HomeMy WebLinkAboutSA_2015-05-12_Agenda PacketSPECIAL MEETING
CITY OF ATASCADERO CITY COUNCIL
IN THE CAPACITY OF
SUCCESSOR AGENCY TO THE
COMMUNITY REDEVELOPMENT
AGENCY OF ATASCADERO FOR
REDEVELOPMENT AND HOUSING
PURPOSES1
AGENDA
Tuesday, May 12, 2015
5:00 PM
City Hall Council Chambers, 4th floor
6500 Palma Avenue
Atascadero, California
(Enter from Lewis Avenue)
REGULAR SESSION – CALL TO ORDER:
ROLL CALL: Mayor O’Malley
Mayor Pro Tem Moreno
Council Member Fonzi
Council Member Kelley
Council Member Sturtevant
APPROVAL OF AGENDA: Roll Call
1 On January 10, 2012, the Atascadero City Council adopted Resolution No. 2012-002, electing to serve as the
successor to the Community Redevelopment Agency of Atascadero for redevelopment purposes, and also elected to
retain the housing assets and functions previously performed by the Community Redevelopment Agency of
Atascadero.
A. CONSENT CALENDAR:
1. Successor Agency Draft Action Minutes – February 24, 2015
Recommendation: Council in the capacity of the Successor Agency to the
Community Redevelopment Agency of Atascadero approve the Successor
Agency Draft Action Minutes of February 24, 2015. [City Clerk]
COMMUNITY FORUM: (This portion of the meeting is reserved for persons wanting to
address the Board on any matter not on this agenda and over which the Board has
jurisdiction. Speakers are limited to three minutes. Please state your name and
address for the record before making your presentation. The Board may take action to
direct the staff to place a matter of business on a future agenda. A maximum of 30
minutes will be allowed for Community Forum, unless changed by the Board.)
B. PUBLIC HEARINGS: None
C. MANAGEMENT REPORTS:
1. Approval of Property Disposition and Marketing Plan for the Creekside
Building
Fiscal Impact: The costs of hiring a broker are included in costs of real
property disposal on the ROPS 14-15B.
Recommendation: Successor Agency Board adopt the Draft Resolution,
approving the Property Disposition and Marketing Plan for the Creekside
Building Located at 6907 El Camino Real, Atascadero. [Community
Development]
BOARD ANNOUNCEMENTS AND REPORTS: (On their own initiative, the Board
Members may make a brief announcement or a brief report on their own activities.
Board Members may ask a question for clarification, make a referral to staff or take
action to have staff place a matter of business on a future agenda. The Board may take
action on items listed on the Agenda.)
D. ADJOURN TO CITY COUNCIL REGULAR SESSION
ITEM NUMBER: SA A-1
DATE: 05/12/15
Atascadero Successor Agency
February 24, 2015
Page 1 of 3
SPECIAL MEETING
CITY OF ATASCADERO CITY COUNCIL
IN THE CAPACITY OF
SUCCESSOR AGENCY TO THE
COMMUNITY REDEVELOPMENT
AGENCY OF ATASCADERO FOR
REDEVELOPMENT AND HOUSING
PURPOSES1
DRAFT MINUTES
Tuesday, February 24, 2015
(Immediately following the City Council Regular Session)
City Hall Council Chambers, 4th floor
6500 Palma Avenue
Atascadero, California
(Enter from Lewis Avenue)
REGULAR SESSION – CALL TO ORDER:
Mayor O’Malley called the meeting to order at 7:18 p.m.
ROLL CALL:
Present: Council Members Kelley, Fonzi, Sturtevant, Mayor Pro Tem
Moreno, and Mayor O’Malley
Absent: None
1 On January 10, 2012, the Atascadero City Council adopted Resolution No. 2012-002, electing to serve as the
successor to the Community Redevelopment Agency of Atascadero for redevelopment purposes, and also elected to
retain the housing assets and functions previously performed by the Commu nity Redevelopment Agency of
Atascadero.
ITEM NUMBER: SA A-1
DATE: 05/12/15
Atascadero Successor Agency
February 24, 2015
Page 2 of 3
Others Present: City Clerk / Deputy City Manager Marcia McClure Torgerson
Staff Present: City Manager Rachelle Rickard, Administrative Services Director
Jeri Rangel, Interim Community Development Director Bobby
Lewis, Public Works Director Nick DeBar, Police Chief Jerel Haley,
Fire Chief Kurt Stone, and City Attorney Brian Pierik.
APPROVAL OF AGENDA:
MOTION: By Council Member Sturtevant and seconded by Council
Member Fonzi to approve the agenda.
Motion passed 5:0 by a roll-call vote.
A. CONSENT CALENDAR:
1. Successor Agency Draft Action Minutes – September 9, 2014
Recommendation: Council in the capacity of the Successor Agency to the
Community Redevelopment Agency of Atascadero approve the Successor
Agency Draft Action Minutes of September 9, 2014. [City Clerk]
2. Successor Agency Draft Action Minutes – September 23, 2014
Recommendation: Council in the capacity of the Successor Agency to the
Community Redevelopment Agency of Atascadero approve the Successor
Agency Draft Action Minutes of September 23, 2014. [City Clerk]
MOTION: By Mayor Pro Tem Moreno and seconded by Council Member
Fonzi to approve the Consent Calendar.
Motion passed 5:0 by a roll-call vote.
COMMUNITY FORUM: None
B. PUBLIC HEARINGS: None
C. MANAGEMENT REPORTS:
1. Approval of Recognized Obligation Payment Schedule 15-16A July 1,
2015 – December 31, 2015
Fiscal Impact: None for this action.
Recommendation: Successor Agency Board approve the Draft
Recognized Obligation Payment Schedule (ROPS) for the period of July 1,
2015 through December 31, 2015 (ROPS 15 -16A), including the
ITEM NUMBER: SA A-1
DATE: 05/12/15
Atascadero Successor Agency
February 24, 2015
Page 3 of 3
Administrative Budget, pursuant to Health and Safety Cod e.
[Administrative Services]
Administrative Services Director Jeri Rangel gave the staff report and answered
questions from the Council.
PUBLIC COMMENT: None
MOTION: By Council Member Fonzi and seconded by Council Member
Kelley to approve the Draft Recognized Obligation Payment
Schedule (ROPS) for the period of July 1, 2015 through
December 31, 2015 (ROPS 15-16A), including the
Administrative Budget, pursuant to Health and Safety Code.
Motion passed 5:0 by a roll-call vote.
BOARD ANNOUNCEMENTS AND REPORTS: None
D. ADJOURNMENT
Mayor O’Malley adjourned the meeting at 7:24 p.m.
MINUTES PREPARED BY:
______________________________________
Marcia McClure Torgerson, C.M.C.
City Clerk / Deputy City Manager
ITEM NUMBER: SA C-1
DATE: 05/12/15
Successor Agency to the Community
Redevelopment Agency of Atascadero
Staff Report – Community Development
Approval of Property Disposition and
Marketing Plan for the Creekside Building
(Continued item from the September 9, 2014 Meeting)
RECOMMENDATION:
Successor Agency Board adopt the Draft Resolution, approving the Property Disposition
and Marketing Plan for the Creekside Building Located at 6907 El Camino Real,
Atascadero.
DISCUSSION:
The former Community Redevelopment Agency purchased the real property located at
6907 El Camino Real, otherwise known as the Creekside Building, in late 2004. The
purchase of property had been identified as a benefit to the Redevelopment Project
Area, assisting in the elimination of physical and economic blight conditions by
encouraging new development and providing needed public improvements. The
purchase was consistent with the former Agency’s Five Year Implementation Plan to
revitalize downtown and encourage rehabilitation of deteriorated structures.
During this same time period, the 2003 San Simeon Earthquake had damaged Historic
City Hall and required the City offices to relocate to temporary facilities. The City and
the former Agency negotiated a lease to rent the Creekside Building as temporary City
Hall offices until the Historic City Hall was repaired. The building acted as City Hall from
late 2005 to August of 2013.
Then in December, 2011, the California Supreme Court upheld Assembly Bill x1 26
(“ABx1 26”) that dissolved all redevelopment agencies in the State as of February 1,
2012, the new dissolution date established by the Supreme Court.
Effective June 27, 2012, Assembly Bill 1484 passed and amended certain provisions of
ABx1 26. One such provision, Section 34191.5, requires each Successor Agency to
prepare and approve a Long-Range Property Management Plan (LRPMP) that
addresses the disposition and use of the real properties of the former redevelopment
agency. Properties held by a successor agency cannot be disposed of until the State
ITEM NUMBER: SA C-1
DATE: 05/12/15
Department of Finance (“DOF”) has approved the LRPMP. The Creekside Building is
the one significant piece of real property owned by the Successor Agency.
On July 9, 2013, the Successor Agency approved the LRPMP. It was approved 9 days
later by the Oversight Board. On January 17, 2014, the Successor Agency received a
response from the DOF, giving the final approval of the Long-Range Property
Management Plan.
In preparation for disposal, the Successor Agency entered into contract with Rosenow
Spevacek Group (“RSG”) to conduct a market analysis and explore a range of potential
development options to maximize value of the property. RSG has completed the
market analysis, identified feasible reuse and development options for the property in
order to identify potential buyers, and recommended a marketing plan to target
appropriate buyers under the development options.
On September 9, 2014, Hitta Mosesman, representing RSG, presented to the
Successor Agency and identified three financially feasible development options
consisting of 1) office use for 100% of the building, 2) mixed used of office space and
indoor recreational use, and 3) mixed use of office space and a public marketplace
concept.
Option 1 is the most conservative option, resulting in the highest initial
development profit but will likely provide few economic development benefits,
limited property value enhancements, and would likely not bring additional
visitors to the City.
Option 2 provides a more modest initial development profit, but may stimulate
limited economic development benefits and provide moderate property value
enhancements. It is not likely that the indoor recreational use will attract visitors
from outside the City.
Option 3 creates the greatest potential for foot traffic and tourist visitation , has
the most significant effect on property values, and would have ripple effects on
local economic development. Development of this Option would set the City
apart as the only community on the Central Coast with this type of retail use.
The public marketplace concept is a relatively new retail trend whe re a large
building houses independent retailers under one roof. With a large number and
variety of specialty shops, the public marketplace provides unique, local business
offerings that cannot be found anywhere else in the region. This option does
indicate the lowest initial level of profit due to high costs of modifying the building
for retail use, but offers the highest value overall.
Staff is not recommending any General Plan Amendment or Zone Change for the
property, thereby avoiding any unnecessary environmental review and determination.
Therefore, the current Downtown Commercial zoning can accommodate the proposed
land uses recommended by RSG.
RSG is recommending that a qualified real estate broker with proven experience and
expertise with office and retail properties be retained after a public Request for
Qualifications (RFQ) process is followed. Staff will follow the City’s Purchasing Policy to
issue the RFQ. It is anticipated that the RFQ process would provide an additional
ITEM NUMBER: SA C-1
DATE: 05/12/15
commission incentive to the selected broker for the successful sale to a progressive and
creative property owner who would improve the Property under Options 2 or 3, due to
the potential to more fully maximize value with the later options. Staff will bring the
recommendation for the broker and associated contract to the Board for consideration.
If awarded, the contract would then also be brought to the Oversight Board.
FISCAL IMPACT:
The costs of hiring a broker are included in costs of real property disposal on the ROPS
14-15B.
ATTACHMENTS:
1. Draft Resolution
2. RSG Property Disposition and Marketing Plan
ITEM NUMBER: SA C-1
DATE: 05/12/15
ATTACHMENT: 1
DRAFT RESOLUTION
RESOLUTION OF THE SUCCESSOR AGENCY TO THE COMMUNITY
REDEVELOPMENT AGENCY OF ATASCADERO APPROVING A
PROPERTY DISPOSITION AND MARKETING PLAN FOR THE
CREEKSIDE BUILDING LOCATED AT 6907 EL CAMINO REAL,
ATASCADERO
WHEREAS, the Successor Agency is a public body corporate and politic, organized and
operating under Parts 1.8 and 1.85 of Division 24 of the California Health and Safety Code, and
the successor for the former Community Redevelopment Agency of the City of Atascadero
(former Agency) that was previously a community redevelopment agency organized and existing
pursuant to the Community Redevelopment Law, Health and Safety Code Section 33000, et seq.
(“CRL”); and
WHEREAS, the former Community Redevelopment Agency became the owner of real
property located at 6907 El Camino Real, Atascadero, California; and
WHEREAS, ABx1 26 dissolved the Community Redevelopment Agency as of February
1, 2012; and
WHEREAS, Health and Safety Code Section 34191.5 requires each Successor Agency
to prepare and approve a Long-Range Property Management Plan (“LRPMP”) that addresses the
disposition and use of the real properties of the former Community Redevelopment Agency; and
WHEREAS, properties held by a Successor Agency cannot be disposed of until the State
Department of Finance (“DOF”) has approved the LRPMP; and
WHEREAS, the DOF approved the LRPMP of the Successor Agency per a letter dated
January 17, 2014; and
WHEREAS, the Successor Agency entered into a contract with Rosenow Spevacek
Group (“RSG”) to conduct a market analysis and explore a range of potential development
options to maximize value of the property; and
WHEREAS, RSG identified the top three financially feasible development options under
the current General Plan and Downtown Commercial (DC) zoning district; and
WHEREAS, RSG recommends that a qualified real estate broker with proven experience
and expertise with office and retail properties be retained after a public request for qual ifications
(“RFQ”) process is followed;
NOW, THEREFORE, BE IT RESOLVED, by the Successor Agency of the Community
Redevelopment Agency of Atascadero:
ITEM NUMBER: SA C-1
DATE: 05/12/15
ATTACHMENT: 1
Section 1. The Successor Agency Board hereby approves the Property Disposition and
Marketing Plan for the property known as the Creekside Building and located at 6907 El Camino
Real, Atascadero, California.
Section 2. The Successor Agency Executive Director or his or her designee is authorized to
issue a public request for qualifications (“RFQ”) for a qualified real estate broker with proven
experience and expertise with office and retail properties.
Section 3. The qualifications of all brokers shall be reviewed by City staff and the Successor
Agency shall recommend one broker to the Oversight Board for approval.
PASSED AND ADOPTED at a regular meeting of the Successor Agency Board held on the 12th day
of May, 2015.
On motion by _______ and seconded by ___________, the foregoing Resolution is
hereby adopted in its entirety on the following roll call vote:
AYES:
NOES:
ABSENT:
ADOPTED:
SUCCESSOR AGENCY TO THE
COMMUNITY REDEVELOPMENT
AGENCY OF ATASCADERO
By:
Tom O’Malley, Mayor
ATTEST:
Marcia McClure Torgerson, C.M.C., City Clerk
APPROVED AS TO FORM:
____________________________________
Brian A. Pierik, City Attorney
ITEM NUMBER: SA C-1
DATE: 05/12/15
ATTACHMENT: 2
July 31, 2014
Property Disposition and
Marketing Plan
Hitta Mosesman, Principal
Dmitry Galkin, Analyst
RSG, Inc.
August 29, 2014
hmosesman@webrsg.com
ITEM NUMBER: SA C-1
DATE: 05/12/15
ATTACHMENT: 2
July 31, 2014
Contents
CONTENTS ............................................................................................................................................................. 1
EXECUTIVE SUMMARY ........................................................................................................................................... 2
DEVELOPMENT ALTERNATIVES .......................................................................................................................................... 2
Alternative #1 - 100% of Building as Office (Including Medical Office) ................................................................. 2
Alternative #2 - Approximately 21,000 Square Feet of Office and 10,000 Square Feet of Indoor Recreational
Use (e.g., Gymnasium or a Laser Tag Center) ....................................................................................................... 3
Alternative #3 - Approximately 21,000 Square Feet for Office and Repurposing the Remaining 10,000 Square
Feet for Public Marketplace Concept Similar to Oxbow Market in Napa .............................................................. 3
PROPERTY DISPOSITION/MARKETING PLAN ......................................................................................................................... 3
INTRODUCTION ..................................................................................................................................................... 4
LEGAL REQUIREMENTS .................................................................................................................................................... 4
THE PROPERTY............................................................................................................................................................... 4
Property Disposition and Marketing Plan ............................................................................................................. 4
MARKET ANALYSIS ......................................................................................................................................................... 5
Levels of Analysis .................................................................................................................................................. 5
Current Conditions ................................................................................................................................................ 7
OPPORTUNITIES ............................................................................................................................................................. 8
TAPESTRIES (GROUPS DEFINED BY LIFESTYLE AND SPENDING PATTERNS) ................................................................................. 10
REAL ESTATE AND DEVELOPMENT METRICS ........................................................................................................ 12
RETAIL TRENDS .................................................................................................................................................... 13
MARKETPLACE/PUBLIC MARKET ..................................................................................................................................... 13
PLACE-MAKING /RETAIL NEAR PUBLIC SPACES .................................................................................................................. 14
RESULTS AND CONCLUSIONS ........................................................................................................................................... 14
Alternative #1 – 100% Office ............................................................................................................................... 15
Alternative #2 – 21,000 Square Feet Office/10,000 Square Feet Indoor Recreation .......................................... 15
Alternative #3 – 21,000 Square Feet Office/10,000 Square Feet Public Marketplace ........................................ 15
DEVELOPMENT FEASIBILITY ANALYSIS ................................................................................................................. 16
OFFICE AND MARKETPLACE ............................................................................................................................................ 16
OFFICE AND INDOOR RECREATION ................................................................................................................................... 17
OFFICE ....................................................................................................................................................................... 17
PROPERTY DISPOSITION/MARKETING PLAN ........................................................................................................ 19
APPENDIX 1 ......................................................................................................................................................... 20
CASE STUDIES .............................................................................................................................................................. 20
ITEM NUMBER: SA C-1
DATE: 05/12/15
ATTACHMENT: 2
July 31, 2014
Executive Summary
Pursuant to the requirements of Assembly Bills x1 26 and 1484 (“Redevelopment Dissolution Law”), the
City of Atascadero Successor Agency (“Successor Agency”) seeks to dispose of the 31,000 square foot
former City Hall building, located at 6907 El Camino Real in downtown Atascadero (“Property”). The
property is currently improved as
office space, with a large portion
of the structure (approximately
10,000 square feet) as a large
open room that was previously the
City Council chambers.
The Property is a relatively high-
value property. It is the Successor
Agency’s intent to adhere to the
requirements of the
Redevelopment Dissolution Law
by yielding the maximum possible
value for all taxing entities. The
Long Range Property Management Plan (“LRPMP”) was approved by the State Department of Finance
(“DOF”) earlier this year.
Development Alternatives
Prior to embarking on the property disposition process, the Successor Agency seeks to understand the
value of the Property in the current development and real estate market. To that end, RSG was retained
to conduct a market analysis, work with the City of Atascadero (“City”) staff to explore a range of
potential development options, and prepare a Property Disposition and Marketing Plan providing
feasible development options to determine the sales value and a marketing approach for the disposition
of the Property.
This Plan presents a range of three (3) conceptual reuse options that were developed to estimate the
potential sales value of the building. The analysis presented in this Plan indicates that the best reuse
options for the highest overall value have more risk and costs for a potential buyer. Consequently, the
Agency should consider flexible pricing for certain desirable uses and an incentive program for the
broker to find the "right" buyer, even if it results in a reduced sales price. It is important to note that the
potential buyer could consider other options not included in this Plan for the Property.
More specifically, the three (3) financially feasible development options include the following:
Alternative #1 - 100% of Building as Office (Including Medical Office)
• This alternative is the most conservative option.
• Highest resulting initial development profit according to a pro forma analysis.
• However, this alternative would likely provide few economic development benefits and would
not bring additional visitors to the City.
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DATE: 05/12/15
ATTACHMENT: 2
July 31, 2014
Alternative #2 - Approximately 21,000 Square Feet of Office and 10,000 Square Feet of Indoor
Recreational Use (e.g., Gymnasium or a Laser Tag Center)
• Pro forma analysis indicates some initial development profit, but may spur limited economic
development benefit as it is unlikely that the indoor recreational use will attract visitors from
outside of the City.
Alternative #3 - Approximately 21,000 Square Feet for Office and Repurposing the Remaining 10,000
Square Feet for Public Marketplace Concept Similar to Oxbow Market in Napa
• Creates the greatest potential for foot traffic and tourist visitation and would have catalytic
ripple effects on local economic development.
• Would set the City apart as the only community with this type of retail use in San Luis Obispo
County and would be a regional draw that would likely capture a good share of the tourism from
Paso Robles and the Central Coast area.
• Pro forma analysis indicates the lowest initial level of profit (due to relatively high costs to
modify the building for retail use), but it is important to note that the public marketplace
concept is a very new and emerging retail trend. As a result, very little development cost
information is available to date. True development costs for this specific retail concept could be
lower than for general retail.
The analysis of developer profit in these scenarios shows that the most beneficial uses to the
community, Alternatives #3 and #2 (i.e., the public market and indoor recreational uses combined with
office) would likely result in less developer profit. This is because of the relatively high initial costs to
convert or modify the entire building for either retail or recreational uses (i.e., ceiling removal, plumbing
improvements, the moving of walls, etc.) causes the exclusive use of the building to be financially
infeasible. The initial costs of improving the property for Alternative #1 (100% office) are lower as major
modification would not be needed.
Ultimately, the maximum value is achieved through the options that have more risk and costs for a
prospective buyer. Consequently, the Agency should consider flexible pricing for certain desirable uses
to enhance the potential for meeting the goal of greatest value.
Property Disposition/Marketing Plan
It is recommended that a qualified real estate broker with proven experience and expertise with office
and retail properties be retained after a public request for qualifications (“RFQ”) process is followed.
The RFQ would provide an additional commission incentive to the selected broker for the successful sale
to a progressive and creative property owner who would improve the Property under Alternatives #2 or
#3. The qualifications of all brokers will be reviewed by City staff and the Successor Agency would
recommend one broker to the Oversight Board for their confirmation or approval.
ITEM NUMBER: SA C-1
DATE: 05/12/15
ATTACHMENT: 2
July 31, 2014
Introduction
Legal Requirements
As part of the requirements under Redevelopment Dissolution Law, the Successor Agency prepared and
submitted an LRPMP to DOF that prescribes how the Successor Agency will dispose of its real property in
accordance with the Redevelopment Dissolution Law. The LRPMP was subsequently approved by DOF
on January 17, 2014.
The most valuable property in the LRPMP, Asset #1, is the site and building located at 6907 El Camino
Real. Previously used as a bowling alley and temporary City Hall, this property represents an attractive
reuse opportunity to incorporate a use that will increase visitors and foot traffic in the downtown area
and encourage further economic development in Atascadero.
The LRPMP calls for the Successor Agency to sell the property. In order to maximize value, as required
by Assembly Bill x1 26, a market and development feasibility analysis that identifies alternatives that will
inform the sale process and guide the marketing and disposition of the property to the appropriate
audience.
The Property
The Property is located in the heart of the City’s Downtown Revitalization Plan Area, between the City
Hall Rotunda and Colony Square, an important downtown commercial center. The Property at 6907 El
Camino Real represents the best current opportunity for the City to enhance downtown activity for
economic benefits as it is within walking distance of City Hall, the Famous Sunken Gardens, Atascadero
Historical Museum, and the city’s largest modern commercial center and it contains more than 30,000
square feet of floor space in an architecturally interesting building,
The Property faces El Camino Real and U.S. Route 101, the latter being the modern highway that follows
the route of the former, the main trail used during the time of Spanish rule. El Camino Real, more locally
oriented, is the primary commercial district in the City, with retail stores, restaurants, and visitor-serving
uses located alongside its stretch.
On a broader level, U.S. Route 101 connects the City to other regional destinations such as Paso Robles
and San Luis Obispo, as well as California’s large metropolitan areas of San Jose, San Francisco, Santa
Barbara, and Los Angeles. The nearest intersection is with State Route 41, which connects the City to
Morro Bay to the southwest and to Fresno to the northeast.
Property Disposition and Marketing Plan
This Property Disposition and Marketing Plan (“Plan”) provides an analysis of the local market and a
development feasibility analysis that identify the potential feasible future uses of the property from the
perspective of the development community.
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July 31, 2014
More specifically, the market analysis provides the following information:
Strongest business sectors currently in the area (an area encompassing a 15-minute drive time
presents opportunities for business growth and is therefore the primary focus area covered in
the market analysis);
Gaps in retail supply (i.e., opportunities where demand for goods and services is not being met
currently);
Demographic, socioeconomic, and spending patterns of local households; and
Potential lease rates.
The development feasibility analysis identifies several existing office, retail and recreation
opportunities, notwithstanding the potential of future retail needs that will arise with the full
development of the Colony project (particularly with residential uses).
Market Analysis
Levels of Analysis
The first step in market analysis is to identify geographic areas of analysis, or trade market areas to best
analyze and understand market data. These areas are often defined by standard geographies such as the
City of Atascadero, San Luis Obispo County, and the State of California, but can also be defined as “trade
areas” that are based on drive times for consumers (i.e., how long it takes a consumer to drive from
their location to a business).
Using 5-minute, 10-minute, and 15-minute drive times from the point of interest (shown in Figure 1) is
most appropriate and widely-accepted for basic retail analysis. Many studies have shown that the
average person in a retail market will:
Drive approximately 5 minutes for groceries, drug stores, and fast food.
Drive approximately 10 minutes for clothing, gifts, crafts, and full-service restaurants.
Drive approximately 15 minutes for a regional mall, car purchases, furniture, specialty building
supplies, and unique dining experiences.
A 5-minute drive time from the Property would include approximately one-half of the City and County
unincorporated area (“5-Minute Drive Time Trade Area”). A 10-minute drive time from the Property
includes most of the cities of Atascadero and Templeton, the census designated place of Garden Farms,
and County unincorporated area (“10-Minute Drive Time Trade Area”). Finally, a 15-minute drive time
includes the cities of all of the cities of Atascadero and Templeton, one-half of Paso Robles, the census
designated places of Garden Farms and Santa Margarita and County unincorporated area (“15-Minute
Drive Time Trade Area”).
Figure 1 on the following page illustrates the 5-Minute, 10-Minute and 15-Minute Drive Time Trade
Areas.
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July 31, 2014
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Figure 1 - Map of the City of Atascadero and 5-Minute, 10-Minute, and 15-Minute Drive Time Trade
Areas from the Property
Beyond these distances, consumers can usually find retailers or restaurants located more conveniently
elsewhere. Two or more of these trade areas can also be compared to each other to provide a sense of
relative conditions and opportunities.
Current Conditions
RSG used data from Environmental Systems Research Institute (ESRI)—which gathers and summarizes
data from sources such as Dun & Bradstreet, the American Community Surveys, and the Bureau of Labor
Statistics—to analyze current demographic and socioeconomic conditions.
Examining the ESRI data for the 5-Minute Drive Time Trade Area (as shown on Figure 1) indicates that
there are limited opportunities for retail business growth, with the exception of clothing and general
merchandise. Given the proposal for Walmart in the City currently, which would considerably fill this
area of opportunity, additional retail opportunities do not appear promising to attract consumers within
City of Atascadero
Source: ESRI, 2014.
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July 31, 2014
the 5-Minute Drive Time Trade Area. However, in examining the 10-Minute and particularly the 15-
Minute Drive Time Trade Area, ESRI data indicates potential for retail business growth that would draw
from an area larger than just the City of Atascadero. Given the City’s population and current retail
vacancies, drawing consumers from the region represents the largest opportunity for growth.
As detailed below, the 15-Minute Drive Time Trade Area is the area with identified opportunities for
retail and office growth. Unless otherwise noted, the analysis below pertains to the 15-Minute Drive
Time Trade Area rather than only the City boundaries.
Opportunities
In order to identify opportunities for growth within the City (as opposed to the trade areas referenced
above), the level of concentration of different industries was measured utilizing ESRI data to determine
the “location quotient” for all identified industries. A location quotient measures how concentrated an
industry category or subcategory is for one area (the focus area) relative to another area (the context
area). In RSG’s analysis, as shown in Figure 2, the focus area is the City of Atascadero (not one of the
trade areas) and the context area it is compared to is the 15-Minute Drive Time Trade Area.
Figure 2 provides the City’s location quotient for each industry category based on the number of
businesses in that category. The definition of a location quotient dictates that a value greater than 1
indicates that the industry has a high concentration level. A value equal to 1 indicates that the
concentration of the industry in the focus area is relatively equal to that in the context area. A value less
than 1 indicates that the concentration of the industry is a relatively weak as compared to the focus
area.
Figure 2 – City of Atascadero vs. 15-Minute Drive Time Trade Area Business Location Quotients
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ATTACHMENT: 2
July 31, 2014
As shown on the previous page, the data indicates that the following eight industries have high
concentration levels in the City that make up approximately 60% of all businesses in the City:
1. Management of Companies
2. Construction
3. Educational Services
4. Personal Services
5. Retail Trade
6. Administrative Services
7. Professional Services
8. Information
It is important to note that the industries represented by numbers 1, 3, 6, 7 and 8 are five industries that
frequently use significant amounts of dedicated office space and represent more than 26% of businesses
in the City. Construction, Personal Services and Retail make up an additional 35% of businesses in the
City. Since businesses are often drawn to areas where their industry is already strong so they can learn
from their competitors or access the same resources (e.g., the way that information technology
companies are attracted to Silicon Valley), these industries offer the best opportunities for the reuse of
the site .
Because Retail Trade is identified as a concentrated industry in the City, Figure 3 focuses on the
relationship between supply and demand for certain retail sub-industries that could fit within the
project site. Supply is an estimate of retail sales calculated by ESRI utilizing data from Census of Retail
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4
Management of Companies
Construction
Educational Services
Personal Services
Retail Trade
Administrative Services
Professional Services
Information
Manufacturing
Health Care & Social Assistance
Arts, Entertainment & Recreation
Finance & Insurance
Public Administration
Real Estate, Rental & Leasing
Utilities
Accommodation & Food Services
Transportation & Warehousing
Wholesale Trade
Mining
Agriculture and Related Industries
Source: Dun & Bradstreet via ESRI, 2014.
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Trade, Dun and Bradstreet and the Bureau of Labor Statistics for, businesses currently located in the
area. Demand is the amount expected to be spent by consumers in the retail market.
The ESRI data presented in Figure 3 covers broad areas rather than specific retail sub-categories and
indicates that there is a demand for clothing, general merchandise and furniture and home furnishings
within the 15-Minute Drive Time Trade Area, representing retail sales leakage. According to ESRI, retail
sales 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.”
Figure 3 - Retail Opportunities, 15-minute Drive Time Area
In addition to the numbers shown in Figure 3 above in the major retail categories, ESRI data also
indicates that there are gaps in two subcategories; Full-Service Restaurants (e.g., diners and family
restaurants) and Grocery Stores.
Tapestries (Groups Defined by Lifestyle and Spending Patterns)
ESRI developed a system of tapestry segments as a way to categorize American households according to
general characteristics that affect lifestyle and spending patterns.
Who are your best customers and prospects?
What do they buy?
Where can you find more like them?
How can you reach them?
Tapestry segmentation is important because it provides a manner to predict and estimate spending
patterns for goods and services,
Figure 4 presents key characteristics of the five most common tapestry segments in the 15-Minute
Drive Time Trade Area that is the focus of this Plan due to the opportunities presented for business
growth. The City as a whole has a younger population, but as the 15 -Minute Drive Time Trade Area is
the focus of the market analysis due to opportunities, the population of this trade area is analyzed
below.
Figure 4 – Top Five Tapestry Segments within a 15-minute Drive Time Radius
Retail Industry Sales Opportunity
Clothing & Clothing Accessories Stores $18,231,339
General Merchandise Stores $7,931,337
Furniture & Home Furnishings Stores $666,115
Source: ESRI and Dun & Bradstreet, 2013.
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These five tapestries compose 63% of the area’s households. Considering the most common tapestry
segments in the area offers a view into the character of the specific population of an area. Compared to
California as a whole, these five tapestry segments feature:
Smaller household sizes because children are less prevalent.
A higher median age with the exception of the Bright Young Professionals and Middleburg
segments.
Median incomes are either approximately equal to or much greater than the statewide median.
Most of the households enjoy domestic travel, are physically active, and significantly invest in
their personal and communities’ future.
By utilizing the tapestry analysis of the 15-Minute Drive Time Trade Area, the appropriate retail tenants
or other users may be tailored to bring appropriate services to the community and foster economic
prosperity in the City. The characteristics of the tapestry segments, as shown in Figure 4, are consistent
with the retail sales leakage areas identified in Figure 3. For example, the “Green Acres” segment
spends time and money remodeling and investing in their homes and furniture and home furniture
stores and general merchandise stores show retail sales leakage. An indoor recreational space,
meanwhile, would appeal to the many physically active residents in the Bright Young Professionals and
Green Acres segments.
Three of the five most common local tapestry segments show a median household income between
$50,000 and $55,000. This statistic is likely to impact the City’s ability to attract credit tenants, the
commercial tenants sufficiently large and financially strong to receive a rating from one of the three
major credit agencies. By working with the broker community, the City can develop further discussion
on socio-economic trends in the community, most importantly considering (a) retired residents do not
Tapestry
Segment
Share of
Households
Average
Household
Size
Median
Age
Median
Household
Income
Other Characteristics
The Great
Outdoors 21%2.43 46 53,000$ Empty nesters living an active but modest lifestyle, prefer
domestic travel over trips abroad.
Green Acres 13%2.69 43 72,000$
Avid do-it-yourselfers who spend a lot of time maintaining
and remodeling their homes, gardening, and engaged in
outdoor recreational activities.
Bright Young
Professionals 11%2.40 32 50,000$ Young, educated, working professionals who are physically
active and up on the latest technology.
Exurbanites 9%2.48 50 98,000$
Approaching retirement, these residents are active in their
communities, generous in their donations, and seasoned
travelers.
Middleburg 8%2.73 35 55,000$
Family-oriented consumers, thrifty but willing to carry
some debt and invest in their futures, they prefer to buy
American and travel in the US.
California 2.91 36 58,469$
Source: ESRI, 2014.
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have high incomes, but they may have wealth and (b) targeting niche retail that augments other
endeavors such as recreationally oriented businesses or unique restaurants will attract tourists as well
as residents.
Moving from segments of the population to the population as a whole, Figure 5 provides greater insight
on average household expenditures, particularly for expenditure categories related to tourism. Since the
majority of regional households are expected to travel domestically, this presents an opportunity for the
City to capture and use regional demand for local benefit.
Figure 5 - Average Household Expenditures by Geographic Area
Moreover, as seen in Figure 5, households in the 10-minute drive time area and beyond spend more
than households in the 5-minute drive time area. This suggests that a regionally and statewide-oriented
development will have a better chance for success than a locally oriented project. One way to attract a
broader base of consumers is by creating an experiential attraction, something that offers a unique
shopping and dining experience. This kind of development is gaining popularity in the current market
throughout California.
Real Estate and Development Metrics
The attraction of a developer willing to invest resources into redevelopment or reuse of the property
depends on several key real estate metrics in the market. Using the North 101 corridor submarket as the
area of analysis, Figure 6 provides average rents and vacancies for the potential uses of the project site
based on data from CoStar, a real estate data aggregator. One-bedroom apartments provide the highest
rents per square foot compared to the other uses under consideration. Ranging between $1.25 and
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Entertainment and Recreation
Travel
Food Away from Home
Alcoholic Beverages
$37,938
$44,017 $42,607
$44,339
Identified amounts
represent other non-
housing expenditures
$39,499
$40,567 $42,022
Source: Bureau of Labor Statistics via ESRI, 2013.
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$1.35 per square foot, the rents for 2-bedroom apartments, retail space, and office space are
respectable for the region. The rental residential market also has a very low vacancy at 0.5%. The
vacancies for retail and office use, 5.4% and 3.8% respectively, are also reasonably low.
Figure 6 - Real Estate Metrics, North 101 Corridor Submarket
These metrics favor residential use of the property. The property’s zoning as Downtown Commercial
seeks to encourage development of first-floor retail, restaurant, or office uses coupled with residential
uses on upper floors. This kind of project, however, would require demolition of the existing structure
and construction of a new building. While this is a worthwhile consideration and would increase the
likelihood of attaining higher rents, it would also increase the costs of redevelopment to the extent of
making the project infeasible. Reuse of the property for office space would preserve the existing
structure in keeping with the architectural character of the nearby City Hall Rotunda and would keep the
costs of revitalizing the property low.
Retail Trends
Marketplace/Public Market
As economic development and real estate consultants to cities and private developers, RSG stays
abreast of all emerging and established retail trends and opportunities throughout California. One of the
most successful emerging retail trends today is the “marketplace” concept, a large retail building that
houses up to 50 independent retailers under one roof, including clothing, home and garden, lifestyle
brands, artwork, restaurants, gourmet food, coffee house, wine and craft beer, and cooking schools. In
two examples in Orange County that will open in 2014, the District in Tustin (i.e., the former closed
Tustin Marine base) and the 28,000 square foot space in the Kaleidoscope Center in Mission Viejo
repurposed existing structures to open Union Markets with these offerings. There are 3 of these urban
markets in Orange County currently, including the OC Mix in Costa Mesa. All of these markets, including
one in Las Vegas, were created by the same husband and wife team from Orange County.
One of the largest factors of the success of these urban markets is the relatively low lease cost for each
vendor/retailer. By occupying small spaces, tenants can afford to pay higher costs per square foot
because the total rent is still considerably less than they would face in a traditional retail center. With
such a large number and variety of specialty shops, these urban markets provide unique yet broad local
Use Type
Rent per
square foot
Vacancy
Rate Rent Type
1-bedroom apartments 1.50$ Gross of operations
2-bedroom apartments 1.25$ Gross of operations
Retail 1.35$ 5.4%Net of operations
Office 1.25$ 3.8%Net of operations
0.5%
Source: CoStar, July 2014
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business offerings that cannot be found anywhere else in the region. These concepts have shown to
generate considerable foot traffic in all existing areas.
Place-Making /Retail Near Public Spaces
Another retail trend is “place-making” and creating retail centers adjacent to public spaces. New
research from Herman Kok and Peter Trimp of Netherlands-based Multi Development, whose findings
were featured in a recent International Council of Shopping Centers publication on retail property,
indicates that the success of retailers hinges on fusing public space and retail development. The authors
state that good retail design creates a “third place,” an area people like to visit and come back to
frequently. When done properly, retail-led urban development can even serve this role when the shops
are closed.
Beyond offering their wares, retail developments that include some form of open space can serve a
social and cultural purpose in that people want to spend time there. An attractive space adjacent to a
retail development helps create identity that others want to be a part of and want to help preserve, Kok
and Trimp note. Adding landscaping on the site would contribute to the creation of inviting public space.
Results and Conclusions
The business location quotient analysis shows that there are relatively significant numbers of business in
the City of Atascadero requiring retail and office space. In the retail gap analysis, some broad and
subcategories of retail for which outstanding demand exists. In the event that retail will be featured in
the eventual development of the site, this analysis indicates that the best options for retail include
Clothing, General Merchandise, Furniture and Home Furnishing, and Grocery stores, as well as Full-
Service Restaurants. Although a Walmart is proposed to locate in the City, the target retail consumer
segment will be different than that of the retail component presented under Alternative #3 of this Plan.
Looking at the demographics for the 15-Minute Drive Time Trade Area reveals a larger somewhat older
population (as compared to the City alone) with smaller households (i.e., fewer persons per household)
and moderate to large incomes, as well as an interest in domestic travel. Data on household spending
indicates that a more regional attraction will have greater chances for success. This Plan also identifies
a popular current trend in the development of the public marketplace concept, an approach that not
only creates a concentration of retailers, but also provides a unique shopping experience.
These data and trends, coupled with the estimated costs of redevelopment, lend themselves to three
strategies for developing the project site that correspond to three feasible development alternatives.
Alternatives #2 and #3 would provide the highest level of community benefit in terms of the services
provided and economic development momentum for the City. Alternative #3 in particular is a significant
trend in economic development and would set the City apart from others in the region as it would be
the first of its kind in San Luis Obispo County.
While Alternatives #2 and #3 appear to be the best reuse options to obtain the highest overall value,
they also have more risk and costs for a potential buyer. Consequently, the Successor Agency should
consider flexible pricing for certain desirable uses and an incentive program for the broker to find the
"right" buyer, even if it results in a reduced sales price.
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It should also be noted that the potential buyer for the property may consider other development
options not covered under the three alternatives outlined below.
Alternative #1 – 100% Office
The first strategy is the most conservative option and calls for upgrades to the entire existing
building’s current interior improvements to attract office users seeking a higher quality of office
space. This alternative has the least potential to lead to additional development since it will be
minimally used outside of business hours and also the least amount of risk among the three
scenarios. The initial developer profit in this scenario, based on a low- and high-cost range, is
estimated at between $600,000 and $1.5 million.
Alternative #2 – 21,000 Square Feet Office/10,000 Square Feet Indoor Recreation
The second strategy is a conservative but somewhat middle-ground approach in terms of risk and
reward. The scenario of allocating part of the building for indoor recreational use and upgrading the
rest of the building for office use would likely draw City residents to the Property but has limited
potential in encouraging further economic development in the downtown area. The initial developer
profit for this scenario is between $100,000 and $1,000,000.
Alternative #3 – 21,000 Square Feet Office/10,000 Square Feet Public Marketplace
The third strategy presents a slightly higher risk than the other two, but involves a bold attempt to
activate the City’s downtown and catalyze additional development. This strategy involves a scenario
repurposing part of the building for a public marketplace concept and upgrading the remainder of
the building for office use. It is important to note that true costs for the public marketplace option
were difficult to estimate as the concept is very new and does not have established cost parameters
according to industry standard organizations such as Marshall and Swift. Using some general
assumptions for retail development from one developer source, the initial developer profit could be
approximately $650,000. However, it is important to consider the economic development benefits of
this option that extend beyond revenues generated directly from the Property. The fact that the
public marketplace would be a regional draw, attracting visitors from Paso Robles and other Central
Coast cities would have the indirect benefit of increasing visitors to Atascadero’s entire downtown
area, benefiting surrounding businesses as well. Alternatives #1 and #2 do not provide these City-
wide benefits to other local businesses.
Alternative #1, office use only, while less ambitious and catalytic, would require fewer and less
expensive changes to the property and is therefore the most feasible of the options considered in this
Plan. Some interior renovations would make the property more marketable to potential office
occupants. RSG found that the office scenario has the relatively highest initial profit of the three options
being considered under the current market conditions. Alternative #2 would likely draw City residents
to the recreation use, but does not represent a regional draw that would attract foot traffic to the
downtown area.
However, with the appropriate property owner and development team, the office and marketplace
scenario is financially realistic and would activate the City’s downtown area, attracting local and regional
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consumers as well as tourists. This scenario would also provide the greatest local fiscal benefits due to
the sales tax revenue from the marketplace’s tenants. RSG recommends that the Successor Agency
encourage Alternative #3, the office and marketplace scenario, by following the Property Disposition
and Marketing Plan outlined on page 17 of this Plan.
Development Feasibility Analysis
RSG analyzed each of the three scenarios to determine their feasibility under current market conditions.
Development costs were estimated as a range. This section summarizes the assumptions and results of
that analysis.
Office and Marketplace
10,000 square feet of marketplace located at the former Council chambers.
Remainder of building upgraded for offices; 40% of office space allocated to medical office use.
Addition of 22 automobile parking spaces and 5 bicycle racks with room for 5 bicycles each.
15,000 square feet of new landscaping.
Complicated project increases developer fee and contingency costs.
24-month timeline.
With low-cost estimate, project is feasible with a moderate buffer for higher costs.
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Office and Indoor Recreation
10,000 square feet of indoor recreational space located at the former Council chambers.
Remainder of building upgraded for offices; 40% of office space allocated to medical office use.
Addition of 47 automobile parking spaces and 5 bicycle racks with room for 5 bicycles each.
15,000 square feet of new landscaping.
Complicated project increases developer fee and contingency costs.
24-month timeline.
Project is feasible with low-cost and high-cost estimates, with a large buffer for the former and a
small buffer for the latter.
Office
Entire building upgraded for office use; 40% of office space allocated to medical office use.
Addition of 31 automobile parking spaces and 5 bicycle racks with room for 5 bicycles each.
15,000 square feet of new landscaping.
Straightforward project decreases developer fee and contingency costs.
20-month timeline, due to less complexity than other two scenarios.
Project is feasible with low-cost and high-cost estimates, with a very large buffer for the former
and a moderate buffer for the latter.
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Property Disposition/Marketing Plan
While the Redevelopment Dissolution Law requires Successor Agencies to dispose of all property
“expeditiously and in a manner aimed at maximizing value,” it does not specify disposition methods.
Figure 7 identifies and describes several methods that are available for former redevelopment agency-
owned property. However, given that a market and development feasibility analysis has been prepared
by RSG that identifies the feasible development options for the Property, and that the Property is a
relatively high-value property valued in excess of $1 million, the majority of the available disposition
methods below are not appropriate in this case. For example, a request for proposals from developers
is unnecessary as the development options are known and this process will be lengthy. In addition, an
auction would be more appropriate for a low-value property and doing so would not address the legal
requirement to maximize value.
Figure 7 - Disposition Methods
The recommended method of disposition given the nature of the property and the analyses presented
in this Plan would be to issue and RFQ to retain a qualified broker after a transparent selection process.
The RFQ should contain a commission incentive for the selected broker upon close of escrow to a
progressive and creative buyer who will develop the Property under either Alternative #2 or #3, as these
alternatives will maximize the value and provide City-wide economic development benefits.
The qualifications of all brokers will be reviewed by City staff and the Successor Agency would
recommend one broker to the Oversight Board for their confirmation or approval.
It is also recommended that the selected broker and City staff engage the adjacent property owner and
developer of the Colony Square project in discussions to assess the level of interest in folding the
selected development alternative into the existing retail center.
If a buyer is found who wishes to develop the property under Alternative #3, RSG also recommends that
City staff reach out to the creators and property owners of the few existing public markets such as those
of Oxbow and OC Mix to determine the level of interest. Other important steps would include talking to
Disposition Method Summary Maximizes Value in
the Form of
Targeted Sale Property offered for sale to specific potential buyer Development potential
Broker Broker hired to find a buyer and arrange a sale Sale price
Surplus Property Auction Property sold at an auction of government properties Sale price
Private Auction Property sold at a privately coordinated auction Sale price
Offering Memorandum Document prepared that summarizes property for sale Sale price
Request for Proposals Document prepared that summarizes property and
requests proposals for its use Development potential
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local businesses and brokers to define and collaboratively market available retail space to local artists,
restaurateurs, retailers, wine makers, and craft beer brewers.
Appendix 1
Case Studies
Oxbow Market – Napa
Oxbow is a 40,000 square-foot marketplace, which includes a scenic outdoor deck with seating along the
Napa River, features a diverse tenant mixture of local food vendors, artisan cafes, and an organic
produce outlet for local farms. Oxbow Public Market and its artisans and purveyors passionately support
the concept of sustainable agriculture and local harvest—promoting a healthy environment and social
and economic equity within the community.
The Market has a commitment to the unique character, spirit, and content of the Public Market not only
as a place to display and sell organic and/or sustainably-produced local crops, other regional specialties,
and other high quality and unique food products, but also as a place that actively supports sustainable
and organic farming practices, owner-operated businesses, local food producers, and the agricultural
community of the Napa Valley and surrounding regions.
OC Mix – Costa Mesa
This 23,000 square-foot urban marketplace is filled with over 25 small retail shops, gourmet food, and
drinks all under one roof. Its moniker is “fashion, food, and findings,” and it seeks to nurture small
businesses and owner-operated shops, while advancing in the artisanal environment.
This development has a modern, shop-from-your-neighbor feel and the opportunity to touch, taste, feel,
see, and hear from its retailers. The project claims similarity to the Ferry Building in San Francisco and
the Chelsea Market in New York City, but with a contemporary southern California aesthetic. The
building features cement floors, reclaimed wood, and exposed ceilings. The majority of the shops are
less than 250 square feet, giving rise to the power of the small business owner and the ability to present
products and services in a unique, fresh new way.
The Mix also features large common areas that can be transformed into event space. Events typically
partner with the Mix operating team to produce shopping events, charity events, corporate events, and
private concerts.