis – Watson Road Commercial District Page 48

Figure 5.B depicts a three and five mile radius extending from both Westfield Crestwood Center and the proposed Sunset Manor Retail Redevelopment complex. The map shows that the primary area to be served by both the Watson Road Commercial District and the Sunset Manor Retail Redevelopment Project will be overlapping by at least 80 percent.

The base map depicts Average Household Income. The darker the color green; the higher the income, conversely the lighter the color; the lower the income. The trade area overlaps is quite obvious.

Figure 5.B Overlapping Trade Areas 3 and 5 mile radius Crestwood Mall and Sunset Manor Retail Redevelopment Complex Crestwood and Sunset Hills, Missouri

Big box retailers within five miles of the Watson Road Commercial District include Wal-Mart, Target, Kohl’s, Sam’s Club, Home Depot, Lowe’s, Circuit City, Costco, Kmart, T.J. Maxx, Bed Bath & Beyond, Borders, Hobby Lobby, Sports Authority, and numerous others.

The Watson Road Commercial District has several concentrations of vacancies. Watson Plaza, which is currently being redeveloped, has numerous vacant stores. The vacant restaurant has been demolished and a new Walgreen's is under construction. When complete, the existing “in-line” Walgreen's store will move to the new location. It is our understanding that negotiations are under way between a major family apparel big box and a major fabrics store to take manor space in the center.

Market Feasibility Analysis – Watson Road Commercial District Page 49

Crestwood Square contains the vacant Sports Authority and Sears Homelife stores located behind Applebee’s. According to the owner, there has been little apparent interest on the part of big box retailers.

Table 5.1 depicts the current property uses in the Watson Road Commercial District.

Table 5.1 Existing Property Uses Watson Road Commercial District Crestwood, Missouri

1 Lauden Plaza - 4 stores 33 Elicia's Pizza 65 Residence 2 Crestwood Appliance Center 34 Treasurer's of ours 66 Residence 3 Car, Muffler & Brake 35 Vacant 67 Imo's Pizza 4 Kentucky Fried Chicken 36 Real Estate Office 68 Barnes and Noble 5 Plaza Tire 37 Vacant 69 BP Gas Station 6 Enterprise Car Rental 38 Apartments 70 Non Retail 7 Convenient Food Mart 39 Watson Auto Care 71 Office 8 McDonald's 40 Value City and vacancies 72 Medical Office 9 Crestwood Center Plaza 41 Creston Center 73 Office 10 Office Max 42 Office 74 Parking 11 First Service Bank 43 Beauty Salon 75 Bally's Fitness 12 Lindburg Cadillac 44 Railroad 76 Walnut Park Auto Body 13 U S Bank 45 Public Storage 77 National City Bank 14 Watson Plaza 46 A to Z Auto 78 Office 15 New Walgreen's 47 Multi-tenant 79 Pauline book & music center 16 Jack & the Box 48 Equity Financial 80 Residence 17 Kohl's 49 Office 81 Residence 18 Westfield Crestwood Center 50 Office 82 Sylvan Learning Center 19 Firestone 51 office 83 Crestwood Bowl 20 Sherwin Williams 52 Southwest Bank 84 Red Lobster 21 First National Bank 53 Aldi's & other stores 85 Sweet Tomato's 22 Watson Industrial Park 54 Real Estate Office 86 Berry Door and Window 23 Office Center 55 Mattress Giant 87 Jim Butler Chevrolet 24 Guitar Center 56 Madga Visual 88 Jim Butler Chevrolet 25 Realtors and Medical office 57 Pier 1 Imports 89 Insurance office 26 Cemetery 58 Apartments 90 Excel Imaging 27 Office 59 Best Buy 91 Medical Office 28 Office 60 Gordmans 92 Rich & Charles Restaurant 29 Crestwood Square - Vacant 61 Schnucks Supermarket 93 National Tire & Battery 30 Applebee's 62 Office 94 Commerce Bank 31 AAA office 63 Multi-tenant retail 95 Mercy Health Care 32 Catholic Church 64 Mienke Muffler Source: City of Crestwood, PGAV, and Melaniphy & Associates, Inc.2005

Market Feasibility Analysis – Watson Road Commercial District Page 50

WATSON ROAD LAND USE ASSESSMENT AND NEEDS

Beautification is an important part of Watson Road. However, while trees add beauty to an area, as they grow larger they obscure retailer’s signs and buildings. Much of retailing and eating out is impulse-driven, which often occurs enroute to the mall. Thus, these obstructions are reducing potential sales. We recommend that future consideration should be given to both beauty and visibility. Retailers need to be seen, especially those that are more parasitical than generative.

Medians on Watson Road are meant to facilitate traffic flow. Unfortunately, they also prevent left turns. We recommend that the City and the State traffic engineers review ingress and egress into commercial properties in the District.

Topographical elevation changes have affected the retail viability of some properties. For example, Crestwood Mall cannot expand its stores or parking to the north because of the significant elevation change between it and the Watson Industrial Park.

Access behind the commercial properties on the south side of Watson Road might improve ingress and egress from some segments. This would require reciprocal agreements between property owners to facilitate access, particularly to streets intersecting with Watson Road. In addition to overcoming the linking problems, there are also some significant elevation changes.

There is a market for a Starbuck’s in the Watson Road Commercial District.

Successfully redeveloping the Crestwood Mall will have a positive impact upon the whole District. Address.

Specific Discussion of Watson Road Uses

Between Starling Drive and Sturdy Drive (Traffic Light) The properties on the north side of Watson Road have limited depth. The stores here are occupied and the facilities look acceptable. The Road simply needs more business generated by the Mall.

Between Sturdy Drive and Crestwood Center Plaza Uses are occupied, nothing appears negative.

Market Feasibility Analysis – Watson Road Commercial District Page 51

Crestwood Center Plaza Office Max, Office Max Furniture, Lone Star Steak House, Harbor Freight Tools are the principal tenants. There is some vacant space. Shopping center ownership should be approached regarding some redevelopment or exterior improvement.

Lindburg Cadillac is located on the north side of Watson Road between Crestwood Center Plaza and Watson Plaza. Jim Butler Chevrolet is located on the south side of Watson Road. The City should work to retain Lindburg Cadillac and Jim Butler Chevrolet, if they have any needs, because of their sales tax revenue generation. While the revenue is small, each transaction is larger than most other retailers.

Crestwood Bowl, Red Lobster, and Sweet Tomatoes, located on the south side of Watson Road across from Lindburg Cadillac. Their principal needs are more traffic on the Watson Road and ingress and egress.

Watson Plaza and Kohl’s Watson Plaza is a City of Crestwood redevelopment project. The center has had considerable vacancy and is currently addressing the problem. Walgreen's will relocate from it current location to the former restaurant site in front of the center. The Walgreen space will then be available for rental. Plans call for linking Watson Plaza to Kohl’s next door to the east. This will permit traffic to move between the properties without accessing Watson Road or Sappington Road. We have been told that negotiations are continuing between Watson Plaza ownership and a major family appeal bib box and a large fabric store. The addition of these stores will assist in filling the remaining vacancies in the Plaza.

Kohl’s operates a new store on the northwest corner of Watson Road and Sappington Road. Kohl’s activity is lower than normally the case. Improvement of the Mall will assist Kohl’s.

Southside of Watson Road between Crestwood Bowl and Sappington Road This area is composed principally of banks, office space, small retailers, a health club, and service oriented facilities. Some of the facilities need to address their appearance. Here again, these uses would like to see more activity and improved access.

Westfield Crestwood Center has been addressed separately

From Sappington Road east to Schnucks on the south side of Watson Road This area includes Barnes and Noble, a gas station, office space, Imo’s Pizza, a Traffic Light, Mienke Muffler, several residences, and some vacancies. This area appears to be satisfactory and would benefit from additional Mall business and other major uses.

Schnucks, Gordmans, and the balance of the Vacant Big Box Store These uses simply need more customers. Gordmans is not doing as well as the Gordmans at Gravois Bluffs. Part of the problem is the older age of the resident population. Gordmans needs to be more focused on the needs of the Primary Trade Area population. With the Mall improvement, the space next to Gordmans should become more leasable.

South Side of Watson Road Between Pier One Imports to Coldwell Banker Real Estate Office This area is directly across from the Mall and appears to be competitive.

Shopping Center on the South Side of Watson Road Across From the Mall with a New Aldi’s Market Feasibility Analysis – Watson Road Commercial District Page 52

(Formerly known as the Circuit City Center). The shopping center has some vacancies but appears to be finding tenants. Aldi’s activity should help with the leasing activity.

Both Sides of Watson Road Between the Mall and Watson Industrial Park Road The north side of Watson Road is composed of offices and the Guitar Center, while the south side of the Road is offices and a bank. These appear adequate and appropriate.

The Watson Industrial Park The industrial park is behind Crestwood Mall has a significant elevation difference. The industrial area is primarily occupied but does have some vacancies. There are offices along the north side of Watson Road along the frontage near the industrial park. This is also true of the south side of Watson Road along with a bank and auto parts store.

Crestwood Square and Applebee’s Crestwood Square has two major vacancies where Sports Authority and Sears Homelife were located. Applebee’s is located on an outlot in front of the center. While the stores are vacant, apparently the companies continue to pay rent on the existing leases. Eventually, this property should be reused for either big boxes or residential.

In summary, the City of Crestwood is addressing the larger properties to bring about more retail attraction which will help other smaller properties. Improving the Mall will have the greatest positive impact upon the entire District.

Market Feasibility Study - Watson Road Commercial District Page 53

SECTION VI

RETAIL MARKET ANALYSIS

The evaluation of the Watson Road Commercial District, including Westfield Crestwood Center, required that our staff analyze the current and future demand for retail and entertainment facilities in contrast to the current supply and future supply. Our basic technique for determining the demand for retail facilities involves the following:

Delineation of the Trade Area Division of the Trade Area into subparts for analysis Computation and forecast of population, households, income, personal consumption expenditures A qualitative and quantitative analysis of existing and proposed competition Locational dynamics Directional growth patterns The road network Accessibility A detailed driving time analysis Traffic counts Public transportation An evaluation of the Center’s customer characteristics Evaluation of retail, restaurant, and entertainment opportunities Projection of retail sales which might be captured by retail, restaurant, and entertainment facilities in the southwest part of the St. Louis area. Identification of retailer’s best suited to meet the retail market demand in the Watson Road Commercial District.

Site/Location

Westfield Crestwood Center is located in the northeast quadrant of Watson Road and Sappington Road in Crestwood, Missouri, a southwestern St. Louis suburb in St. Louis County. We have studied Watson Road from approximately Starling Street on the west to Rock Hill Road (Elm Avenue to the north) on the east. . West Crestwood Center, with slightly over 1,000,000 square feet, is a two level, enclosed regional mall with three anchor department stores. The anchor department stores include Famous-Barr, Sears, and Dillard’s. The Center has been the catalyst for most of the commercial development along Watson Road. Westfield Crestwood Center offers the consumer over 130 specialty stores as well as AMC 10 screen cinema and three restaurants. The restaurants include Chevy’s Mexican Restaurant, Houlihan’s, and the Pasta House Company. A food court is located in the lower level.

The Watson Road Commercial District, including the Center, contains over 2,000,000 square feet of commercial space. Major big boxes in the District include Kohl’s (across Sappington Road from the Mall), Best Buy, Gordmans, Schnucks, Barnes and Noble are located on the south side of Watson Road near the Mall. Additional big box retailers include Value City, Office Max, and several major vacancies. The City of Crestwood has commenced several redevelopment programs to assist property owners in improving their occupancy and viability. In addition, the Watson Road Commercial District contains a mix of national name-brand retailers and restaurants, office buildings, banks, quick service food

Market Feasibility Study - Watson Road Commercial District Page 54

operations, automobile aftermarket facilities, automobile dealers, gasoline stations, storage facilities, entertainment, and services as well as unique local merchants, restaurants, and other non-retail uses.

Figure 6.A presents a general map of the Crestwood Area indicating the location of Westfield Crestwood Center.

Figure 6.A Location Map Watson Road Commercial District Crestwood, Missouri

Accessibility

The St. Louis Metropolitan Area enjoys excellent regional accessibility. Interstate Highways serving the St. Louis Metropolitan Area include Interstates 44, 64, 270, 55, 255, and 70. The major U.S. Highways serving the southwest St. Louis area include 67-61 (Lindbergh Road), 40, and 50. Missouri State Highways serving the southwest area include 366 (Watson Road), 100 (Manchester Road), 30 (Gravois Road), 21, 231, and 141.

Market Feasibility Study - Watson Road Commercial District Page 55

Interstate 44 affords excellent regional east-west accessibility between the City of St. Louis and southwest suburban St. Louis. Interstate 44 commences at Interstate 55 in St. Louis and extends west-southwesterly throughout the Metropolitan Area. Nearby interchanges are provided at Big Bend (near Sappington Road), Elm Avenue, Berry Road, Lindbergh Road, and Watson Road.

Interstate 270, known as the Bypass, along with Interstate 255 provides a circumferential highway serving St. Louis’ outer ring suburban areas. Interstate 270-255 is a limited access interstate highway connector/bypass. Interstates 270 and 44 junction approximately 3.5 miles west of the Westfield Crestwood Center. Direct eastbound access from Interstate 44 is provided to Watson Road just west of Lindbergh Road (U.S. 61-67). Westbound Interstate access is provided at Lindbergh Road. Watson Road (Missouri Highway 366) is a major northeast-southwest traffic artery junctioning with all of the major and many of the minor north-south traffic arteries in southwest portion of both suburban St. Louis and the City of St. Louis.

Local north-south access is provided by Sappington Road. Sappington Road extends northward from Watson Road to Big Bend Boulevard where it terminates. Big Bend Boulevard extends both northeast and southeast from the junction. Sappington Road to the south of the Mall extends and terminates at Kennerly Road, just south of Interstate 270.

Watson Road (Missouri Highway 366) is a four lane roadway with generally a 40 mile per hour speed limit which intersects with all of the major and many of the minor north-south traffic arteries throughout much of the Primary Trade Area.

Driving Time Analysis

Our staff conducted a detailed Driving Time Analysis from Westfield Crestwood Center in all directions. The Driving Time Analysis assists in the delineation of the Trade Area by simulating the distances a consumer can travel during given time allocations. The Driving Time Analysis was undertaken for 30 minutes in each direction by five-minute intervals during non-peak travel periods. Next, we focused upon the 15 minute driving time since it reflects the Primary Trade Area, the area where the most frequent visitors originate. Figure 6.B presents the Driving Time Analysis Map for 5, 10, and 15 minutes. The Driving Time Analysis Map is a simulation of driving times at varying peak and non-peak periods. The street name, direction of travel, and driving time by five-minute interval is presented in Table 6.1 presented.

The driving time study shows the impact of the Interstate System. Interstates 64 and 270 expand the driving time study area because one can travel greater distances at higher speeds. Thus, the 15 minute driving time is affected east to west by Interstate 64 and north to south by Interstate 270.

Market Feasibility Study - Watson Road Commercial District Page 56

Table 6.1 Driving Time Analysis Watson Road & Sappington Road April 2005

Watson Road – Westbound to Lindbergh Boulevard –North on Lindbergh Boulevard 3.5 minute interval - Lindbergh Boulevard 5 minute interval - Kirkwood Commons Shopping Center 10 minute interval - Adams Avenue – Downtown Kirkwood 15 minute interval - Manchester Road in Kirkwood

Watson Road Eastbound 5 minute interval - Burlington Northern RR in Shrewsbury 10 minute interval - Bancroft Avenue in St. Louis 15 minute interval - January Avenue in St. Louis

Interstate 44 - Westbound 5 minute interval - Interstate 270 via Sappington & Big Bend 10 minute interval - Slightly west of Missouri 141 near Gravois Bluffs 15 minute interval - Eureka, Missouri

Sappington Road North to Big Bend Then East to Interstate 44 5 minute interval - Selma Avenue 10 minute interval - Kingshighway 15 minute interval Mississippi River (Downtown St. Louis)

Sappington Road to Gravois Road Traveling South 5 minute interval - Hadley Road in Sunset Hills 10 minute interval - Missouri Highway 141 near Gravois Bluffs 15 minute interval - Dillon Road

Source: Melaniphy & Associates, Inc. – April 2005

Market Feasibility Study - Watson Road Commercial District Page 57

Figure 6B Driving Time Analysis 10, 20, and 30 Minutes Westfield Crestwood Center Crestwood, Missouri

Source: Melaniphy & Associates, Inc. and MapPoint, 2005

Again, the Driving Time Analysis was conducted during non-peak travel times to simulate the travel times of consumers during normal shopping hours. The interstate system serving the St. Louis area allows consumer's to drive long distances in a short period of time during non-peak periods.

Traffic Volumes

Our staff obtained annual average daily traffic volume data from the State of Missouri Department of Transportation (MDOT) for the Watson Road Commercial District and the St. Louis Freeway System. Figure 6.C on the following page presents the St. Louis Freeway System Traffic Volume Summary Map for 2002 prepared by the Missouri Department of Transportation. Table 6.2 presents the 2002 average annual daily traffic volumes.

Market Feasibility Study - Watson Road Commercial District Page 59

Table 6.2 Annual Average Daily Traffic Volumes - 2002 Selected Arterials

Selected Arterials Traffic Count

Interstate 44 Interstate 44 - East of Lindbergh Boulevard 104,480 Interstate 44 – West of Lindbergh Boulevard 106,401

Watson Road Watson Road – Eastbound from Interstate 44 50,545 Watson Road – East of Sappington Road 19,577 Watson Road – West of Sappington Road 21,165

Interstate 270 Interstate 270 - North of Interstate 44 144,355 Interstate 270 - South of Interstate 44 134,687

Lindbergh Boulevard Lindbergh Road North of Watson Road 29,748 Lindbergh Road South of Watson Road 31,628 Source: Missouri Department of Transportation, 2005

Local road improvements include: • Rte. 366 (Watson Rd.) at Elm Rd. – Improve signals and lighting. Spring 2005-Late 2005. Source: State of Missouri Department of Transportation (MDOT), 2005

Westfield Crestwood Center Shopping Habits and Patterns

We requested and received two consumer surveys conducted at Westfield Crestwood Center. The first was a Customer Intercept Survey conducted during October 23 and 31, 2004 with 200 randomly selected customers exiting the Center . The second was a Focus Survey conducted in December 2004, including four focus groups and a total of 39 respondents. The results of both surveys are presented below.

Westfield Crestwood Center Exit Survey The highlights of the survey relevant to this study were as follows:

Females were preponderance at 69 percent. Weekdays, males were a higher percentage at 36 percent.

Median age of Westfield Crestwood Center shoppers is in the 35 to 44 year old age group. Also, weekday and weekends do not differ significantly. During the week, there are apparently more younger shoppers.

Racially, approximately 94 percent were Caucasian, 5 percent were African American, 1 percent was Hispanic, and another 1 percent were of other races.

Female shoppers were mostly married, however men were principally single.

Market Feasibility Study - Watson Road Commercial District Page 60

Most female shoppers were employed either full or part time (69 percent), and approximately 71 percent of the males were employed either full or part time. Almost one-third of both the female and male shoppers were not employed outside the home. Approximately 13 percent were over 65 years of age.

Female shoppers held more white collar employment, while males were more inclined toward blue collar jobs.

Westfield Crestwood Center shoppers generally reflected the household income of the Trade Area, although slightly higher than the U S at the low end of the income spectrum and slightly lower at the higher end of the household income spectrum.

Westfield Crestwood Center shoppers are similar to US averages in household size, family presence, and home ownership. However, the shoppers are slightly more educated than the U S averages, with women more educated than men.

Almost 75 percent of Center shoppers considered the Mall to be their primary place to shop. Females were even more inclined toward Westfield Crestwood Center at 80 percent.

More affluent Crestwood shoppers have a higher orientation toward Westfield West County and South County Centers.

Westfield South County Center was number one (57 percent) as the other shopping centers visited, followed by Westfield West County (34 percent). The St. Louis Galleria recorded 31 percent. Gravois Bluffs was next at 19 percent.

“Convenience” was the main reason for shopping at Westfield Crestwood Center vs. other malls.

“Location” is the primary reason for not shopping at Westfield Crestwood Center.

Average number of visits during the past three months was 5.7 visits.

Time spent in the Center is comparable to the national mall average.

Westfield Crestwood Center shoppers visited department stores slightly above the national average.

Department stores are more popular with older customers, similar to findings elsewhere in the country.

Westfield Crestwood Center shoppers visited 2.6 stores per visit, significantly higher than the US average of 1.6 visits. As expected, women visited more stores per visit than men.

Women and men had similar spending patterns in mall stores.

Westfield Crestwood Center shoppers are spending less at specialty stores than the US average.

The amount spent in the Mall by shoppers is less than the national average.

Market Feasibility Study - Watson Road Commercial District Page 61

“Clean and attractive atmosphere, safe and secure environment, and availability of reasonably priced stores were ranked high by mall shoppers. “Food court selection” ranked lowest.

Focus Group Findings – Westfield Crestwood Center

Focus groups (four) were conducted on December 6th and 7th, 2004 to obtain consumer feedback on Westfield Crestwood Center. The groups consisted of 39 persons; half from within seven miles of the Mall, and half who did not consider Westfield Crestwood Center their primary shopping area (or beyond seven miles). All respondents were females between the ages of 35 and 54. The relevant findings are as follows:

There was general agreement that Westfield Crestwood Center needs a facelift.

Few Focus Group shoppers shop for their own apparel or for their homes at Crestwood Center.

Group members wanted better apparel options, and home and kitchen items.

The most negative physical item at Westfield Crestwood Center was the condition and selection of the food court.

The Westfield Crestwood Center parking situation was also negative.

Restaurant selection needs improvement.

Mom’s with young children were the most satisfied Crestwood shoppers.

Westfield Crestwood Center is seen by shoppers and non-shoppers alike, as catering to a young, under 30, and younger audience. Teens hanging out is a perception.

Westfield Crestwood Center is perceived as average, familiar, and convenient.

Westfield West County Center is seen as an upscale, trendy, fashion center

Westfield South County Center is seen as similar to Westfield Crestwood Center with the exception of J.C. Penney.

Respondents want a new food court, better apparel, home shops, kitchen goods, more restaurants, improved parking, and a new major anchor.

TRADE AREA DELINEATION The Trade Area of the Watson Road Commercial District including Westfield Crestwood Center has been delineated on the basis of the Center’s customer distribution, department store customer distributions, competition, accessibility, the road network, Interstate accessibility, the Driving Time Analysis, employment distribution, physical and psychological barriers, shopping habits and patterns, dining-out patterns, as well as our experience in evaluating shopping centers and other commercial developments throughout the world. Most of the retailers, restaurants, and services in the District will also serve this Trade Area. Many restaurants, retail facilities, and entertainment venues located in proximity to a major regional mall take on the same trade area characteristics as the mall. The tenant mix in the corridor dictates the cross-shopping habits and patterns of consumers patronizing Westfield Crestwood Center.

Market Feasibility Study - Watson Road Commercial District Page 62

The Total Trade Area for the Watson Road Commercial District including Westfield Crestwood Center is depicted in Figure 6.D on the following page. The Trade Area was delineated on the basis of all of those factors which directly or indirectly affect the geographic drawing power of the Subject Site. The Trade Area has been divided into two sections for analysis. The Primary Trade Area represents the geographic area from which the majority of sales will be derived. The Secondary Trade Area represents the geographic area from which consumers will come on a less frequent basis. We have delineated the Trade Area by Zip Codes.

The major competitive retail concentrations which directly and indirectly affect the geographic size of the Trade Area include Westfield West County Center, Westfield South County Center, the St. Louis Galleria, Plaza Frontenac, and the concentration of big box retailers including Target, Wal-Mart, and numerous others.

Figure 6E depicts the Primary Trade Area delineated to include the following zip codes, population, households, average household income, and median age.

Figure 6E Primary Trade Area Watson Road Commercial District Crestwood, Missouri

The base map depicts population density. The darker the color; the greater the population density. Conversely, the light the color; the lesser the density.

Market Feasibility Study - Watson Road Commercial District Page 64

Table 6.3 presents the zip codes and basic demographic data for 2004 and 2009 for the Primary Trade Area.

Table 6.3 indicates that the Primary Trade Area had a 2004 population of 437,906 persons in 189,410 households. By 2009, the population and households are expected to rise to an estimated 441,355 and 195,589 respectively. The median ages in the nearby Zip Codes are older; all over 40 years of age.

Table 6.3 Primary Trade Area Zip Codes Watson Road Commercial District 2004 and Forecasts to 2009 Average Average Household Median Household Population Households Income Age Population Households Income ZIP (2004) (2004) 2004 (2004) (2009) (2009) (2009) 63021 55,782 21,160 $79,837 35.4 56,644 22,303 $89,908 63026 43,463 16,264 $66,730 34.5 46,066 17,919 $75,276 63049 15,480 5,596 $64,783 34.7 16,634 6,198 $72,949 63088 8,772 4,024 $49,294 32 9,980 4,838 $56,231 63109 28,978 14,288 $46,455 37.1 28,382 14,516 $51,822 63116 45,963 19,764 $36,779 34.1 41,709 19,273 $40,760 63119 34,179 15,301 $69,880 40.2 33,948 15,987 $77,659 63122 38,427 16,549 $86,903 41.7 38,217 16,368 $94,999 63123 49,062 22,820 $49,339 41.3 48,140 22,601 $55,864 63126 14,961 6,657 $61,532 44.3 14,795 6,912 $69,604 63127 4,757 2,019 $94,498 48.3 4,818 2,142 $103,915 63128 29,061 12,449 $70,961 45.2 28,803 12,980 $79,495 63129 51,637 20,115 $65,280 37.9 52,057 21,272 $74,603 63139 23,005 12,087 $40,448 36.8 21,162 12,280 $45,064 Totals 437,906 189,410 441,355 195,589 Source: Tactician, Inc. and Melaniphy & Associates, Inc., 2005

The Secondary Trade Area is presented in Table 6.4 reflecting the zip codes that have been delineated. The data indicate that the Secondary Trade Area had a 2004 population of 797,971 persons in 324,983 households. By 2009, the population is forecast to rise to 807,833 and households are estimated at 343,215. Frequency of customer visits is fairly infrequent, and thus, is less important than the Primary Trade Area.

Market Feasibility Study - Watson Road Commercial District Page 65

Table 6.4 Secondary Trade Area Watson Road Commercial District Zip Codes Crestwood, Missouri 2004 and Forecast 2009 Demographics

Population in the Total Trade Area (combined Primary and Secondary Trade Areas) in 2004 amounted to 763,707 persons and 319,646 households. By 2009, population and households are expected to rise to 770,649 and 333,127 respectively.

Trade Area Market Support Factors

Demographic characteristics of the Trade Area were thoroughly evaluated. Demographic characteristics of the Primary, Secondary, and the Total Trade Area of Watson Road Commercial District, including Westfield Crestwood Center are provided in Table 6.5, entitled Market Support Factors.

Market Feasibility Study - Watson Road Commercial District Page 66

Table 6.5 Market Support Factors Primary and Secondary Trade Area Watson Road Commercial District Crestwood, Missouri Population Secondary Trade Classification Primary Trade Area Area Percent Percent Number Change Number Change 1980 Census 403,172 294,399 1990 Census 420,862 4.40% 302,613 2.80% 2000 Census 442,506 5.10% 323,200 6.80% 2004 Projection 437,906 -1.00% 325,801 0.80% 2009 Projection 432,930 -1.10% 329,294 1.10%

Households 1980 Census 151,116 108,406 1990 Census 168,303 11.40% 115,458 6.50% 2000 Census 182,170 8.20% 124,054 7.40% 2004 Projection 189,410 4.00% 130,236 5.00% 2009 Projection 197,998 4.50% 137,538 5.60%

Race White 397,362 90.70% 269,456 82.70% Black 23,148 5.30% 45,530 14.00% Asian 8,890 2.00% 3,323 1.00% Native American 812 0.20% 960 0.30% Hawaiian / Pacific Islander 108 0.00% 80 0.00% Two or More 5,504 1.30% 4,598 1.40% Other Race 2,081 0.50% 1,859 0.60%

Hispanic 7,890 1.80% 6,206 1.90% Not Hispanic 430,015 98.20% 319,595 98.10% Total 437,905 100.00% 325,801 100.00% Source: Tactician, Inc. 2005 and Melaniphy & Associates, Inc. 2005

Market Feasibility Study - Watson Road Commercial District Page 67

Table 6.5 (Continued) Market Support Factors Primary and Secondary Trade Area Watson Road Commercial District Crestwood, Missouri

Primary Trade Secondary Trade Classification Area Area Percent Percent Number Change Number Change Age Age 0-4 27,721 6.30% 22,967 7.00% Age 5-9 26,172 6.00% 23,066 7.10% Age 10-14 28,862 6.60% 23,865 7.30% Age 15-19 28,551 6.50% 23,450 7.20% Age 20-24 25,045 5.70% 22,479 6.90% Age 25-29 26,500 6.10% 21,465 6.60% Age 30-34 29,846 6.80% 23,246 7.10% Age 35-39 32,824 7.50% 25,295 7.80% Age 40-44 36,228 8.30% 26,686 8.20% Age 45-49 36,462 8.30% 25,038 7.70% Age 50-54 32,119 7.30% 21,533 6.60% Age 55-59 25,417 5.80% 17,082 5.20% Age 60-64 19,152 4.40% 13,478 4.10% Age 65-69 15,430 3.50% 10,420 3.20% Age 70-74 14,417 3.30% 8,632 2.60% Age 75-79 12,944 3.00% 7,036 2.20% Age 80-84 10,107 2.30% 5,139 1.60% Age 85+ 10,105 2.30% 4,921 1.50% Total 437,906 100.00% 325,801 100.00% Median Age 39.0 35.5 Source: Tactician, Inc. 2005 and Melaniphy & Associates, Inc., 2005

The data show that the Primary Trade Area population stood at 442,506 in 2000. Our current estimates place the population of the Primary Trade Area at 437,906 in 2004. By 2009, the population in the Primary Trade Area is estimated at 432,930. Households in the same area stood at 182,170 in 2000 and are estimated at 189,410 in 2004. They are estimated to continue to increase to 197,998 households in 2009.

Population in the Secondary Trade Area in 2000 amounted to 323,300 and is currently estimated at 325,801people. Population in this area is expected to rise to 329,294 by 2009. Households in the Secondary Trade Area in 2000 stood at 124,054. They are currently estimated at 130,236 and are expected to rise to 137,538 by 2009.

Market Feasibility Study - Watson Road Commercial District Page 68

Table 6.5 (Continued)

Market Support Factors Primary and Secondary Trade Area Watson Road Commercial District Crestwood, Missouri

Primary Trade Secondary Trade Classification Area Area Percent Percent Number Change Number Change Households by Income (2004) Less Than $10,000 9,792 5.20% 12,705 9.80% $10,000-$14,999 7,797 4.10% 7,989 6.10% $15,000-$19,999 8,906 4.70% 7,853 6.00% $20,000-$24,999 10,398 5.50% 8,911 6.80% $25,000-$29,999 10,586 5.60% 8,043 6.20% $30,000-$34,999 11,072 5.80% 8,263 6.30% $35,000-$39,999 10,157 5.40% 7,673 5.90% $40,000-$49,999 20,266 10.70% 14,915 11.50% $50,000-$59,999 17,434 9.20% 12,523 9.60% $60,000-$74,999 22,164 11.70% 14,430 11.10% $75,000-$99,999 27,108 14.30% 14,571 11.20% $100,000-$124,999 15,283 8.10% 6,603 5.10% $125,000-$149,999 7,624 4.00% 2,494 1.90% $150,000-$199,999 5,315 2.80% 1,456 1.10% $200,000-$249,999 1,801 1.00% 450 0.30% $250,000-$499,999 2,062 1.10% 467 0.40% $500,000+ 1,638 0.90% 905 0.70% Total 189,410 100.00% 130,236 100.00%

Median Household Income $53,285 $42,473 Average Household Income $61,869 $53,419 Average Family Income $73,239 $62,593 Source: Tactician, Inc. 2005 and Melaniphy & Associates, Inc, 2005.

The median age of the Primary Trade Area is currently estimated at 39.0 years and 35.5 years for the Secondary Trade Area.

Within the Primary Trade Area, the 2004 ethnic characteristics of the residents were estimated as follows: 90.7 percent White, 5.3 percent, African American; 2.2 percent, Asian/Pacific Islander; and 1.3 percent, Other Races. Those of Hispanic Origin amounted to 1.8 percent.

Market Feasibility Study - Watson Road Commercial District Page 69

The Secondary Trade Area has the following ethnic characteristics: 82.7 percent, White; 14.0 percent, African American; 1.0 percent, Asian/Pacific Islander; and 1.4 percent, Other races. Another 1.9 percent of the population is of Hispanic Origin.

Within the Primary Trade Area, the average household income amounted to an estimated $73,239 in 2004. The Secondary Trade Area had a 2004 average household income of $53,419.

Competitive Environment

The principal competitors to the Watson Road Commercial District include Westfield West County Center, Westfield South County Center, St. Louis Galleria, Plaza Frontenac, Plaza of Sunset Hills, Shoppes at Sunset Hills, Kirkwood Commons, Kirkwood Shopping Center, South County Marketplace, Gravois Bluffs, and others with more major big boxes. Table 6.6 provides a list of competitive facilities and Figure 6.F is a Competitive Map depicting to the competitive numbers listed below. A discussion of major malls is as follows.

1. St. Louis Galleria – 1,200,000 Square Feet

This upscale two level mall is located in the northwest quadrant of Interstate 64 and Brentwood Boulevard west of Interstate 170. Major stores include Famous-Barr, Dillard’s, Lord & Taylor, and Mark Shale. Restaurants include Cheesecake Factory, Houlihan’s, California Pizza Kitchen, Charley’s Steakery, and Cajun Café & Grill. The Galleria also contains approximately 35 specialty stores and the Galleria 6 Cinema. Crate & Barrel is under construction across the street.

2. Plaza Frontenac – 600,000 Square Feet

Plaza Frontenac, a two level mall, is located in the southwest quadrant of Lindbergh Road and Interstate 64. This upscale mall contains department stores operated by Neiman Marcus and Saks Fifth Avenue, along with approximately 40 specialty stores, a cinema, and restaurants. Restaurants include Brio! Tuscan Grill, Canyon Café, Fleming’s Prime Steakhouse & Wine Bar, and others.

3. Westfield West County Center –1,267,700 Square Feet

Westfield West County Center, located in the southwest quadrant of Interstate 270 and Manchester Road, is the closest major mall to Westfield Crestwood Center. Operated on two levels, the Center has department stores operated by Nordstrom, Famous-Barr, Lord & Taylor, and J.C. Penney. Dick’s Sporting Goods (formerly Galyan’s) is also located in the Center. In addition, the Center has approximately 150 specialty stores and restaurants. The Center was redeveloped and Nordstrom’s was added. A cinema is located on Manchester Road west of Interstate 270.

4. Westfield Crestwood Center – 1,026,000 Square Feet

5. Westfield South County Center –1,020,300 Square Feet

Westfield South County Center, located in the northeast quadrant of Interstate 270 (Interstate 255) and Interstate 55 along Lindbergh Road (U.S. 67-61), is a two level facility. Major stores include Dillard’s, Famous-Barr, J.C. Penney, and Sears. The mall also contains over 130 stores. Ronnie’s 20 screen cinema is located across from the Center on Lindbergh Boulevard.

Market Feasibility Study - Watson Road Commercial District Page 70

Market Feasibility Study - Watson Road Commercial District Page 71

Table 6.6 COMPETITIVE RETAIL INVENTORY1

Mall Name/Location Approximate Approximate Major Anchors Approximate Number Size Occupancy Anchor Sizes

1 St. Louis Galleria 1,200,000 100% Famous 260,000 Lord & Taylor 115,000 Dillard’s 315,000 Galleria 6 - Screens 2 Plaza Frontenac 600,000 100% Saks Fifth Avenue 160,056 Neiman Marcus 109,512 Cinema 3 Westfield West 1,267,700 99% Dick’s 80,000 County Center Famous Barr 266,000 JC Penney 199,469 Nordstrom 185,000 Lord & Taylor 140,000

4 Westfield 1,026,000 85% Sears 221,375 Crestwood Center Dillard’s 200,000 Famous Barr 156,601 AMC – 10 Cinema 5 Westfield South 1,020,300 95% Sears 168,695 County Center JC Penney 147,324 Dillard’s 142,787 Famous Barr 204,592

Shopping Chippewa Plaza 175,000 100% Shop ‘N Save 55,000 Center Watson Road Value City 75,000 Number South County DEAL$ 15,000 1 2 Mackenzie Pointe 120,000 90% Dierbergs 55,000

3 Kenrick Plaza 60,000 90% Drug Emporium 35,000

4 Yorkshire Plaza 135,000 80% Pet Marketplace 16,000 Dollar Tree 10,191

5 Value City 105,000 50% Value City 87,856 (vacant strip center) 6 Crestwood Square 90,000 20% Sports Authority (vacant) 40,000 Office Depot (vacant) 33,000

7 Old 66 Plaza 200,000 90% Best Buy 30,000 Gordmans 57,577 Schnucks 67,000

8 Crestwood Point 88,000 100% Kohl’s 88,000

9 Barnes & Noble 33,000 100% Barnes & Noble 33,000

1 Data set up to match Pace Properties, Incorporated St. Louis Shopping Center Map

Market Feasibility Study - Watson Road Commercial District Page 72

10 Watson Plaza 125,000 Walgreen’s 14,820 Factory Card Outlet 10,515 Anticipated anchor 60,848

11 Crestwood Center 80,164 80% Office Max 27,963 Harbor Freight Tools 14,400

12 Crestview Center 81,080 50% Aldi 16,032 Available Anchor (vacant) 20,671

13 Big Bend Crossing 150,000 90% Sam’s Club 135,000

14 Shoppes at Sunset 100,000 100% Toys R Us 48,178 Hills CompUSA 26,500 World Market 17,500

15 Plaza of Sunset 328,000 100% Home Depot 109,812 Hills Borders 30,109 Old Navy 13,650 Marshalls 32,218 Bed Bath & Beyond 36,140 David’s Bridal 13,552 Petsmart 25,415 Party City 12,000

16 Concord Plaza 75,000 80% Available Anchor 20,000

17 Ronnie’s Plaza 189,000 80% TJ Maxx 24,169 Wehrenberg Theatres 97,200 Available Anchor

18 Southfield Center 100,000 100% Schnucks 55,000 Miss Sherri’s Cafeteria 12,500

19 Southroads Center 80,000 100% Dierbergs 65,000

20 Kennerly Center 25,000 80% Walgreen’s 7,500 Blockbuster 6,000

21 South Oaks 100,000 100% Shop ‘N Save 73,125 Walgreens 7,605 Michaels 18,000

22 Weekends Only 125,000 100% Weekends Only 93,600 Office Depot 32,292

23 South County 500,000 70% Costco 176,472 Marketplace (add’l outlots) Target 139,968 Basset Furniture 28,080

24 Marshalls Plaza 100,000 90% Marshalls 30,870 JC Penney Homestore 67,500

25 Circuit City/Toys 97,453 100% Circuit City 42,453 R Us Toys R Us 55,000

Market Feasibility Study - Watson Road Commercial District Page 73

26 Best Buy 53.,568 100% Best Buy 53,568

27 Rhodes Furniture 47,736 100% Rhodes Furniture 47,736

28 South County 175,000 85% Kmart 139,680 Plaza 29 Home Depot Plaza 125,000 100% Home Depot 125,000

30 Southpoint 140,000 100% Sports Authority 31,860 Babies R Us 33,480 Big Lots 21,060 PetsMart 21,600 Dollar Tree 32,400

31 South Lakeview 120,000 90% Walgreen’s 10,000 Plaza Old Navy 28,700 Ashley Furniture Home 42,120 Store

32 Keller Plaza 215,000 90% Sam’s 105,823 Wehrenberg Theatres 30,000

33 Lemay Plaza 100,000 90% Dierbergs 64,512 Factory Card Outlet 10,000

34 Value City 87,210 100% Value City 87,210

35 Dierbergs Fenton 130,000 Dierbergs 61,327 Crossing 36 Fenton Plaza 75,000 70% Family Dollar 10,000 Blockbuster 6,000

37 Former Wal-Mart 65,000 60% Cummings Tools 65,000

38 Fenton Park Mall 100,000 Under Borders 25,000 construction Best Buy 30,000

39 Gravois Bluffs 1,500,000 100% Lowe’s 125,000 Target 155,000 Kohl’s 75,000 OfficeMax 18,000 Linens ‘N Things 17,000 Shop ‘N Save 70,000 Gordmans 50,000 Wal-Mart 175,000 Garden Ridge 125,000 Ultimate Electronics 27,000 Circuit City 36,000 Michaels 25,000 Party America 10,000 Petco 14,000 Supermarket of Shoes 10,000 DEAL$ 8,000 Pier One 9,000 Tuesday Morning 15,000

Market Feasibility Study - Watson Road Commercial District Page 74

Sears Outlet 35,000 American TV 125,000

40 Target 135,000 Open 11/05 Target (under construction) 135,000

41 Hampton Village 100,000 90% Schnucks 60,000 JC Penney 23,000 Walgreens 7,800

42 Christy Plaza 80,000 100% Burlington Coat Factory 55,000 Office Depot 16,000

43 Southtown Center 99,000 Walgreens 15,120 Office Max 20,000 PETsMART 19,107

44 Gravois Plaza 150,000 90% Shop ‘N Save 30,000 DEAL$ 11,000

45 Home Depot 125,000 100% Home Depot 125,000

46 Olympic Oaks 90,000 100% TJ Maxx 29,850 Michaels 19,504 Blockbuster 4,854

47 Barnes & Noble 35,000 100% Barnes & Noble 24,192

48 Des Peres Crossing 80,000 Schnucks 60,000 49 Kirkwood 175,000 100% Hemispheres Furniture 46,842 Shopping Center Hobby Lobby 40,000 Hancock Fabrics 16,000 Dollar Tree 16,000 Sports Authority 31,675 Office Depot 16,000

50 Kirkwood 500,000 95% Wal-Mart 177,120 Commons Lowes 150,000 Target 125,412 TJ Maxx 19,872 HomeGoods 12,870 Supermarket of Shoes 6,000

Source: City of Crestwood, Department of Economic Development, 2005

Proposed Retail Faculties

In addition to the shopping center inventory, there are a few proposed shopping centers in the St. Louis Metropolitan Area that will have a negative impact upon the Watson Road Commercial District. A brief description of each of the proposed facilities is presented in the following paragraphs.

Sunset Manor Redevelopment Area

A major project is proposed in the city of Sunset Hills proposed by Novus Development in the northwest quadrant at Lindbergh Boulevard and Watson Road near Interstate 44. The project

Market Feasibility Study - Watson Road Commercial District Page 75

requires the acquisition of numerous homes to provide an adequate site. The project anticipates the development of approximately 821,000 square feet of retail, restaurants, a cinema, and office facilities. Moreover, the retail component is proposed to contain a major two story anchor of approximately 200,000 square feet along with approximately 585,000 square feet of retail and restaurants. The plan calls for the development of approximately 10 restaurants. According to a report prepared by Peckham Guyton Albers & Viets, Inc. (PGAV), the proposed complex is expected to generate annual sales amounting to over $200,000,000. The project and TIF assistance was recently approved by Sunset Hills.

New Target – 175,000 Square Feet

A new-story Target store is under construction in Hampton Village Shopping Center is on Chippewa Road in the City of St. Louis at January Street.

RETAIL EXPENDITURES

The focus of this analysis has been to evaluate those factors which either directly or indirectly affect the retail market potential and the attraction of consumer dollars to the Subject Property, as opposed to competitive shopping centers. We have delineated the Primary and Secondary Trade Area and assembled demographic characteristic data. We then calculated per capita expenditures by retail category to assist in determining the overall retail market expenditure potential. Finally, all of the other factors which have an impact on the market potential of the Subject District were thoroughly studied including: existing and proposed competition, accessibility, traffic counts, road patterns, roadway improvement plans, retail sales trends, spending patterns, consumer orientation, Westfield Crestwood Center customer patterns, and development activity.

This section of the report addresses retail expenditures potential that the retail facilities in the Watson Road Commercial District are competing. The Economic Census of Retail Trade, compiled by the United States Department of Commerce; Bureau of the Census, is the principal source of retail sales data in Missouri. The Economic Census of Retail Trade is compiled and published every five years; the most recent publication being 2002. These data have been compared to the previous Economic Census of 1997.

The 2002 Economic Census of Retail Trade and Foodservice revealed retails sales for the St. Louis Metropolitan Area of $30.6 billion. Retail sales are currently estimated at over $31 billion. Next, we evaluated the 2002 retail sales data by retail category. The objective was to determine the per capita expenditures for each major retail category in each of these geographic areas. The per capita expenditures by retail category were calculated by dividing the actual retail sales captured in each category by the Metropolitan Area population in 2002. From these calculations, the per capita expenditures for individual retail categories were determined.

In order to forecast the 2004 retail expenditures, it was necessary to evaluate those factors which have affected retailing between 1997 and 2002 and the present. We reviewed data from the St. Louis Federal Reserve District, the Missouri Department of Revenue; retail sales forecasts prepared by the U.S. Department of Commerce; Economic Census: Retail Trade; retail expenditure forecasts prepared by Tactician; industry sales forecasts prepared by the International Council of Shopping Centers (ICSC); forecasts prepared by Vue Isite; and our own in-house computations of consumer expenditures by category relationships. Lastly, it was necessary to forecast these expenditures for the projections years. These forecasts were accomplished several ways. First, household income data were evaluated. Since consumers tend to spend fairly consistent percentages of their household income for specific types of

Market Feasibility Study - Watson Road Commercial District Page 76 goods and services, income dynamics were analyzed for 2000, 2004, and forecast to 2009 and 2014. The income composition also provided insight into the expenditures within individual retail categories.

Table 6.7 presents the 2002 Economic Census of Retail Trade – St. Louis Metropolitan Area. The table indicates that overall 2002 retail trade amounted to approximately $30.6 billion in the St. Louis MSA. Table 6.8 presents the 2004, 2009, and 2014 per capita expenditures by retail category for the Primary, Secondary, and Total Trade Area.

Table 6.7

2002 Economic Census: Retail Trade & Foodservices St. Louis Missouri-Illinois Metropolitan Statistical Area

2002 Category Census Sales Motor Vehicle & Parts Dealers $8,282,164,000 Furniture & home furnishing stores $873,827,000 Electronics & Appliance stores $866,906,000 Home Improvement $2,479,202,000 Food & Beverage Stores $4,106,659,000 Foodservices & Drinking Places $3,442,451,000 Health & Personal Care $1,832,823,000 Clothing & Clothing Accessories Stores $1400,217,000 Sporting Good, Hobby, Book & Music $692,031,000 General Merchandise $4,731,580,000 Miscellaneous Retail Stores $939,733,000 Gasoline Stations $2,798,547,000 Non-store Retailers $1,609,096,000

Total $30,612,785,000 Source Economic Census: Retail Trade and Foodservices, St. Louis, Mo-Il Metropolitan Statistical Area - 2002

Table 6.8 Watson Road Commercial District Per Capita Retail Expenditures by Store Category and Trade Area Segment 2004, 2009, & 2014

Primary Trade Area Secondary Trade Area Total Trade Area Store Category 2004 2009 2014 2004 2009 2014 2004 2009 2014

General Merchandise $2,443 $2,834 $3,401 $2,445 $2,836 $3,403 $2,444 $2,835 $3,402

Home Improvement / Hardware $1,172 $1,360 $1,631 $1,159 $1,344 $1,613 $1,166 $1,352 $1,622

Food Stores $3,208 $3,721 $4,466 $3,201 $3,713 $4,456 $3,205 $3,717 $4,461

Drug Stores $632 $733 $880 $634 $735 $883 $633 $734 $881

Furniture & Home Furnishings $601 $697 $837 $554 $643 $771 $578 $670 $804

Radio, TV, Computers, & Music $643 $746 $895 $598 $694 $832 $621 $720 $864

Apparel & Accessories $1,064 $1,234 $1,481 $1,200 $1,392 $1,670 $1,132 $1,313 $1,576

Tires, Batteries & Accessories $110 $128 $153 $111 $129 $155 $111 $128 $154

Eating Places $1,110 $1,288 $1,545 $1,112 $1,290 $1,548 $1,111 $1,289 $1,547

Miscellaneous Retail $993 $1,192 $1,430 $989 $1,147 $1,377 $991 $1,150 $1,379

Source: Melaniphy & Associates, Inc. 2005 Market Feasibility Study - Watson Road Commercial District Page 78

WATSON ROAD COMMERCIAL DISTRICT CONSUMER EXPENDITURE POTENTIAL AND MARKET PENETRATON

We have evaluated the demographic and Personal Consumption Expenditures of the Total Trade Area (Primary and Secondary Trade Area portions), and specifically, the per capita income and expenditure levels. Table 6.9 presents the application of the per capita expenditures by retail categories to the population of both the Primary and Secondary Trade Area for 2004. The following is a discussion of the estimated Personal Consumption Expenditures by retail category for the Watson Road Commercial District’s Primary and Secondary Trade Areas.

Market Feasibility Study - Watson Road Commercial District Page 79

Table 6.9 Watson Road Commercial District Total Retail Expenditure Potential And Estimated Market Penetration, and District Sales By Trade Area Segment 2004 Estimated Watson Road Personal Market Commercial Consumption Penetration District Store Category Expenditures 2004 Sales 2004 (Percent) 2004 General Merchandise Primary $1,069,804,400 7.0% $74,886,000 Secondary $796,583,400 2.5% $19,915,000 Total $1,866,387,800 5.1% $94,801,000 Food Stores Primary $1,404,802,500 1.5% $21,072,000 Secondary $1,042,889,000 0.7% $7,300,000 Total $2,447,691,500 1.2% $28,372,000 Drug Stores Primary $276,756,600 4.0% $11,070,000 Secondary $206,557,800 1.0% $2,066,000 Total $483,314,400 2.7% $13,136,000 Furniture & Home Furnishings Primary $263,181,500 6.0% $15,791,000 Secondary $180,493,800 2.0% $3,610,000 Total $443,675,300 4.4% $19,401,000 Radio, TV, Computers, & Music Primary $281,573,600 8.0% $22,526,000 Secondary $194,829,000 3.0% $5,845,000 Total $476,402,600 6.0% $28,371,000 Apparel & Accessories Primary $465,932,000 5.0% $23,297,000 Secondary $390,961,200 2.5% $9,774,000 Total $856,893,200 3.6% $33,071,000

Market Feasibility Study - Watson Road Commercial District Page 80

Table 6.9 (Continued) Watson Road Commercial District Total Retail Expenditure Potential And Estimated Market Penetration, and District Sales By Trade Area Segment 2004 Estimated Watson Road Personal Market Commercial Consumption Penetration District Store Category Expenditures 2004 Sales 2004 (Percent) 2004

TOTAL $9,154,951,700 3.1% $283,002,000

Source: U.S. Department of Commerce, Census of Economic Trade, 1997 and 2002, City of Crestwood, Westfield, Inc, and Melaniphy & Associates, Inc. 2005 Note: the data have been rounded to the nearest thousand.

Radio, TV, Computers & Music Category This category in 2004 had Trade Area expenditures in this category amounting to an estimated $371,375,300. These expenditures are expected to rise to $434,713,100 in 2009 and $485,500,600 in 2014. Market penetration in 2004 in this category in the Total Trade Area amounted to an estimated 6.0 percent

Market Feasibility Study - Watson Road Commercial District Page 81

Entertainment Entertainment is not a retail category, and therefore, we have separately computed entertainment expenditures using the 1997 Economic Census of Arts, Entertainment, and Recreation for the St. Louis Metropolitan Statistical Area. In 1997, the St. Louis Metropolitan Area had receipts (taxable and exempt) for Arts, Entertainment, and Recreation amounting to $1,467,000,000 The 2002 Economic Census for Missouri and St. Louis shows that receipts for Arts, Entertainment, and Recreation amounted to $1,631,800,000. We forecast the data to 2005 to determine the potential market for the Watson Road Commercial District Trade Area. The categories that are included in entertainment venues that might be included in the Watson Road Commercial District had sales of approximately $220,000,000 in 1997.

The 2004 Primary Trade Area has Entertainment market potential of an estimated $251,000,000. The Secondary Trade Area has Entertainment expenditures estimated at $187,000,000. In total, the Watson Road Commercial District is competing for a total of $438,000,000. At the present time, the District is only capturing a limited amount of this potential, principally in the Westfield Crestwood Center theaters and the nearby Crestwood Bowl. Because of a confidentially agreement, we cannot discuss the Theaters level of market penetration. However, there is significant future potential for varying entertainment venues.

Our estimates indicate that today per capita expenditures for entertainment and paid recreation amount to nearly $600. Thus, our estimates of Entertainment Expenditures for 2009 and 2014 are presented in Table 6.10.

Market Feasibility Study - Watson Road Commercial District Page 82

Table 6.10 Entertainment Expenditures Primary, Secondary, and Total Trade Area Segments Watson Road Commercial District 2005, 2009, and 2014

Demographics 2005 2009 2014 Primary Trade Area 437,906 432,930 505,229 Secondary Trade Area 325,801 329,294 384,286 Total Trade Area 765,712 764,233 891,529

Per Capita Expenditures Per Capita Entertainment Expenditures Primary Trade Area $598 $694 $798 Secondary Trade Area $565 $633 $709 Total Trade Area $582 $666 $758

Entertainment Expenditures Entertainment Expenditures Primary Trade Area $251,008,543 $300,314,882 $403,037,588 Secondary Trade Area $187,132,000 $208,377,243 $272,357,392 Total Trade Area $438,140,543 $508,692,126 $675,394,980

Watson Road Commercial District Share Primary Trade Area $15,814,000 $19,521,000 $26,200,000 Secondary Trade Area $4,678,000 $6,251,000 $8,200,000 Total Trade Area $20,492,000 $25,772,000 $34,400,000 Source: Economic Census, Arts, Entertainment, and Recreation, 2002 and Melaniphy & Associates, Inc. 2005 Note: the data have been rounded to the nearest thousand.

The Primary Trade Area has current entertainment market potential of an estimated $251,009,000. The Secondary Trade Area has Entertainment expenditures estimated at approximately $187,132,000. In total, the Watson Road Commercial District is competing for a total of approximately $438,141,000. In our opinion, the Watson Road Commercial District should be able to initially capture approximately $20,000,000, rising to $25,000,000 by 2009 and $34,400,000 by 2014.

The total Watson Road retail and entertainment sales potential amounts to an estimated $283,002,100 in retail sales and an estimated $20,500,000 in entertainment sales, or a total of approximately $303,494,000.

Market Feasibility Study - Watson Road Commercial District Page 83

ALTERNATIVE REDEVELOPMENT SCENARIOS WATSON ROAD COMMERCIAL DISTRICT

Recommendations for the Watson Road Commercial District outside of the Mall are discussed following the discussion of the Mall’s various alternative redevelopment scenarios. We have examined a number of alternatives, each of which is discussed below.

Alternative 1 – Do Nothing

Should neither the City of Crestwood nor Westfield take any action to improve the Watson Road Commercial District, sales will continue to decline and vacancies will rise. These changes will have a negative impact upon property values, as well as declining sale tax revenues. This is especially true if the Sunset Manor Redevelopment Project is developed as proposed. It is possible that if nothing is done the department stores will not renew their leases at the expiration dates, thus adversely affecting the desirability of the Mall for specialty stores. For the future of Watson Road, “do nothing” is not, in our opinion, an acceptable alternative. Under this alternative, the Watson Road Commercial District’s sales could decline to under $200,000,000.

Alternative II – Add a Major Department Store to Westfield Crestwood Center to Replace Dillard’s and Make Other Major Changes

A possible replacement is Von Maur department stores from Iowa. They currently are operating stores in the Chicago Metropolitan Area and have been successful in a very competitive market. They are essentially a junior Nordstrom. The Dillard’s store is probably too large for them, however they should be contacted and encouraged to consider the St. Louis market. Unfortunately, it is extremely difficult to add a department store economically that will perform above $250 a square foot and generate over 30 percent increase in sales to the Mall.

Market Feasibility Study - Watson Road Commercial District Page 84

Should it be possible to secure an acceptable major department store with acceptable economics, we recommend that other major changes be made including:

Renovate both the exterior and interior of the Mall.

Relocate the Food Court to the main level near the East Mall Entrance.

Improve parking utilization in both grade parking and the parking deck through the use of better signing and circulation routes.

New restaurants and entertainment venues should be added to the East Mall Entrance area.

Alternative III – Add Major Big Boxes Should Dillard’s Wish to Vacate the Mall

Should Dillard’s opt to vacate the Mall, a possible replacement may be a major big box retailer, such as Cabela’s, Costco, and Meijer’s. If that is not possible because of lack of interest or poor economics, we recommend reconfiguring the space for mix of junior big box anchors such as Barnes & Noble, Nordstrom Rack, Dick’s Sporting Goods, Gander Mountain, Ross Dress for Less, DSW Shoes, Stein Mart, Steve & Barry’s University Sportswear, Jos. A Banks, Burlington Cost Factory, or a major supermarket. Regardless, it will be necessary to make other major changes, which include the following:

Renovate both the exterior and interior of the Mall.

Relocate the Food Court to the main level near the east Mall entrance.

Improve parking utilization in both grade parking and the parking deck through the use of better signing and circulation routes.

New restaurants and entertainment venues should be added to the east end of the renovated Mall.

Alternative IV – Add Retail, Restaurant, and Entertainment Uses at the East End of the Mall

Today, lifestyle and entertainment components are replacing department stores as major generators. In other cases housing and hotels are replacing department stores. The weakest part of the Westfield Crestwood Center is the eastern end of the Center near Dillard’s department store. Based upon our analysis of retail, entertainment, and restaurants, we recommend that consideration be given to relocating the Food Court to the eastern end of the Center; building a new Cinema at the front of the Center’s new eastern entrance; the addition of entertainment venues, and redevelopment the restaurants near the East Center Entrance. This would bring the Food Court to the main level near a redeveloped east Center entrance. The former Cinema might be replaced with a major entertainment venue. Finally, in the future should Dillard’s decide to vacate their space, the building could be divided for several junior anchors such as a major book store, apparel store, or more entertainment venues.

Market Feasibility Study - Watson Road Commercial District Page 85

Revitalizing the East Center Entrance with the new cinema, a new food court, retail specialty shops, major entertainment venues, and redeveloped restaurants will have a positive impact on the Center and the District, by generating new customers and increasing frequency of existing customer visits. This alternative will be directly competitive with the Sunset Manor Redevelopment Project plans. Nonetheless, Westfield Crestwood Center already has the critical mass to continue generating substantial customers and space that can be retrofitted for additional restaurants, retail, and entertainment venues. Finally, this alternative can be accomplished more economically that the other alternatives.

In addition to a new Cinema, restaurants, the new Food Court, retail, and entertainment venues, it will be necessary to make other major changes. These would include the following:

Renovate both the exterior and interior of the Center.

Improve parking utilization in both grade parking and the parking deck through the use of better signing and circulation routes.

RECOMMENDATIONS

Following the market evaluation of the opportunities for the Watson Road Commercial District, we have arrived at the following recommendations.

Possible new candidates for the Mall and the District are listed below in Table 6.11:

Market Feasibility Study - Watson Road Commercial District Page 86

Table 6.11 Suggested Target Retailers Watson Road Commercial District

General Merchandise AJ Wright Belk Burlington Coat Factory Blaine’s Farm & Fleet Costco Family Dollar Meijer Nordstrom Rack Sears Essentials Sears Grand Stein Mart Von Maur Wal-Mart Supercenter

Building Materials & Hardware Menards Ace Hardware

Sporting Goods Cabela’s Dick’s Sporting Goods Gander Mountain REI

Apparel Stores Ann Taylor Loft Anchor Blue Big Dog Sportswear H&M Jos. A Banks Lerner New York Maurices Rue 21 Rainbow Ross Dress for Less Steve & Barry’s University Sportswear

Shoes DSW Shoes Famous Footwear Red Wing Shoes Shoe Carnival

Market Feasibility Study - Watson Road Commercial District Page 87

Table 6.11 (Continued)

Suggested Target Retailers Watson Road Commercial District

Grocery Stores and Supermarkets Cub Foods Dierberg’s Food 4 Less Trader Joe’s Whole Foods Market Wild Oats Market

Bookstores Barnes & Noble – Relocation – New two Story store Books-A-Million Half Price Books

Miscellaneous Retail Stores Vitamin Shoppe

Restaurants Claim Jumper Champps Claddagh Irish Pub Hooter’s Joe’s Crabshack Johnny Rockets Max & Erma’s Portillo’s Red Robin Romano’s Macaroni Grill Culver’s

Market Feasibility Study - Watson Road Commercial District Page 88

Table 6.11 (Continued)

Suggested Target Retailers Watson Road Commercial District

Entertainment Comedy Club Dave & Busters Jillian’s Theater (New) Chuck E Cheese’s Strike + Spare Bowling Pin Up Bowl Laser Tag Pin City Build A Bear

Automobiles and Automotive Automobile Dealerships Advance Auto Parts Auto Zone Murray’s Auto Parts Pep Boys

Market Feasibility Study - Watson Road Commercial District Page 89

RETAIL SALES AND ENTERTAINMENT FORECASTS WATSON ROAD COMMERCIAL DISTRICT FOLLOWING MALL RENOVATION

The implementation of the above recommendations will have varying sales impacts depending upon which major retailer is obtained. Table 6.12 at the end of this section depicts the Watson Road Commercial District – Total Retail Potential Expenditures, Estimated Market Penetration and District Sales by Trade Area Segment for 2009 and 2014. Each retail category is discussed below along with the sales impacts.

General Merchandise Category Sales in this category will depend upon the Center actions, the actions of the Center department stores, and actions of the other general merchandise retailers in the District. We have assumed that all general merchandise and department stores will stay in place with the possible exception of Dillard’s. We expect them to be replaced some time in the future with either another department store such as Von Maur. Otherwise, Dillard’s, should they decide to vacate the Mall, might be replaced with a major big box store with significant attraction such as Cabela’s or Costco.

We estimate that the Watson Road Commercial District in 2004 was capturing approximately $94,800,900 in sales. With the Center improvement, the sales in this category are forecast to increase to between $106,000,000 and $125,000,000. By 2014, sales in this category under this scenario are forecast to range between $115,000,000 and $132,000,000.

Apparel and Accessories Category The 2009 Apparel & Accessories category currently assumes that positive actions will be taken at the Center and in the District. We expect with Center improvements that the entire District will experience some benefits. Furthermore, we expect that the Center will add some additional apparel stores and replace others to meet the new attraction. Watson Plaza is attempting to add a major family apparel store and a national fabrics retailer. This should be encouraged. Finally, we estimate that 2009 sales in the District in this category will amount to between $40,000,000 and $45,000,000. By 2014, sales in this category are forecast to rise to $60,000,000 and $65,000,000.

Market Feasibility Study - Watson Road Commercial District Page 90

$21,000,000. With the increased activity, we expect that an additional drug store operation will seek a location on Watson Road.

Eating Places Category Total sales in this category in the District for 2004 were estimated at between $17,000,000 and $23,000,000. Assuming the redevelopment of the Mall and District, we expect sales in this category to rise to between $24,000,000 and $27,500,000. This will necessitate adding restaurants to the Mall and the development of several food service facilities in the District. By 2014, we estimate that the sales will rise to between $35,000,000 and $38,500,000.

Miscellaneous Retail Stores Category Sales in 2004 in this category in the District are estimated at between $40,000,000 and $45,000,000. Given the Mall and District redevelopment improvement, we estimate that sales in this category will rise to between $55,000,000 and $60,000,000 in 2009. By 2014, the sales should increase to between $65,000,000 and $70,000,000.

Entertainment Venues The Primary Trade Area has Entertainment market potential of an estimated $251,000,000. The Secondary Trade Area has Entertainment expenditures estimated at $187,000,000. In total, the Watson Road Commercial District is competing for a total of $438,000,000. The Entertainment Potential is forecast to rise to over $508,000,000 in 2009 and to over $675,000,000 in 2014. Initially, we estimate that the District can capture an estimated $20,000,000 in Entertainment sales. In 2009, Entertainment potential in the District is estimated at between $23,000,000 and $26,000,000. By 2014, we estimate that Watson Road Commercial District Entertainment sales might range between $30,000,000 and $35,000,000.

The Total Watson Road Commercial District Sales Retail sales in the District for 2004 were estimated at $340,000,000 including total Automobile and Gasoline Service store sales. Sales that were attributed to sales taxes for the City were based upon sales of $290,000,000. In 2009, assuming Mall and District redevelopment, total sales including automobiles and gasoline are forecast to increase to between $380,000,000 and $400,000,000. By 2014, sales are estimated to increase to between $450,000,000 and $470,000,000. This would give the District a market penetration of approximately 4.3 percent. With Entertainment potential added, the 2009 total District

Market Feasibility Study - Watson Road Commercial District Page 91

sales are estimated at between $400,000,000 and 415,000,000. By 2014, total District sales including Entertainment are estimated at between $475,000,000 and $500,000,000.

TABLE 6.12 Watson Road Commercial District Total Retail Expenditure Potential And Estimated Market Penetration By Trade Area Segment 2009 & 2014

Expenditure Potential Penetration Estimated Retail Sales Store Category 2009 2014 2009 2014 2009 2014

Market Feasibility Study - Watson Road Commercial District Page 92

able 6.12 (Continued) Watson Road Commercial District Total Retail Potential Expenditure Potential And Estimated Market Penetration By Trade Area Segment 2009, & 2014

Expenditure Potential Penetration Estimated Retail Sales Store Category 2009 2014 2009 2014 2009 2014

TOTAL $9,691,076,400 $10,824,848,400 4.2% 4.6% $411,109,600 $496,788,00

Source: Melaniphy & Associates, Inc. 200. Note: All millions are rounded to the nearest thousand.

We also suggest that new multi-family housing development be encouraged to improve the nearby residential population. While we have not conducted a housing market analysis, having evaluated the area demographics, it appears to us that the opportunity exists, especially for condominium housing for older residents of Crestwood who would like to sell their homes, but remain in the community.

Market Feasibility Study - Watson Road Commercial District Page 93

WATSON ROAD LAND USE NEEDS DISCUSSION

Beautification is an important part of Watson Road. However, while trees add beauty to an area, as they grow larger they obscure retailer’s signs and buildings. Much of retailing and eating out sales are impulse decisions which take place enroute to the mall. Thus, these obstructions are reducing potential sales. We recommend that future consideration should be given to both beauty and visibility. Retailers need to be seen; especially those that are more parasitical than generative.

Successfully redeveloping the Westfield Crestwood Center will have a positive impact upon the whole District and reduce the overall impact of the proposed Sunset Hills Redevelopment Project.

Specific Discussion of Watson Road Uses The following is a discussion of the various parts of the Watson Road Commercial District. Almost all can benefit from a stronger Mall, additional major retailers on Watson Road, and reduced vacancy.

Between Sturdy Drive and Crestwood Center Plaza The uses are occupied and nothing appears negative.

Market Feasibility Study - Watson Road Commercial District Page 94

Crestwood Bowl, Red Lobster, and Sweet Tomatoes are located on the south side of Watson Road across from Lindburg Cadillac. The restaurants all appear to be active at both lunch and dinner. Bowling is staging a comeback and should get better with the community’s aging. Their principal needs are more traffic on Watson Road.

Kohl’s operates a new store on the northwest corner of Watson Road and Sappington Road. Kohl’s activity is lower than normally the case. Improvement of the Mall will also assist Kohl’s.

Westfield Crestwood Center has been addressed separately

Schnucks, Gordmans, and the balance of the Vacant Big Box Store These uses simply need more customers. Gordmans is not doing as well as the Gordmans at Gravois Bluffs. Part of the problem is the older age of the resident population. Gordmans needs to be more focused on the needs of the Primary Trade Area population. With the Mall improvement, the space next to Gordmans should become leasable to another big box retailer.

South Side of Watson Road Between Pier One Imports to Coldwell Banker Real Estate Office This area is directly across from the Mall and appears to be competitive.

Shopping Center on the South Side of Watson Road Across From the Mall with a New Aldi (Formerly known as the Circuit City Center). The shopping center has some vacancies but appears to be finding tenants. Aldi’s activity should help with the leasing activity.

Market Feasibility Study - Watson Road Commercial District Page 95

Both Sides of Watson Road Between the Mall and Watson Industrial Park Road The north side of Watson Road is composed of offices and the Guitar Center, while the south side of Watson Road is offices and a bank. These appear adequate and appropriate.

The Watson Industrial Park The industrial park behind Westfield Crestwood Center has a significant elevation difference. The industrial area is primarily occupied but does have some vacancies. There are offices along the north side of Watson Road along the frontage near the industrial park. This is also true of the south side of Watson Road along with a bank and auto parts store.

In summary, the City of Crestwood is addressing the larger properties to bring about more retail attraction which will help the smaller properties. Improving the Mall will have the greatest positive impact upon the entire District. The City of Crestwood should strengthen the public/private partnership with Westfield Corporation and the other commercial owners in the District to improve tenancy, access, linkages, building facades, aesthetics, lighting, signage, gateways, and parking. The City must become aggressive, along with Westfield and other property owners with incentives to enhance the long term viability of the Watson Road Commercial District.

Some communities have encouraged residents to shop locally in their own communities. Some of the other retail marketing tools which others have tried include:

Shop Crestwood Program Frequent Shopper Programs Frequent Diner Programs Tenant Incubator Programs Sidewalk Sales

ADDENDA

REAL ESTATE COUNSELORS

SITE SELECTION SPECIALISTS

MARKET ANALYSTS

INVESTMENT ADVISORS

CONSULTANTS

INTRODUCTION ______

Melaniphy & Associates, Inc. is a firm of real estate counselors, site selection specialists, market analysts, retail consultants, and international investment advisors who practice their specialties throughout the world. Members of the firm, evaluate both problems and opportunities involving urban and suburban development and redevelopment. Since its beginning in 1971, the company has successfully advised thousands of national and international clients in both the private and public sectors regarding solutions to their individual needs.

In the private sector, the firm's activities include market and locational feasibility studies, retail store and restaurant development strategies, revenue potential analysis, market development strategies, locational criteria, prioritization, site selection, long range planning, redevelopment alternatives, and financial analysis. Clients include: major retailers, restaurants, supermarkets, fast food chains, shopping centers owners and developers, manufacturing companies, casino’s, convenience stores, family entertainment centers, leisure-time attractions, hotels and hotel developers, resorts, sports organizations, financial institutions, insurance companies, pension funds, foreign investment trusts, major and minor mixed use developers, residential developers, condominium converters, industrial park developers, congregate care facilities planners, office complexes, business parks, housing, hospital administrators, and many others. Additional programs include: demographic projections, highest and best use studies, tax impact programs, tax increment financing, rehabilitation programs, mixed-use development analyses, adaptive reuse, and merger and acquisition programs.

In the public sector, services include: neighborhood needs studies, resident shopping surveys, housing programs, downtown revitalization programs, industrial opportunity identification, job- oriented analyses, community assets, stadium and arena feasibility, convention and meeting facilities, demographic forecasts, festival marketplaces, waterfront developments, leisure attractions, airport spatial and expansion requirements, school facility re-use, data base analyses, criminal justice evaluation, and numerous other social and economic programs.

The staff consists of market analysts, site selection specialists, financial analysts, urbanologists, economists, marketing professionals, planners, real estate experts, and real estate professionals.

Melaniphy & Associates, Inc. has both the depth and breadth of experience to provide comprehensive and innovative consultation. The firm is often engaged with clientele throughout the United States, Canada, México, South America, Europe, the Middle East, and the Far East.

PHILOSOPHY ______

The philosophy of Melaniphy & Associates, Inc. is to analyze a client's problems and provide expert advice and recommendations. Also, the company's mission is to help the client implement the advice to ensure the attainment of his or her goals. We often work with our clients from concept planning to project completion to provide our client with maximum benefit of our experience. Our staff of experts come from a wide variety of disciplines which are financially and economically oriented; thus, our philosophy dictates that we look at each recommended action as though we were spending our own money. Thus, if we were hesitant to invest our money, then we certainly would not recommend risking our clients' resources on a marginal or uneconomic project. This entrepreneurial approach is critical to the consulting business and absolutely essential in providing sound economic investment advice.

Most consultants have never had to implement their own recommendations nor build the project as recommended. Members of our staff have. As a result, we have a profound respect for risk/resources and returns on invested capital.

ABOUT OUR FOUNDER AND PRESIDENT

John C. John C. Melaniphy has been a real estate counselor; restaurant, fast food and retail site selection specialist; and market analyst for over 40 years. During this time, he has been involved in almost every type of urban and suburban restaurant and retail development and redevelopment problem and opportunity.

He began his career with, at that time, the largest market analysis and site selection firm in the world and worked on all phases of the company's business over a 12 year span. The last three years, he was Senior Vice President of Real Estate Research Corporation, in charge of its commercial analyses and the operation of 13 world-wide offices.

In 1969, Mr. Melaniphy resigned from Real Estate Research Corporation to become Corporate Vice President of Kentucky Fried Chicken Corporation. His duties were to establish a real estate and construction division and assist in Financial Management. He was responsible for the selection and development of hundreds of KFC units, as well as commissaries, warehouses, office buildings, and other facilities.

Mr. Melaniphy became aware of the need in the corporate world for the unique background he possesses - a combination of both sound theory and practical application in acquiring and developing real estate, estimating sales and strategic market planning and prioritization. With the acquisition of KFC by Heublein, Mr. Melaniphy resigned to establish his own market-oriented consulting firm in 1971. He also assisted in packaging a $50,000,000 loan for corporate expansion. With the merger of company with Heublien, Melaniphy resigned to start Melaniphy & Associates, Inc.

Mr. Melaniphy has counseled thousands of companies throughout the world. Some of these include: Marshall Field & Company, J.C. Penney Company, Wal-Mart, Sears Roebuck & Company, Macy's, Lord & Taylor, Saks Fifth Avenue, Dayton Hudson (now Marshall Field’s), Neiman Marcus, Federated Department Stores, Target, Meijer’s, the Hudson Bay Company, El Puerto de Liverpool, Fabricas de Francia, International Multifoods, the Jewel Companies, Escada, Marshalls, Wickes Furniture, the Rouse Company, G.E. Capital, Heller Financial, Household Commercial, Aetna Life Insurance Company, Travelers Life Insurance Company, Hollywood Casinos, Huizenga Capital Management, The Simon Property Group, Birtcher Realty Advisors, Iowa Electric, Corrigan Properties, Gerald D. Hines Interests, Heitman Capital Management, CMC Heartland Partners, Avatar Properties, Forest City Enterprises, Zale Construction Company, Concord Development Amoco, Fondo Opcion, S.A., ICA Asociadas, FRISA Division Comercial, Mobile, Union, USX Realty, the Kuwait Bank, Marriott, Sheraton, Hilton, Embassy Suites, Budgetel Inns, Hampton Inns, , Fitness USA, and many others.

Some of the foodservice related clients include: Marriott Corporation, Lettuce Entertain You Enterprises, Schwartz Brothers, Bennigan's, Maggiano’s Little Italy, Sir Walter Raleigh, Shaw’s Crab House, P F Chang’s, Friendly's, Restaurant Associates, Arigato Steak House, Charlie Brown's, Big Bowl Asian Café, Columbia Restaurants, Max & Irma's, TGI Friday's, Shorty Small's, Pepe's, Superdawg, Border Cafe, County Line Barbecue, Steak and Stein, Pizza Hut, Pizza Delight, McDonald’s, Burger King, Hardee’s, Taco Bell, Arby’s, Church's, Popeye’s, Dunkin Donut, Baja Fresh, and numerous others individual restaurants and fast food operators.

Municipalities assisted include: Chicago, Minneapolis, Cleveland, San Antonio, Charlestown, Louisville, Milwaukee, Omaha, Seattle, Los Angeles, Boston, Atlanta, Dallas, Tampa, and numerous others.

His affiliations include: The Counselors of Real Estate, Urban Land Institute, International Council of Shopping Centers, Lambda Alpha International Real Estate Economics Fraternity, the National Restaurant Association, the National Retail Federation, Realty Club of Chicago, and many others.

He is the author of Commercial and Industrial Condominiums published by Urban Land Institute and Restaurant and Fast Food Site Selection published by John Wiley & Sons. This book has been rewritten and updated and will be republished in the summer of 2005. He is also a contributing author of the book entitled Shopping Centers and Other Properties also published by John Wiley & Sons. The author of over100 articles, Mr. Melaniphy, also presents seminars covering real estate, mixed-use development, site selection, store development strategies, shopping center opportunities, restaurant and fast food market analysis and site selection, and long range development planning. The seminars are presented throughout the world for associations and private companies. Mr. Melaniphy is an expert witness in all levels of the judicial system. Moreover, he is a much sought after speaker on a wide variety of subjects. For further information, please visit the company’s Website @ www.melaniphy.com where over 40 articles are posted, along with several newsletters.

MELANIPHY & ASSOCIATES, INC. 6333 NORTH MILWAUKEE AVENUE SUITE 106 CHICAGO, ILLINOIS 60646-3744 E-mail - [email protected] Fax: 773-774-0454 Phone: 773-467-1212

PRIVATE SECTOR ASSIGNMENTS

Our private sector clients represent a wide variety of business interests throughout the world with perhaps one common thread - their desire to make the wisest use of their resources.

Problem: The future retail and entertainment mix in Mall of America, the largest retail/dining/entertainment complex in the world.

Solution: An analysis of the market for retail and entertainment concepts and determine the future strategic mix for the mega-mall.

Client: Simon Property Group and Teachers Life Insurance Company

Problem: The market for a major commercial and residential development in Kuwait City, Kuwait.

Solution: Analysis of shopping habits and patterns in Kuwait, along with comprehensive market feasibility study.

Client: Coast Investment and Development Company-Kuwait

Problem: Market penetration and trade area delineation Easton Towne Center, Columbus, Ohio

Solution: Evaluation of customer distribution, trade area determination, computation of Personal Consumption Expenditures by major retail categories, allocation of Easton’s sales and determination of the Center’s market penetration by major retail category.

Client: Steiner + Associates, Inc.

Problem: Customer profiles, trade areas, and market penetration of major regional malls.

Solution: Interview program of mall customers, analysis of the data, determination of trade areas, and computation of market penetration level by retail groups.

Client: General Growth Company ______

PRIVATE SECTOR ASSIGNMENTS

Problem: Department store site selection and shopping center development strategy throughout México.

Solution: Market feasibility and financial studies in over 30 Méxican cities.

Client: El Puerto de Liverpool, S.A. de C.V. and Fabricas de Francia (México) ______

Problem: Market potential for the 1.2 million square foot Galleries Santa Fe.

Solution: Market feasibility study, rental rates, key money, and financial analysis.

Client: Galleries Santa Fe, S.A. Mexico City

Problem: Retail market potential for a major mall in Hermosillo, Sonora.

Solution: An analysis of the market for department stores and specialty retail shops.

Client: ICA Asociadas (México)

Problem: The potential for the proposed Mundo E entertainment mall in México, D.F.

Solution: Market feasibility, rental rates, key money analysis, and financial analysis.

Client: FRISA Division Comercial (México)

PRIVATE SECTOR ASSIGNMENTS

Problem: Alternative redevelopment for a defunct regional mall.

Solution: Analysis of alternative uses including housing, hotel, office, retail, and institutional opportunities.

Client: Heller Financial

Problem: Increasing vacancy in San Jacinto Mall in Baytown, Texas

Solution: Market analysis, customer profile, trade area resident survey, Identification of alternative solutions to improve occupancy and the financial ramifications.

Client: Aetna Life Insurance Company

Problem: Metropolitan area store placement and sizing to meet current and future demand in Chicago, Minneapolis, Pittsburgh, Dallas, Los Angeles and others

Solution: Strategic market evaluation and locational selection plan including repositioning and store sizing for maximum sales capture.

Client: Wickes Furniture

Problem: Market potential for proposed congregate care housing project, flex-tech industrial development, major regional shopping center, and hotel complex in Lincolnwood, Illinois (Chicago suburb).

Solution: Highest and best use analysis of mixed-use development opportunities (housing, industrial, and commercial) and phasing of the development.

Client: The Simon Property Group

PRIVATE SECTOR ASSIGNMENTS

Problem: Market potential for an atrium mall at 840 North Michigan Avenue in Chicago anchored by Plaza Escada.

Solution: Delineate trade area, evaluate demographic characteristics, assess competitive facilities, analyze pedestrian traffic patterns, estimate market potential and determine overall sales.

Client: The RREEF Funds

Problem: Actions necessary to update Hilldale Mall (300,000 square foot), an aging mall located in Madison, Wisconsin.

Solution: Interview program of mall customers, tenants, and area residents, analysis of the data, delineation of trade area, computation of market penetration levels by individual retail category, and recommendation of alternative redevelopment scenarios and their financial ramifications.

Client: Hilldale, Inc. (The University of Wisconsin Endowment Fund)

Problem: Improvement and Expansion possibilities for Bay Shore Mall, located in a Milwaukee, Wisconsin suburb.

Solution: Evaluation of the Mall's market penetration, the tenant and merchandising mix, customer profile, resident shoppers survey, recommended renovation and 400,000 square foot Lifestyle expansion of the facility

Client: Corrigan Properties, Inc.

Problem: Determine the overall market potential of the underperforming Paradise Mall (250,000 square feet) in West Bend, Wisconsin.

Solution: Evaluation of the current tenant mix, sales performance, vacancy problems, leasing strategy, site configuration, accessibility, and future sales potential of the mall. A comprehensive leasing strategy was developed to increase the overall occupancy of the mall.

Client: Household Commercial

PRIVATE SECTOR ASSIGNMENTS

Problem: Consolidation of operating and distribution facilities of a major oil company.

Solution: Determination of objectives, integration of operations, geographics best suited to the need, and the presentation of a consolidation plan.

Client: Atlantic Richfield Company

Problem: Development opportunities of 1,400 acre estate trust in the Chicago area (Danada).

Solution: Highest and best use analysis of mixed-use development opportunities and their phasing.

Client: Bank of America

Problem: Health Club development strategy program for Michigan, Illinoid, Tennessee, and California.

Solution: Application of customer profiles to major markets and strategy action determination.

Client: Fitness Management Corporation

Problem:

The potential market for multi-family residential, congregate care, life care, nursing home, day care, retirement housing, industrial, medical, office, retail, and recreational facilities on the subject property.

Solution: Highest and best use analysis of 120-acre Lake Michigan College property in Benton Harbor, Michigan.

Client: Lake Michigan College and Cornerstone Alliance

PRIVATE SECTOR ASSIGNMENTS

Problem: Development opportunities of a Goose Island site in Chicago, Illinois.

Solution: Highest and best use analysis of mixed-use development opportunities and its phasing.

Client: CMC Heartland Partners, Ltd.

Problem: Market potential for Windy Knoll Farm in Bull Valley, Illinois.

Solution: Market feasibility study addressing the development of a high quality housing subdivision with an Equestrian Club and championship golf course.

Client: Equity Developing Corp.

Problem: The economic impact of lights at Wrigley Field and the social and economic impact of the Chicago Cubs relocating to another city.

Solution: An analysis of the Chicago Cubs employment, taxes, revenue, economic impact, and acceptance to the city of Chicago. Also, alternative cities were analyzed.

Client: Chicago Cubs Organization ______

Problem: The location and demand for commercial and industrial land in Poinciana and Cape Coral, Florida.

Solution: Evaluation of the expansion of Walt Disney World and other entertainment venues and their impact upon growth and market demand for commercial and industrial land.

Client: Avatar Properties, Inc.

PRIVATE SECTOR ASSIGNMENTS

Problem: Location Selection, Customer Characteristics and Profiles for numerous Lettuce Entertain You restaurants such as Shaw's Crab House, Big Bowl Asian Cafe, Foodlife, Maggiano’s Little Italy, Shaw’s Seafood Grill, and Wildfire.

Solution: Interview customers, develop profiles, determine current market penetration, develop site selection criteria and select locations.

Client: Lettuce Entertain You Enterprises, Inc.

Problem: The market potential for a major industrial park development in Brookfield, Wisconsin (a Milwaukee Suburb).

Solution: Industrial Market Analysis to determine competitive location, probable land absorption, market indicated site size allocations, types of industrial uses, sale prices, marketing requirements, essential amenities, competitiveness, and financial implications.

Client: Village of Brookfield, Wisconsin

Problem: How to educate foodservice people about real estate and site selection.

Solution: Conduct over 50 seminars in conjunction with the National Restaurant Association on Restaurant Real Estate and Site Selection.

Client: National Restaurant Association

Problem: Improve the competency levels and communication of real estate and marketing staff.

Solution: Preparation of two-day seminar for all senior management executives and real estate personnel.

Client: CKE - Hardee's Food Systems, Inc.

PRIVATE SECTOR ASSIGNMENTS

Problem: Market opportunities and site selection opportunities for a family entertainment center

Solution: Market evaluation of the family entertainment market in the Chicago market area and selection of appropriate locations which could obtain zoning approval

Client: Enchanted Castle Systems, Inc.

Problem: Market and location selection for the Rock N' Roll Hall of Fame and Museum.

Solution: Establish market and site selection criteria, apply to numerous cities, determine city interest, evaluate locations and economics and select the appropriate city - Cleveland, Ohio

Client: Rock n' Roll Site Selection Committee

Problem: The desirability of having the Grammy Museum at Navy Pier in Chicago

Solution: An analysis and forecast of potential museum attendance, museum economics, construction costs, rental structure, and financial analysis of the market alternatives

Client: Grammy Museum Committee and the Metropolitan Pier and Exposition Authority

Problem: The market, impact, and economics of adding a 18 screen Cinema to the existing upscale Northbrook Court mall, along with restaurants and an expansion of the food court.

Solution: Evaluation of the cinema market, parking impacts, restaurant and food court demand, impact upon mall traffic and the economics of the expansion proposal

Client: Village of Northbrook, Illinois (Chicago suburb) and Grosvenor International

PUBLIC SECTOR ASSIGNMENTS

The staff of Melaniphy & Associates, Inc. has provided multi-faceted services to governments of all sizes and at all levels. In addition, the firm has carried out numerous studies for neighborhood organizations and business groups designed to improve the urban and suburban society.

Some of the examples of public sector activities are:

Problem: Identifying and analyzing the needs of every neighborhood in Chicago.

Our Service: Largest neighborhood needs strategy analysis conducted in the United States by a consulting firm.

Client: City of Chicago - Office of the Mayor

Problem: The market for a new major regional shopping complex in downtown Charleston, West Virginia.

Our Service: Downtown revitalization and store potential analysis.

Client: City of Charleston, West Virginia and Forest City Enterprises, Cleveland, Ohio

Problem: The feasibility of redeveloping the "Mercado," a Mexican Market, in downtown San Antonio, Texas.

Our Service: Market potential and financial feasibility study.

Client: The San Antonio Redevelopment Agency -San Antonio, Texas.

Problem: Development Possibilities of Cleveland's Lake Front at North Coast Harbor.

Our Service: Market feasibility study of recreational and commercial demand including two new museums.

Client: North Coast Harbor Development Corp.

PUBLIC SECTOR ASSIGNMENTS

Problem: The market for industrial park development within the City of Chicago.

Our Service: Industrial market analysis of potential for industrial development in Chicago.

Client: Economic Development Department - City of Chicago

Problem: United States Postal Service needed site selection and real estate services.

Our Service: Selection, analysis, appraisal, and real estate services for over 100 sites.

Client: United States Postal Service

Problem: Concession space needs and rental analysis at O'Hare International Airport.

Our Service: An analysis present and future commercial space requirements, rents and lease conditions at O'Hare for both current and future terminal buildings.

Client: Department of Aviation - City of Chicago

Problem: Railroad relocation and consolidation - Northern Indiana.

Solution: Economic, social and financial impact studies, including cost/benefit determinations.

Client: Federal Highway Administration

Problem: Lack of land fill sites and the alternative solutions to waste and garbage management.

Solution: Analysis of Chicago's garbage supply, recycle possibilities, and the market for by-products.

Client: Department of Public Works - City of Chicago

PUBLIC SECTOR ASSIGNMENTS

Problem: The impact of stadiums on downtown areas.

Solution: Survey of existing stadiums in or near downtown areas throughout the country.

Client: Department of Public Works - City of Chicago ______

Problem: Re-development possibilities for Navy Pier in Chicago.

Solution: Market feasibility analysis of commercial and recreational development possibilities.

Client: Metropolitan Pier and Exposition Authority - Chicago, Illinois

Problem: Reuse of an historic downtown railroad station.

Solution: Evaluate alternative possible uses and recommend the best economic and community use.

Client: Village of Hinsdale, Illinois

Problem: The amount of retail space and what types that should be permitted in a community.

Solution: Resident shopping habits and preferences survey, market feasibility analysis, and future supportable demand projections.

Client: City of St. Charles, Illinois

Problem: How to improve a community’s retail areas.

Solution: Market and development analysis of numerous commercial areas.

Client:

Arlington Heights, Illinois

OUR SERVICES

Shopping Center Feasibility

Shopping Center Redevelopment Studies

Retail Site Selection

Retail Store Development Strategy

Entertainment Feasibility Studies

Long Range Strategic Planning Analyses

Restaurant and Fast Food Site Selection Programs

Central Business District Revitalization Programs

Highest and Best Use Analyses

Industrial Relocation and Industrial Park Studies

Housing Market Analyses

Office Building Feasibility Analyses

Hotel and Resort Studies

Urban Redevelopment Analyses

Stadium, Health and Sports Facility Studies

Fiscal Impact and Tax Increment Financing Analyses

Planned Unit Development and Mixed-Use Programs

Investment Counseling and Strategy Programs

Parking Demand and Utilization Studies

Acquisition and Merger Assistance

Public Facilities Planning

Airport Location and Spatial Requirements

School Re-use Analyses

Corporate Real Estate Department Audits

Expert Testimony

REPRESENTATIVE LIST OF CLIENTS

MAJOR DEVELOPERS AND OWNERS MAJOR RETAILERS U.S.X. Realty Development Corp. Marshall Field & Company The Simon Property Group Saks Fifth Avenue The Rouse Company Sears, Roebuck & Company Upland Industries (Union Pacific RR) J.C. Penney Company Corrigan Properties, Inc. The May Company Merrill Lynch Realty Macy’s The RREEF Funds Marshalls/ T.J. Maxx Gerald D. Hines Interests The Jewel Companies Forest City Enterprises Meijer’s Superstores Mills Development Corporation Wal-Mart Birtcher Realty Advisors Federated Department Stores Tucker Properties Corporation Dayton Hudson Company CMC Heartland Partners Neiman Marcus The Harlan Group Wickes Furniture Red Seal Development Target Department Stores Aetna Life Insurance Company Teachers Insurance and Annuity Assoc. INTERNATIONAL RETAILERS Metropolitan Real Estate Co. Trammel Crow Company Escada Westfield El Puerto de Liverpool Fabricas de Francia CITIES Capitol Supermarkets New York, New York Chicago, Illinois FINANCIAL ORGANIZATIONS Milwaukee, Wisconsin Bank of America San Antonio, Texas First National Bank of Chicago Charleston, West Virginia Harris Trust & Savings Bank Cleveland, Ohio Northern Trust & Savings Bank Boston, Massachusetts Citibank Denver, Colorado Chase Manhattan Madison, Wisconsin G.E. Capital Corp. Lawrence, Kansas First National Bank of Ottawa, Illinois Olathe, Kansas Heller Financial Manhattan, Kansas Household Commercial Glen Ellyn, Illinois The RREEF Funds Oak Park, Illinois Huizenga Capital Management St. Charles, Illinois Park Ridge, Illinois RESTAURANTS/FAST FOOD Highland Park, Illinois Glenwood, Illinois Lettuce Entertain You Enterprises Brookfield, Wisconsin Schwartz Brothers Joliet, Illinois Pizza Delight Arby’s CITY OF CHICAGO PROJECTS Sir Walter Raleigh Inns Shoney’s Neighborhood Needs Analysis- Friendly’s All of Chicago’s Neighborhoods Brinker Analysis of over 25 Business Districts Restaurant Associates Industrial Park Development Analysis Burger King

CITY OF CHICAGO PROJECTS RESTAURANTS/FAST FOOD (Continued) (Continued)

Potential for a New Stadium Piccadilly Cafeterias Mayor's Special Projects Baja Fresh Waste Resource Recovery Analysis Steak and Stein O'Hare International Airport Expansion Brennan's Housing Development on Urban Pizza Delight - Canada Renewal Properties Marriott Corporation Objectives Analysis-Economic Shorty Small's Development Commission Popeye's Analysis of Property Disposition- Hardee's Chicago Board of Education Pizza Hut Navy Pier-Metropolitan Pier and Wendy's Exposition Authority SPECIAL MANUFACTURERS/PRODUCERS W.W. Grainger Ziebart Atlantic Richfield Company National Restaurant Association ITW International Council of TDW/Hercules Tires Shopping Centers International Multifoods Fitness Management Corp. IBM Catholic Archdiocese of Chicago Iowa Electric (IE) Industries Illinois Masonic Medical Center William C. Brown Group SBC Ameritech Booth Fisheries Chicago Cubs Campbell Soup Company U.S. Postal Service Griffith Laboratories Illinois Law Enforcement Commission Exxon Mobil Oil Santa Fe Railroad Texaco United Parcel Service Standard Oil Chicago Northwestern Railroad Dresser Industries Hammond Railroad Consolidation IBM Project

INTERNATIONAL INVESTMENT FUNDS STATES

Ivanhoe Investment Funds IL Dept. of Transportation Coast Investment & Development IL Capital Development Board Company-Kuwait IL Dept. of Commerce and Merrill Lynch Capital Markets Community Affairs Iowa Dept. of Transportation HOTELS IN Dept. of Transportation MI Dept. of Transportation Hyatt WI Dept. of Transportation Sheridan Holiday Inn WATERFRONT PROJECTS Marriott Embassy Suites Navy Pier-Chicago Budgetel Inns North Coast Harbor-Cleveland, Ohio Days Inn Miami Beach Marina Redevelopment

6333 N. Milwaukee Avenue Suite 106 Chicago, Illinois 60646-3744 Phone 773-467-1212 Facsimile 773-774-0454

[email protected]