411661 San Vicente Boulevard, Suite 306 Los Angeles, 90049 310.820.2680-p, 310.820.8341-f www.stanleyrhoffman.com

To: Laura Stetson, AICP, Principal, MIG Jose Rodriguez, Project Manager, MIG From: Stan Hoffman, President Date: July 15, 2016 Subject: Taxable Retail Sales and Retail Supply-Demand Analysis for Walnut SRHA Job # 1306

INTRODUCTION As part of the General Plan Update process, Stanley R. Hoffman Associates is analyzing the retail sales performance of shopping centers and retail establishments in Walnut. We are comparing the City’s retail sales performance with adjacent cities (Pomona, Diamond Bar, Covina, City of Industry, West Covina, San Dimas, and La Puente) in the competitive trade area, as shown in Figure 1, and compared to Los Angeles County. While the 60 freeway, the 10 freeway, and the 57 freeway all surround Walnut, the City is landlocked with no direct freeway access resulting in a lack of freeway accessibility and visibility. By comparison, all of the cities surrounding Walnut, except for La Puente, have direct access to the freeways and provide more competitive regional retail and big box retail locations.

The following sources were used to provide this taxable retail sales performance analysis: • California Board of Equalization for taxable sales data • California Department of Finance for demographic data • HdL Companies for average taxable sales per square foot performance measures

COMPARISON OF TAXABLE RETAIL SALES BETWEEN CITIES: 2008 AND 2013 Table 1 displays the population, total taxable retail sales, and taxable retail sales per capita among the neighboring jurisdictions compared to the City of Walnut from 2008 to 2013 in constant 2013 dollars – i.e., adjusted for inflation. In 2013, according to the Department of Finance (DOF), the largest neighboring city was Pomona at 151,211, and the smallest was the City of Industry at 438. Walnut was reported at 30,000.

In 2008, Walnut had per capita taxable retail sales of $4,410 that declined about 8.4 percent to $4,040 in 2013, as shown in Table 2. Similarly, per capita taxable retail sales for the combination of the adjacent cities decreased about 4.3 percent from $11,908 to $11,391 over Stanley R. Hoffman Associates, Inc.

July 15, 2016 Ms. Laura Stetson, MIG Taxable Retail Sales and Retail Supply-Demand Analysis for Walnut Page 2 of 25

this period. In contrast, taxable retail sales for Los Angeles County increased by about 2.3 percent.

As shown in Table 2, when you compare Walnut’s retail taxable sales per capita to its neighboring jurisdictions, it has the lowest ratio of all the cities with the closest being La Puente. La Puente, coincidentally, is also landlocked from freeway accessibility and visibility for its retail centers. As illustrated graphically in Figure 2, at $4,040 per capita taxable retail sales in 2013, Walnut is only 35.5 percent of the combined per capita taxable sales of the adjacent cities ($11,391) and only slightly more at 40.5 percent of the County’s per capita taxable sales ($9,984).

Excluding the City of Industry, Figure 3 compares each adjacent city’s and the county’s taxable retail sales per capita to the City of Walnut. The City of Covina had the highest taxable retail sales per capita from 2008 to 2013, while the City of Walnut had the lowest taxable retail sales per capita. The Cities of Walnut, Pomona, Diamond Bar, and Covina each saw a decrease in total taxable retail sales per capita during this time period, while the Cities of West Covina, San Dimas, La Puente, and Los Angeles County each saw slight increases in total taxable retail sales per capita.

What is also striking (as shown in Figure 4), is the per capita taxable retail sales ratio of about $2.9 million in 2008 for the City of Industry, and increasing to $3.5 million in 2013, which dwarfs the ratios of all the other cities in the study area. The other cities don’t even appear at this scale on the chart. This is because both the City of Industry’s population was estimated to be only 438 in 2013 by the DOF, and because it essentially monopolizes almost all the retail frontage along the north side of the 60 freeway from the 605 freeway on the west to the 57 freeway on the east, as was shown earlier in Figure 1.

The total aggregate taxable retail sales of about $1.53 million in 2013 for the City of Industry – with a relatively low population of about 438 - is about twenty-five percent (25%) more than the total aggregate taxable retail sales amount of about $1.22 million for West Covina. The City Stanley R. Hoffman Associates, Inc.

July 15, 2016 Ms. Laura Stetson, MIG Taxable Retail Sales and Retail Supply-Demand Analysis for Walnut Page 3 of 25

Figure 1 Walnut Sub-Regional Location Map Walnut General Plan Update Study

Source: Stanley R. Hoffman Associates, Inc. of West Covina has the next largest taxable retail sales total, with an estimated 2013 population of 107,442. Furthermore, a large portion of the taxable retail sales that are captured by the City of Industry is located within the regional retail and big box retail categories, which are two

(2) types of taxable retail sales that are severely lacking in Walnut. Stanley R. Hoffman Associates, Inc.

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Table 1 Population, Total Taxable Retail Sales, Taxable Retail Sales Per Capita: 2008 and 2013 City Of Walnut, Adjacent Cities, Los Angeles County (In Constant 2013 Dollars) 2008 2013

Total Taxable Total Taxable 1 1 Geography Population Retail Sales Per Capita Population Retail Sales Per Capita Walnut 29,305 $129,245 $4,410 30,000 $121,187 $4,040 Pomona 150,865 $908,306 $6,021 151,211 $781,599 $5,169 Diamond Bar 55,610 $282,638 $5,083 56,200 $266,403 $4,740 Covina 47,701 $651,123 $13,650 48,445 $600,954 $12,405 City of Industry 541 $1,576,183 $2,913,462 438 $1,527,696 $3,487,891 West Covina 106,426 $1,205,379 $11,326 107,442 $1,220,415 $11,359 San Dimas 33,789 $370,730 $10,972 33,745 $392,976 $11,645 La Puente 40,139 $187,362 $4,668 40,294 $196,458 $4,876 Adjacent Cities2 435,071 $5,180,851 $11,908 437,775 $4,986,503 $11,391 Los Angeles County 9,785,474 $95,477,737 $9,757 9,980,432 $99,641,174 $9,984

1. Total Taxable Retail Sales are in constant 2013 dollars. 2. Adjacent Cities are a combination of: Pomona, Diamond Bar, Covina, City of Industry, West Covina, San Dimas, and La Puente. Source: Stanley R. Hoffman Associates, Inc. California Board of Equalization California Department of Finance

able 2 Change in Taxable Retail Sales Per Capita: 2008 and 2013 City of Walnut, Adjacent Cities, Los Angeles County (In Constant 2013 Dollars)

Walnut Walnut % Change in Per as % of as % of Capita Amount Geography 2008 Other Areas 2013 Other Areas 2008-2013 Walnut $4,410 N/A $4,040 N/A -8.4% Pomona $6,021 73.3% $5,169 78.2% -14.1% Diamond Bar $5,083 86.8% $4,740 85.2% -6.7% Covina $13,650 32.3% $12,405 32.6% -9.1% City of Industry $2,913,462 0.2% $3,487,891 0.1% 19.7% West Covina $11,326 38.9% $11,359 35.6% 0.3% San Dimas $10,972 40.2% $11,645 34.7% 6.1% La Puente $4,668 94.5% $4,876 82.9% 4.5% Adjacent Cities1 $11,908 37.0% $11,391 35.5% -4.3% Los Angeles County $9,757 45.2% $9,984 40.5% 2.3%

1. Adjacent Cities are a combination of: Pomona, Diamond Bar, Covina, City of Industry, West Covina, San Dimas, and La Puente. Sources: Stanley R. Hoffman Associates, Inc. California State Board of Equalization Stanley R. Hoffman Associates, Inc.

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Figure 2 Taxable Retail Sales per Capita: 2008 and 2013 City of Walnut, Adjacent Cities (Including City of Industry), and Los Angeles County (In Constant 2013 Dollars)

14,000

$11,908 12,000 $11,391

$9,757 $9,984 10,000

8,000 2008 6,000 2013 $4,410 $4,040 4,000

2,000

0 Walnut Adjacent Cities Los Angeles County

Note: Adjacent Cities are a combination of Pomona, Diamond Bar, Covina, City of Industry, and La Puente.

Source: Stanley R. Hoffman Associates, Inc.

Stanley R. Hoffman Associates, Inc.

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Figure 3 Taxable Retail Sales per Capita: 2008 and 2013 City of Walnut, Adjacent Cities (Not Including City of Industry), and Los Angeles County (In Constant 2013 Dollars)

$16,000

$14,000 $13,650 $12,405 $11,359 $12,000 $11,645 $11,326 $10,972 $9,984 $10,000 $9,757

$8,000 2008 2013 $6,021 $6,000 $5,169 $5,083 $4,876 $4,740 $4,668 $4,410 $4,040 $4,000

$2,000

$0 Walnut Pomona Diamond Bar Covina West Covina San Dimas La Puente Los Angeles County

Source: Stanley R. Hoffman Associates, Inc.

Stanley R. Hoffman Associates, Inc.

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Figure 4 Taxable Retail Sales per Capita: 2008 and 2013 City of Walnut, Neighboring Cities (Including the City of Industry), Los Angeles County (In Constant 2013 Dollars)

4,000,000

$3,487,891 3,500,000

3,000,000 $2,913,462

2,500,000

2,000,000 2008 2013 1,500,000

1,000,000

500,000

0 Walnut Pomona Diamond Covina City of West San Dimas La Puente Los Bar Industry Covina Angeles County

Source: Stanley R. Hoffman Associates, Inc.

Stanley R. Hoffman Associates, Inc.

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TAXABLE RETAIL SALES LEAKAGE ANALYSIS Retail sales leakage analysis is a method to test the retail performance of a jurisdiction against its competitive market area. This has been prepared for Walnut on a per capita taxable retail sales basis compared to the overall per capita levels for the adjacent cities and for Los Angeles County. Where the level of per capita taxable retail sales for Walnut – by retail category - is equal to its comparable jurisdictions, then retail capture is said to be in balance; where the ratio of Walnut is greater than the other areas, then retail capture for that particular retail category is said to be competitively greater; and conversely, if the ratio is less than the comparable jurisdictions, then retail capture is at a deficit – or performing competitively less well than the other areas.

Figure 5 and Table 3 compare the City of Walnut’s taxable retail sales per capita by retail category in 2013 to the combined adjacent cities, as well as with Los Angeles County. The City has noticeable leakage in the category of Motor Vehicle and Parts Dealers, largely due to the lack of auto dealer sales, in comparison with other cities that have either large dealerships or popular auto malls.

As mentioned earlier, in the General Merchandise category, that includes department stores and big box retailers, Walnut has significant leakage at about 15.0 percent of the adjacent cities’ average and about 23.0 percent of the Los Angeles County average, as shown in Table 3. Also, in the Other Retail Category – that includes specialty retail stores that often cluster around General Merchandise stores and big box retailers – Walnut is also showing significant retail leakage. In the next category that tends to cluster around regional retail locations – Clothing and Clothing Accessories Stores – Walnut is showing sizable leakage at about 34.0 percent of the County’s average level, and less leakage, but still significant, at about 50.0 percent of the adjacent cities’ average.

The category of Home Furnishings and Appliance Stores is showing strong leakage at about 31.0 percent compared with the adjacent cities, but stronger capture on a per capita basis than the County average at about 131.0 percent – in this case the per capita average is higher than the Stanley R. Hoffman Associates, Inc.

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Los Angeles County average. In the categories of Building Material and Garden Equipment Supplies, the estimated retail taxable sales were so low that they were not reported for confidentiality reasons.

When it comes to local serving retail categories, such as Food and Beverage Stores and Food Services and Drinking Places – i.e., restaurants and fast food establishments - the City was doing markedly better. This is to be expected as generally households will not drive as far to patronize local serving establishments as they will for regional retail destinations.

As shown in Figure 5 and Table 3, for Food and Beverage Stores – that includes grocery and specialty food stores – the per capita average is virtually the same as the adjacent cities’ average at about 100.0 percent, and about 87.0 percent of the County average. Similarly for the Food Services and Drinking Places – that have a strong local serving market sales component – Walnut was about 94.0 percent of the adjacent cities’ average and about 86.0 percent of the County’s average.

Stanley R. Hoffman Associates, Inc.

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Figure 5 Taxable Retail Sales per Capita by Retail Category: 2013 City of Walnut, Adjacent Cities (Including City of Industry), Los Angeles County (In Constant 2013 Dollars)

$3,000 Walnut Adjacent Cities $2,500 Los Angeles County

$2,000

$1,500

$1,000

$500

$0 Motor Vehicle Home Bldg. Matrl. and Food and Gasoline Clothing and General Food Services Other Retail and Parts Furnishings and Garden Equip. Beverage Stations Clothing Merchandise and Drinking Group Dealers Appliance and Supplies Stores Accessories Stores Places Stores Stores

Note: Adjacent Cities are a combination of Pomona, Diamond Bar, Covina, City of Industry, and La Puente. Source: Stanley R. Hoffman Associates, Inc.

Stanley R. Hoffman Associates, Inc.

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Table 3 Comparison of Taxable Retail Sales by Retail Category: 2013 City of Walnut, Adjacent Cities, and Los Angeles County (In Constant 2013 Dollars) Walnut as % of Per Capita Taxable Sales Adjacent Cities & LAC

Los Adjacent Los Angeles Adjacent Angeles Retail Category Walnut Cities County Cities County Motor Vehicle and Parts Dealers $104 $2,398 $1,557 4.4% 6.7% Home Furnishings and Appliance Stores $336 $930 $257 36.1% 130.5% Bldg. Matrl. and Garden Equip. and Supplies N/A $590 $657 N/A N/A Food and Beverage Stores $528 $528 $606 100.1% 87.1% Gasoline Stations $551 $1,677 $1,384 32.9% 39.8% Clothing and Clothing Accessories Stores $337 $678 $995 49.8% 33.9% General Merchandise Stores $268 $1,802 $1,149 14.9% 23.3% Food Services and Drinking Places $1,503 $1,600 $1,752 94.0% 85.8% Other Retail Group $411 $1,188 $1,626 34.6% 25.3% Total Taxable Retail Sales per Capita $4,040 $11,391 $9,984

1. Adjacent Cities are a combination of: Pomona, Diamond Bar, Covina, City of Industry, West Covina, San Dimas, and La Puente.

Source: Stanley R. Hoffman Associates, Inc. California Board of Equalization

Stanley R. Hoffman Associates, Inc.

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RETAIL SUPPLY AND DEMAND ANALYSIS Methodology. The retail supply and demand analysis is based on Esri’s 2014 Retail MarketPlace database. The database includes the latest market statistics for Retail Trade and Food Services and Drinking Places (the retail market). The dollar volume estimates, which represent total retail supply and demand conditions for the past year, are presented in the North American Industry Classification System (NAICS) for the Retail Trade sector, NAICS 44–45, as well as the four industry groups within the Food Services and Drinking Places subsector, NAICS 722.

As presented in subsequent tables, Esri enables the comparison of supply and demand within selected geographic areas through the use of one measure, the Leakage/Surplus Factor, also referred to as the “Retail Gap.” The Leakage, or Retail Gap, analysis measures the balance between the dollar volume of supply (i.e., retail sales) generated by retail industry compared with the dollar volume of demand (i.e., spending by households, or retail potential) within the same retail industry categories.

Retail Leakage in an area represents a condition where a market's supply is less than the demand. That is, retailers outside the market area are fulfilling the demand for retail products; therefore, demand is leaking out of the trade area. Surplus in an area represents a condition where supply exceeds the area's demand. Retailers are attracting shoppers that reside outside the trade area, so the surplus is captured in the local retail market supply.

Walnut’s Regional Serving Supply and Demand Analysis. Using Esri’s Supply-Demand estimates for 2014, the retail leakage, or retail gap, is shown in dollar volumes for Walnut in Table 4 by retail categories. As shown, there is an estimated retail gap in all categories except Home Furnishings and Appliance Stores. The retail gap for these retailers generally associated with regional retail categories - General Merchandise ($64.0 million), Clothing and Clothing Accessories ($26.9 million) and the Other Retail Group ($44.0 million) – totals about $136.4 million. This constitutes an estimated 45.0 percent of the total estimated retail gap of $303.9 million. Stanley R. Hoffman Associates, Inc.

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The primary reason for this large retail gap is illustrated in Figure 6 which plots the locations of General Merchandise and Clothing Stores with 5 or more employees within a 1-mile, 3-mile, and 5-mile ring. As shown, Walnut has limited retail stores compared with the competition from these types of stores and malls within the City of Industry directly on its border and along the 60 freeway, such as the Mall. Also, competition to the north comes from such malls such as the Eastland Center in West Covina.

Walnut’s Local Serving Supply and Demand Analysis. Again, using Esri’s Supply-Demand estimates for 2014, the retail leakage, or retail gap, for categories that have a more local serving focus – i.e., Food and Beverage Stores, including grocery stores, and Food Services and Drinking Places, including restaurants and fast food - is shown in dollar volumes for Walnut in Table 4. As shown, the retail gap for these retailers – Food and Beverage Stores ($43.8 million) and Food Services and Drinking Places ($23.4 million) – totals about $67.2 million. This constitutes an estimated 22.0 percent of the total estimated retail gap of $303.9 million.

As illustrated in Figure 7, these types of stores, with 5 or more employees, are plotted within a 1-mile, 3-mile, and 5-mile ring. The retail gap is not as large in Walnut for retailers with a more local serving focus, because customers generally do not travel as far from their residential location – with exceptions for some specialty grocery stores that have a unique product mix. Walnut has two large grocery stores – Von’s and Stater Bros. and smaller markets and convenience stores, as well as a mix of restaurants and fast food stores. While there is competition from these types of stores within the 5-mile ring, particularly in the City of Industry along the 60 freeway, future retail opportunities are also considered in these categories.

3- Mile Ring Supply and Demand Analysis. For comparison, Table 5 presents a Retail Gap analysis for a 3-mile ring centered from the Lemon Creek Village in Walnut at the intersection of Lemon Avenue and La Puente Road. As shown in both Figures 6 and 7, the 3-mile ring encompasses most of Walnut and portions of the adjacent residential areas on its borders, plus much of the commercial areas within the City of Industry on Walnut’s southern border. Stanley R. Hoffman Associates, Inc.

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As shown in Table 5, the total Retail Gap is estimated at a negative $472.7 million, meaning that the estimated Supply (as measured by retail sales) exceeds the estimated Demand (as measured by potential household retail expenditures). Essentially, these stores within the 3- mile ring have to draw much of their retail sales from beyond the households only within the 3- mile ring. Many of these stores and mall locations have freeway access and visibility so they do draw from a larger trade area.

What this suggests is that Walnut cannot compete directly with the retailers that have these advantages unless they can offer something unique that keeps a greater proportion of local household spending in Walnut, draws in visitors that desire a less traditional retail or dining experience, or captures more of the student, faculty and staff commuters to Mount San Antonio College. Mount San Antonio College employs about 3,300 people according to the City of Walnut Finance Department as of June 30, 2014, which at the time had an estimated 44 percent share of total employment in the city, as shown in Appendix C, Table C-1. Additionally, according to the California Community Chancellor’s Office Student Enrollment Status Report for the Fiscal Period 2014-2015, the College had a student enrollment of about 57,300 students.

Distribution of Selected Retail Employment Categories by Cities and Geographic Areas. The estimated employment distribution of key retail categories for Walnut - Food & Beverage Stores, Clothing and Clothing Accessories Stores, General Merchandise Stores and Food Services and Drinking Places – are presented in Table 6. These employment estimates are derived from the InfoUSA-SCAG 2011 database for a 1-mile, 1-3-mile, and a 3-5-mile ring from the intersection of Lemon Avenue and La Puente Road in Walnut. The employment data is also shown for Walnut and selected neighboring cities and the surrounding unincorporated areas.

As shown in Table 6, the estimated retail employment within the 5-mile ring is 18,893. Walnut, at an estimated 1,162 retail employment, constitutes only about 6.2 percent of this total. The City of Industry at 5,957 retail employment constitutes the largest share at 31.5 percent. The concentration of these selected retail categories in the City of Industry is similar to the earlier finding of corresponding retail taxable sales being concentrated in this city, as well. Stanley R. Hoffman Associates, Inc.

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From another perspective, almost two-thirds (64.4 percent) of the retail employment for the selected categories is concentrated in the 3-5-mile portion of the 5-mile ring which has more freeway access and visibility. Employment in Walnut is only within the 1-mile ring (309) and the 1-3-mile portion (853). Stanley R. Hoffman Associates, Inc.

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Table 4 2015 Retail Leakage for the City of Walnut Walnut General Plan Update

Retail Category NAICS Code Demand Supply Retail Gap

Motor Vehicle and Parts Dealers 441 $113,854,742 $9,250,184 $104,604,558 Home Furnishings and Appliance Stores 442-443 $47,369,624 $82,292,931 -$34,923,307 Bldg. Matrl. and Garden Equip. and Supplies 444 $30,740,532 $10,373,248 $20,367,284 Food and Beverage Stores 445 $97,633,267 $53,869,144 $43,764,123 Gasoline Stations 447 $29,161,571 $16,755,883 $12,405,688 Clothing and Clothing Accessories Stores 448 $36,478,766 $9,627,733 $26,851,033 General Merchandise Stores 452 $79,599,585 $16,109,876 $63,489,709 Food Services and Drinking Places 722 $57,800,470 $34,392,428 $23,408,042 Other Retail Group 446,451,453 $77,478,805 $33,502,828 $43,975,977 Total $570,117,362 $266,174,255 $303,943,107

Source: Stanley R. Hoffman Associates Esri and Infogroup

Table 5 2015 Retail Leakage within a 3 mile radius of the City of Walnut Walnut General Plan Update

Retail Category NAICS Code Demand Supply Retail Gap Motor Vehicle and Parts Dealers 441 $310,114,636 $337,294,400 -$27,179,764 Home Furnishings and Appliance Stores 442-443 $129,326,983 $297,151,882 -$167,824,899 Bldg. Matrl. and Garden Equip. and Supplies 444 $81,518,759 $54,464,530 $27,054,229 Food and Beverage Stores 445 $274,215,848 $209,499,814 $64,716,034 Gasoline Stations 447 $81,451,745 $81,503,354 -$51,609 Clothing and Clothing Accessories Stores 448 $101,258,787 $349,660,037 -$248,401,250 General Merchandise Stores 452 $221,243,075 $337,252,199 -$116,009,124 Food Services and Drinking Places 722 $159,628,709 $183,093,776 -$23,465,067 Other Retail Group 446,451,453 $212,380,209 $193,894,125 $18,486,084 Total $1,571,138,751 $2,043,814,117 -$472,675,366 Source: Stanley R. Hoffman Associates Esri and Infogroup

Stanley R. Hoffman Associates, Inc.

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Figure 6 Distribution of General Merchandise and Clothing Stores Within 1-, 3-, and 5-mile Rings from Walnut

Source: Stanley R. Hoffman Associates, Inc. Info-USA-SCAG Business Data 2011 ESRI

Stanley R. Hoffman Associates, Inc.

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Figure 7 Distribution of Food & Beverage Stores and Eating & Drinking Places Within 1, 3, and 5-mile Rings from Walnut

Source: Stanley R. Hoffman Associates, Inc. Info-USA-SCAG Business Data 2011 ESRI

Stanley R. Hoffman Associates, Inc.

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Table 6 Distribution of Retail & Food Employment Categories by Selected Cities Within 1-, 3-, and 5-mile Rings from Walnut

RING NAICS 3- Diamond La San West GRAND MILES Digit Description Covina Bar Industry Puente Pomona Dimas Unincorp. Walnut Covina TOTAL % Dist.

1 MILE 445 Food & Beverage Stores 114 114 448 Clothing Stores 6 2 55 63 452 General Merchandise 19 19 722 Food Services & Drinking 121 121 Subtotal 0 0 6 0 0 0 2 309 0 317 1.7%

1- 3 MILES 445 Food & Beverage Stores 75 496 3 327 189 128 1,218 448 Clothing Stores 20 1,027 11 74 3 14 1,149 452 General Merchandise 10 127 58 77 177 449 722 Food Services & Drinking 682 619 10 1,164 584 526 3,585 Subtotal 0 787 2,269 0 24 0 1,623 853 845 6,401 33.9%

3-5 MILES 445 Food & Beverage Stores 110 349 441 67 12 54 375 491 1,899 448 Clothing Stores 54 29 452 59 6 165 133 898 452 General Merchandise 14 112 952 46 4 259 450 1,837 722 Food Services & Drinking 942 751 1,837 440 266 61 1,088 2,156 7,541 Subtotal 1,120 1,241 3,682 612 288 115 1,887 0 3,230 12,175 64.4%

TOTAL MARKET AREA 445 Food & Beverage Stores 110 424 937 67 15 54 702 303 619 3,231 448 Clothing Stores 54 49 1,485 59 17 0 241 58 147 2,110 452 General Merchandise 14 122 1,079 46 4 0 317 96 627 2,305 722 Food Services & Drinking 942 1,433 2,456 440 276 61 2,252 705 2,682 11,247 GRAND TOTAL 1,120 2,028 5,957 612 312 115 3,512 1,162 4,075 18,893 100.0% Percentage Distribution 5.9% 10.7% 31.5% 3.2% 1.7% 0.6% 18.6% 6.2% 21.6% 100.0%

Source: Stanley R. Hoffman Associates, Inc. InfoUSA-SCAG 2011

Stanley R. Hoffman Associates, Inc.

July 15, 2016 Ms. Laura Stetson, MIG Taxable Retail Sales and Retail Supply-Demand Analysis for Walnut Page 20 of 25

FUTURE RETAIL AND FOOD SERVICE OPPORTUNITIES As mentioned earlier, Walnut cannot compete directly with the retailers that have the advantages of freeway accessibility and visibility unless they can offer something unique that keeps a greater proportion of local household spending in Walnut, draws in visitors that desire a unique retail or dining experience, or captures more of the student, faculty and staff commuters to Mount San Antonio College. The retail gap analysis as presented in Table 7 is discussed for each of the retail categories below.

Motor Vehicle and Parts Dealers. Except for smaller, motor vehicle parts stores, it is not likely that Walnut will attract new motor vehicle dealers to reduce the large retail gap in this category.

Home Furnishings and Appliance Stores. This is the only retail category that shows an excess of retail supply versus demand; however, expansion of this category is considered limited.

Building Materials and Garden Equip and Supplies. While this category shows a retail gap, it will be hard to compete with the larger, better located Big-Box type building materials stores.

Food and Beverage Stores. It is felt that the retail gap for these types of stores presents an opportunity for Walnut; while Walnut has two large format grocery stores – Von’s and Stater Bros. - and the Albertson’s Market recently closed – there should be opportunities for smaller format, unique specialty markets that also offer an array of prepared foods and outdoor dining.

Gasoline. Four gasoline stations were identified in shopping centers located throughout Walnut, with one located just on its southern border in the City of Industry’s Marketplace at the SW corner of Valley Boulevard and Grand Avenue. Given the relatively small estimated retail gap, it is not likely that there is strong demand for an additional gasoline stations.

Clothing and Clothing Accessories Stores. While TJ Maxx, a 30,340 square-foot apparel store is located in The Village Shopping Center, these types of stores like to cluster around regional locations where most comparison shopping occurs. There may be additional opportunity for apparel retailers, but probably of a smaller specialty, more boutique style orientation. Stanley R. Hoffman Associates, Inc.

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General Merchandise Stores. As has been mentioned earlier in this study, the larger format general merchandise stores will generally cluster around higher accessibility, higher visibility locations; with the Kohl’s department store just on Walnut’s southern border in the City of Industry’s Marketplace East, it is not likely that a large format general merchandise store will locate in Walnut; however, there may be an opportunity for a smaller sized general merchandise store looking for a unique location in a relatively higher income community.

Food Services and Drinking Places. It was observed by visiting each of the shopping center and freestanding retail locations in Walnut, that the array of dining opportunities seemed limited for fine dining, family style restaurants and dinning/coffee shop style establishments. These types of food service establishments can cater not only to the local households, but also to student, faculty and staff commuters to Mount San Antonio College; the Mount San Antonio Center directly across from the College at the intersection of Grand Avenue and Amar Road had an unusually high level of vacancy for a center so well situated in relationship to the College.

This center may benefit from casual dining and coffee shop tenants that provide an environment that is inviting for both residents and students to gather for work purposes or personal enjoyment; it would likely require some redesign of the various, smaller tenants to create larger spaces, including outdoor dining areas. There may also be opportunities to attract other retail and service tenants that cater to student and university needs, as well as potential public investment in landscaping and signage along the major arterials fronting the center.

Other Retail Group. The Other Retail Group – also referred to as Specialty Retail – can feature a range of smaller, specialized stores that could fit within both existing shopping centers as well as future retail developments currently being contemplated in Walnut. The City should continue ongoing marketing efforts with local developers and attending conventions and trade shows, such as ICSC – the International Council of Shopping Centers, in order for City staff to assist their local shopping center developers in attracting a preferred mix of tenants.

Stanley R. Hoffman Associates, Inc.

July 15, 2016 Ms. Laura Stetson, MIG Taxable Retail Sales and Retail Supply-Demand Analysis for Walnut Page 22 of 25

Table 7 Retail Leakage Gap for the City of Walnut Walnut General Plan Update

Retail Category NAICS Code Retail Gap Motor Vehicle and Parts Dealers 441 $104,604,558 Home Furnishings and Appliance Stores 442-443 -$34,923,307 Bldg. Matrl. and Garden Equip. and Supplies 444 $20,367,284 Food and Beverage Stores 445 $43,764,123 Gasoline Stations 447 $12,405,688 Clothing and Clothing Accessories Stores 448 $26,851,033 General Merchandise Stores 452 $63,489,709 Food Services and Drinking Places 722 $23,408,042 Other Retail Group 446,451,453 $43,975,977 Total $303,943,107

Source: Stanley R. Hoffman Associates Esri and Infogroup

Stanley R. Hoffman Associates, Inc.

July 15, 2016 Ms. Laura Stetson, MIG Taxable Retail Sales and Retail Supply-Demand Analysis for Walnut Page 23 of 25

Appendix A

Table A-1 displays the demographic and household income information for the City of Walnut compared with these same statistics for the 1-, 3-, and 5- Mile radius from the intersection in Walnut at Lemon Avenue and La Puente Boulevard. While Walnut’s population and households are shown to decrease as a percent of the 3-mile and 5-mile rings, conversely, Walnut’s median disposable income of $82,412 is relatively higher than at the 3-Mile ring ($59,114) and the 5- Mile ring ($58,445). The 1-Mile ring covers about 50 percent of the population and households in Walnut.

Table A-1 Walnut Demographic and Household Income Comparison: 2015 Walnut General Plan Update

Ratio of Ratio of Ratio of Walnut to Walnut to Walnut to City of 1- Mile 1-Mile 3- Mile 3-Mile 5- Mile 5-Mile Demographic Walnut Radius Radius Radius Radius Radius Radius

Population 29,658 14,097 2.10 113,996 0.26 327,651 0.09 Households 8,662 4,038 2.15 32,656 0.27 94,303 0.09 Median Disposable Income $82,412 $77,099 1.07 $59,114 1.39 $58,445 1.41 Per Capita Income $38,554 $33,020 1.17 $27,324 1.41 $27,252 1.41

Source: Stanley R. Hoffman Associates Esri and Infogroup

Stanley R. Hoffman Associates, Inc.

July 15, 2016 Ms. Laura Stetson, MIG Taxable Retail Sales and Retail Supply-Demand Analysis for Walnut Page 24 of 25

Appendix B Table B-1 displays the total Taxable Retail Sales, Taxable Sales from All Other Outlets, and Total Taxable Sales for the City of Walnut compared with selected Adjacent Cities and Los Angeles County. For the City of Walnut, about 28.1 percent of the City’s total taxable sales are derived from other outlets, which is comparable with Los Angeles County (28.9 percent) and the combined Adjacent Cities (28.7 percent). The City of Industry has the highest proportion of taxable sales from All Other Outlets as a percent of Total Taxable Sales at 43.9 percent. Taxable sales from All Other Outlets represents those sales from non-retail store establishments and business-to-business taxable sales.

Table B-1 Total Taxable Retail Sales and All Other Outlets: 2013 Walnut General Plan Update

All Other Taxable All Other Total Taxable Outlets as % Geography Retail Sales Outlets Sales of Total

Walnut $121,187 $47,288 $168,475 28.1% Pomona $781,599 $457,410 $1,239,009 36.9% Diamond Bar $266,403 $49,050 $315,454 15.5% Covina $600,954 $75,460 $676,414 11.2% City of Industry $1,527,696 $1,197,380 $2,725,077 43.9% West Covina $1,220,415 $114,173 $1,334,588 8.6% San Dimas $392,976 $96,137 $489,112 19.7% La Puente $196,458 $18,876 $215,334 8.8% Adjacent Cities1 $4,986,503 $2,008,486 $6,994,988 28.7% Los Angeles County $99,641,174 $40,438,534 $140,079,708 28.9%

1. Adjacent Cities are a combination of: Pomona, Diamond Bar, Covina, City of Industry, West Covina, San Dimas, and La Puente.

Source: Stanley R. Hoffman Associates, Inc. California Board of Equalization

Stanley R. Hoffman Associates, Inc.

July 15, 2016 Ms. Laura Stetson, MIG Taxable Retail Sales and Retail Supply-Demand Analysis for Walnut Page 25 of 25

Appendix C Table C-1 displays the City of Walnut’s principal employers as of June 30th, 2014, according to the City of Walnut’s Finance Department. Mount San Antonio College had the largest employment share at 44 percent (3,273 employees). No other employer had a share higher than 2 percent.

Table C-1 City of Walnut Principal Employers: 2014 Walnut General Plan Update

Number of Percent of Employer Employees Employment Product/Services

Mount San Antonio College 3,273 44% Community College

Rosin Photocopy 130 2% Photocopy Manufacturer Nina's Mexican Foods, Inc. 129 2% Manufacturer Edro Engineering Company, Inc. 96 1% Manufacture Mold Bases Stater Brothers 75 1% Grocery Store Fairway Injection Molding System 67 1% Manufacture Mold Bases Vons #2167 64 1% Grocery Store McDonalds 61 1% Fast-Food Applebee's Neighborhood Grill 58 1% Restaurant TJ Maxx #682 51 1% Retailer of Apparel

Source: City of Walnut Finance Department As of June 30, 2014