Retail Real Estate from Pasadena to Claremont
Posts tagged ‘CRE’
Village Roadshow Gold Class Cinemas has announced the layoff of 53 employees effective November 30, 2010. The upscale theatre boasts very comfortable reclining seats, food service at your seat, and blankets and pillows upon request.
The theatre is located in the One Colorado Boulevard retail complex, with an address of 42 Miller Alley.
Introduction
Azusa is an 8.9 square mile city located in the northeastern portion of Los Angeles County at the base of the San Gabriel Mountains. Like the other cities along the Foothill Retail Corridor, there is a gentle slope from south to north heading toward the mountains.
The city was incorporated December 29, 1898. The source of the name Azusa probably derives from the Tongva name Asuksagna, but the legend is that it means “everything from A to Z in the USA.”
California State Route 39 (aka, Azusa Avenue) runs north and south from the southern end of the city deep into the San Gabriel Mountains and into Angeles National Forest, which makes Azusa a very well traversed city for people seeking recreation in the mountains. This is a beautiful benefit to Azusa, but it also limits Azusa’s expansion north because the San Gabriel Mountains line the north border of Azusa. So although Azusa is urban, it takes only a few minutes to feel completely secluded in nature. Alosta Avenue and Foothill Boulevard run east and west through the city. Although decommissioned now, Foothill Boulevard was at one time better known as Route 66, America’s Highway.
Economic Forces
Azusa has many large employers from manufacturing plants to large academic institutions. As seen in Table 1, 13 of the top 18 employers in the city of Azusa are manufacturing. The government and educational services are also heavily prevalent in Azusa.
Table 1: Azusa - Largest Employers
Source: Azusa Chamber of Commerce
Business Name Type Number of Employees
Azusa Unified School District Education 1,600
Northrop Grumman Manufacturer 1,100
Azusa Pacific University Education 900
Monrovia Nursery Agriculture 700
City of Azusa Government 522
Costco General Consumer Goods 311
Berger Bros. Manufacturer 300
Pacific Precision Metals Manufacturer 250
Target General Consumer Goods 225
Tru Wood Prducts Manufacturer 160
Wynn Oil Company Manufacturer 150
Rain Bird Manufacturer 132
California Amforge Manufacturer 106
Vulcan Manufacturer 100
Naked Juice Manufacturer 75
Morris National Candy Manufacturer 70
Physician's Formula Manufacturer 70
Trek Industries Manufacturer 37
Heppner Hardwood Manufacturer 63
Although manufacturing has the most companies employing people, educational services and health care and social assistance have the highest percentage of employment (19.8%) in the city (Table 2).
Table 2: Azusa Industry Profiles
Source: U.S. Census Bureau, State and County QuickFacts, 2006-2008
INDUSTRY Estimated # Employees Percent
Civilian employed population 16 years and over 22,869 100%
Agriculture, forestry, fishing and hunting, and mining 337 1.5%
Construction 1,839 8.0%
Manufacturing 3,277 14.3%
Wholesale trade 873 3.8%
Retail trade 2,512 11.0%
Transportation and warehousing, and utilities 958 4.2%
Information 484 2.1%
Finance and insurance, and real estate and rental and leasing 1,439 6.3%
Professional, scientific, and management, and administrative and waste management services 2,414 10.6%
Educational services, and health care and social assistance 4,538 19.8%
Arts, entertainment, and recreation, and accommodation, and food services 2,251 9.8%
Other services, except public administration 1,185 5.2%
Public administration 762 3.3%
Education
Azusa has multiple educational institutions. The Azusa Unified School District offers public schooling for children grades K-12. It consists of 11 elementary schools, 3 middle schools and 3 high schools. Azusa also has a Catholic elementary school (K-8), St. Frances of Rome School, as well as a Christian Elementary School, Light and Life School. Azusa Pacific University is a four year Christian University with over 10,200 students, faculty and staff. Immediately adjacent to Azusa Pacific University to the north is Citrus College, a community college located in Glendora, with over 11,000 students, faculty, and staff.
Table 3: Azusa Educational Attainment
Source: U.S. Census Bureau, State and County QuickFacts, 2006-2008
Education Level Estimate Percent
Population 25 years and over 26,039 100%
Less than 9th grade 3,545 13.6%
9th to 12th grade, no diploma 3,158 12.1%
High school graduate (includes equivalency) 7,700 29.6%
Some college, no degree 5,591 21.5%
Associate's degree 1,865 7.2%
Bachelor's degree 2,663 10.2%
Graduate or professional degree 1,517 5.8%
Transportation
When it comes to transportation Azusa has many accessible transport 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). Azusa is also serviced by multiple bus routes with service provided by both the Metropolitan Transit Authority (“MTA”) and Foothill Transit.
Table 4: Azusa Commuter Profile
Source: U.S. Census Bureau, State and County QuickFacts, 2006-2008
Commute Type Estimate Percent
Workers 16 years and over 22,241 100%
Car, truck, or van -- drove alone 16,008 72.0%
Car, truck, or van -- carpooled 3,730 16.8%
Public transportation (excluding taxicab) 1,000 4.5%
Walked 683 3.1%
Other means 584 2.6%
Worked at home 236 1.1%
Mean travel time to work (minutes) 28.2 (X)
In addition, the construction has begun on the Metro Gold Line Foothill Extension from Pasadena to Azusa. This extension will add two stops in Azusa, which will connect Azusa with light rail to downtown Los Angeles. One of the stops will be across from the new Target at North Azusa Canyon Road just above Foothill Boulevard, the other will be at North Citrus Avenue and near West Foothill Boulevard. Eventually the Gold Line will connect to Ontario Airport.
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
Environmental Forces
As indicated earlier, Azusa is located at the base of the San Gabriel Mountains to the north, and the western boundary of Azusa is the San Gabriel River. These natural boundaries and the fact that the city is bordered by the cities of Glendora on the east, Duarte and Irwindale to the west and southwest, and Covina 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 highest 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
Azusa is a city of 46,672 people and continues to grow. In Table 5 the social forces of Azusa are illustrated, as well as the data for Los Angeles County in order to give a sense of comparison to how Azusa compares to the rest of the county. The city has a young population, which may be due in large part because of Azusa Pacific University. As seen in Table 5 the homeownership rate is 52% and the people per household is 3.41. People below the poverty rate are about 2.5% higher in Azusa than the average in Los Angeles County. Median household income is just over $53,000 per year.
Table 5: Azusa Demographic Profile
Source: U.S. Census Bureau, State and County QuickFacts, 2006-2008
Azusa LA County
Population, 2009 estimate 46,672 9,848,011
Population, 2000 44,712 9,519,331
Persons under 5 years old, percent, 2006-2008 9.3% 7.4%
Persons 65 years old and over, percent, 2006-2008 6.7% 10.6%
Median age (years), 2006-2008 28.8 34.5
Female persons, percent, 2006-2008 48.8% 50.4%
Housing units, 2006-2008 13,491 3,390,793
Homeownership rate, 2006-2008 52.1% 48.9%
Median value of owner-occupied housing units, 2006-2008 $430,600 $564,900
Persons per household, 2006-2008 3.42 3.22
Median household income, 2006-2008 $53,150 $55,452
Per capita money income, 2006-2008 $19,516 $27,264
Persons below poverty, percent, 2006-2008 14.9% 12.2%
Redevelopment
The Redevelopment Agency of the City of Azusa put together a five year implementation plan in 2009 for the period beginning in 2010 and finishing in 2014. Following are summaries for the various redevelopment districts.
Downtown North: Complete Disposition and Development Agreement with developer and assist in recruitment of retail and restaurant uses.
Block 36 Development: Complete planning process for Block 36 improvements and finalize Disposition and Development Agreement with developer. Block 36 is located at the southeast corner of Azusa and Foothill and is show in the picture below.
Block 37 Development: Continue to provide recruitment and retention assistance to businesses.
Arrow & Azusa: Reevaluate development opportunities as economic conditions improve and solicit developer and tenant interest.
Costco East: Work with Costco, Northrop, S&S Foods and other surrounding businesses to develop economic strategy for expansion project.
Enterprise Site Reuse: Evaluate the acquisition and reuse potential of the site on Azusa Avenue (south of the 210 Freeway) and consolidation with existing Agency property.
D-Club Site Reuse: Evaluate development opportunities as economic conditions improve and solicit developer and tenant interest.
Foothill & Dalton Mixed Use: As economic conditions improve, work with developer to proceed with entitled improvements.
Capital Improvements: During the next five years, the Agency will assist in the funding of selected capital projects and public improvements such as the Block 37 parking structure at 6th Street and San Gabriel and the Gold Line parking structure.
Retail Forces
Potential retail expenditures for residents of Azusa (Table 6) comes from a 2008 study done by the U.S. Department of Labor. In this particular table, it assumes the average median household income in Azusa is $39,191 therefore the income bracket of $30,000-$39,999 is used. To get the average annual expenditures the total number of households in Azusa was multiplied by household expenditure in this bracket.
Table 6: Azusa Retail Expenditures
Sources: U.S. Department of Labor, Consumer Expenditures, 2008; Strother, Stuart, Economic Development in Azusa, 2008
Expenditure Category Household Income % Household Expenditure Citywide Aggregate Expenditure Potential
Food at home 8.8% $3,449 $42,914,823
Food away from home 5.6% $2,195 $27,384,951
Alcoholic beverages 0.9% $353 $4,350,617
Housekeeping supplies 1.4% $549 $6,955,355
Furnishings 3.3% $1,293 $16,078,979
Apparel and services 4.4% $1,724 $21,161,739
Vehicle purchases 9.5% $7,917 $98,177,514
Gas and oil 3.8% $1,488 $18,430,283
Other vehicle expenses 6.2% $2,438 $30,200,885
Entertainment 5.1% $1,999 $24,526,779
Personal care 1.3% $509 $6,364,009
Reading 0.3% $118 $1,478,365
Tobacco 0.9% $353 $4,547,732
Miscellaneous 1.6% $327 $7,673,418
Non-retail expenditures 46.2% $18,106 $225,585,669
Total Expenditure Potential 100.0% $39,191 $487,199,950
Total Retail Expenditure Potential 53.8% $21,085 $261,614,281
Table 7 illustrates the retail trade that is going on in Azusa. The information comes from the U.S. Census Bureau Economic Census of 2007. Looking at the 2002 economic census, there have been positive increases in retail trade in the five years in between. The number of establishments increased from 87 to 96, and total sales volume increased from $337,056,000 (2002) to $426,971,00 (2007).
Table 7: Azusa Retail Expenditures by NAICS Code
Source: U.S Census Bureau, Economic Census, 2007 (D= Withheld to avoid disclosing data for individual companies; data are included in higher level totals)
NAICS Code Description # of Establishments Sales (x 1,000)
44-45 Retail Trade 96 $426,971
441 Motor vehicle and part dealers 15 $29,518
4413 Automotive parts, accessories & tire stores 11 $24,840
442 Furniture & home furnishings stores 2 D
443 Electronics & appliance stores 5 D
444 Building material & garden equipment 5 D
445 Food & beverage stores 23 $47,725
446 Health & personal care stores 7 $19,237
447 Gasoline stations 13 $66,478
448 Clothing & clothing accessories stores 9 D
451 Sporting goods, hobby, book & music stores 3 D
452 General merchandise stores 4 D
453 Miscellaneous store retailers 4 D
454 Nonstore retailers 6 D
Azusa Retail Real Estate
Location - Most of Azusa’s retail properties are located along Foothill Boulevard (which becomes Alosta just west of Citrus Avenue), Azusa Avenue, Arrow Highway and Citrus Avenue. These are the main thoroughfares in the city, and consequently have the highest traffic counts. There are also smaller retail properties on Gladstone.
Inventory – There is approximately 1.3 million square feet of retail space in the city of Azusa ranging from single tenant net leased properties and unanchored strip centers to the largest retail property, Citrus Crossing, a power center located across the street from Azusa Pacific University. Citrus Crossing and APU together have caused the intersection of Citrus Avenue and Alosta Avenue (Route 66) to become the retail epicenter of the city. The total inventory of 1.3 million square feet does not include automotive use, gas stations,
Construction – There has been virtually no new construction in the city in the last five years, other than the 190,000 square foot Target which opened in October 2010. Citrus Crossing was a major redevelopment project by Trachman Indevco, which took a very tired shopping center and turned it into the retail hub of the city.
Vacancy – The historical vacancy rate in the last five years for Azusa has ranged from a low of 2% in the second quarter of 2007 to a high of 8% in third quarter 2009. The current rate is about 4%, with most of the vacancy occurring in older class C properties. The addition of the new Target with 160,000 square feet has had an impact on the vacancy and absorption numbers.
Absorption – Absorption has ranged from a low of -30,000 square feet in third quarter 2009, to a high of 20,000 square feet in first quarter 2007. The low figures on absorption is due to the lack of developable land in the market.
Rental Rates – Rental rates range from a low of about $11.00 per square foot per year to a high of about $30.00. Citrus Crossing commands the highest rental rates for shop space, whereas the lowest rental rates are found in the unanchored centers in the southern portion of the city.
Citrus Crossing – This community center (pictured below) is approximately 170,000 square feet and features anchor tenants Fresh & Easy, Kragen Auto Parts, a 99 Cent Only Store, CVS Pharmacy, Regency 10 Theatres, and Ross. Inline tenants include Kelly’s Coffee, Panda Express, Jamba Juice, Pinkberry, Chipotle, and Payless Shoes. There are plans are to build an Applebee’s on the pad along Citrus Avenue.
Edgemont – Located at the northwest corner of East Gladstone Street and South Azusa Avenue, this 158,699 square foot shopping center lacks a credit anchor, and the asking rent of $1.50 per square foot triple net reflects that, as well as a lower traffic count.
Azusa College Center – Anchored by Stater Bros. and Starbucks, this nearly 71,000 square foot neighborhood center also has a Dollar Bill Store, a Subway, a cleaners, and a Marie Callendar’s on the northwest corner of Barranca and Alosta. Asking rents for this center are about $1.95 per square foot per month, triple net.
Costco – Wholesale retailer Costco is located on the western edge of Azusa on Foothill Boulevard. This big box store is approximately 111,000 square feet, and has its own brand gasoline station on a pad along Foothill Boulevard.
Target – Opened in October 2010, this store is nearly 190,000 square feet and features 39 rows of groceries, and a Starbucks. What is unique about this store is that the sales floor is on the second level above the ground floor parking. Access is easy via an elevator or an escalator. When customers are done shopping, they can put their carts on a separate escalator going down.
Authors:
Austin Gordon, Senior Economics Major, Azusa Pacific University
Ken Rhinehart
I couldn’t help but make a connection between three articles I read just recently. One article was about the woes of Blockbuster Video, the second was about the woes of Barnes & Noble, and the third was about the growth of video retailer, Redbox.
For the second quarter 2010 Blockbuster Video reported total revenue of $788 million. This was a decrease of nearly 20% from second quarter 2009 which saw total revenues of $982 million. During the same period, net losses went from $37 million to $69 million, an increase of about 87%. This has led to a downgrade in Blockbuster’s long-term issuer default rating.
Meanwhile, Barnes & Noble is fighting off a proxy battle with grocery store magnate Ron Burkle, and has recently announced that it is up for sale.
What is behind these three stories? Digital media. About a year ago I bought a Samsung Blue Ray DVD player with a feature that lets me connect to my wireless router. With a push of a button on the remote I can connect to my Netflix account and have access to hundreds of movies, documentaries, and TV shows. I no longer have to endure the hassle of going to my mailbox to retrieve a video, putting it back into the self addressed postage prepaid envelope and walking it back out to the mailbox when I am finished. And forget about driving to a video store!
While Movie Gallery and Hollywood Video are now defunct, along with most of the mom and pop video stores, Redbox is springing up to take over a niche market. You may have seen them on your way in or out of the grocery store. For only a dollar you can rent the latest films. The entire Redbox kiosk occupies about five to nine square feet reducing the real estate cost to next to nothing when compared to a Blockbuster. And, there are no employees to deal with other than the delivery driver who stocks the videos. Redbox recently had their billionth movie rental.
Barnes & Noble is adapting to the digital trend by offering e-books both online and through their brick and mortar stores. You’ve probably seen people reading their Kindles and iPads. No longer will people have to order a book that isn’t in stock and then come back a week later to pick it up. Digital is never out of stock, and an entire library is reduced to a hard drive.
Barnes & Noble recently announced they will be investing approximately $140 million in the next year to market their digital offerings. That portion of its business has grown from 0% of market share in June 2009 to 20% one year later. The company predicts that digital sales will represent 50% of its total revenue and 75% of its total profit by the end of 2011. Meanwhile, Barnes & Noble has closed a 61,000 square foot space in New York, to be occupied by high-end discount department store retailer Century 21.
So, while Barnes & Noble and Blockbuster may be closing stores, Best Buy continues to expand. After all, you have to buy those digital media readers and accessories somewhere.
I couldn’t help but make a connection between three articles I read just recently. One article was about the woes of Blockbuster Video, the second was about the woes of Barnes & Noble, and the third was about the growth of video retailer, Redbox.
For the second quarter 2010 Blockbuster Video reported total revenue of $788 million. This was a decrease of nearly 20% from second quarter 2009 which saw total revenues of $982 million. During the same period, net losses went from $37 million to $69 million, an increase of about 87%. This has led to a downgrade in Blockbuster’s long-term issuer default rating.
Meanwhile, Barnes & Noble is fighting off a proxy battle with grocery store magnate Ron Burkle, and has recently announced that it is up for sale.
What is behind these three stories? Digital media. About a year ago I bought a Samsung Blue Ray DVD player with a feature that lets me connect to my wireless router. With a push of a button on the remote I can connect to my Netflix account and have access to hundreds of movies, documentaries, and TV shows. I no longer have to endure the hassle of going to my mailbox to retrieve a video, putting it back into the self addressed postage prepaid envelope and walking it back out to the mailbox when I am finished. And forget about driving to a video store!
While Movie Gallery and Hollywood Video are now defunct, along with most of the mom and pop video stores, Redbox is springing up to take over a niche market. You may have seen them on your way in or out of the grocery store. For only a dollar you can rent the latest films. The entire Redbox kiosk occupies about five to nine square feet reducing the real estate cost to next to nothing when compared to a Blockbuster. And, there are no employees to deal with other than the delivery driver who stocks the videos. Redbox recently had their billionth movie rental.
Barnes & Noble is adapting to the digital trend by offering e-books both online and through their brick and mortar stores. You’ve probably seen people reading their Kindles and iPads. No longer will people have to order a book that isn’t in stock and then come back a week later to pick it up. Digital is never out of stock, and an entire library is reduced to a hard drive.
Barnes & Noble recently announced they will be investing approximately $140 million in the next year to market their digital offerings. That portion of its business has grown from 0% of market share in June 2009 to 20% one year later. The company predicts that digital sales will represent 50% of its total revenue and 75% of its total profit by the end of 2011. Meanwhile, Barnes & Noble has closed a 61,000 square foot space in New York, to be occupied by high-end discount department store retailer Century 21.
So, while Barnes & Noble and Blockbuster may be closing stores, Best Buy continues to expand. After all, you have to buy those digital media readers and accessories somewhere.
