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Retail Mixed Use Market Study Update 1 January 6, 2010 Existing Retail Supply Summary The market for local- serving strip and large format retail space serving Hacienda's Primary Trade Area has withstood the general recent economic downturn better than many other areas, likely due to pent -up demand from the considerable household growth in greater Dublin since 2000. In particular, neighborhood centers anchored by grocery stores have maintained low vacancy and lease rates in keeping with the age of the property. Neighborhood centers not anchored by groceries have fared worse, with vacancy rates as high as 40 %. As shown in the previous Retail Demand section, there is currently significant unmet demand for groceries in the Primary Trade Area and centers with groceries therefore benefit from a larger customer base than is typical. Community retail centers such as Metro 580 in Hacienda and Rose Pavilion near the park draw customers locally and from the greater Tri- Valley region with a variety of mid - market and discount- oriented large format stores. Those community centers with excellent freeway access like Metro 580 and Pleasanton Square are performing well, while Rose Pavilion has historically had higher vacancy rates due in part to its indirect access from Interstate 580. Planned new Dublin retail (profiled in the following section) also adjacent to I -580, may impact the ongoing competitiveness of Pleasanton community retail centers as they continue to age. Newer centers with more contemporary formats and lifestyle amenities that create a shopping experience, including the Shops at Waterford Place and Hacienda Crossings, are performing strongly, with rents over $3.00 triple net per square foot and vacancies of 3 percent or less. The one exception is the Tralee mixed use center which, although new and just leasing up, nonetheless had more significant vacancy than anticipated at the time of research. As discussed under Case Studies Lessons Learned, pg 55, the project has design features that limit its appeal and point to the importance of focusing on the retail space in its own right, rather than subsuming its design to that of the other uses included in the project. Customers with the educational and income characteristics of Hacienda's Primary Trade Area households have increasingly come to expect and pay for enhanced shopping experiences and specialty goods, even for daily and weekly needs shopping, and despite the current recession. There are currently only a few newer - generation mixed use or lifestyle retail formats centers in the area meeting that demand. Since many retailers have rigorous standards for their stores with respect to both design and co- tenants, the lack of more contemporary retail formats precludes many prospective restaurants and retailers from locating in the area. Local pipeline supply, discussed next, is responding to local customer demand for higher end shopping opportunities in environments that offer the shopper more than plentiful parking. Pipeline Supply of Retail Major planned projects in Dublin and Pleasanton that include retail and would serve Hacienda's Primary Trade Area are shown on Map C and detailed in Table 14. Pipeline projects range from mixed use projects that are primarily other uses, to expansion of Stoneridge Mall and existing large format centers, to the creation of whole new retail centers, including most prominently the Green at Park Place Retail Center. The vast majority of new retail is proposed in Dublin along Dublin Boulevard, near 1 -580 and following on the heels of the rapid residential growth in the city. These projects are in various stages of proposal, review and approval; their status as of November, 2009 is noted in Table 14. Those projects of most relevance to retail at Hacienda are discussed below. 39