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Chao, Liang-Fang 3-12 1-35pm_UnredactedLiang-Fang Chao Sent via email — 3/12/20181:37 p.m. RE: Vallco Shopping District Specific Plan (NOT Vallco Special Area, which doesn't exist in the General Plan) Dear Vallco Planners and City Council members, Please consider these facts as you evaluate the land use decisions at Vallco Shopping District. FACT1: Plenty of Interested Developers. Nine Potential buyers were interested to purchase Vallco within weeks of being the market in 2012. Among them, three companies specialized in shopping malls: Federal Realty, Caruso Affiliated, DDR Corp. [May 19, 2014, Silicon Valley Business , ournal] (Vallco was purchased through a different agent to get around the first agent contacted by the 8 other interested buyers. This is still the subject of an ongoing lawsuit since 2014.) FACT2: Great Location. Vallco Shopping Center in Cupertino sits at the heart of the Silicon Valley, easily accessible by all South Bay cities. There is no large shopping center in Saratoga, Los Altos or Cupertino. The image below show that Vallco (in blue square) sits in an area without sufficient coverage of shopping centers. WPI.. m.4 h1h. mid in }nnny'v�Y. Vallco is the blue square, between the two clusters of circles. FACTS: Affluent, Stable and Growing Population. The area around Vallco Shopping Center is an affluent community. The population in Cupertino has been growing at a faster pace than the Bay Area Average. Other neighboring cities, like San Jose, Santa Clara and Sunnyvale have plan to build thousands more housing units. FACTS: Stable Occupancy. EC 9212 Report for Measure C states that the occupancy rate of Vallco Mall was 66% in Nov. 2014 when Sand Hill took over Vallco. Majority of the occupants have been in Vallco since 2009 or earlier with a steady customer and were reluctant to leave Vallco. (At least 80% of the 1.2 million square feet of the former Vallco was occupied with stable businesses and stable customer base in 2014. More in http://bettercupertino.blogsl2ot.com/2016...) Most of the Vallco Mall was occupied by many long-term viable business with stable customer. The large ones: Ice Center, Bowlmor, Dynasty Restaurant, Alexander's Steakhouse, Victoria Secret, Magic with 2 shops, Tatami, TGI Friday's Restaurant, Benihana of Tokyo, Fresh Choice, New Things West with 2 shops, Famous Footwear. Smaller ones: Howard's Shoes, American Nail, Perfume Plus, Capezio, Toys Sports Cards, SportAction, Gymboree, General Nutrition Center (GNC), Alteration Express, Apollo & TZ, Grain D'or, Elite Menswear, Site for Sore Eyes, Maxi's Fine Jewelry, Cinnabon, Preztel Maker. n_!p" la WdUa m4Tnmd OTaNa Sal" of wall cmtmlift Nils CeruimklmknF 3� ' ra�sars��+Mk+Mb �+�, — Ie+stleu4eP96i+ln 33)P S-afvo�am-n �-�. 5106 2d L# vk. u o li��l� I��i dD:4-1... nue 1hw T" ..��amainae..toihr p, uxuo- ..o..,�«,. 2W M? AM Mt MP &H X41 2M 2*14 4015 Figure III.3 (p.55) in EC 9212 Report for Measure C • Steady Sales. Figure III.3 (p.55) in EC 9212 Report for Measure C shows that the sales at Vallco has remained relatively steady and kept up with inflation, despite of ignorance by the management without many promotional activities for years. FACT6: NOT Operated by Professionals. Successful malls are operated by professional shopping mall management companies, such as Simons, Westfield or Federal Realty. But Vallco has been owned by real estate developers who have no experience running successful shopping malls. (More in Vallco Mall: the Abused and Neglected Poor Orphan with Great Potential) • Moderate malls and their management firms: (ordered by sq. ft.) + Santana Row - 625,000 sq. ft. - Federal Realty + Westgate Mall - 637,000 sq. ft. - Federal Realty + Eastridge Mall -1 million sq. ft. - General Growth Properties (GGP) + Oakridge Mall -1.14 million sq. ft - Westfield + Vallco -1.2 million sq. ft. ** a string of inexperienced owner or developer ** + Stanford Shopping Center, 1.34 million - Simon Property + Great Mall (Milpitas), 1.36 million - Simon Property + Valley Fair -1.5 million s.f. - Westfield • Professional shopping center management firms: + Simon Property - more than 225 retail properties totaling approximately 189 million sq. ft. + General Growth Properties (GGP) -120 U.S. locations, Total 125 million s.f. + Westfield - 38 shopping centres, 46 million square feet of retail space + Federal Realty - Federal Realty's 90 properties include over 2,600 tenants, in approximately 21 million square feet. + Sand Hill - real estate developer who builds mostly office buildings and some small scale shopping centers. No shopping center is operated by Sand Hill as a long-term holding. FACT7: Bay Area shopping malls have about 2% vacancies in 2015 and 2016. The highest occupancy levels are in the South Bay. Both enclosed malls and he other types of shopping centers are doing well. • "The highest occupancy levels are in the South Bay. The South Bay also has more disposable income than other areas." [Mercury News, May 13, 2016] • "Because of the Bay Area's "exceptionally strong economic performance in recent years," both enclosed malls and the other types of shopping centers are doing well, said Garrick Brown, the vice president of research for DTZ." [San Francisco Business Times, Feb. 23, 2015] FACTS: All three anchor stores are performing well at Vallco. Macy's earning is better than the Macy's in Sunnyvale. Valley Fair Macy's --in a large mall with better regional location --is doing better than the Vallco Macy's. The earnings of Vallco JCPenny is among the best in California. Sears is also profitable. All three anchor stores did not have any plan to close the store in Vallco, when interviewed for the Retail Strategy Report (March 6, 2014, prepared by the retail consultant for the GPA). • More in The Three Anchor Stores Were Not Doing Well? Or Were They Pushed Out? • Long-time tenants were pushed out: Vallo Shop Owners Speak Up - 2015-11-03 CC Meeting FACT9: Vallco sales remained steady throughout 2008-2009 recession. The 2014 sales is only slightly less than that of 2006 sales, after adjusted for inflation. On the other hand, the sales of Stanford Shopping Center has seen a big decline during 2008-2009 recession and even the 2014 sales is still significantly lower than the 2006 sales. Refer to Figure III.3 (p.55) in EC 9212 Report for Measure C above. REFERENCE: • "Cupertino's ghost mall, Vallco, may be best hope for a real downtown — despite vexing lawsuit", May 19, 2014, Silicon Valley Business Journal (http://www.bizjoumals.com/sanjose/news/2014/05/19/cupertino-s-ghost-mall- vallco-may-be-best-hope-for.html) • EC 9212 Report of Measure C from March 31, 2016 City Council meeting. • "Bay Area shopping malls enjoy low vacancy rates," May 13, 2016, Mercury News (http://www.mercurynews.com/2016/05/13/bay-area-shoppin -malls- enj oy-low-vacancy-rates/) • Why these are boom times for some Bay Area malls, Feb. 23, 2015, San Francisco Business Times (http://www.bizjournals.com/sanfrancisco/blog/2015/02/bay- area-malls-shopping-center-occupancy-2014.html) • Vallco Myth Busters, Jan. 25, 2015: http://www.bettercupertino.org/vallco-myth- busters • Retail Strategy Report (March 6, 2014, prepared by the retail consultant for the GPA). Retail Strategy Report (March 6, 2014, prepared by the retail consultant for the GPA). Reference: Stakeholder Interviews and Discussion, Page 54 of the Retail Strategy Report. "It was confirmed that the Vallco store does better than Macy's at Sunnyvale Town Center, but much lower sales than Valley Fair..... While no plans to do so were expressed, if choosing a store to close between Vallco and Sunnyvale, Sunnyvale would be the more obvious choice.... Since the store makes money, the tendency is not to consider closure." "....[Sears] intend to maintain control over their real estate, they do not want any planning process to result in a redevelopment plan they do not like, .... There was little interest expressed in either relocation or a store closure." "While the surrounding mall environment is severely packing, the store performs well. JCPenny has reinvested in the Vallco store over the past two years including the addition of a home department and other shops in the store.... They would be concerned about the size of a retail component as part of such a project, like many retailers wanting to be part of a critical mass large enough to be a designation attraction for customers.... they would like to continue operating in the market and at Vallco" Cupertino's ghost mall, Vallco, may be best hope for a real downtown — despite vexing lawsuit, May 19, 2014, Silicon Valley Business Journal (http://www.bizjoumals.com/sanjose/news/2014/05/19/cupertino-s-ghost-mall-vallco- may-be-best-hope-for.html) Excerpts: There was no shortage of interested parties. Within weeks, the brokers had signed confidentiality agreements with nine potential buyers to look into the property offering further. The list included Apple, which already had a sizable office presence in the neighborhood; Federal Realty, the national shopping -center landlord; the Sobrato Organization, the Cupertino -based developer and landlord; Barry Swenson Builder, a longtime San Jose -based developer; and Caruso Affiliated, the high-profile Los Angeles lifestyle center developer headed by billionaire Rick Caruso. Also signing agreements: Irvine Company, the huge privately held landlord; DDR Corp., a large operator of retail power centers; Bristol Group Inc., a San Francisco -based investment firm that specializes in distressed assets; Grosvenor, the Britain -based investor/developer; and Redwood City -based Sand Hill Property Co., headed by Pau. "According to court records, companies that looked at buying the mall included Cupertino -based Apple Inc., national mall operators such as Federal Realty Investment Trust (owner of San Jose's Santana Row) and major real estate developers including Caruso Affiliated (owner of the successful The Grove and Americana at Brand projects in the Los Angeles area). None of the potential buyers appear to have actually gone into contract on the property, and it's unclear just how interested they were."