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Retail Mixed Use Market Study Update 1 January 6, 2010 on existing plans to continue Iron Horse Trail as a pedestrian and bike path through Hacienda. • Retail proximity: Stores and restaurants should be located as close to one another as possible, unseparated by parking or unnecessary physical or visual obstacles. • Pedestrian - friendly landscaping: landscaping and street trees can be used to create a pedestrian- friendly retail environment, encouraging shoppers to linger and take full advantage of public space. • Wide sidewalks: sidewalks should be at least 15 feet wide to allow for the placement of street furniture and outdoor seating for restaurants and cafes. • The creation of "complete streets" leading to and incorporated with the retail development. Complete streets are designed to serve a range of users, including pedestrians, bikes, automobiles and people of all ages and abilities. A complete streets program would improve access to retail stores and the BART station for a range of Hacienda employees and residents. • Flexible mixed -use development: mixed use requirements for the site should allow for vertical or horizontal mixed use development, providing that design and circulation principles are employed to connect adjacent uses. RECOMMENDED RETAIL TENANTING MIX The tenant mix below includes several recommendations to capture market support from Hacienda employees, BART commuters and trade area residents. In determining these recommendations, Strategic Economics interviewed representatives from five small -to- mid -size grocers, a developer specializing in urban infill projects, and consulted extensively with Craig Semmelmeyer from Main Street Property Services, Inc.' Small Grocery /Take out /Restaurant /Catering 8,000 — 20,000 square feet A small grocery store with a significant prepared foods /catering component would be a strong candidate to anchor a mixed -use retail development in Hacienda. Such a business would serve three primary market segments: park employees, local residents and commuters. Hacienda employees would visit the store for breakfast or lunch, while residents and commuters might pick up dinner in the evenings. All market segments would likely utilize the grocery portion of the store, as a resource to pick up fresh ingredients from day to day. Hacienda is unlikely to attract a medium - format (35,000 — 45,000 square foot) grocer due to competition from nearby supermarkets, and a reluctance among grocers of this size to locate in newly constructed retail space. The grocers interviewed for this study report a preference for "back- filling" old stores which have been left behind as larger grocers expand in size, often to 50,000 — 70,000 square foot locations. These "abandoned" medium format grocery stores offer rents as low as 30 cents per square foot. This location is a good fit for a "small- basket" grocer — which relies on high sales margins from prepared, gourmet or specialty foods, rather than the low margins generated by weekly shopping trips to stock up on staples. A store of this size would be unable to compete with large grocers ' Strategic Economics also attempted to interview several pharmacy representatives, but received little response. Craig Semmelmeyer reports that the retail category of high-end, specialty pharmacy is currently retracting in Northern California. Elephant Pharmacy has closed, and Pharmaca has put expansion plans on hold indefinitely. Difficulties within the industry likely explain the reluctance of remaining pharmacies to speculate about future retail expansion. 61