The new Walmart Neighborhood Market at 2408 N Lincoln opened on March 1, 2013. The store, located at the signalized intersection of Figueroa Drive, is a new format to the Los Angeles retail market.

According the Walmart website “the new Walmart Neighborhood Market is tailored for the Altadena community, featuring a wide variety of fruits and vegetables, fresh cakes and bread, as well as meats, cheeses and prepared foods. The deli will feature a Grab-and-Go section with rotisserie chicken, fresh-baked pizza and standard deli sides. In addition to the fresh produce, bakery and deli items, the store will carry a full line of groceries, including frozen foods, meat and dairy products and organic items.”

I went in to the new store last Wednesday around noon, and there was a lot of activity. It looked very similar to the Walmart Neighborhood Market I went into in Oklahoma City a few years ago. Very clean and bright. I suspect we will see more of these stores going into vacating big box stores in the area.

According to assessor records, the building is 240,500 square feet and it sits on just over three acres. In its previous life (see photo below), the building was a thrift store and long before that it was another grocery store.

The new Walmart Neighborhood Market was previously a thrift store.

Chick-fil-A coming to Azusa at the southeast corner of Citrus and Alosta.

A new Chick-fil-A restaurant is under construction at the southeast corner of Citrus and Alosta, at the site of the former Sizzler. No opening date has been set, although it is tentatively scheduled for Spring 2013.

The company started in Atlanta with its first restaurant in 1967. Today, Chick-fil-A operates over 1,615 stores in 39 states and Washington, D.C., with total sales over $4.1 billion.

The new restaurant is the result of an idea of an Azusa Pacific University undergraduate student. The story can be found here: www.theclause.org/2012/05/eat-mor-chikin-chick-fil-a-coming-to-azusa/

Jack in the Box opened November 7, 2012 at the site of the former Pottery Ranch.

Jack in the Box opened in Monrovia on November 7, 2012 at 248 E Huntington Drive, on the southeast corner of Magnolia. The site was previously leased by Pottery Ranch, which occupied the space for over 70 years. Jack in the Box bought the site which included an apartment building which was subsequently torn down.

Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Grill®, a leader in fast-casual dining, with more than 600 restaurants in 42 states and the District of Columbia.

Jack in the Box under construction on July 13, 2012.

The old Pottery Ranch

The entry to Duarte heading west along Huntington Drive, formerly known as Route 66.

Introduction

Duarte is a 6.8 square mile city located in the northeastern portion of Los Angeles County at the base of the San Gabriel Mountains, approximately 21 miles northeast of downtown Los Angeles. Like the other cities along the Foothill Retail Corridor, there is a gentle slope from south to north heading toward the mountains, which provides the northern boundary of the city. The San Gabriel River provides the eastern boundary, the city of Monrovia borders the west at Mountain Avenue, and the city of Irwindale borders the city to the south, just below Duarte Road.

The city was incorporated August 22, 1957 and was named after Andres Duarte who was granted 7,000 acres of land in the upper San Gabriel Valley and operated the Rancho Azusa de Duarte. Duarte’s motto is “The City of Health,” as it is host to several parks and recreation areas, as well as the world-renowned cancer research center, City of Hope.

The following is a short description of the various forces affecting the Duarte retail market, including Economic Forces, Education, Transportation, Environmental, Demographics, Redevelopment, and a brief discussion about the Retail Market itself.

Economic Forces

True to its city motto, “The City of Health,” Duarte’s largest employer is the cancer research center, City of Hope, which employs over 3,500 people on its park-like campus. City of Hope is one of only 41 National Cancer Institute-designated Comprehensive Cancer Centers, which provides both patient care and research. WalMart (270 employees), Target (183 employees) and CarMax (187 employees) are the top retail employers in the city. Duarte School District, GE Aviation, We Pack It All and TheraPack round out the city’s top employers. Duarte was recently named “Most Business-Friendly City” by Los Angeles County Economic Development Corporation, for cities under 60,000 residents.

Table 1: Duarte - Largest Employers

City of Hope Campus on Duarte Road

Table 2: Duarte Industry Profiles

Educational services, and health care and social assistance accounts for the largest percentage of employees at 26.2%, with retail trade the next largest with only half the number of employees, or 13.0%. As stated previously, City of Hope is the largest provider which accounts for the majority of the 26.2%. Professional, scientific and management and administrative and waste management services is the third largest industry classification, with over one thousand employees (12.3%). Duarte has a small manufacturing base with about 924 employees (10.5%). (Note: Discrepancy in number of employees is due to different data sources.)

WalMart, CarMax and Target are the three largest retail employers in the city of Duarte.

Education

The Duarte Unified School District offers public schooling for children grades K-12. It consists of 5 elementary schools, one middle school and one high school and one continuation high school. Duarte has no universities or colleges, but is very close to Citrus College (a two year community college) and Azusa Pacific University in the neighboring city of Azusa.

Table 3: Duarte Educational Attainment

Over sixteen percent of Duarte residents have a college degree, indicating a fairly educated workforce, but only one-third of the residents have graduated from high school.

Transportation

When it comes to transportation Duarte has many accessible transportation systems, and there are plans to improve. Interstate 210 (aka, the “Foothill Freeway”) runs east and west through the middle of the city. The city is also very close to both the 57 and 605 freeways (both less than 5 miles depending on what part of the city you are in). Duarte is also serviced by multiple bus routes with service provided by both the Metropolitan Transit Authority (“MTA”) and Foothill Transit.

Table 4: Duarte Commuter Profile

Huntington Drive and Duarte Road are the main east-west thoroughfares and are heavily used during peak hours by commuters trying to avoid the 210 Freeway. Interstate 605, which runs north-south, terminates in Duarte via Mount Olive Drive. Drivers may enter either the 605 or the 210 via Mount Olive. There are on and off ramps for the 210 at Buena Vista and Mountain Avenues, which are the two main north-south thoroughfares in the city.

The nearest airport to Duarte Bob Hope (Burbank) Airport, approximately 25 miles west.  Ontario International is about 28 miles east.

In addition, construction has begun on the Metro Gold Line Foothill Extension from Pasadena to Azusa, with stops in Arcadia, Monrovia, Duarte and two stops in Azusa. This extension will connect Azusa with light rail to downtown Los Angeles.

An image depicting the Gold Line from downtown L.A. to Azusa is shown in Figure 1.

FIGURE 1

Source: Metro Goldline Foothill Extension Construction Authority

There will be one stop in Duarte on Duarte Road, just west of Highland, across the street from the City of Hope campus.

Future site of the Gold Line station in Duarte.

Environmental Forces

As indicated earlier, Duarte is located at the base of the San Gabriel Mountains to the north, and the eastern boundary of Duarte is the San Gabriel River. These natural boundaries and the fact that the city is bordered by the cities of Monrovia on the west and Irwindale to the south, make future retail development in the city limited to redevelopment of existing properties.

Azusa has a similar climate to all cities along the Foothill Retail Corridor. On average July and August are the two warmest months with average highs reaching 89 degrees, and February is the rainiest month. December is the coolest month with an average low of 41 degrees.

Demographics

Duarte is a city of 21,321 people with virtually no population growth between the 2000 and 2010 Census. In Table 5 the social forces of Duarte are illustrated, as well as the data for Los Angeles County in order to give a sense of comparison to how Duarte compares to the rest of the county. The city has a much higher home ownership rate compared to the county, but has a lower median value of owner-occupied housing units. The median household income in Duarte is slightly higher than the county, and the city has a lower poverty rate than the county.

Table 5: Duarte Demographic Profile

Redevelopment

Effective February 1, 2012, all redevelopment agencies in the state of California were dissolved, and were replaced by Successor Agencies. Also, all assets and properties of the former RDAs that were funded by tax increment were to be expeditiously disposed of. An Oversight Board membership was to be appointed by May 1, 2012. The Oversight Board’s responsibility is to direct the Successor Agency to determine whether contracts, agreements or other arrangements between the former RDA and private parties should be terminated or renegotiated to reduce the Successor Agency’s liabilities and to increase net revenues to the taxing entities.

The City of Duarte owns 26 parcels throughout the city. Of note are two parcels, one at the northwest corner of Buena Vista and Huntington where Hopkins Real Estate Group has plans to develop a 5,000 square foot Five Guys Burgers.

Potential future site of Five Guys Burgers.

Just east of Buena Vista on Huntington Drive, is a site that is now vacant but was formerly occupied by a Burger King restaurant which was torn down after the Redevelopment Agency acquired the property, potentially for affordable housing.

Former Burger King acquired through eminent domain by the Redevelopment Agency of Duarte.

Retail Forces

Table 6 illustrates the retail trade that is going on in Duarte. Clearly, CarMax and Performance Nissan have contributed greatly to the city’s retail sales base due to the sale of large ticket items like cars. WalMart and Target would fall into the category of general merchandise stores, and those sales numbers have been withheld, however, they are included in the total dollar amount.

Table 6: Duarte Retail Expenditures by NAICS Code

Duarte Retail Real Estate Market

Location - Most of Duarte’s retail properties are located along Huntington Drive (which becomes Foothill Boulevard when it enters into Irwindale at the eastern border), with additional retail along Mountain Avenue, Duarte Avenue, and Buena Vista. These are the main thoroughfares in the city, and consequently have the highest traffic counts.

Inventory –  There is approximately 1.12 million square feet of retail space in the city of Duarte ranging from single tenant net leased properties and unanchored strip centers to the largest retail property, Mountain Vista Plaza at over 167,00 square feet. The total inventory does not include automotive use and gas stations.

Construction – The last properties to be constructed in Duarte were the 45,648 square foot Best Buy at 1470 Mountain Avenue, and the 11,087 square foot strip retail center adjacent to Best Buy at 1430 Mountain Avenue. Both of these properties finished construction in the second half of 2009. Any new construction in the city will most likely be limited to redevelopment of existing properties. Presently, at the northeast corner of Buena Vista and Central, there are plans for construction of approximately 10,950 square feet of retail on the site currently occupied by Performance Nissan’s used car lot. Plans call for a 6,700 square foot building including a 4,200 square foot fast food drive through, and a 4,250 square foot building which may include  1,250 square foot Starbucks. A 99 Cent Only Store was built from an existing structure which was essentially rebuilt from the slab up. The store opened in March 2012 at 1327 E Huntington Drive.

Vacancy –  The historical vacancy rate in the last three years for Duarte has ranged from a low of 3% in the third quarter of 2012 to a high of 5.5% in third quarter 2011. The current rate is about 3.25%, with most of the vacancy occurring in older class C properties. Fresh & Easy anchors a 34,710 square foot shopping center which has the largest spaces currently available, including a 6,000 square foot space and a 3,600 square foot space. Both spaces have been on the market for quite some time and the owner recently lowered the asking rent for the space.

Absorption – Absorption has ranged from a low of -12,780 square feet in fourth quarter 2010, to a high of 25,960 square feet in fourth quarter 2009 when the new Best Buy opened. Net absorption year to date is just over 3,000 square feet. At this rate, it will take approximately two years to absorb the current vacant space.

Rental Rates – Rental rates range from a low of about $1.16 per square foot per month to a high of about $3.00 for two spaces at 1430 Mountain Avenue, adjacent to Staples and Best Buy.

Major Shopping Centers

Mountain Vista Plaza – Anchored by a 112,000 square foot Target, this center has several inline shop spaces including a Chase Bank branch, and several non-national tenants. A Sonic Burger and a Denny’s are located on outparcels. The center has the benefit of a signalized entrance from Huntington Drive. Total square feet is approximately 167,000 square feet, including the Denny’s and Sonic Burger.

WalMart – A WalMart store is located at 1600 S Mountain Avenue, just below the 210 Freeway, which has on and off ramps in both directions at Mountain. This particular WalMart has a pharmacy, vision center, and auto center, as well as a large selection of groceries. The store is 146,165 square feet.

WalMart on Mountain Avenue in Duarte.

Buena Vista Marketplace - This a 136,887 square foot grocery anchored shopping center located on Huntington Drive and is the dominant grocery anchored shopping center in the city. Tenants include Starbucks, SCE Credit Union, UPS Store, Ralphs, Dollar Tree, Hertz, Jamba Juice, and Wells Fargo.

Buena Vista Marketplace

Conclusion

Duarte is well situated in the northeast portion of Los Angeles County, at the base of the San Gabriel Mountains, and is easily accessible to all portions of the County via the 210 Freeway. The expansion of the Gold Line from Pasadena will enhance Duarte’s visibility and desirability as a place to live, giving commuters an alternative means to downtown Los Angeles. There is little room for major new retail construction, which contributes to Duarte’s retail vacancy rate being so low.

Stein Mart’s new location in San Dimas.

The La Verne Stein Mart at 1375 Foothill Boulevard has moved and is now open in the space formerly occupied by Office Depot at 826 West Arrow Highway in San Dimas. The new location opened October 18th, 2012.

The new Stein Mart store is located in the San Dimas Marketplace, with co-tenants such as Petco, Trader Joe’s, Dress Barn, Ross Dress For Less, Party City, and across the parking lot from Target. The center is owned by Kimco, and has excellent freeway access and visibility.

According to their website Stein Mart was founded by the current chairman’s grandfather just after the turn of the 20th century. “The Stein Mart concept has evolved into a nationwide network of easy-to-access freestanding stores. [Their] merchandise includes current-season, brand name fashion for women and men; accessories; home decor; linens; and shoes. All are at prices up to 60% below department store prices, every day. Because [their] customer appreciates variety – and because she likes to be unique – [they] update merchandise frequently and supply a limited inventory of each item per store.”

Stein Mart’s previous location in La Verne.

The Outlet by ELS opened September 11, 2012 at 880 S Azusa Ave.

The Outlet by ELS (www.theOutletbyELS.com) opened at 880 S. Azusa Avenue in Azusa on September 11, 2012. The 46,000 square foot store is a “premier discount outlet store which provides a unique mix of merchandise and excellent service that brings excitement and value” to its customers.

Unique mix of merchandise, indeed. The have everything from canned goods to water heaters, toilets, tools, and clothes. I even saw a couple of snow shovels. Not sure those are going to be moving any time soon.

The city of Azusa acquired parcels and assembled them through the eminent domain process, and then sold the parcels to Charvat Family, LLC.

I went into the store on a Thursday around noon, and there were probably three dozen shoppers in the store. Quite a bit of traffic for mid-day during the week. I saw some pretty good deals. I even walked back out to my car to get my wallet so I could buy some office supplies!

The Outlet by ELS under construction.

The property is located at the northeast corner of Azusa Avenue and Arrow Highway.

The property is located at the northeast corner of Azusa Avenue and Arrow Highway, and was previously occupied by a furniture store.

Petco has opened another of their smaller format stores in Claremont at 905 W Foothill in the Sprouts shopping center.

I wrote earlier about the new format in Monrovia that is approximately 1,500 square feet, which is much smaller than their typical stores that are 10,000 to 15,000 square feet. The smaller format focuses more on pet essentials such as food. Sorry, you can’t go in there to see puppies or kittens, as they do not carry them.

The new Chase Bank branch at 805 Foothill is currently under construction at the north west corner of Foothill and Mountain Avenue in Claremont. After some debate from existing tenants and neighbors, the city council approved the development in September. The debate centered on visibility for tenants in the shop space as well as potential parking issues.

According to their website, Chase Bank offers more than 5,100 branches and over 16,000 ATMs nationwide.