retail market as well as trends that they are seeing out there. most of you are familiar with related california. one of the latest supportable housing developments in california. 14,000 units over the last 30 years. we have 1500 affordable housing units under development. that is 588 in mission bay. west side court and the fillmore, the sunny dale public housing and goodwill site working for office space for the city of san francisco on the corner of mission and vanness. the neighborhood development is

the nonprofit partner as well. don is out of the city today. he wasn't able to attend. affordable housing is important. we formed this partnership. in addition to being a nonprofit developer they are providing social services for the 150 families occupying the transbay blockade. as shane mentioned the project consists of 548 residents, 150 are affordable housing. right now we are scheduled to complete construction ahead of our dda schedule to provide much needed housing to the city of san francisco, tax revenue and sales tax revenue to finance the debt obligations of the transit center. we expect residents to move in

early spring of 2019. in addition we provide a community benefit which is an important part of our design for the overall project. this is something we volunteered. it is open space that will be open to everyone inspired by local favorites. in addition, the project as well as the related team has been very active and engaged supporter of the east neighborhood. showing some renderings and construction progress for the project to give you a sense where we are. this is a rendering of the project. you can see the neighborhoods serving retail. the following slide was an image taken last week where we are in the construction process. as you can see we are pretty far

along, and we expect to meet our completion date and residents move in early next year. to emphasize, the destination we are trying to create here with v remembereaverylane. an overview of retail is laura, who is right behind me. >> good afternoon. just touching base across the trends here domestically in the u.s. we will start with openings for 2018. there is a lot of press right now about retail struggling. there is disruption in the market. not all negative. some of the highlights are the

openings across the board. we have seen 75% that are discount retailers and restaurants such as t.j. maxx, home goods, ross, dollar general, across the board and restaurants based on the experience in retail in general. quick serve small format restaurants we ar we seeing. to closures if we take out toys and department stores. the toys at the top of the list are toys-r-us and the bankruptcy last year as well as department stores are due to sears. if we take out those the 700 closings, 50% is grocers. the trend is that they are closing or consolidating. some of the closures or groceries we have seen pullout

of the market in the bay area is new seasons who pulled out in 2016. cal foods that closed in san francisco and bell and ralphs. some consolidations we have seen from save more acquiring 140 albertsons eight years ago to the rest of the safe way here in california as well as probably the one to make the news recently is amazon acquiring whole toeds. in whole foods' struggle am magone bought that not as an investment. going to the next slide which is the consumer demand and the trend across the board what we are seeing a movement where we see a lot of consumers wanting

more of an experienced based retail. we are getting away from what we are familiar with. we are shopping more from the couch. we can get the goods to the door front. what is drawing us out you have the house? food and beverages, entertainment, personal care and medical and fitness. those categories specifically food and benches and entertainment is very active. as we moved to home goods and delivery service, there is definitely a friend includes the groceries to get the goods to the front door. one of -- i think one you have the ones to highlight as far as the quick to fix retailers locally, albert'ss started here

in bay area and is moving to brick and mortar stars. there are others that come to mind. most of them are in appairrel. amazon is the one exception. clicks to bricks including amazon go is in san francisco in seven locations throughout the bay. now on 300 california. 2800 to 3,000 square feet. then most of the pop ups which is a trend for the clicks to bricks operators are in new york, la and san francisco. that is a way to text the market before they get to physical brick and mortar stores. there is grocery demand with the introduction ofence take cart and others that it is a one hour delivery service to your door.

less frequent visits to the grocer in general. i think the take away is there is a consolidation to best-in-class and experience. grocers are impacted by the changes across the retail category. >> i wanted to talk a little bit about the design of the grocery space. when we first proposed on the project? early 2014, we had envisioned 25,000 square feet at transbay blockade. if you recall the original proposal included letter of intent from whole foods about amazon. based on feedback when we presented during the afp, feedback from the community

recommended we contact the local grocers. their footprint was 5,000 to 20,000 square feet. notable names included buy right, gus and molly's among other also. based on that feedback we realized the size of footprint fell within the range accessible to grocers at the time in 2014. the project when we were designing it included accommodation for customer elevator do adjust the two level format. loading sign for a 40 to 50-foot long truck. loading zone when we worked with development team and other government agencies to accommodate. a loading dock, service elevator and back up house. here are diagrams to illustrate

that. you can see the loading zone on first street for the longer loading truck. we have the service elevator to the right of that. as you move to the center you have the ground floor space 2700 square feet. we included customer elevator and staircase. we cannot have the loading area on freemont street due to the off-ramp. we cannot put the loading zone on fulsome street we are trying to enhance the pedestrian environment from a planning perspective. second floor from the left you can see the service elevator to the second floor. we designed a path to allow the grocer operator to stock their store. in the middle of the dye gravel

we show the connection for the elevator and the staircase. similar to what you can see at trader joe's on fourth and market if any of you have been there before. next diagram is one we prepared in 2014-2015 before the outreach to grocers. it shows from adry dimensional perspective what that would look like to get the grocers comfortable with the space. the transition to the outreach efforts. we'll didn't market the space until 2017, we started conversations with multiple grocers from 2014 when we were awarded the project. we reached out to over 20

grocery prospects local as well as national operators. it is important to know because we were very goody sign and construction team made of local and regional consultants and contractors and subcontractors, they have done a fantastic job to meet and exceed the schedule. we were able to give hard had tours of the physical space four the grocers. a lot of times it is hard to them them with the space. it helped the decision-makers make a informed decision. in addition to that, the terms we offered were well with in and at times below market rate rents for commercial real estate. the rest we were offering was

$55 per foot annually. that is significantly less than leases first signed at the kansas center and block 64. to reiterate the points laura just made, i think while we had a positive response initially, as the market became more volatile some concerns expressed were the transbay neighborhood is developing and we can see the density created and vibrant neighborhood it is going to become. a lot of operators are unsure of the neighborhood. it is largely to the general public unestablished. when it opened after our design of the project and after we were awarded the project, that was a

big concern expressed by potential prospects. despite our efforts to make accommodations, i want to reemphasize as we heard from the last item. the shortage of labor on the construction side as well as operations has increased costs to operate all businesses here throughout the city. the grocer business model is a very low margin business that made it more consult with these variables in place. next slide is diagram of the timeline that shane presented in his presentation. really what we saw happen in 2017 was announcement of trader joe's fourth and market,

acquisition of whole foods by amazon and woodlands opening. in addition to that the real foods closed the business which is the supermarket, new seasons also went out of business and local market in the mission went out of business, showing the consolidation of the industry. all of our design concept took place before 2017. while we were certainly excited about having a grocer at the space or project. the series of events in 2017 hindered our abilities to move forward on that effort. here is the expanded list of the grocers that we contacted, conducted hard had tours with and had personal discussions

about the space. feel free to ask questions about this list. meanwhile as an active member of the east neighborhood, i have done extensive research and my team has done surveying of the existing retail in the neighborhood. if you are just walking around tans bay you see retail and restaurants catering to to employees working in the neighborhood. not many food and restaurant options in the growing neighborhood in transbay district. what the survey illustrates. it is difficult to read. what it indicates. there is a lack of food and bench options serving the evenings and weekend. something they need and have

been asking for in addition to a super market or grocer. start of that we have our efforts focusing on this market k.it is to create a neighborhood for the transbay district. >> in conclusion. we respectfully request our release of our obligation. we feel it is an outreach process as well as offerin offer prospects reasonable terms. it ensures adequate time to identify the retail sennants and mitigate having a vacant ground floor retail space in the neighborhood. i request take any questions. >> before we take questions, i

think shane has to come back. >> good afternoon, commissioners, i am sarah graham. i am getting my slides up here. i am with strategic economics we were to provide the peer review that a grocery store is not feasible at the location. today i will provide an overview of our review, our peer review and dig deeper to the demographics and other conditions in the area that in the transbay area that relate to this. the developer sited three main

issues that discouraged grocer operations from locating afternoon that is parking, site layout and the neighborhood or location. for parking, the developer claims most operators would require more than 10 on site parking spaces. we disagree this is a major impediment to locating a grocery store in the location. most patrons are not car dependent when grocery shopping. they offer valet parking at thelumina. very few patrons request the stickers for valet parking. it is not a big issue. of the our nearby grocery stores, two offer no parking at all. i will give you more information about that.

we do agree with the claim that the layout of the space is an impediment to grocery. it is an awkward split of square footage between first floor and underground floor is not well suited to grocery. third reason sited by the developer is the neighborhood in proximity to woodlands were im peddiments. we agree with this claim. this is an unproven retail market, and the woodlands market is just two blocks away. i am digging in deep pirto this particular claim in the next several slides. we recently completed a study of the state every tail in san francisco as a whole for lewd.

the report was released earlier this year. i will rely on information from that study and other work we have done in the transbay area. i am going to give a really quick review of national trends in retail, reiterating a lot of what you just heard, but i will go over it quickly. nationally, retail ask undergoing a major restructuring. you may have seen the headlines. we just heard about store closures. it appears the trend has slowed in 2018, but it has continued this year. a major trend that continues is that online sales are driving growth in retail. in 2017, which is the most recent year that i have data,

half of all growth in retail happened online. online sales account to half of the growth in all retail. along with that trend and there is discussion about this in the previous presentation, grocery as a retail category is changing rapidly right now. grocery stores are experimenting. here in san francisco grocery stores are experimenting with online sales strategies, with delivery and click and collect. nationally amazon's purchase of whole foods suggests there is value in brick and mortar. they are an asset for sales. the whole foods 430 existing locations which are by large located in affluent urban areass

are expecting them as hubs. while preferring to go in person. the other major trend is that increasingly americans are spending their money on experiences rather than buying things. by experiences i mean dining out and travel are the experiences that are seeing an increase in sales. as part of the city wide study, we looked at how the financial trends are playing out here in san francisco. we looked at sales tax revenue city wide, and the thing that really jumps out is that since

2015, sales tax revenues for general consumer goods has been declining. for the last three years those sales have been declining. sales in restaurants continue to increase, but sales of stuff are down. i looked at the data for the most recent portion of 2018, an and that trend continues to this year. we also looked city wide at vacancies and specifically in the transbay area. in the transbay area earlier this year the vacancy rate was 16%. 16% every tail locations are vacant with vacancies concentrated in the eastern parts along fulsome street. this prevalence is something that retailers notice when they

look at a location. it doesn't provide the welcoming attractive location that they desire. as part of our work for ocii we looked at the competitor grocery stores and the map that you see here shows half-mile radius from the block 8 location, and the five grocers. there are five globe you ares located near this site. woodlands is two blocks. it is within that half-mile, then four more right on the pere outside. trader joe's on fourth, whole foods on fourth. safe way on kings street and

safe way on jackson street. two of those stores offer no on site parking. trader joe's and jackson street safe way. given the san francisco population and density and income. we found this half-mile radius or a 10 minute walk appear to capture most of the trade area for neighborhood or convenience retail like grocery. in a more suburban location there is an old rule of thumb a grocery store requires a population of 10,000 to 30,000 people within a one to three mile area to support the grocery. that is a different scale. we found that in san francisco in our denser neighborhoods about a half-mile usually covers it. that is why we have the circle at a half mile.

there are a few more factors of why we consider this a challenging retail location then i will go more to the demographics. this is a largely unproven retail location. we talked to brokers earlier this year for a different progress. they reported the lack of foot traffic, lack of location with a critical malice every tail, unwelcoming pedestrian environment, congestion, construction, ongoing construction all relate to this being a challenging location. in addition. the rents in the area are relatively high compared to other places in the city. all of that together makes it challenging for any type every tail.

with that i will go to the demographic to illustrate why we did agree that the current and projected population does not support an additional grocery store at this location. what you see on this slide is the current and projected population and job in the transbay area. the most significant source of demand in this area is office-based employment. for a couple different jobs we talked to retailers and brokers. this is an office-based employment neighborhood. that drives the retail that is currently available which is largely convenient space with serving those employment uses.

the area i is -- dominated by te workers. they might pick up food to take home. they are unlikely to do major shop and get on bart or transbay bus to go home. [please stand by] squires as you. [please stand by]

>> i want to go into the households. the types of households that are predominent. this compares the market areas. the majority of households of people living alone. there are few people with

children in the area. 50% of the people living alone in the neighbourhood. moving on to 8. we also have about 60% of the residents are between the ages of 25 and 44 years old. that is 60% of the residents in the category. and again, there are few children. there are 20% of houses without children. it is likely the households are made up with couples without kids. we have an area that is made of young adult single and young

couples. the demographic is more likely to eat out a lot. they are more likely to get takeout and they are less likely to do a lot of grocery shopping and cooking at home than other groups like families with children. so i have the slide on demographics and then we will finish up. this one shows median household income in the areas we talk about. it is $179,000 in the area. it is double that of san francisco as a whole. so the prevalent household type is young, living alone or a couple without kids. and very affluent. the demographic we will look at

when they think of relocation. and again, this is a demographic that is relatively doing more shopping online than other demographics. there is evidence of this in the area. the buildings have lockers or rooms for delivery. they have services for packages and delivery. and that is to accommodate all the online shopping that people are doing and the delivery that is happening. so just to wrap it up, in summary, we do not believe that the retail conditions in this area support a second grocery store at this time. and this is because the most significant source of demand or retail is dominated for office

workers. for the residents there, the demographic is a high income, single or couple demographic, and that number is growing with the influx of new high income households, there would be increased buying power in the area. that does not necessarily translate into increased demand for retail space or for groceries because of changes in shopping habits. the group that is doing more of online shopping than other groups including groceries. the other part of that is also that all americans, but particularly younger adults and high income individuals are increasingly eating out rather than shopping and cooking at

home. i think with that, i am done. >> okay. thank you. and we can answer any questions. before we answer questions. >> madam chair. >> good afternoon. i am a long time member. and i did not support the motion that was approved.

i oppose the recommendation. it is clear from the presentations we heard and the material that the developer had obligations. the developer had no obligations under the terms of the agreement. a at the meeting, the members of influence in attendance, the need for a grocery store in this neighbourhood, and i was thinking that maybe the way forward with this issue would be to change the focus on it.

i think the problem with the current situation is that the grocery store search we have been talking about here today was very restricted. it was restricted in terms of time and scope. in terms of time, basically they have been looking for a grocery tenant during the construction period in just the last couple of years. i moved into my place in 1990. it was over ten years after i moved in that we saw a full service grocery store anywhere in the neighbourhood. and now there are several. and it is wonderful. but it took time to develop. and i think this as the neighbourhood develops as i heard from the speakers, this neighbourhood will become more

attractive to a grocer. the other way that it was restricted was -- just to one storefront. if we expand to the entire neighbourhood, i think it will permit more properties that could be considered by a grocery tenant. my suggestion is if they wanted to take this on to have the staff prepare marketing, they would engage a retail consultant. all the vacant properties, the future properties -- and maybe in conjunction with the community. and work a property outside the project area within the neighbourhood itself. that is my suggestion. thank you. >> i will be quick.

i have three minutes. i would like to make a statement. before there was an oci, before there was a redevelopment agency, going way back. i am sick and tired of being sick and tired of the agencies, the workers -- you don't know the real history. the real history going way back. [indiscernible] th [indiscernible] i am sick and tired of all the newcomers coming here and talking and spending all the money. you should talk about the trends of the population? no. none of that is in the

demographics. you go back and tell all the developers that ace is back and on the case. i looked at the rules way back. i am bringing back and what do you think about that. i will say this, even to the mayor and the whole community, if we don't go way back and see what happened, [indiscernible] you are all developers.

we will have to pitch money. bring it back to where it was. if you don't... nobody wants to talk about issues. it gets emotional sometimes. what about us? okay. i get excited sometimes. i have to go back to my peers. my grandchildren. nobody is worried about them. you go back in the day.

let's go way back. >> hi. i am a homeowner in the district in the east. and i am talking today because i think most of us in the neighbour, the people who have been in the neighbourhood for a while, new residents too, feel as if we have been abandoned by the development in the area. that no matter what the data is and how it is characterized, we are one of the most dense if not the most dense districts in san francisco. we are a new district. we are not a community. there is no way we can build community if we do not offer the kind of retail that we need to service our community. not everybody is ordering

online. we are not going out to eat. there are no places to eat after 4:00 because of the neighbourhood is seen as this -- it caters only to employees. it is difficult to tell the retail. it is frustrating to see the designs, get excited about a supermarket that will go in. i was following the development of this going from 25,000 square feet to 13,000 square feet. and people saying that they can't fill the vacancy. i don't understand, after market closed, 10,000 retail space goes. there is no parking in the space. they are opening up. i don't understand why in my neighbourhood which is a wonderful place to live, a place that has -- there are people who

are very high income and there are people of low income housing. i am proud of that. we are the neighbourhood who stepped up out of all the neighbourhoods in san francisco to provide housing. for all people. of all kinds. and i would like to know how people in housing will go shopping. my neighbour who owns a property over $3 million can't even shop there. he complains. we joke about it. you have to take a mortgage out. and that's is just not right. in order to build community, we need store fronts. we need people to make a commitment to us. the commitments they make and the design to bring retail here instead of throwing up their hands and saying -- people are staying online and are not going into the community. we don't go into the community because we don't have retail. and we are a desert. there is no way we should be a desert. we should be a vibrant community that we see in all those plans and dreams that we were waiting to be fulfilled. thank you very much.

>> hi. i am a member of the ociicuc and i was part of the selection committee. the landscape has changed since the original bid in 2014. hopefully the profile brought out -- i would like to point out that the original offer on the table was for whole foods at 25,000 square feet. 10 parking spaces two blocks from the grocery store. that is an easy offer to turn down. so aside from that, i have two major concerns. one is that this is the last best chance we have to get a full grocery store.

and the remaining properties, blocks 2, 4, and 12 are not viable. it is a high end grocery store and it is expensive. it does not meet the needs of the residents, particularly the 35% of those who are in units. regardless of your household income, everyone needs to buy paper towel, toilet tissue. it doesn't really matter. some of the arguments made here today are exactly ones that are made nine years ago when i moved into the neighbourhood. to get a grocery store. more housing is wonderful. adding housing doesn't mean you have a neighbourhood. we need the basics and that starts with a grocery store. i would ask the commission to think about the mandate and its responsibility to the neighbourhood. if there is anything within the oci power to help build a neighbourhood, whether finding a new location for a grocer, or susidizing rent for a short

time, i would strongly encourage you all to do so. thank you. >> commissioners, thank you for the opportunity to speak. i am the vice-chair. at a meeting last thursday evening, we voted to oppose the leasing to pursue a grocery store in this space. there are three reasons why. one, we disagree with the need for a store -- the fact that retail has changed so much is -- these are not just convenience items we can do without. i want to advocate for a store. there are no other options. sometimes we can't live things to the free market.

the free market can't just make a space. we need to look at the only few viable spaces that we have and work with those in order to provide a grocery store for the community. we are as a community really bought into the long-term vision of building a pedestrian friendly neighbourhood. it has been a long-term vision. almost all of the committee members have been serving 10 years. two of us are 4 years. we have a long-term commitment to create a community and it is a slow process. we are getting near the end. we cannot start to abandon core elements now that we are getting near the end. i have two recommendations. one is related to the obligation. they take the financial

statements get the investors to invest. it is a risk. things change. it is reasonable, they could go back to the investors and say sorry, the retail market changed dramatically. we are have to pay $400 per square foot to get a grocery space. sorry about that. something worked out much better than the per for ma stated. some things were worse. i would recommend that the commission just hold related to the obligation and have them say that to the investors. the other option is that the city says we have an obligation, particularly to the people in affordable units, many of which will be families, the units that are not built, many of them are more than one bedroom units. and job development dollars could be applied to grocery

stores to create a very, very important amenity for people of all income levels moving into this high density neighbourhood. i encourage you not [indiscernible] thank you. >> good afternoon. i am the executive director of the east benefit district. i just wanted to step up because i think the district works tirelessly to listen to the neighbourhood and represent the neighbourhood. i can also say there are several board members standing behind -- or sitting behind me. and the cbd has not taken a position on block 8 or related to the grocery store. what i can say is that they have been a partner in the neighbourhood. they have been very engaged.

they have been a supporter of the street team, a work experience program for homeless folks to get a new start and change lives. we want what is best for the neighbourhood. we will work with other property owners to see a district that helps strengthen the economic base that currently exists. we, through our work in tracking vacancies and activating retail spaces understand the complex challenges and costs of doing business in san francisco. some of the ideas this afternoon, we are committed to see the ground floor be active. we do have a high density of office workers, but pushing 15,000 residents right now that have little happening on weekends and evenings.

it is a tremendous challenges and forces people to make the very decisions, we are compounding the online isolation we are talking about. i genuinely would ask to trust the commission and the process and the staff. we will work to bring something to the neighbourhood something will serve the neighbourhood that is growing rapidly. i would encourage you to look at the median and not the mean income. there are super high value properties, i would say a fair number of people, even people in housing do not make anything near. thank you. >> no more speakers? >> okay. i will refer for questions.

commissioner? >> thank you. i would like to thank everyone who participated in presenting to the commission. i thought they were very thoughtful presentations. i have received some of them previously and had a chance to think about this. i do have some questions, but i want to say at the outset, i am inclined to vote no on the staff recommendation. i can repeat a lot of what has been stated here, for members of the public, for folks who have written. but suffice it to say that these are the words that i will express, i don't live in the area. i live in the closest commercial corridor is heartland.

the area is not the same as it is today. it has changed a lot over the years. the grocery store is the heart and anchor of a lot of what happens on the street. and which grows around the grocery store is exciting. everything from retail to, you know, a wine shop. there are a lot of different varieties. i have a vision as a commissioner that transbay would be as vibrant as the heights. it would be a fun place for a san francisco person would want to go to eat. based on all of that and because we have a growing population of affordable households coming in,

we want to creation. i don't want the area to be a financial district south of... there has been a fabulous job of what i consider -- one would consider the normal good faith efforts. not the good faith efforts that i think, i tried to impart directly. not in the complexity that i would envision -- that i would see as a commissioner when we came to this place. the approval or disproval, the release of the condition of the commission item, it is precisely because i was chair of the commission and i would foresee that we would have the conversation at the staff level and i wanted it at the commission level so i could have

the members public speak to us, the way that they are. i do have perhaps an option, if you will. not an option but an alternative. i want to ask some series of questions. what i heard in the presentation is that the space was anticipated to be split level initially. did i hear that correctly? >> that is correct. >> was that designed -- was that design vision based on something that the developer came up with? or was it as a result of model? >> the transbay -- the city design. it is to better activate the

ground floor space. we took our experience and observation of the market that split level with one space, one floor, and an option for the design -- >> okay, was there thought given to the challenges that you felt along the way with the long list of grocers to think about it a little differently? have an experimenting view. the concept of a pop-up or a testing of the market. i agree in my experience having worked as we mentioned at the airport and understanding how retail is thought about, beverage opportunities, there is a question of what comes first.

i understand that grocers could be conservative, if you will, but there has to be incentive, i think to draw them to the area. did you consider other creative alternatives? >> we have considered creative alternatives as well. we will consider it going forward. we will give updates. we are considering concepts that offer a different type of offerings within a larger concept. an example of this would be the -- the market. they would account for the

space. they realize the business model was not feasible. they pulled out of the space and with the concept. the original proposal in 2014, it was also -- they envision a proposal that it would be innovative concept. we continue to explore because we really feel that the offerings, it is beneficial to the neighbourhood as well as the residents that are coming. >> can you tell if you know what prompted -- in