Existing Conditions & Market Demand Analysis — Diamond Bar City Council, January 24, 2023

EXISTING CONDITIONS &

MARKET DEMAND ANALYSIS

D I A M O N D B A R T O W N C E N T E R

D I A M O N D B A R , C A L I F O R N I A
Prepared for Torti Gallas + Partners
September 6, 2022
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 2 Since 1967, RCLCO has been the “first call” for real estate developers, investors, the public sector, and non-real estate companies and organizations seeking strategic and tactical advice regarding property investment, planning, and development.

RCLCO leverages quantitative analytics and a strategic planning framework to provide end-to-end business planning and implementation solutions at an entity, portfolio, or project level. With the insights and experience gained over 50 years and thousands of projects–touching over $5B of real estate activity each year–RCLCO brings success to all product types across the United States and around the world.

Learn more about RCLCO at www.RCLCO.com.

ABOUT RCLCO

REPORT AUTHORS
Project Director:

Derek Wyatt, Managing Director
► P: (310) 203-3035 | E: [email protected]
Project Manager:

Jordan LaMarche, Vice President
► P: (310) 752-9032 | E: [email protected]
Additional Authors:

Tyler Fischer, Associate
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 3

CONTENTS
KEY FINDINGS 4
REGIONAL OVERVIEW 10
DEMOGRAPHICS & EXISTING CONDITIONS 14
MULTIFAMILY COMPETITIVE ENVIRONMENT 31
FOR-SALE COMPETITIVE ENVIRONMENT 44
SENIOR HOUSING 50
RETAIL MARKET OVERVIEW 54
HOSPITALITY COMPETITIVE MARKET 65
OFFICE COMPETITIVE MARKET 70
DISCLAIMERS 74
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 4

KEY FINDINGS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 5

BACKGROUND & OBJECTIVES

BACKGROUND & OBJECTIVES
Torti Gallas + Partners (“Client”) was retained by the City of Diamond Bar to prepare the Town Center Specific Plan (TCSP). The TCSP will serve as a long-range plan to transform an aging commercial area into a mixed-use urban village. RCLCO has been commissioned as a sub-consultant by Torti Gallas + Partners to complete a market demand analysis, fiscal impact analysis, and existing conditions analysis.

RCLCO is providing initial findings relevant to the existing conditions of the Diamond Bar Town Center, the City of Diamond Bar, as well as an analysis of broader market trends.

This component of the study focuses specifically on housing, population, demographic, and social characteristics, economic conditions and factors, and local business conditions.

RCLO also identified economic and demographic drivers of growth, how they impact the quantity and quality of demand for residential and commercial land uses, and where that demand most desires to locate. The interrelationship of these factors inform an assessment of supply-demand dynamics underpinning the optimal development potential for the Town Center.

Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 6

MARKET OPPORTUNITY
THE SUBJECT SITE IS HIGHLY ACCESSIBLE AND WELLPOSITIONED IN AN AFFLUENT CITY IN THE GROWING SAN

GABRIEL VALLEY
► The proposed Diamond Bar Town Center is located adjacent to California 57 and California 60 providing convenient access to the rest of the San Gabriel Valley to the west, Orange County to the south, and the Inland Empire to the east. The site benefits from strong visibility along the highway, as well as positioning along major thoroughfares Diamond Bar Blvd and Golden Springs Dr. within the City of Diamond Bar.
► Given the city’s current lack of a central retail corridor or true town center, the Diamond Bar Town Center has the opportunity to capture a broad demand pool for retail, dining, hospitality, and multifamily housing with limited competition. ► Diamond Bar is a highly affluent city with over 67% of residents earning more than $75,000 annually, significantly higher than the San Gabriel Valley (52%) and Los Angeles County (50%). Average household incomes within Diamond Bar are also substantially greater than surrounding areas at nearly $130,000 annually compared to $104,000 in the San Gabriel Valley and $105,000 in Los Angeles County.
► Households earning over $200,000 annually are the fastest growing segment within Diamond Bar while all households earning less than $100,000 are projected to shrink over the next five years as the area grows increasingly affluent.

STRONG OPPORTUNITY FOR RESIDENTIAL – TOWN CENTER
COULD SUPPORT OVER 2,000 HOUSING UNITS
► Development of new housing in Diamond Bar has been limited over the past two decades. No new apartment communities have delivered in the city since 1989 and building permits within the City decreased precipitously between 1980 and 2000 before receding again following the financial crisis in 2008. ► The limited inventory of apartments within Diamond Bar has led to historically low vacancies of just 0.8%. Tight vacancies combined with strong rent growth averaging 5.3% between 2017 and 2021 indicate strong demand for new multifamily housing.
► While these analyses typically utilize historical patterns of new construction and housing demand to project future demand, RCLCO believes the market has been underdeveloped for several decades and harbors inherent unmet demand. The aging population of Diamond Bar is resultant of a lack of new housing and the introduction of a highly stratified and master-planned housing program should induce the latent demand within the region that has been building. ► The proposed program includes diversified rental housing options ranging including 360 workforce apartments, 440 standard apartments, 320 premium apartments, 125 rental townhomes, 180 senior housing units, and 310 affordable units (50% AMI). RCLCO recommends each product type be sized such that it achieves stabilization in two years with staggered delivery dates. ► The for-sale program at the Subject Site includes 200 townhomes and 120 stacked flat condominiums. RCLCO projects that staggered sales of each product type are likely to be completely absorbed over ten years.

Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 7

MARKET OPPORTUNITY

A VIBRANT RETAIL CORE IS THE FOUNDATION OF

SUCCESSFUL MIXED-USE TOWN CENTERS
► The retail market in the San Gabriel Valley is strong with vacancies currently at

4.9% and average lease rates of nearly $27 NNN per square foot. In Diamond Bar, NNN lease rates are 28% higher than the surrounding Southeast San Gabriel Valley, $25.16 compared to $19.70 per square foot. However, retail rents in the existing Diamond Bar Town Center are much lower at just $18.80 per square foot.
► Diamond Bar has experienced limited retail deliveries since 2010 which has reduced vacancies to just 6.7% as the area enjoyed strong, positive net absorption over the past decade.
► Retail space in mixed-use developments benefits from synergies created through the on-site housing and increased demand from the broader community generated through careful programming. Comparable retail town centers, such as NoHo West in Los Angeles, Alhambra Place, Santana Row in San Jose, and Center Street Anaheim, are performing well, attracting notable tenants and achieving rents up to $50 NNN per square foot per year on average. ► RCLCO’s analysis suggests the Diamond Bar Town Center should reposition some existing retail as a ground-floor retail component of proposed multifamily housing. The approximately 125,000 square feet of ground-floor retail would likely be oriented towards residents with retail, grocery, and services programming. An additional 321,000 square feet of retail is proposed as the frontfacing, retail town center. The town center would benefit from an entertainment anchor, such as a movie theater, as a focal point, increasing the draw to the area and inducing additional demand.
► The careful programming and reorientation of retail at the Diamond Bar Town Center creates the opportunity to generate significantly higher retail rents.

HOTEL COMPLEMENTS THE MIXED-USE ORIENTATION OF

THE SITE
► The existing hotel at the Diamond Bar Town Center, the Best Western Diamond Bar Hotel & Suites, is a 97-room midscale hotel. Constructed in 1988, the Best Western is one of the older hotel properties in the area, but is well positioned off the highway to provide good visibility and accessibility to the future Diamond Bar Town Center.
► The current hospitality pipeline for the Southeast San Gabriel Valley is historically large with one property with 148 rooms under construction and an additional five properties in various stages of planning, representing an additional 576 hotel rooms.
► While the existing Best Western Diamond Bar could potentially reposition as a more elevated brand and increase the number of rooms offered, the historically outsized pipeline presents additional challenges as the property would likely face increased competition in the higher tier as properties begin to deliver. ► RCLCO analyzed demand for hotel rooms in the Southeast San Gabriel Valley and projects that there is demand for 220 rooms in excess of existing and planned hotels over the next decade. However, given the existing hotel property and the outsized pipeline, RCLCO does not recommend adding additional hotel space to the Diamond Bar Town Center.

OFFICE MARKET FUNDAMENTALS INDICATE POOR

OPPORTUNITY AT THE DIAMOND BAR TOWN CENTER
► Current market dynamics do not appear to support office space at the Diamond Bar Town Center. Office vacancies in Diamond Bar have been rising since 2018 and are currently at a historic high of 12.2% with negative net absorption over each of the previous four years. Further, office development in Diamond Bar has been limited over the past decade, indicating that it is not a recent oversaturation of product leading to increasing vacancies. As such, RCLCO does not recommend including new office space in the Diamond Bar Town Center.

Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 8

SITE CONTEXT
Image Source: Esri

STRENGTHS
► Affluent Neighborhood: The average household income in Diamond Bar in 2021 was just under $130,000, far exceeding the average household income of $104,000 in the San Gabriel Valley, and $113,000 in Los Angeles County. With strong median home values and affluent, middle-aged residents, Diamond Bar presents a strong opportunity for the Diamond Bar Town Center to capture spending from this key demographic.
► Visibility and Access: Located adjacent to two major area freeways, California 60 and California 57, the Diamond Bar Town Center is visible and accessible from major freeways. Further, the site is easily accessible to residents of the San Gabriel Valley as well as the eastern portions of San Bernardino and Riverside counties.

OPPORTUNITIES
► Limited Multifamily Housing: Diamond Bar has not had the delivery of new multifamily rental product in over 15 years and currently only has 500 market-rate multifamily rental units across three properties. Given the mixed-use concept, the Diamond Bar Town Center redevelopment has the opportunity to deliver high-quality multifamily units that should provide synergies across the retail offerings. ► Retail Gap: The City of Diamond Bar is currently underserved with retail establishments. Average retail sales per capita, per Esri, in Los Angeles County is approximately $14,000 annually compared to just over $10,000 per capita annually in Diamond Bar. With neighboring cities, Covina ($21,000), San Dimas ($16,000), and West Covina ($14,000) generating much greater retail sales per capita, the Diamond Bar Town Center is positioned to capture a greater portion of local spending and fill a sizeable retail gap in the city of Diamond Bar.

CHALLENGES
► Community Serving Retail: Retail establishments currently located in the Diamond Bar Town Center are largely community and commuter serving. The majority of these business do not attract patronage from outside the immediate Diamond Bar area, and those that do are likely capturing spending from commuters due largely to the site’s proximity to several major freeways (McDonald’s, Chevron, Shell, 7-Eleven). The retail offerings at the site will likely need to be elevated and represent a broader array of shopping options to transform the site into a retail destination.

Map of Diamond Bar Town Center
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 9

RECOMMENDED DEVELOPMENT PROGRAM
Source: RCLCO

THERE IS A STRONG OPPORTUNITY FOR THE DIAMOND BAR TOWN CENTER TO BE DEVELOPED AS A RESIDENTIAL

ANCHORED, MIXED-USE DISTRICT WITH COMPLEMENTARY RETAIL SPACE AND HOTEL ROOMS ► RCLCO believes the Subject Site can support over 1,200 market-rate rental units, 310 affordable rental units, and 320 for-sale properties over the next decade. ► The site is proposed to be developed with a movie theater as a central point within the retail center to draw unmet cultural demand.

ACHIEVABLE POSITIONING
(RENT/PRICE)

TEN YEAR MARKET

POTENTIAL

RESIDENTIAL USES
Market Rate Apartments (p. 31) 360 Workforce apartments, 440 standard apartments, 320 premium apartments, and 125 rental townhomes
$2,890 per month 1,245 units
$3.34 per square foot Average 865 square feet
Affordable Apartments (p. 31) 310 affordable units - 20% of all housing units allocated to affordable housing at 50% AMI
$1,225 per month 310 units
$1.57 per square foot Average 780 square feet
For-Sale (p. 44) 200 For-sale townhomes and 120 stacked flat condos $977,000 320 units
$576 per square foot Average 1,695 square feet
Total
1,875 units
Average 995 square feet

NON-TRADITIONAL RESIDENTIAL
Senior Housing (p. 50)
$4,025 per month 180 units
$5.59 per square foot Average 720 square feet

COMMERCIAL USES
Retail (p. 54)
Retail town center anchored around a movie theater/large gym with increased entertainment & services, restaurant, and grocery space $3.00-$4.00/SF/Mo. NNN 321,300 square feet Ground-floor retail at multifamily properties with street-level retail, grocery, and service spaces.
$3.00-$4.00/SF/Mo. NNN 125,000 square feet
Total 446,300 square feet
Hotel (p. 66) Existing Hotel (Diamond Bar Best Western) $140 ADR 97 Rooms Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 10

REGIONAL OVERVIEW
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 11 LOS ANGELES EXPERIENCED SIGNIFICANT JOB LOSSES DURING IN 2020 BUT DEMONSTRATED A STRONG RECOVERY IN 2021

AND IS PROJECTED TO OUTPACE THE COUNTRY OVER THE NEXT FIVE YEARS ► Between 2011 and 2019, Los Angeles County added over 937,000 jobs, translating to average annual job growth of 1.8% per year. In comparison, the country as a whole demonstrated average annual job growth of just 1.6% during this same period. ► Los Angeles County lost nearly 539,000 jobs in 2020 following the start of the COVID-19 pandemic, representing a 9% downturn in job growth compared to just 6% nationally.

However, Los Angeles County enjoyed job growth of 3.1% in 2021 surpassing the national average of 2.8%. Further, Los Angeles County is projected to average job growth of

2.0% over the next five years versus just 1.4% nationally during the same period.

REGIONAL EMPLOYMENT GROWTH
Source: Moody’s Analytics; RCLCO
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
-600
-500
-400
-300
-200
-100
0 100
200
300
400
Annual Growth Rate
Annual Growth (000s)
Historical Growth - Los Angeles County Growth Rate - Los Angeles County Growth Rate - National Historical and Projected Employment Growth, 1992-2026;
Los Angeles County
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 12

LOS ANGELES COUNTY EMPLOYMENT IS PROJECTED TO
GROW BY 6.2% OVER THE NEXT DECADE WITH CONTINUED

RECOVERY IN LEISURE & HOSPITALITY AND PROFESSIONAL
& BUSINESS SERVICES SECTORS
► Education & health services surpassed trade, transportation, & utilities as the largest employment sector in Los Angeles County in 2020, and is projected to grow an additional 7.7% between 2022 and 2031.
► The recovery and continued growth of the leisure & hospitality sector is projected to account for over 273,000 jobs by 2031.
► The construction industry is projected to retract by approximately 12% over the next decade, representing a loss of over 20,000 jobs in the field.

REGIONAL EMPLOYMENT
Source: Moody’s Analytics, RCLCO
Historic Projected Employment by Industry, 1991-2031;
Los Angeles County
Employment Growth and Distribution by Industry 2010-2031 Los Angeles County
0 200
400
600
800
1,000
1,200
1,400
Total Employment (000s)
Edu. & Health Services
Trade, Transp. & Utilities
Prof. & Business Services
Leisure & Hospitality
Government
Manufacturing
Financial Activities
Information

INDUSTRY

SHARE OF
GROWTH (2010-
2021)

FORECASTED GROWTH
(2022-2031)
TOTAL

DISTRIBUTION
(2021)
Edu. & Health Services 28.0% 7.7% 18.3%
Prof. & Business
Services 23.7% 8.3% 16.2%
Construction 46.0% -12.4% 4.3%
Trade, Transp. & Utilities 7.9% -0.1% 18.2%
Leisure & Hospitality 10.0% 23.7% 10.3%
Information 11.0% 6.8% 4.0%
Financial Activities 3.9% 3.6% 5.6%
Other Services 1.2% 9.1% 3.1%
Natural Resources -40.2% 2.0% 0.0%
Government -2.5% 5.9% 12.2%
Manufacturing -13.7% -1.9% 7.8%
TOTAL 10.9% 6.2% 100.0%
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 13

GEOGRAPHY DEFINITIONS
Source: Esri

WITHIN THE SOUTHEASTERN PORTION OF THE SAN GABRIEL VALLEY AND BORDERING SAN BERNARDINO COUNTY, THE DIAMOND BAR TOWN CENTER IS LOCATED IN THE AFFLUENT SUBURB OF DIAMOND BAR. THE SITE IS WELL LOCATED NEAR

MULTIPLE FREEWAYS, PROVIDING HIGH VISIBILITY AND CONVENIENT ACCESS TO THE BROADER LOS ANGELES REGION KEY
City of Diamond Bar
Diamond Bar Town Center
KEY
San Gabriel Valley
Southeast San Gabriel Valley (Zip Codes: 91765, 91766, 91768, 91789)
Map of San Gabriel Valley, Southeast San Gabriel Valley, and Diamond Bar Map of Diamond Bar and Diamond Bar Town Center
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 14

DEMOGRAPHICS & EXISTING

CONDITIONS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 15

IN DEPTH DEMOGRAPHICS
Source: Esri; RCLCO
DIAMOND BAR IS A HIGHLY AFFLUENT CITY WITH A SIGNIFICANT PROPORTION OF HOUSEHOLDS (52.7%) EARNING GREATER THAN $100,000 ANNUALLY AND A RENTER PROPENSITY (19.8%) MUCH LOWER THAN SURROUNDING COMMUNITIES (31.1%+) Note: The Competitive Market Area above is the geography defined on page 16.

CHARACTERISTIC DIAMOND BAR SE SAN GABRIEL VALLEY SAN GABRIEL VALLEY LOS ANGELES COUNTY CALIFORNIA

POPULATION
2000 56,737 197,582 1,857,838 9,519,135 33,871,648
2010 55,544 195,804 1,865,973 9,818,605 37,253,956
2021 55,942 199,842 1,902,943 10,108,711 39,476,705
2026 55,867 200,534 1,913,564 10,229,558 40,507,842
Growth Rate (2000-2010) -0.2% -0.1% 0.0% 0.3% 1.0%
Growth Rate (2010-2021) 0.1% 0.2% 0.2% 0.3% 0.5%
Growth Rate (2021-2026) 0.0% 0.1% 0.1% 0.2% 0.5%
Per Capita Income (2021) $41,876 $29,394 $31,567 $34,684 $38,272

HOUSEHOLDS
2000 17,758 52,943 556,576 3,133,720 11,502,870
2010 17,880 53,556 566,873 3,241,204 12,577,498
2021 17,992 54,487 576,979 3,328,361 13,283,432
2026 17,912 54,498 578,785 3,366,546 13,615,954
Growth Rate (2000-2010) 0.1% 0.1% 0.2% 0.3% 0.9%
Growth Rate (2010-2021) 0.1% 0.2% 0.2% 0.2% 0.5%
Growth Rate (2021-2026) -0.1% 0.0% 0.1% 0.2% 0.5%
Average Household Size (2021) 3.11 3.67 3.30 3.04 2.97
Average Household Income (2021) $129,776 $107,499 $104,060 $105,124 $113,468 HOUSEHOLDS AGE DISTRIBUTION (2021)
Under 35 11.7% 16.3% 15.9% 19.4% 19.4%
35-54 35.7% 38.0% 37.3% 38.2% 36.2%
Over 55 52.7% 45.7% 46.8% 42.5% 44.4%
HOUSEHOLDS INCOME DISTRIBUTION (2021)
Under $50,000 20.4% 29.5% 31.7% 34.4% 31.6%
$50,000-$99,999 25.1% 29.1% 29.6% 28.5% 27.7%
Over $100,000 54.4% 41.3% 38.7% 37.1% 40.6%

HOUSEHOLD RENTER PROPENSITY
Renter Propensity (2000) 17.4% 28.1% 41.6% 52.1% 43.1%
Renter Propensity (2010) 18.9% 29.8% 42.2% 52.3% 44.1%
Renter Propensity (2021) 19.8% 31.4% 43.6% 54.0% 44.3%
Renter Propensity (2026) 19.5% 31.1% 43.4% 54.3% 44.2%
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 16

DEMOGRAPHIC OVERVIEW
Source: Esri; RCLCO

THE COMPETITIVE MARKET AREA HAS A LOWER RENTER PROPENSITY THAN LOS ANGELES AS A WHOLE, BUT A MUCH GREATER PROPORTION OF HOUSEHOLDS EARNING OVER $50K WITH A SLIGHTLY LARGER AVERAGE HOUSEHOLD SIZE Tenure (2021) Average Household Income (2021)
Average Household Size (2021) Annual Household Growth Rate Note: The Competitive Market Area above is the geography defined on page 16.

80.2%

68.6%

56.4% 46.0% 55.7%

19.8%

31.4%

43.6% 54.0% 44.3%
Diamond Bar Southeastern
San Gabriel
Valley
San Gabriel
Valley
Los Angeles
County
California
Rent
Own

3.11 3.67

3.30 3.04 2.97
Diamond Bar Southeastern San
Gabriel Valley
San Gabriel
Valley
Los Angeles
County
California

0.1%

0.2%

0.3%

0.9%

0.1%

0.2%

0.5%
-0.1%

0.0%

0.1%

0.2%

0.5%
Diamond Bar Southeastern San
Gabriel Valley
San Gabriel Valley Los Angeles County California
2000-2010 2010-2021 2021-2026
$129,776
$107,499 $104,060 $105,124
$113,468
Diamond Bar Southeastern San
Gabriel Valley
San Gabriel
Valley
Los Angeles
County
California
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 17 1.1% 10.6% 16.5% 19.2% 24.9% 18.6% 9.1% 2.2% 13.8% 18.1%19.2% 19.7% 15.3% 11.7% 3.1% 16.3% 19.2% 19.0% 18.5% 13.7% 10.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%
<25 25-34 35-44 45-54 55-64 65-74 75+
Diamond Bar San Gabriel Valley Los Angeles County

HOUSEHOLDS BY AGE
Source: Esri; RCLCO
DIAMOND BAR HOUSEHOLDS SKEW OLDER, WITH 43.5% OF HOUSEHOLDS BETWEEN 55 AND 74; COMPARED TO 35.5% IN THE SAN GABRIEL VALLEY, AND 32.2% IN ALL OF LOS ANGELES COUNTY Household Distribution by Age (2021)
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 18 DIAMOND BAR HAS AN AFFLUENT HOUSEHOLD BASE WITH 54.4% OF HOUSEHOLDS EARNING OVER $100,000; COMPARED TO

38.7% IN THE SAN GABRIEL VALLEY, AND 37.7% IN ALL OF LOS ANGELES COUNTY 4.9% 3.1% 5.9%6.6% 12.4% 12.7%

24.5%

14.4%

15.5%

7.8%

7.0%

6.9%

10.0%

16.2%

13.4%

18.9%

9.3%

10.5%

9.7%

7.4%

7.3%

10.1%

15.8%

12.7%

17.1%

8.6%

11.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%
Diamond Bar San Gabriel Valley Los Angeles County

HOUSEHOLDS BY INCOME
Source: Esri; RCLCO
Household Distribution by Income (2021)
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 19

DIAMOND BAR DEMOGRAPHIC

DISTRIBUTION
Median Age by Census Tract
Diamond Bar, 2021
Household Growth by Census Tract,
Diamond Bar, 2010 - 2021
KEY
50 and Over
45 – 49
40 – 44
35 – 39
Under 35
Median Household Income by Census Tract,
Diamond Bar, 2021
KEY
$200,000+
$150,000 - $199,999
$100,000 - $149,999
$50,000 - $99,999
Under $50,000
KEY
> 3%
2% - 3%
1% - 2%
0% - 1%
< 0%
Diamond Bar Town Center
Source: Esri; RCLCO

HOUSEHOLD GROWTH IN DIAMOND BAR HAS BEEN LIMITED OVER THE LAST DECADE AS THE CITY IS AN ESTABLISHED SUBURB. DIAMOND BAR HAS A HIGH PROPORTION OF HOUSEHOLDS EARNING BETWEEN $150,000 AND $199,999 AND RESIDENTS ARE GENERALLY BETWEEN THE AGES OF 40 AND 49, SKEWING OLDER AND MORE AFFLUENT THAN

SURROUNDING AREAS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 20

STRENGTH OF PREDOMINANCE
>65% of the Block Group
<20% of the Block Group

ETHNICITY
Source: Esri; RCLCO
THE ASIAN COMMUNITY ACCOUNTS FOR 56% OF DIAMOND BAR RESIDENTS, A FAR GREATER PROPORTION THAN IN THE

SURROUNDING SAN GABRIEL VALLEY AND LOS ANGELES AS A WHOLE KEY
Hispanic Population
White Population
Asian Population
Black Population
Non-Hispanic Multiple Race Population

DIAMOND BAR SOUTHEAST SAN GABRIEL VALLEY SAN GABRIEL VALLEY LOS ANGELES COUNTY

NUMBER OF
RESIDENTS % OF TOTAL

NUMBER OF
RESIDENTS % OF TOTAL
White Population 16,652 30% 75,197 38% 837,046 44% 4,898,203 48% Black Population 2,081 4% 8,904 4% 64,633 3% 826,820 8% American Indian Population 172 0% 1,449 1% 14,175 1% 70,842 1% Asian Population 31,331 56% 64,541 32% 510,609 27% 1,525,640 15% Pacific Islander Population 105 0% 332 0% 2,248 0% 25,898 0% Some Other Race Population 3,256 6% 40,711 20% 394,054 21% 2,262,171 22% Multiple Races Population 2,347 4% 8,708 4% 80,195 4% 499,137 5% Total Population 55,942 100% 199,842 100% 1,902,943 100% 10,108,711 100% Households 17,992 54,487 576,979 3,328,361
Population by Race (2021)
Diamond Bar and Surrounding Area
Diamond Bar Town Center
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 21

DEMOGRAPHIC DIVERSITY
Source: Esri; RCLCO
DIAMOND BAR HAS A DIVERSITY INDEX OF 73, INDICATING A STRONG DEGREE OF DIVERSITY, THOUGH LOWER THAN NEARBY

COMMUNITIES OF WEST COVINA, COVINA, AND POMONA
Demographics by Geography (2021)
.
56%
32%
27%
15%
30%
38% 44%
48%
6%
20% 21%
22%
4% 4% 3%
8%
4% 4% 4% 5%
0% 1% 1% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%

DIAMOND BAR SOUTHEAST SAN

GABRIEL VALLEY

SAN GABRIEL
VALLEY

LOS ANGELES
COUNTY
Asian Population White Population
Some Other Race Population Black Population
Multiple Races Population American Indian Population
Diversity Index by Census Tract
Diamond Bar and Surrounding Areas; 2021
KEY
80 & Greater
60 – 79
40 – 59
20 – 39
Under 20
Note: The Census Diversity Index indicates the probability that two people chosen at random will be from different race and ethnic groups.

Diamond Bar Town Center
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 22 THE VAST MAJORITY (93%) OF DIAMOND BAR RESIDENTS WORK OUTSIDE OF THE CITY, WITH A SIGNIFICANT PORTION (41%) COMMUTING BETWEEN 10 AND 24 MILES TO WORK. HIGHER-DENSITY BUSINESS CORES ALONG CA-60, DOWNTOWN LOS

ANGELES, AND ANAHEIM ARE KEY EMPLOYMENT CENTERS FOR DIAMOND BAR RESIDENTS

DIAMOND BAR LIVE/WORK TRENDS

INFLOW/OUTFLOW JOB COUNTS COUNT SHARE
Employed in the Selection Area 21,023 100%
Employed in the Selection Area but Living Outside 19,428 92.4% Employed and Living in the Selection Area 1,595 7.6%
Living in the Selection Area 22,456 100%
Living in the Selection Area but Employed Outside 20,861 92.9% Living and Employed in the Selection Area 1,595 7.1%
Work Patterns, 2019
Diamond Bar
Employment Locations of Residents, 2019
Diamond Bar and Los Angeles County

MAP KEY
Jobs/Sq. Mile
724 – 1,127
409 – 723
185 – 408
50 – 184
5 – 49

COMMUTE DISTANCE OF DIAMOND BAR RESIDENTS COUNT SHARE
TOTAL PRIMARY JOBS 22,456 100%
Less than 10 miles 7,868 35.0%
10 to 24 miles 9,111 40.6%
25 to 50 miles 3,790 16.9%
Greater than 50 miles 1,687 7.5%
Diamond Bar Town Center Source: Census on the Map; Esri; RCLCO Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 23

EMPLOYMENT IN DIAMOND BAR IS CONCENTRATED ALONG
CA-60 AND DIAMOND BAR BOULEVARD
► The majority of employees commute into Diamond Bar, with only 1,600 Diamond Bar residents working within the city. Workers are generally between the ages of 30 and 54 (53%) and are heavily concentrated in the professional services industry (47%). ► Though employment in Diamond Bar is concentrated in the professional services industry, the employer landscape is more broadly distributed. Major employers in Diamond Bar are South Coast Air Quality Management (786 employees), Walnut Valley Unified School District (520 employees), and Travelers (401 employees).

Niagara Bottling is another major employer in Diamond Bar, and was anticipated to have approximately 700 employees by 2019.
► Greater than 92% of residents of Diamond Bar commute outside of the city for work and a nearly equivalent number of workers commute to Diamond Bar from the surrounding area.

DIAMOND BAR LIVE/WORK TRENDS

PRIMARY JOBS COUNT SHARE
Employed in the Selection Area 21,023 100%
Worker Age
Age 29 or younger 4,679 22.2%
Age 30 to 54 11,217 53.4%
Age 55 or older 5,133 24.4%
Heat Map of Diamond Bar Employment, 2019
Source: City of Diamond Bar; Census on the Map; Esri; RCLCO Employment by Sector, 2019
Diamond Bar
17%
17%
47%
15%
5%
Manufacturing and
Logistics
Retail, Hospitality, and
Other Services
Professional Services
Healthcare and Education
Government

MAP KEY
Jobs/Sq. Mile
6,783 – 10,595
3,818 – 6,782
1,700 – 3,817
429 – 1,699
5 – 428
Diamond Bar Town Center
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 24

EMPLOYMENT IN DIAMOND BAR IS VARIED ACROSS JOB CATEGORIES, HOWEVER THERE IS CURRENTLY A LACK OF RETAIL SPACES RELATIVE TO NEARBY COMMUNITIES. MANUFACTURING AND LOGISTICS AND, TO A LESSER EXTENT, PROFESSIONAL

SERVICES COMPRISE THE MAJORITY OF JOBS IN THE DIAMOND BAR AREA

EMPLOYMENT IN DIAMOND BAR
Source: US Census; RCLCO, Inspired by Employment in America, 2014 – Robert Manduca

KEY JOB CATEGORIES

MANUFACTURING AND LOGISTICS

PROFESSIONAL SERVICES

HEALTHCARE AND EDUCATION

RETAIL, HOSPITALITY, AND OTHER SERVICES

GOVERNMENT
Diamond Bar Town Center
Employment by Sector, 2019;
Diamond Bar and Surrounding Communities
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 25

DIAMOND BAR TOWN CENTER RETAIL

TENANTS
Source: CoStar; RCLCO
PARCEL
# OF

BUSINESSES
SQUARE
FEET

OCCUPIED
SF

OCCUPIED
% PRIMARY TENANT(S)
1 0 0 0 N/A Vacant
2 1 54,473 54,473 100% Best Western Diamond Bar Hotel
3 1 8,483 8,483 100% Aashiana Restaurant
4 1 2,145 2,145 100% Brown Rice Thai
5 1 4,246 4,246 100% Diamond Palace Chinese Seafood
6 1 6,975 6,975 100% Tire Choice
7 1 3,372 3,372 100% Carl's Jr.
8 1 3,746 3,746 100% McDonald's
9 5 100,702 73,084 73% Sprouts Farmers Market / Ross Dress for Less
10 1 2,000 2,000 100% Pump Station
11 1 2,000 2,000 100% 76 Gas Station
12 13 46,598 45,302 97% Ace Hardware / AutoZone
13 14 49,326 34,507 70% Local Restaurants and Service Oriented Businesses
14 13 41,281 37,281 90% Local Restaurants and Service Oriented Businesses
15 14 20,134 16,784 83% Medical and Service Oriented
Businesses
16 1 6,538 6,538 100% Chevron Gas Station
17 8 20,528 20,528 100% Encore Teppan / Diamond Bar
Montessori Academy
18 2 6,538 6,538 100% Shell Gas Station / 7-Eleven
19 3 10,500 10,500 100% Taco Bell / Leslie's Pool Supply / Diamond Bar Beauty
20 1 32,750 32,750 100% Smart & Final Extra!
21 3 62,399 56,399 90% CVS
22 1 2,600 2,600 100% Mobil Gas Station
23 5 7,420 7,420 100% Village Dental
24 7 11,562 10,212 88% Service Oriented Businesses
TOTAL 99 506,316 447,883 88%
Map of Diamond Bar Town Center Parcels

BUSINESS LOCATIONS ALONG GOLDEN SPRINGS DRIVE ARE LARGELY SERVICE ORIENTED WITH THE MAJORITY OF TRADITIONAL RETAIL FOUND ON DIAMOND BAR BOULEVARD. GENTLE SPRINGS LANE PROVIDES ACCESS TO SEVERAL

RESTAURANTS AND THE BEST WESTERN HOTEL
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 26

ALMOST HALF OF ALL TRAFFIC TO EXISTING DIAMOND BAR TOWN CENTER ORIGINATES FROM WITHIN DIAMOND BAR ► The retail visitor analyses were performed utilizing data from SafeGraph which provides a sample of cell phone data for over 18 million places of interest (POIs) where the cell phone was located for at least four minutes.
» The left graph shows that the most visited locations at the Diamond Bar Town Center are McDonald’s (11%), CVS (6%), the Shell gas station (5%), and The Habit Burger Grill (5%).
» The right graph displays the home location of visitors to the Diamond Bar Town Center. For the most part these visitors stem from the greater southeast San Gabriel Valley area and parts of southwestern San Bernardino County.
» The census block groups that comprise Diamond Bar, and those immediately bordering the city, account for approximately 47% of all visitors to the Diamond Bar Town Center.

EXISTING RETAIL VISITORS
Source: SafeGraph, ArcGis, RCLCO

ESTIMATED VISITS PERCENTAGE
>84% of the Block Group
<4% of the Block Group
Map of Estimated Visit Percentage by Retailer - 2022 Map of Diamond Bar Town Center Visitors by Origin (Block Group of Residence) - 2022

ESTIMATED VISITS PERCENTAGE
>11% of Diamond Bar Town
Center Traffic
<1% of Diamond Bar Town
Center Traffic Diamond Bar Town Center
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 27

SCHOOLS
Source: GreatSchools.com
The Diamond Bar Town Center is located in the Pomona Unified School District (PUSD) with Lorbeer Middle School nearby on the corner of Diamond Bar Boulevard and Golden Springs Drive. The PUSD, which supports over 23,000 students as of 2022, is comprised of 30 elementary, 14 middle, and 11 high schools.

The City of Diamond Bar also features another school district, the Walnut Valley Unified School District (WVUSD). Supporting nearly 14,000 students, the WVUSD is comprised of 10 elementary schools, four middle schools, and four high schools.

Over 93% of schools in the WVUSD are rated above average. A small proportion of PUSD schools are located in Diamond Bar and are largely ranked above average despite the majority of PUSD schools outside of Diamond Bar being below average Great Schools Rating, 2022
Diamond Bar Schools
Diamond Bar Town Center
MAP

KEY SCHOOL NAME
SCHOOL

DISTRICT
GREAT

SCHOOLS
RATING

ELEMENTARY SCHOOLS
1 Maple Hill Elementary School WVUSD 10
2 Pantera Elementary School PUSD 9
3 Quail Summit Elementary School WVUSD 9
4 Evergreen Elementary School WVUSD 8
5 Walnut Elementary School WVUSD 8
6 Golden Springs Elementary School PUSD 7
7 Castle Rock Elementary School WVUSD 7
8 Armstrong Elementary School PUSD 6

MIDDLE SCHOOLS
8 Chaparral Middle School WVUSD 8
9 South Pointe Middle School WVUSD 8
10 Lorbeer Middle School PUSD 5

HIGH SCHOOLS
11 Diamond Bar High School WVUSD 10
12 Diamond Ranch High School PUSD 7
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 28

BUILDING PERMITS
Source: U.S. Department of Housing and Urban Development; RCLCO

NEW DEVELOPMENT IN DIAMOND BAR HAS BEEN LIMITED

OVER THE PAST TWO DECADES AND IS SHRINKING AS A

PROPORTION OF DEVELOPMENT IN THE SAN GABRIEL
VALLEY
► After declining from the late 1980s until the early 2000s, building permits rapidly increased in the San Gabriel Valley until the financial crisis of 2008-2009. ► Despite the number of units from building permits in the San Gabriel Valley beginning to reach pre-financial crisis levels, permits in Diamond Bar as a proportion of permits in the San Gabriel Valley have averaged just 1.7% over the past decade.
► Since 1980, permits for only 12 multifamily units (for the Willow Heights development in 2015) have been permitted in Diamond Bar, representing just 1% of all permits, compared to permits for over 1,100 single-family units.

Residential Building Permits Comparison;
Southeast San Gabriel Valley and Diamond Bar; 1990 - 2021 0 500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1980 1985 1990 1995 2000 2005 2010 2015 2020
Units in Single-Family Structures Units in All Multi-Family Structures Building Permits by Year;
San Gabriel Valley; 1980-2021
1%
2%
8%
5% 5%
3%
6%
4%
1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0 500
1000
1500
2000
2500
3000
3500
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Diamond Bar Southeast San Gabriel Valley Diamond Bar as a Proportion of SE SGV Total Units Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 29

MAP KEY
UC P&P
SQUARE

FOOTAGE
<100,000
>1,000,000
Diamond Bar Town Center

NEW DEVELOPMENT IN THE SAN GABRIEL VALLEY IS CONCENTRATED ALONG HIGHWAYS AND IN WESTERN PORTIONS OF THE

MARKET AREA
► There are numerous multifamily developments both currently under construction and proposed, the majority of which are concentrated in the western half of the San Gabriel Valley
► Industrial development is being developed predominantly in Irwindale and the City of Industry while hospitality spaces have been proposed throughout the San Gabriel Valley, with several currently under construction.

PIPELINE IN SAN GABRIEL VALLEY
Source: US Census; CoStar; RCLCO
Under Construction and Planned and Proposed Developments, August 2022; San Gabriel Valley

KEY TYPE COUNT UC SF P&P SF TOTAL SF
Retail 49 151,885 599,996 751,881
Hospitality 30 446,187 1,290,591 1,736,778
Office 25 141,219 1,194,395 1,335,614
Flex 1 0 100,748 100,748
Industrial 30 2,237,232 2,798,512 5,035,744
Multi-Family 69 3,517,588 6,639,777 10,157,365
Health Care 1 0 60,000 60,000
Student 1 300,000 0 300,000
Specialty 2 217,413 0 217,413
Diamond Bar 4 0 101,187 101,187
TOTAL 208 7,011,524 12,684,019 19,695,543
.
.

Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 30

ADDRESS CITY TYPE RBA YEAR BUILT

UNDER CONSTRUCTION
20922 Currier Rd City Of Industry Industrial 147,490 2022 2027 Rancho Valley Dr Pomona Hospitality 50,000 2022
508 W Mission Blvd Pomona Multi-Family 40,000 2022
2801 S Towne Ave Pomona Industrial 37,690 2022
1300 W Mission Blvd Pomona Multi-Family 30,536 2022
21921 Industry Way City Of Industry Industrial 1,000,720 2023 584 Humane Way Pomona Retail 6,600 2023
TOTAL 1,313,036

PLANNED/PROPOSED
1925 W Holt Ave Pomona Multi-Family 200,000 2023
6 Innovation Way Pomona Office 125,000 2023
888 S Brea Canyon Dr Diamond Bar Office 46,000 2023
701 S Garey Ave Pomona Retail 36,942 2023
21935-21985 Valley Blvd Walnut Retail 8,400 2023
888 W Mission Blvd Pomona Retail 8,320 2023
2705 S Towne Ave Pomona Retail 7,050 2023
868 S Brea Canyon Rd Diamond Bar Retail 6,500 2023
21925 Valley Blvd Walnut Retail 4,200 2023
21905 Valley Blvd Walnut Retail 4,150 2023
850 Brea Canyon Rd Diamond Bar Hospitality 44,687 2024
55 Rancho Camino Dr Pomona Hospitality 40,000 2025
55 Rancho Camino Dr Pomona Hospitality 10,000 2025
Gillette Rd Pomona Hospitality 42,656 2026
Grand Ave City Of Industry Industrial 240,500 Unknown
Grand Ave City Of Industry Industrial 606,480 Unknown
Grand Ave City Of Industry Industrial 694,400 Unknown
8 Innovation Way Pomona Office 125,000 Unknown
3 Kellogg Dr Pomona Flex 100,748 Unknown
TOTAL 2,351,033

THERE IS A GROWING PIPELINE IN THE SOUTHEAST SAN GABRIEL VALLEY CONTAINING A RANGE OF PLANNED AND PROPOSED PROJECTS, BUT A RELATIVELY LIMITED PIPELINE OF DEVELOPMENTS WITHIN DIAMOND BAR.

PROJECT PIPELINE IN SOUTHEAST SAN

GABRIEL VALLEY
Source: US Census; CoStar; RCLCO
Under Construction and Planned and Proposed Developments, August 2022; Southeast San Gabriel Valley

KEY PROPERTY TYPE
Retail
Hospitality
Office
Flex
Industrial
Multi-Family
UC P&P Square Footage
<100,000
>1,000,000
.
.

Diamond Bar Town Center
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 31

RENTAL RESIDENTIAL ANALYSIS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 32

APARTMENT MARKET OVERVIEW

DIAMOND BAR IS CHARACTERIZED BY LOW-DENSITY, SINGLE-FAMILY HOUSING WITH A NEAR ABSENCE OF MULTIFAMILY

HOUSING
► With just 500 multifamily units in Diamond Bar and a population of roughly 56,000, there is approximately one apartment unit per 112 residents of the city. Comparatively, the Southeast San Gabriel Valley (excluding Diamond Bar) has twice as many apartments per capita with one apartment unit per 56 residents and a total population of nearly 144,000 (from 2,576 apartment units).
► Diamond Bar has not experienced the delivery of new multifamily product since 1989, while the Southeast San Gabriel Valley region delivered three properties between 2019 and 2021, totaling 104 units.
► Given the highly limited inventory, apartment vacancy in Diamond Bar has remained below 1% since 2020, a 15-year historic low. ► While rent growth in Diamond Bar has been marginally lower than in the Southeast San Gabriel Valley, both in the short-term and long-term, as of July 2022 rents in Diamond Bar are 19% higher than Southeast San Gabriel Valley.

DIAMOND BAR

SOUTHEAST SAN

GABRIEL VALLEY

SAN GABRIEL
VALLEY
CURRENT CHARACTERISTICS (2022 YTD)
Properties 3 52 1,037
Units 500 3,076 56,606
Avg. Effective Rent $2,420 $2,039 $2,098
Vacancy 0.8% 2.1% 2.9%
SHORT-TERM TRENDS (2017-2021)
Avg. Rent Growth 5.3% 5.7% 4.2%
Avg. Vacancy 3.9% 3.6% 3.8%
Avg. Net Absorption 3 32 609
Avg. Completions 0 21 286
LONG-TERM TRENDS (2007-2021)
Avg. Rent Growth 2.6% 2.7% 2.5%
Avg. Vacancy 4.8% 4.1% 4.5%
Avg. Net Absorption 1 11 344
Avg. Completions 0 7 292
Source: CoStar; RCLCO
Map of Diamond Bar and Southeast San Gabriel Valley
Note: Includes market-rate properties with 20 units or more Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 33 -15.0%
-10.0%
-5.0%

0.0%

5.0%

10.0%

15.0%
-25
-20
-15
-10
-5
0 5
10 15
20 25
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD
Vacancy / Rent Growth
Units
Change in Inventory Net Absorption Vacancy Effective Rent Growth APARTMENT MARKET TRENDS – DIAMOND
BAR
WITH A LIMITED APARTMENT INVENTORY AND NO CHANGE IN MULTIFAMILY INVENTORY IN OVER 20 YEARS, THE DIAMOND BAR MULTIFAMILY RENTAL MARKET EXPERIENCED RAPIDLY DECREASING VACANCIES OF 0.8% AND 0.6%, AND RECORD EFFECTIVE RENT GROWTH OF 6.6% AND 13.9%, IN 2020 AND 2021, RESPECTIVELY. ► The limited supply of new housing, as shown by the lack of new development and tight vacancy rates, combined with significant rent growth is making Diamond Bar a less affordable place to live.
► By developing more housing, Diamond Bar will likely achieve greater diversity, particularly among younger demographics currently lacking in the city.

Source: CoStar; RCLCO
Completion, Absorption, Vacancy, and Rent Growth; Apartment Competitive Market Area; Diamond Bar 2007-2022 YTD
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 34

COMPARABLE MARKET-RATE APARTMENT

COMMUNITIES
Source: Axiometrics; CoStar; RCLCO

APARTMENTS IN THE COMPETITIVE SET ARE GENERALLY OLDER, PARTICULARLY COMMUNITIES WITHIN THE SOUTHEAST SAN

GABRIEL VALLEY
RCLCO identified nine market-rate apartment communities, five of which are in the competitive market area of Southeast San Gabriel Valley. The other four communities, located in Pomona, San Dimas, and La Verne were included to provide a basis of comparison against more recently delivered product. The Gabriel is the newest community and achieves near the highest rents per square foot, largely due to the quality of execution and the property’s location. Walnut Ridge II, despite being the second older community in the competitive set, achieves the highest per square foot rents primarily due to the smaller size of the units at the community.

The competitive properties range in scale from 136 to 501 units and ask average monthly rents of $2,632 with an average unit size of 869 square feet ($3.03/SF).

MAP

KEY COMMUNITY NAME
YEAR
BUILT
YEAR
LAST
RENO.
# OF

STORIES
MARKET
RATE
UNITS
OCC.

RATE
AVG.

SIZE
(SF)
AVG.

ASKING
RENT
AVG.

ASKING
$/SF
1 Avalon San Dimas 2014 N/A 3 156 99% 971 $2,861 $2.95
2 Walnut Ridge II 1983 N/A 2 464 98% 754 $2,452 $3.25
3 Eaves Phillips Ranch 1990 N/A 3 501 100% 994 $2,829 $2.85 4 The Hills of Diamond
Bar 1979 2016 2 203 99% 933 $2,765 $2.96
5 La Verne Village 2014 N/A 3 172 98% 930 $2,736 $2.94
6 The Gabriel 2022 N/A 4 312 18% 890 $2,810 $3.16
7 Diamond Bar Village 1987 N/A 2 136 99% 863 $2,371 $2.75 8 Monterey Station 2014 N/A 4 349 94% 727 $2,261 $3.11
9 Emerald Pointe 1989 N/A 2 160 98% 843 $2,720 $3.23
AVERAGE 1999 2016 3 273 98% 869 $2,632 $3.03
Comparable Apartment Communities
Southeast San Gabriel Valley, August 2022
Subject Site
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 35

COMPARABLE MARKET-RATE APARTMENT

COMMUNITIES
Source: CoStar; RCLCO

WE RECOMMEND PRICING UNITS AT THE SUBJECT SITE AT THE TOP OF THE MARKET FOR MULTIFAMILY RENTALS Our recommended pricing would position the Subject Site above all competitive properties in the Southeast San Gabriel Valley. Based on our pricing adjustment analysis:
► The workforce program should be priced at an average monthly rent of $2,315 for an average unit size of 710 square feet ► The standard apartment program should be priced at $2,820 per month on average for an average 790 square foot unit ► The premium apartments should be priced at $3,245 per month on average for an average 990 square foot unit ► The townhome units should average $3,905 per month for an average unit size of 1,270 square feet $1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
200 400 600 800 1,000 1,200 1,400 1,600
Asking Rent
Unit Size (SF)
Subject Site - Standard
Subject Site - Workforce
Subject Site - Premium
Subject Site - Townhome
Avalon San Dimas
Walnut Ridge II
Eaves Phillips Ranch
The Hills of Diamond Bar
La Verne Village
The Gabriel
Diamond Bar Village
Monterey Station
Emerald Pointe
Linear Trend of Average Rent to Average Unit Size Relationship Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 36

COMPARABLE MARKET-RATE APARTMENT

COMMUNITIES
Source: CoStar; RCLCO

WE RECOMMEND A MIX OF MULTIFAMILY PRODUCT THAT RANGES IN SIZE, LAYOUT, AND QUALITY OF FINISH TO CAPTURE

DEMAND FROM ALL MARKET SEGMENTS
MAP KEY 1 2 3 4 5 6 7 8 9
TOTAL/ WTD.

AVG.

COMMUNITY
Avalon San
Dimas Walnut Ridge II
Eaves Phillips
Ranch
The Hills of
Diamond Bar
La Verne
Village The Gabriel
Diamond Bar
Village
Monterey
Station Emerald Pointe
YEAR BUILT 2014 1983 1990 1979 2014 2022 1987 2014 1989 OCCUPANCY % 99% 98% 100% 99% 98% 18% 99% 94% 98%

MARKET RATE UNITS
Studio 16 79 95
1BR 56 166 63 200 38 53 96 672
1BR+ 85 26 10 121
2BR 100 282 416 183 100 108 70 207 64 1,530
2BR+ 2 2
3BR 20 9 4 33
Total 156 464 501 203 172 312 136 349 160 2,453

UNIT MIX
Studio 3% 23% 4%
1BR 36% 36% 37% 64% 28% 15% 60% 27%
1BR+ 17% 19% 3% 5%
2BR 64% 61% 83% 90% 58% 35% 51% 59% 40% 62%
2BR+ 1% 0%
3BR 10% 5% 1% 1%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

AVERAGE SIZE (SF)
Studio 550 456 472
1BR 770 590 758 755 735 630 731 701
1BR+ 925 835 975 910
2BR 1,084 862 1,008 923 1,005 1,120 935 844 1,010 958
2BR+ 1,140 1,140
3BR 1,020 1,296 1,397 1,141
Total 971 754 994 933 930 890 863 727 843 869
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 37

RENTAL RATES AT COMPARABLE

PROPERTIES
Source: CoStar; RCLCO
MAP KEY 1 2 3 4 5 6 7 8 9
TOTAL/ WTD.

AVG.

AVERAGE ASKING RENT
Studio $2,038 $1,912 $1,933
1BR $2,493 $2,080 $2,447 $2,595 $2,099 $2,119 $2,611 $2,382 1BR+ $2,516 $2,250 $2,425 $2,451
2BR $3,067 $2,695 $2,893 $2,764 $2,841 $3,164 $2,550 $2,423 $2,885 $2,788 2BR+ $2,850 $2,850
3BR $2,775 $3,600 $4,028 $3,152
Total $2,861 $2,452 $2,829 $2,765 $2,736 $2,810 $2,371 $2,261 $2,720 $2,632 AVERAGE ASKING $/SF
Studio $3.70 $4.19 $4.10
1BR $3.24 $3.52 $3.23 $3.43 $2.86 $3.36 $3.57 $3.40
1BR+ $2.72 $2.69 $2.49 $2.69
2BR $2.83 $3.13 $2.87 $2.99 $2.83 $2.82 $2.73 $2.87 $2.86 $2.91 2BR+ $2.50 $2.50
3BR $2.72 $2.78 $2.88 $2.76
Total $2.95 $3.25 $2.85 $2.96 $2.94 $3.16 $2.75 $3.11 $3.23 $3.03 Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 38

RENTAL APARTMENT PIPELINE
Source: CoStar; Axiometrics; City Planning Websites; RCLCO

THE SOUTHEAST SAN GABRIEL VALLEY EXPERIENCED NO NEW DEVELOPMENT FOR OVER A DECADE UNTIL PROJECTS DELIVERED EACH YEAR BETWEEN 2019 AND 2021. THE CURRENT PIPELINE IS MIRRORING THIS CHANGING DYNAMIC IN THE REGION.
► The limited supply of new housing, lack of new development and tight vacancy rates, combined with significant rent growth have signify significant pent up demand in the Southeast San Gabriel Valley.
► There are three properties currently under construction, totaling nearly 360 units, more new product than the market has experienced in over a decade.

Map of Under Construction and Planned Apartments
Southeast San Gabriel Valley, August 2022
MAP

KEY PROJECT DEVELOPER
EST.

OPENING
TOTAL
UNITS

UNDER CONSTRUCTION
1 The Terraces at Walnut Sunjoint Development LLC 2024 270 2 1300 W Mission Blvd Not Available 2022 33
3 West Mission Apartments Not Available 2022 55
358

PLANNED/PROPOSED
4 Lanterman Greystar 2026 100
5 Begonia Heights Begonia Real Estate 2025 200
300
Subject Site
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 39 APARTMENT MARKET TRENDS –

SOUTHEAST SAN GABRIEL VALLEY

THE SOUTHEAST SAN GABRIEL VALLEY MARKET SAW THE DELIVERY OF NEW PRODUCT FOR THE FIRST TIME IN OVER A DECADE IN 2019, FOLLOWED BY SMALL PROJECTS IN 2020 AND 2021. DESPITE THE INCREASED SUPPLY, THE UNITS WERE RAPIDLY ABSORBED LEADING TO DECREASING VACANCY AND RECORD RENT GROWTH OF 14.2% IN 2021. WITH RECORD DELIVERIES ANTICIPATED BETWEEN 2024 AND 2035, VACANCY IS EXPECTED TO SPIKE INITIALLY, BUT TAPER OFF BEGINNING IN 2028
Source: CoStar; RCLCO
Historical and Forecasted Completion, Absorption, Vacancy, and Rent Growth; Apartment Competitive Market Area; Southeast San Gabriel Valley 2007-2035
-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%
-100
-50
0 50
100
150
200
250
300
350
400
2007 2009 2011 2013 2015 2017 2019 2021 2023 (f) 2025 (f) 2027 (f) 2029 (f) 2031 (f) 2033 (f) 2035 (f) Vacancy/Rent Growth
Units
Change in Inventory (Units) Net Absorption (Units) Vacancy (%) Historical Effective Rent Growth (%) RCLCO Rent Growth Forecast Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 40 APARTMENT MARKET TRENDS –

SOUTHEAST SAN GABRIEL VALLEY
ON AVERAGE, COSTAR, AXIOMETRICS, AND RCLCO PROJECT RENT GROWTH OF 5.1% PER YEAR BETWEEN 2022 AND 2027 ► Axiometrics provides a more aggressive rent growth projection than CoStar and RCLCO, but all projections anticipate significant and continued rent growth in the region tapering towards long-term averages at the end of the projection period.

Source: CoStar; Axiometrics; RCLCO
Historical and Projected Rent Growth
San Gabriel Valley 2008-2032
-10.0%
-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 Historical Axiometrics CoStar RCLCO

RENT GROWTH
SOURCE 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Axiometrics 15.0% 10.0% 6.8% 5.5% 4.4% 3.9% N/A N/A N/A N/A N/A CoStar 5.3% 5.1% 3.7% 3.1% 2.7% 2.3% N/A N/A N/A N/A N/A RCLCO 8.2% 4.5% 3.7% 3.1% 2.6% 2.6% 2.5% 2.6% 2.6% 2.9% 2.9% Average 9.5% 6.5% 4.7% 3.9% 3.2% 2.9% 2.5% 2.6% 2.6% 2.9% 2.9% Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 41

SUPPORTED SUPPLY ADDITIONS
Source: CoStar; RCLCO
THE DIAMOND BAR TOWN CENTER IS PROJECTED TO SUPPORT OVER MARKET-RATE 1,200 UNITS DURING THE DEVELOPMENT CYCLE BETWEEN 2025 AND 2034
► RCLCO recommends a program that includes several rental housing types to facilitate more rapid lease-up and draw from a broader renter pool. This program includes workforce, standard, and premium apartments as well as rental townhomes. ► In addition to the market rate rental housing, RCLCO recommends offering 310 affordable units (representing 20% of the market-rate rental and for-sale housing, excluding workforce housing, at the Diamond Bar Town Center) spread across the four rental types. ► Phasing of the various multifamily housing types should allow for greater absorption, however between 2024 and 2029 vacancies are projected to be heavily impacted by the influx of new product in the market
<<<HISTORICALFORECAST>>>
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

NEW INVENTORY
YTD Deliveries 1
0 Under Construction 2
88 0 270 0 0 0 0 0 0 0 0 0 0
Planned & Proposed 3
0 0 60 60 60 60 60 0 0 0 0 0 0
Other Planned & Proposed 4
0 0 0 0 0 0 0 0 0 0 0 0 0
Subject Site 5
0 0 0 65 70 100 110 130 140 155 165 145 140
Total New Inventory 20 88 0 330 125 130 160 170 130 140 155 165 145 140 SUPPLY
Beginning Inventory 1
3,056 3,076 3,164 3,164 3,494 3,619 3,749 3,909 4,079 4,209 4,349 4,504 4,669 4,814 Plus: Change in Inventory 20 88 0 330 125 130 160 170 130 140 155 165 145 140 Ending Inventory 3,076 3,164 3,164 3,494 3,619 3,749 3,909 4,079 4,209 4,349 4,504 4,669 4,814 4,954 DEMAND
Beginning Occupied Units 1
2,960 3,021 3,064 3,119 3,189 3,286 3,402 3,528 3,671 3,831 4,008 4,202 4,412 4,634 Plus: Net Absorption 4
61 43 55 71 97 115 126 143 160 177 194 211 222 222
Ending Occupied Units 3,021 3,064 3,119 3,189 3,286 3,402 3,528 3,671 3,831 4,008 4,202 4,412 4,634 4,857

SUPPLY-DEMAND BALANCE
Ending Occupancy 98.2% 96.8% 98.6% 91.3% 90.8% 90.7% 90.3% 90.0% 91.0% 92.2% 93.3% 94.5% 96.3% 98.0% (Over)/Under Supply at 5% 104 61 119 -137 -160 -168 -195 -215 -176 -130 -81 -25 64 158 Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 42

MULTIFAMILY DEMAND
THE DEMAND POOL FOR MULTIFAMILY UNITS IN THE SAN GABRIEL VALLEY IS APPROXIMATELY 52,000 HOUSEHOLDS ANNUALLY, REPRESENTING APPROXIMATELY 9% OF ALL HOUSEHOLDS IN THE SAN GABRIEL VALLEY 576,693 Households in the Primary Market Area
14% 37% 20% 27%
27,891 33,293 5,847 6,122 79,957
6,198 Renters 21,212 Renters 20,073 Renters 2,902 Renters 1,854 Renters 52,240 Renters 3,692 2,357 (425) (3,244) 3,894
(352) (730) 0 0
73% 56% 41% 36% 51%
31,231 34,919 5,422 2,878 82,740
Total Renters
Total
Households
Annual Renter
Demand
Annual
Multifamily
Demand
% Renters
Move Each
Year
Net Tenure
Switch
New Household
Growth
TOTAL
DEMAND
79,353 215,124 113,914 156,111 576,963
25-34 35-54 55-64 65+
57,899 120,184 46,688 56,456 292,793
75% 68% 57% 54% 64% 63%
(1,111)
% Rent
Multifamily
2%
6,804
1,514
(28)
93%
8,290
UNDER 25
12,461
11,565
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 43

PROGRAM RECOMMENDATIONS
Source: RCLCO

RCLCO RECOMMENDS A BLEND OF PRODUCT TYPES, INCLUDING WORKFORCE APARTMENTS, STANDARD APARTMENTS,

PREMIUM APARTMENTS, AND TOWNHOMES
► Workforce apartments offer a value alternative to the standard apartments as the units have smaller average sizes and the community would offer a greater proportion of studio units.
► The standard apartment program is reflective of current apartment offerings in the Southeast San Gabriel Valley in terms of unit sizes, but provides a greater proportion of studio and one-bedroom units. This program would likely fill a void in the market and could attract demand from the single and couples demographics that are currently underserved. ► The premium apartments have a unit distribution similar to existing communities in the area, though they offer a greater number of three-bedroom units. The unit sizes are larger than most of the competitive properties and are anticipated to be highly amenitized and have superior unit finishes. ► Rental townhomes could potentially capture demand from couples and young families looking for the increased privacy of single-family living, but who are currently priced out of the for-sale market.

Rental Community Programs;
Diamond Bar Town Center

WORKFORCE

APARTMENTS

STANDARD

APARTMENTS PREMIUM APARTMENTS TOWNHOMES TOTAL/AVERAGE
MARKET RATE UNITS 360 440 320 125 1,245
AVG. SIZE 710 790 990 1,270 865
AVG. RENT $2,315 $2,820 $3,245 $3,905 $2,890
AVG. $/SF $3.26 $3.57 $3.28 $3.07 $3.34

MONTHLY ABSORPTION
PACE 33.8 Units per Month 22.9 Units per Month 18.0 Units per Month 16.4 Units per Month AFFORDABLE UNITS 90 110 80 30 310
AVG. SIZE 640 710 890 1,145 1,005
AVG. RENT $1,160 $1,180 $1,295 $1,380 $1,225
AVG. $/SF $1.81 $1.66 $1.46 $1.21 $1.22
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 44

FOR-SALE RESIDENTIAL ANALYSIS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 45

FOR-SALE HOUSING TRENDS
AFTER A PERIOD OF STAGNATION FOLLOWING THE 2008 HOUSING CRISIS, PRICES HAVE STEADILY INCREASED EACH YEAR BEGINNING IN 2013-2014. THE INCREASE IN HOME DEMAND SPURRED BY THE COVID-19 PANDEMIC, COMBINED WITH LIMITED NEW INVENTORY HAS RAPIDLY ACCELERATED HOME VALUE INCREASES SINCE 2020. ► As of May 2022 the Zillow Home Value Index for Diamond Bar is approximately $954,000, a 37.4% increase from the December 2019 value of roughly $694,000. » This tracks closely to the average for Los Angeles county which increased by 36.7% over the same period. $0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Median Home Value
Diamond
Bar
Los
Angeles
Walnut
Pomona
Comparison of Zillow Home Value Index by Geography
2000–2022
Source: Zillow; RCLCO
Note: Zillow Home Value Index is a seasonally adjusted figure that reflects the typical value of homes in the 35th to 65th percentile within a region.

Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 46 THE MAJORITY OF HOMES SOLD IN DIAMOND BAR OVER THE PAST 12 MONTHS EXCEEDED $1 MILLION, WITH 98% OF HOMES SELLING FOR GREATER THAN $700K.
► The average sale price for single-family homes in Diamond Bar during the last year was roughly $1.23 million, or $475 per square foot (average size of 2,586 SF). » Condos and townhomes performed similarly well, selling for $568,000 on average, or $458 per square foot (average size of 1,240 SF) ► An indicator of the high incomes and spending power in the market, 52% of homes sold in Diamond Bar since June 2021 were priced at over $1 million, with fewer than 2% of homes selling for less than $700k.
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Sale Price
Square Footage
Single-Family Condo Townhouse

FOR-SALE HOUSING TRENDS
Comparison of Sale Price by Home Type; Diamond Bar
June 2021 – May 2022
Source: Redfin; RCLCO
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 47

FOR-SALE RESIDENCES AT THE DIAMOND BAR TOWN CENTER WILL LIKELY COMPETE MOST DIRECTLY WITH EXISTING

TOWNHOME AND CONDO COMMUNITIES IN THE SOUTHEAST SAN GABRIEL VALLEY REGION ► With no actively selling communities in Diamond Bar, RCLCO focused our analysis on the resale market of attached and detached product at townhome and condo communities. The attached properties on the resale market range in size from 976 square feet to 1,700 square feet and range in price from $393,000 to $875,000. Detached product at the two communities surveyed is significantly larger ranging in size from 2,100 to nearly 3,500 square feet and achieves a sizable price premium ranging from $865,000 to $1.8 million.
► Immediately southwest of the Diamond Bar Town Center, Fall Creek Condos is a for-sale community built in 1979 with resales currently priced just below $400,000. ► Given the age of the existing communities, and the projected quality of execution at properties at the Diamond Bar Town Center, RCLCO anticipates for-sale properties will likely compete most directly with the newly built detached communities in the area.

FOR-SALE COMPETITIVE SET
Map and Summary of Competitive Communities
Diamond Bar; August 2022
Source: Redfin; RCLCO
MAP
KEY
COMMUNITY AVG. HOME
SIZE
TOTAL AVG.

PRICE
TOTAL AVG.
$/SF
TOTAL

MONTHLY

PAYMENT
1 Washington Ave & Cottonwood 1,473 $700,000 $475 $2,674 2 Quarry Ln & Crest Ln 1,115 $661,596 $593 $2,527
3 Presado Dr & Laurelrim Dr 1,067 $592,400 $555 $2,263
4 Canyon Park Dr & Shady Hills Dr 976 $538,750 $552 $2,058 5 Silver Hawk Dr & Shannon Ct 1,732 $875,000 $505 $3,342 6 Paseo De Terrado & Chardonnay Dr 1,223 $726,333 $594 $2,774 7 Cleghorn Dr & Monument Canyon Dr 1,212 $643,250 $531 $2,457 8 Fall Creek Condos 1,005 $393,043 $391 $1,501
9 High Knob Rd & Golden Springs Dr 1,293 $597,499 $462 $2,282 10 Lennar Phillips Ranch 2,123 $865,467 $408 $3,305
11 South Pointe 3,470 $1,836,000 $529 $7,012
TOTAL/AVERAGE 1,461 $714,914 $489 $2,730
MAP KEY Subject Site
Attached Product
Detached Product
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 48

FOR SALE POSITIONING
Source: New Home Source; Redfin; Zillow; Individual Community Websites; RCLCO

THE TOWNHOMES AND STACKED FLATS AT DIAMOND BAR TOWN CENTER ARE POSITIONED ABOVE ALL ATTACHED PRODUCT

FOR-SALE PRICING AND ABSORPTION
BASED ON RCLCO’S DEMAND ANALYSIS AND PROJECTED ABSORPTION FOR THE DIAMOND BAR TOWN CENTER, FOR-SALE HOUSING IS PROJECTED TO AVERAGE ABSORPTION OF 7 HOMES PER MONTH RESULTING IN A TOTAL SALES PERIOD OF JUST

OVER FIVE YEARS

TOWNHOMES
► Pricing and Product Segmentation: RCLCO projects that the Diamond Bar Town Center can likely achieve strong pricing, in line with or above, competitive townhome communities in the submarket (on a per square foot basis), given the community’s anticipated quality of execution, newer vintage, and proximity to retail and dining options. The current pricing will likely appeal to those looking for increased privacy and space over multifamily rental housing, but who may be potentially priced out of the single-family housing market.
► Absorption: At the projected prices, RCLCO anticipates townhomes at the Diamond Bar Town Center could likely absorb four units per month, selling out in just over four years.

STACKED FLATS
► Pricing and Product Segmentation: RCLCO projects that the Diamond Bar Town Center can likely achieve strong pricing, above the performance of the townhome product due to a higher level of execution and the absence of this product type in the area market. Despite the anticipated quality of build, this product still represents a discount to some newly constructed single-family homes in Diamond Bar like the South Pointe community (included in the competitive set). ► Absorption: The stacked flats are projected to absorb approximately three units per month, resulting in a sales period of just over three years.

HOMES
HOME

SIZE HOME PRICE
PRODUCT LINE # %
SALES
PACE AVG.

AVG.

BASE
PRICE
BASE
$/SF (INCENTIVES)

NET BASE
PRICE

NET BASE
$/SF OPTIONS

PREMIUM
S
TOTAL
AVG.

PRICE
TOTAL
AVG. $/SF
Townhomes 200 62.5% 4 1,460 $846,000 $580 ($5,000) $841,000 $576 $12,000 2.0% $869,000 $595 Stacked Flats 120 37.5% 3 2,090 $1,125,000 $538 ($5,000) $1,120,000 $536 $15,000 2.0% $1,157,000 $554 TOTAL/WTD. AVG. 320 100.0% 7 1,696 $951,000 $561 ($5,000) $946,000 $558 $13,000 2.0% $977,000 $576 Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 50

SENIORS HOUSING ANALYSIS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 51

SENIOR HOUSING PROGRAM
RCLCO’S ANALYSIS SUGGESTS THE DIAMOND BAR TOWN CENTER CAN SUPPORT AN ADDITIONAL 180 RENTAL HOUSING

UNITS AS SENIOR HOUSING
► Given the significant aging population of the San Gabriel Valley, senior housing presents an attractive housing opportunity for the Diamond Bar Town Center. ► The sizable, and rapidly growing, elderly population of the San Gabriel Valley represents a large demand pool that is currently underserved with senior housing options. ► With smaller average unit sizes than traditional multifamily units, senior housing would likely achieve average rents of $4,025 per month for an average 720 square foot unit ($5.59 per square foot).
► There are currently 117 senior housing units in the development pipeline and RCLCO recommends 180 senior housing units at the Diamond Bar Town Center. These units are projected to absorb rapidly at nearly 12 units per month, resulting in a lease-up period of just under 15 months to reach stabilization (95% occupancy).

SENIOR HOUSING
DELIVERY YEAR 2026
MARKET RATE UNITS 180
AVG. SIZE 720
AVG. RENT $4,025
AVG. $/SF $5.59
MONTHLY ABSORPTION PACE 11.5 Units per Month
MONTHS TO STABILIZATION (95%) 14.9 Months
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0-4 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+ 2010 2021 2026
Population Distribution by Age
San Gabriel Valley
Aging
Population
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 52

SENIOR HOUSING DEMOGRAPHICS

THE SENIOR POPULATION OF THE SAN GABRIEL VALLEY IS

PROJECTED TO EXPERIENCE TREMENDOUS GROWTH
THROUGH 2026
The San Gabriel Valley currently has a population of 1.9 million and is projected to grow by only 10,000 people through 2026.
► The senior population (75+) currently make up 6.8% of the population at 129,211. ► The senior population in the San Gabriel Valley is projected to increase by 23,452 over the next five years for an annual population growth of nearly 4,700 people. This is projected to increase the share of senior population to 8.0% of the PMA population due to outsized growth of the senior population and a shrinking of younger demographics.

The PMA is currently made up of 576,979 households. By 2026, the PMA is projected grow to a total of 578,785 households.
► Senior households (75+) currently make up 11.7% of the total households in the PMA at 67,679.
► Senior households in the PMA are projected to increase by 9,380 over the next five years for an annual household growth of 1,876 households. This is projected to increase the share of senior households to 13.3% of the total PMA households.

The senior population growth projection is substantially higher than the growth that occurred from 2010 to 2021.
► From 2010 to 2021 the age cohort from 75-79 increased by 1,203 seniors annually while it is projected that the same cohort is projected to increase by 2,545 seniors annually from 2021-2026.
► From 2010 to 2021 the age cohort of those over the age of 80 increased by 835 seniors annually while it is projected that the same cohort is projected to increase by nearly triple that amount from 2021-2026 with an annual projected increase of 2,146. ► Overall, the senior population is expected to grow at a much higher rate as the BabyBoomer generation enters into the senior housing age range. 41,465
54,700
67,424 65,324
74,511
85,239
0 10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2010 2021 2026 2010 2021 2026
+2,545
seniors
per year
+835
seniors
per year
+2,146
seniors
per year
+1,203
seniors
per year
75-79 Years 80 Years +
Senior Population Growth by Age Group
2021 2021-2026* 2026

POPULATION
All 1,902,915 10,634 1,913,549
75+ 129,211 23,452 152,663
% 75+ 6.8% 220.5% 8.0%

HOUSEHOLDS
All 576,979 1,806 578,785
75+ 67,679 9,380 77,059
% 75+ 11.7% 519.4% 13.3%
Senior Demographics; 2021-2026
* %75+ includes growth and people aging in place
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 53

SENIOR HOUSING SUPPLY & DEMAND

THERE IS A SIGNIFICANT LACK OF SENIOR HOUSING IN THE SAN GABRIEL VALLEY, THE AREA IS CURRENTLY UNDERSUPPLIED BY OVER 4,000 UNITS
As part of our analysis, we studied the current supply demand dynamics of the San Gabriel Valley. A key metric we focus on is the Penetration Rate, defined by the National Investment Center for Seniors Housing and Care’s NIC MAP data service as (Inventory / Number of Households headed by a senior aged 75+). We also look at how demographics and inventory change over time, and how those factors affect the future Penetration Rate.

The Penetration Rate of a particular submarket compared to the greater MSA, or national levels, is one indication of whether or not there is room for new supply. Based on NIC MAP, the current national aggregate Penetration Rate for seniors is approximately 10.5%. ► A low Penetration Rate, especially when coupled with high Occupancy Rates of existing facilities, is typically a good indicator of a submarket that has room for new supply. ► A high Penetration Rate coupled with low Occupancy Rates suggests a market with too much supply versus demand. ► One less apparent nuance here is that the quality, age, location, and accessibility of the inventory is likely to also play a role. If a market has a select number of newer facilities with higher occupancy paired with a greater number of older facilities with low occupancy, this oftentimes indicate that consumer preferences are not necessarily being satisfied by the existing inventory.

We found that the growth of quality eldercare supply in the PMA has been very low, with approximately 12% of total units added between 2001 and 2011 and no new development since 2011. A demographic trend analysis indicates that the PMA is projected to see an increase in 75+ senior population of 23,452 people by 2026, or 4,690 people each year for the next five years. In terms of households, there are currently 67,679 households over the age of 75 in the PMA. By 2026, there is projected to be 77,059 senior households in the PMA representing an increase of 9,380 households or 1,876 new senior households per year.

Currently the PMA is undersupplied by 4,050 units due to a current penetration rate of 4.5%. With the delivery of all units in the current pipeline and the Subject Site, by 2026 the PMA is projected to continue to be underserved and is projected to have a lower penetration rate of 4.4%, and is projected to be undersupplied by 4,738 units. 2021 2021-2026 2026
Total 75+ Population1 129,211 23,452 152,663
Total 75+ Households1 67,679 9,380 77,059
Total Units of Senior Housing (Including Subject Property)2 3,056 297 3,353 Penetration Rate 4.5% -- 4.4%
Supported Supply at National Penetration Rate (10.5%) 7,106 985 8,091 (Over)/Under Supply 4,050 688 4,738
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 54

RETAIL ANALYSIS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 55

RETAIL MARKET OVERVIEW

RETAIL ESTABLISHMENTS IN DIAMOND BAR ARE GENERALLY

LARGER THAN THE SURROUNDING AREA, BUT COMPRISE
ONLY 15% OF ALL RETAIL LOCATIONS IN THE SOUTHEAST SAN

GABRIEL VALLEY
► While the 96 retail buildings, including multi-tenant buildings, in Diamond Bar account for just 15% of locations in Southeast San Gabriel Valley, the average establishment is nearly 16,000 square feet, compared to just over 9,600 in the broader area. ► Vacancies in the area are roughly similar, but average NNN lease rates in Diamond Bar are 28% higher than Southeast San Gabriel Valley, $25.16 ($2.10 per month) compared to $19.70 ($1.64 per month).
► The number of retail locations in Diamond Bar has remained largely unchanged since 2006, with the delivery of five properties over that time totaling nearly 88,500 square feet (average of 17,693 square feet per new establishment). Over the same period Southeast San Gabriel Valley (excluding Diamond Bar) added 26 locations for a total of approximately 416,800 square feet (average of 16,030 square feet per new establishment)
► There has been substantial absorption of retail space in Diamond Bar over the past decade, with net absorption representing 360% of the 10-year completions (Southeast San Gabriel Valley had a ratio of 108%). This demonstrated demand for new retail space is mirrored in the vacancy rate decreasing from 14.3% in 2015 to

6.7% as of July 2022.

Diamond Bar Town Center
1Properties profiled represent all existing retail locations 2Average Lease Rate calculated using Overall NNN Rents on a monthly basis. Source: CoStar; RCLCO Map of Diamond Bar and Southeast San Gabriel Valley and San Gabriel Valley MAP CLUSTER # OF TOTAL AVERAGE AVG LEASE AVG 10-YEAR 10-YEAR KEY NAME BUILDINGS1 SF BUILDING SF RATE2 VACANCY COMPLETIONS SF ABSOPTION SF Diamond Bar Town Center 28 447,567 15,985 $18.80 10.4% 0 32,345 1 Diamond Bar 96 1,513,091 15,761 $25.16 6.7% 8,552 30,902 2 Southeast San Gabriel Valley 642 6,179,480 9,625 $19.70 6.8% 297,908 321,433 3 San Gabriel Valley 8,363 86,068,580 10,292 $26.83 4.9% 2,333,403 3,194,366 Diamond Bar Capture and Premium/Discount of SE SGV 15.0% 24.5% 63.7% 27.7% -1.5% 2.9% 9.6% Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 56 RETAIL MARKET TRENDS – DIAMOND BAR
THE DIAMOND BAR AREA EXPERIENCED LIMITED NEW SUPPLY BETWEEN 2011 AND 2021, WITH JUST TWO RETAIL DELIVERIES.

OVER THIS PERIOD, VACANCY, EFFECTIVE RENT GROWTH, AND ABSORPTION HAVE FLUCTUATED HEAVILY. HOWEVER, POSITIVE NET ABSORPTION OVER THIS PERIOD HAS CREATED NEAR 10-YEAR LOW VACANCY OF 6.7% AS OF JULY 2022 AND RETAIL ABSORPTION APPEARS TO BE RECOVERING FROM THE EFFECTS OF THE COVID-19 PANDEMIC.

Source: CoStar; RCLCO
Retail Completion, Absorption, Vacancy, and Rent Growth; Diamond Bar 2007-2021
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
(150,000)
(100,000)
(50,000)
0 50,000
100,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD

OCCUPANCY

SQUARE FEET
Change in Inventory Net Absorption Vacancy (Overall) Rent Growth (Overall) Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 57

TAXABLE RETAIL SALES
TAXABLE RETAIL SALES IN DIAMOND BAR AVERAGED OVER $432 MILLION P ER YEAR BETWEEN 2017 AND 2021 AND ACCOUNTED FOR ROUGHLY 20% OF RETAIL SALES WITHIN TH E SOUTHEAST SAN GABRIEL VALLEY DURING THAT PERIOD. NEIGHBORING POMONA AVERAGED A NNUAL TAXABLE RETAIL SALES OF ROUGHLY $1.5 BILLION ANNUALLY FOR THE PREVIOUS FIVE YEA RS AND COMPRISES 70% OF SOUTHEAST SAN GABRIEL VALLEY SALES.

Source: California Board of Equalization; RCLCO
0%
5%
10%
15%
20%
25%
$
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 In $Millions
Diamond Bar Walnut Pomona Diamond Bar as a % of Southeast San Gabriel Valley Taxable Retail Sales by City
2009-2021
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 58

RETAIL REVENUES BY CATEGORY
Source: California Board of Equalization; CoStar; RCLCO FAST FOOD AND GENERAL MERCHANDISE ACCOUNT FOR OVER A THIRD (37%) OF ALL TAXABLE RETAIL REVENUE IN EXISTING RETAIL AT THE DIAMOND BAR TOWN CENTER. LOCAL RESTAURANTS, GROCERY, AND CLOTHING AND ACCESSORY STORES ACCOUNT FOR AN EVEN LARGER COMBINED PORTION OF TAXABLE RETAIL REVENUE (40%).

DIAMOND BAR TOWN
CENTER
# OF RETAIL

SPACES RETAIL SALES

TAXABLE
SALES %

TAXABLE
SALES $
% OF ALL TAXABLE

REVENUE SQUARE FEET

RETAIL SALES
/ SF
General Merchandise 3 $26,737,035 100% $26,737,035 31% 57,499 $465 Local Restaurant 13 $10,857,000 100% $10,857,000 13% 43,428 $250 Service 58 $0 0% $0 0% 102,649 $0
Ice Cream 1 $268,710 0% $0 0% 1,014 $265
Service w/ Retail Component 3 $2,425,500 5% $121,275 0% 13,475 $180 Fast Casual 4 $4,328,250 100% $4,328,250 5% 9,950 $435
Pharmacy 2 $5,900,075 24% $1,416,018 2% 7,613 $775
Specialty Grocer 2 $26,826,000 25% $6,706,500 8% 17,884 $1,500 Grocery 2 $46,738,750 25% $11,684,688 13% 67,250 $695
Hospitality 1 $2,965,169 14% $415,124 0% 54,473 N/A
Auto Parts 1 $1,056,000 100% $1,056,000 1% 4,800 $220
Fast Food 3 $5,409,000 100% $5,409,000 6% 10,818 $500
Clothing & Accessory Stores 1 $12,340,790 100% $12,340,790 14% 32,054 $385 Home Improvement 1 $4,050,000 100% $4,050,000 5% 10,000 $405 Gas Station 4 $1,497,600 100% $1,497,600 2% 14,976 $100 Vacant 23 $0 N/A $0 0% 58,433 N/A
TOTAL 122 $151,399,879 57% $86,619,279 100% 506,316 $299 Retailers and Taxable Retail Sales; Diamond Bar Town Center 2021
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 59

RETAIL MARKET TRENDS
Source: CoStar; RCLCO
RETAIL CONSTRUCTION ACTIVITY IN THE SOUTHEAST SAN GABRIEL VALLEY HAS BEEN LIMITED SINCE 2013 ► Lack of new product in the area lead to rapidly declining vacancy rates between 2015 and 2017. ► Vacancy rates rose between 2018 and 2021, likely worsened during the latter two years due to the effects of the Covid-19 pandemic on brick and mortar retail spending, demonstrated through negative net absorption during that period. -6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-150,000
-100,000
-50,000
0 50,000
100,000
150,000
200,000
250,000
2017 2018 2019 2020 2021 2022 YTD
Vacancy Rate
SF Delivered / Absorbed
Deliveries, SF Net Absorption, SF Vacancy Rate
Historical Retail Deliveries and Occupancy Rate, 2010-2022 YTD; Southeast San Gabriel Valley
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 60

THE DIAMOND BAR TOWN CENTER IS PROJECTED TO
SUPPORT JUST OVER 446,000 SQUARE FEET OF RETAIL SPACE
BY 2031
► RCLCO analyzed existing retail conditions and projected future demand using projected household growth for the Southeast San Gabriel Valley. By 2031, the site is projected to support over 446,000 square feet.
► Despite the site containing 447,000 square feet of occupied space currently, RCLCO has determined the actual demand for retail at the site is just over 308,000 square feet which should increase to 446,000 square feet at the maturation of the site.

RCLCO believes this program will likely enable greater retail rents and higher occupancies.
► The RCLCO proposed program supports maintaining a high proportion of grocery and drug as well as restaurants to best occupy this space. The program also proposes to increase entertainment and services, a sector that is underrepresented in the current Diamond Bar Town Center.
► Future retail demand at the Diamond Bar Town Center is comprised predominantly of grocery & drug and soft goods locations, combining for 57% of retail demand by 2031. ► Grocery & drug and restaurants comprise a large proportion of the proposed program at a combined 44%, reflective of the current tenancy of the Diamond Bar Town Center.

Distribution of Retail Demand for Diamond Bar Town Center; 2031 Grocery & Drug
109,000 SF
Restaurants
87,100 SF
Soft Goods
82,600 SF
Entertainment &
Services
75,700 SF
Auto & Gas
56,300 SF
Hard Goods
35,600 SF

RETAIL DEMAND
Source: CoStar; Client Materials; RCLCO
Summary of Retail Demand at the Diamond Bar Town Center; 2021-2031 STORE TYPE 2021 2026 2031
Grocery & Drug 72,900 89,500 109,000
Restaurants 62,200 73,600 87,100
Hard Goods 24,400 29,500 35,600
Soft Goods 57,700 69,200 82,600
Entertainment & Services 48,100 60,700 75,700
Auto & Gas 42,900 49,100 56,300
TOTAL 308,200 SF 371,600 SF 446,300 SF
PARCEL # OF BUS. SF OCC. SF OCC. % PRIMARY TENANT(S)
1 0 0 0 N/A Vacant
2 1 54,473 54,473 100% Best Western Diamond Bar Hotel
3 1 8,483 8,483 100% Aashiana Restaurant
4 1 2,145 2,145 100% Brown Rice Thai
5 1 4,246 4,246 100% Diamond Palace Chinese Seafood
6 1 6,975 6,975 100% Tire Choice
7 1 3,372 3,372 100% Carl's Jr.
8 1 3,746 3,746 100% McDonald's
9 5 100,702 73,084 73% Sprouts Farmers Market / Ross Dress for Less 10 1 2,000 2,000 100% Pump Station
11 1 2,000 2,000 100% 76 Gas Station
12 13 46,598 45,302 97% Ace Hardware / AutoZone
13 14 49,326 34,507 70% Local Restaurants and Service Oriented Businesses 14 13 41,281 37,281 90% Local Restaurants and Service Oriented Businesses 15 14 20,134 16,784 83% Medical and Service Oriented Businesses 16 1 6,538 6,538 100% Chevron Gas Station
17 8 20,528 20,528 100% Encore Teppan / Diamond Bar Montessori Academy 18 2 6,538 6,538 100% Shell Gas Station / 7-Eleven
19 3 10,500 10,500 100% Taco Bell / Leslie's Pool Supply / Diamond Bar Beauty
20 1 32,750 32,750 100% Smart & Final Extra!
21 3 62,399 56,399 90% CVS
22 1 2,600 2,600 100% Mobil Gas Station
23 5 7,420 7,420 100% Village Dental
24 7 11,562 10,212 88% Service Oriented Businesses
TOTAL 99 506,316 447,883 88%
Summary of Existing Retail at the Diamond Bar Town Center; 2022 Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 61

RETAIL DEMAND ANALYSIS

AN ANALYSIS OF EXISTING RETAIL SUPPLY AND DEMAND SUGGESTS THERE IS AN OVERABUNDANCE OF ELECTRONICS & APPLIANCE STORES AND GASOLINE STATIONS IN THE SOUTHEAST SAN GABRIEL VALLEY. CONVERSELY, THE AREA IS

CURRENTLY SIGNIFICANTLY UNDERSUPPLIED BY GENERAL MERCHANDISE $156,068,012
$124,821,101
$74,580,367
$32,673,073
$29,701,051
$29,183,023
$10,343,957
-$3,606,032
-$15,563,522
-$60,793,377
-$123,989,198
-$137,813,232
-$200,000,000 -$100,000,000 $0 $100,000,000 $200,000,000 General Merchandise Stores
Motor Vehicle & Parts Dealers
Clothing & Clothing Accessories Stores
Food & Beverage Stores
Health & Personal Care Stores
Bldg Materials, Garden Equip. & Supply Stores
Food Services & Drinking Places
Sporting Goods, Hobby, Book & Music Stores
Miscellaneous Store Retailers
Furniture & Home Furnishings Stores
Gasoline Stations
Electronics & Appliance Stores
Retail Leakage Analysis; Southeast San Gabriel Valley
August 2022
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 62

RETAIL PROGRAMMING

THE PROPOSED RETAIL PROGRAM INCLUDES UTILIZING A

GREATER AMOUNT OF ENTERTAINMENT AND SERVICES

SPACE, IN THE FORM OF A MOVIE THEATER, AS A CENTRAL

POINT FOR THE DIAMOND BAR TOWN CENTER
► RCLCO believes that a movie theater provides an aesthetic visual focal point as well as a cultural draw that can drive increased traffic to the Diamond Bar Town Center. ► The city of Diamond Bar does not currently have a movie theater and the two nearest theaters are Harkins Theatres Chino Hills 18, approximately 5.5 miles east in Chino Hills and AMC Puente Hills 20, approximately 8.7 miles west in City of Industry. ► The program proposes increasing restaurants by 7,000 square feet as there is additional unmet demand for food and beverage in the Southeast San Gabriel Valley.

The increased space provides an opportunity to bring in several smaller fast-casual restaurants or a few larger full-service restaurants.
► Grocery and drug has approximately 12,000 square feet of unmet demand, which RCLCO believes could be met by the addition of another specialty or boutique grocer at the Diamond Bar Town Center. This type of retail offering would complement existing grocery stores at the Diamond Bar Town Center while providing an increased draw from new consumer segments.

Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 63

RETAIL PRICE POSITIONING
Source: CoStar; RCLCO
EXECUTED LEASES IN THE SOUTHEAST SAN GABRIEL VALLEY AREA OVER THE PAST TWELVE MONTHS RANGE FROM $1.50 TO $3.25 NNN PER SQUARE FOOT PER MONTH. RCLCO RECOMMENDS POSITIONING ASKING RENTS BETWEEN $3.00 AND $4.00 PER SQUARE FOOT.

Executed Retail Lease Comps Positioning;
August 2022
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 64

RETAIL PRICE POSITIONING
Source: CoStar; RCLCO
ASKING RETAIL LEASES IN THE SOUTHEAST SAN GABRIEL VALLEY RANGE FROM $1.65 TO $3.30 NNN PER SQUARE FOOT PER MONTH. AT THE RECOMMENDED $3.00 TO $4.00 PER SQUARE FOOT, THE DIAMOND BAR TOWN CENTER WOULD BE ASKING

TOP OF MARKET RETAIL RENTS
Asking Retail Lease Comps Positioning;
August 2022
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 65

HOSPITALITY ANALYSIS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 66

COMPARABLE HOTEL PROPERTIES
Source: CoStar; Hotel Websites; RCLCO
Comparable Hotel Properties
August 2022

THE SOUTHEAST SAN GABRIEL VALLEY LACKS MODERN, AND

WELL-AMENITIZED HOTELS
► Within the competitive area (including Diamond Bar, Walnut, and the western portion of Pomona), RCLCO identified 13 comparable hotels. The competitive properties range in scale from independent to upper upscale with average rack rates from $119 to $224 per night and with the exception of the Comfort Inn in Pomona, were constructed prior to 1998.
► Hospitality locations at the Diamond Bar Town Center should compete most directly with the primary competitive set which is comprised of hotels between the midscale and upper upscale class. While RCLCO believes the Best Western could be upgraded to a higher-end offering, it would face further competition as the pipeline begins to deliver. The secondary competitive set demonstrates more budget-friendly alternatives and includes properties in the independent and economy class. ► The majority of comparable hotels within the area are concentrated along major highways and beyond facilitating conferences, provide guests convenient access to the greater San Gabriel Valley and nearby events at places like the Pomona Fairplex and Disneyland in Anaheim.

MAP

KEY HOTEL CLASS
YEAR

OPENED ROOMS
AVG. RACK
RATE

PRIMARY COMPETITIVE SET
1 Sheraton Hotel Fairplex & Conference Center Upper Upscale 1992 244 $224 2 Ayres Suites Diamond Bar Upscale 1997 101 $164
3 DoubleTree by Hilton Pomona Upscale 1989 132 $182
4 Comfort Inn Pomona Near Fairplex Upper Midscale 2008 51 $151 5 Holiday Inn Diamond Bar – Pomona Upper Midscale 1990 176 $145 6 La Quinta Inns & Suites Pomona Upper Midscale 1985 161 $136 7 Quality Inn & Suites Walnut Midscale 1990 92
8 Best Western Diamond Bar Hotel & Suites Midscale 1988 97 $119

SECONDARY COMPETITIVE SET
9 Motel 6 Los Angeles – Pomona Economy 1985 121 $89
10 America Inn & Suites Independent 1981 115
11 Lemon Tree Motel Independent 1973 67 $76
12 Kellogg West Conference Center Independent 1971 85
13 Claremont West Suites Independent 1969 60
MAP

KEY TOTAL ROOMS
Upper Upscale 244
Upscale 233
Upper Midscale 388
Midscale 189
Economy 121
Independent 327
TOTAL EXISTING 1,502
Map of Southeast Diamond Bar Hotel Supply
August 2022

PROPERTY NAME ROOMS SCALE YEAR BUILT
Holiday Inn Diamond Bar - Pomona 176 Upper Midscale 1990 Best Western Diamond Bar Hotel & Suites 97 Midscale 1988 Ayres Suites Diamond Bar 101 Upscale 1997
Hampton Inn & Suites by Hilton Diamond Bar Lo 124 Upper Midscale 2024 TOTAL/AVG. 498 2000
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 67

HOSPITALITY TRENDS
AVERAGE DAILY RATES IN THE DIAMOND BAR DECLINED BY 14% IN 2020 AS THE COVID-19 PANDEMIC HEAVILY IMPACTED THE TOURISM INDUSTRY. HOWEVER, THE MARKET DEMONSTRATED STRONG RECOVERY OF 15% IN 2021, REACHING NEAR PREPANDEMIC LEVELS. OCCUPANCIES ALSO DIPPED HEAVILY IN 2020 AND HAVE BEEN SLOW TO RECOVER, STILL LAGGING BEHIND PRE-PANDEMIC LEVELS.

Comparison of Hotel ADR, RevPAR, and Occupancy; Diamond Bar 2016-2021
Source: CoStar; RCLCO
$113
$120 $118 $118
$102
$117
$87 $91 $86 $86
$50
$73
77% 75% 72% 72%
48%
61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
$0
$20
$40
$60
$80
$100
$120
$140
2016 2017 2018 2019 2020 2021
ADR RevPAR Occupancy

PROPERTY NAME ROOMS SCALE YEAR BUILT
Holiday Inn Diamond Bar - Pomona 176 Upper Midscale 1990 Best Western Diamond Bar Hotel & Suites 97 Midscale 1988 Ayres Suites Diamond Bar 101 Upscale 1997
Hampton Inn & Suites by Hilton Diamond Bar Lo 124 Upper Midscale 2024 TOTAL/AVG. 498 2000
Summary of Diamond Bar Hospitality Properties
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 68

HOTEL PIPELINE
Source: CoStar; RCLCO
Under Construction and Planned Hotels
August 2022
Subject Site
MAP

KEY HOTEL CLASS
YEAR

OPENED ROOMS

PIPELINE
1 Fairfield Inn & Suites Los Angeles Pomona Upper Midscale 2026 105 2 Hilton Garden Inn Pomona Upscale 2022 148
3 Hampton Inn & Suites by Hilton Diamond Bar Lo Upper Midscale 2024 124 4 Tryp by Wyndham Pomona Upper Midscale 2025 132
5 Hyatt Place Pomona Upscale 2025 115
6 Hyatt House Pomona Upscale 2025 100
MAP

KEY TOTAL ROOMS
Under Construction 148
Planned / Proposed 576
TOTAL PIPELINE 724

THE PIPELINE IN THE HOTEL COMPETITIVE MARKET AREA IS LARGE RELATIVE TO RECENT YEARS WITH ONLY ONE DELIVERY

OVER THE PREVIOUS TWO DECADES
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 69

HOSPITALITY DEMAND ANALYSIS

HISTORICAL PROJECTED
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 SUPPLY
Beginning Room Nights 501,346 477,999 518,542 526,330 433,336 493,299 602,250 602,250 647,510 764,529 795,189 795,189 795,189 795,189 795,189 Change in Room Nights -23,347 40,543 7,788 -92,994 59,963 108,951 0 45,260 117,019 30,660 0 0 0 0 0 Ending Room Nights 477,999 518,542 526,330 433,336 493,299 602,250 602,250 647,510 764,529 795,189 795,189 795,189 795,189 795,189 795,189 DEMAND
Demonstrated Demand Growth Rate -8.3% 5.8% 1.8% -41.5% 41.8% 35.3% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Beginning Demand Nights 388,282 356,175 376,700 383,597 224,477 318,255 430,619 452,150 474,758 498,495 523,420 549,591 577,071 605,924 636,221 Demonstrated Demand Growth -32,107 20,525 6,897 -159,120 93,778 112,364 21,531 22,608 23,738 24,925 26,171 27,480 28,854 30,296 31,811 Ending Demand Nights 356,175 376,700 383,597 224,477 318,255 430,619 452,150 474,758 498,495 523,420 549,591 577,071 605,924 636,221 668,032 Historical & Projected Occupancies 74.5% 72.6% 72.9% 51.8% 64.5% 71.5% 75.1% 73.3% 65.2% 65.8% 69.1% 72.6% 76.2% 80.0% 84.0% Target Occupancy 70.0% 70.0% 70.0% 70.0% 70.0% 70.0% 70.0% 70.0% 70.0% 70.0%

UNMET DEMAND
Demand at Target Occupancy (Nights) 421,575 421,575 453,257 535,170 556,632 556,632 556,632 556,632 556,632 556,632 Unmet Demand (Nights) 9,044 30,575 21,501 0 0 0 20,439 49,292 79,588 111,399 Unmet Demand (Available Room Nights) 12,920 43,679 30,715 0 0 0 29,198 70,417 113,698 159,142 Unmet Demand (Rooms) 35 120 84 0 0 0 80 193 312 436
DEMAND FOR HOTEL ROOMS IN THE SOUTHEAST SAN GABRIEL VALLEY IS PROJECTED TO REACH 220 ROOMS BY 2031. GIVEN

THE EXISTING BEST WESTERN DIAMOND BAR HOTEL & SUITES AND THE OUTSIZED HOSPITALITY PIPELINE, RCLCO DOES NOT

RECOMMEND ADDING ADDITIONAL HOTEL SPACE
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 70

OFFICE ANALYSIS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 71

OFFICE MARKET OVERVIEW
DIAMOND BAR ACCOUNTS FOR 42% OF ALL OFFICE SPACE IN
THE SOUTHEAST SAN GABRIEL VALLEY AND COMMANDS A 9%

PREMIUM IN FSG RENTS
► Given the current conditions of the office market, RCLCO does not recommend including office space as a component of the Diamond Bar Town Center. Higher vacancies than surrounding areas may indicate the office market in Diamond bar is already saturated.
► Despite accounting for only 28% of office buildings in the area, Diamond Bar provides over 2.35 million square feet of the Southeast San Gabriel Valley’s 5.62 million square feet of office space.
► The office market in Diamond Bar generates average FSG lease rates of $31.24 ($2.60 per month), a 9.2% premium to rents in the Southeast San Gabriel Valley, averaging $28.61 ($2.38 per month).
► Office vacancy in Diamond Bar is 12.2% as of July 2022, exceeding the 10.6% vacancy in the San Gabriel Valley and matching a 20-year record high of from 2010. ► The most recent office delivery in Diamond Bar occurred in 2014, with one new property providing just over 22,000 square feet. In comparison, the Southeast San Gabriel Valley (excluding Diamond Bar) has had seven completions over the same period, totaling roughly 338.000 square feet (an average of 48,322 square feet per office building).
► Between 2012 and 2021, Diamond Bar absorbed nearly 22,000 square feet of office space, an absorption ratio of 98% of new space. Comparatively, the Southeast San Gabriel Valley (excluding Diamond Bar), had an absorption ratio of just 54% of new space during the same period.
►
1Properties profiled represent all existing office buildings over 5k square feet. 2Total average rate calculated using Full-Service Gross (FSG) rent on a monthly basis. Source: CoStar; RCLCO Map of Diamond Bar and Southeast San Gabriel Valley
Diamond Bar Town Center
MAP CLUSTER # OF TOTAL AVERAGE AVG LEASE AVG 10-YEAR 10-YEAR KEY NAME BUILDINGS1 SF BUILDING SF RATE2 VACANCY COMPLETIONS SF ABSOPTION SF 1 Diamond Bar 70 2,356,311 33,662 $31.24 12.2% 22,181 21,761 2 Southeast San Gabriel Valley 252 5,622,682 22,312 $28.61 10.6% 360,434 205,972 3 San Gabriel Valley 1,833 50,619,471 27,616 $32.58 9.5% 1,407,273 1,291,092 Diamond Bar Capture and
Premium/Discount of SE SGV 27.8% 41.9% 50.9% 9.2% 15.1% 6.2% 10.6% Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 72 OFFICE MARKET TRENDS – DIAMOND BAR
DIAMOND BAR HAS EXPERIENCED STEADILY INCREASING OFFICE VACANCY SINCE 2018, WITH NEGATIVE NET ABSORPTION EACH YEAR DURING THE SAME PERIOD. FOLLOWING SEVERAL YEARS OF SLIDING RENT GROWTH, DIAMOND BAR OFFICE SPACES GENERATED RENT GROWTH OF 5.7% IN 2021 AND AS OF JULY 2022 HAS HAD RENT GROWTH OF 4.8%. NEGATIVE NET

ABSORPTION LEADING TO INCREASING VACANCIES INDICATE THERE IS INSUFFICIENT DEMAND FOR NEW OFFICE SPACE IN DIAMOND BAR.

Source: CoStar; RCLCO
Completion, Absorption, Vacancy, and Rent Growth; Diamond Bar 2003-2022 YTD
-30.0%
-20.0%
-10.0%

0.0%

10.0%

20.0%
(120,000)
(100,000)
(80,000)
(60,000)
(40,000)
(20,000)
0 20,000
40,000
60,000
80,000
100,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD

OCCUPANCY

OFFICE MARKET TRENDS
OFFICE RENTS IN BOTH DIAMOND BAR AND THE SOUTHEAST SAN GABRIEL VALLEY HAVE STEADILY INCREASED SINCE 2014.

VACANCY RATES ARE ALSO SIMILAR IN BOTH MARKETS AND HAVE BEEN RISING EACH YEAR SINCE 2018. $1.87 $1.89 $1.85 $2.04 $2.20 $2.44 $2.16 $2.12 $1.99 $2.03 $1.95 $1.99 $2.01 $2.16 $2.20 $2.31 $2.42 $2.42 $2.35 $2.48
$2.60
$1.75
$1.80
$1.59
$1.83
$1.96
$2.38
$2.12
$2.04
$1.87
$1.91
$1.96
$1.93
$1.91
$1.99
$1.92
$2.01
$2.14
$2.26
$2.25
$2.36
$2.38

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 YTD Office Vacancy
Office Rent (NNN)
Diamond Bar Southeast San Gabriel Valley Diamond Bar Southeast San Gabriel Valley Office Rent (NNN) and Vacancy; Diamond Bar and Southeast San Gabriel Valley 2002-2022 YTD
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 74

DISCLAIMERS
Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 75

CRITICAL ASSUMPTIONS
Our conclusions are based on our analysis of the information available from our own sources and from the client as of the date of this report. We assume that the information is correct, complete, and reliable.

We made certain assumptions about the future performance of the global, national, and local economy and real estate market, and on other factors similarly outside either our control or that of the client. We analyzed trends and the information available to us in drawing these conclusions. However, given the fluid and dynamic nature of the economy and real estate markets, as well as the uncertainty surrounding particularly the near-term future, it is critical to monitor the economy and markets continuously and to revisit the aforementioned conclusions periodically to ensure that they are reflective of changing market conditions.

We assume that the economy and real estate markets will experience a period of slower growth in the next 12 to 24 months, and then return to a stable and moderate rate in 2024 and beyond. However, stable and moderate growth patterns are historically not sustainable over extended periods of time, the economy is cyclical, and real estate markets are typically highly sensitive to business cycles. Further, it is very difficult to predict when inflection points in economic and real cycles will occur.

With the above in mind, we assume that the long-term average absorption rates and price changes will be as projected, realizing that most of the time performance will be either above or below said average rates.

Our analysis does not consider the potential impact of future economic shocks on the national and/or local economy, and does not consider the potential benefits from major "booms” that may occur. Similarly, the analysis does not reflect the residual impact on the real estate market and the competitive environment of such a shock or boom. Also, it is important to note that it is difficult to predict changing consumer and market psychology.

As such, we recommend the close monitoring of the economy and the marketplace, and updating this analysis as appropriate.

Further, the project and investment economics should be “stress tested” to ensure that potential fluctuations in revenue and cost assumptions resulting from alternative scenarios regarding the economy and real estate market conditions will not cause failure.

In addition, we assume that the following will occur in accordance with current expectations:
► Economic, employment, and household growth
► Other forecasts of trends and demographic and economic patterns, including consumer confidence levels ► The cost of development and construction
► Tax laws (i.e., property and income tax rates, deductibility of mortgage interest, and so forth) ► Availability and cost of capital and mortgage financing for real estate developers, owners and buyers ► Competitive projects will be developed as planned (active and future) and that a reasonable stream of supply offerings will satisfy real estate demand ► Major public works projects occur and are completed as planned Should any of the above change, this analysis should be updated, with the conclusions reviewed accordingly (and possibly revised) Torti Gallas + Partners | Market Demand and Fiscal Impact Analysis | Diamond Bar Town Center R1-10743.27 | September 6, 2022 | 76 Reasonable efforts have been made to ensure that the data contained in this study reflect accurate and timely information and are believed to be reliable. This study is based on estimates, assumptions, and other information developed by RCLCO from its independent research effort, general knowledge of the industry, and consultations with the client and its representatives. No responsibility is assumed for inaccuracies in reporting by the client, its agent, and representatives or in any other data source used in preparing or presenting this study. This report is based on information that to our knowledge was current as of the date of this report, and RCLCO has not undertaken any update of its research effort since such date.

Our report may contain prospective financial information, estimates, or opinions that represent our view of reasonable expectations at a particular time, but such information, estimates, or opinions are not offered as predictions or assurances that a particular level of income or profit will be achieved, that particular events will occur, or that a particular price will be offered or accepted. Actual results achieved during the period covered by our prospective financial analysis may vary from those described in our report, and the variations may be material. Therefore, no warranty or representation is made by RCLCO that any of the projected values or results contained in this study will be achieved.

Possession of this study does not carry with it the right of publication thereof or to use the name of "Robert Charles Lesser & Co." or "RCLCO" in any manner without first obtaining the prior written consent of RCLCO. No abstracting, excerpting, or summarization of this study may be made without first obtaining the prior written consent of RCLCO. This report is not to be used in conjunction with any public or private offering of securities or other similar purpose where it may be relied upon to any degree by any person other than the client without first obtaining the prior written consent of RCLCO. This study may not be used for any purpose other than that for which it is prepared or for which prior written consent has first been obtained from RCLCO.

GENERAL LIMITING CONDITIONS

A U S T I N
1 0 0 C o n g r e s s A v e n u e , S u i t e 2 0 0 0
A u s t i n , T X 7 8 7 0 1

L O S A N G E L E S
1 1 6 0 1 W i l s h i r e B o u l e v a r d , S u i t e 1 6 5 0 L o s A n g e l e s , C A 9 0 0 2 5

O R L A N D O
9 6 4 L a k e B a l d w i n L a n e , S u i t e 1 0 0
O r l a n d o , F L 3 2 8 1 4

WA S H I N G TO N , D C
7 2 0 0 W i s c o n s i n A v e n u e , S u i t e 1 1 1 0 B e t h e s d a , M D 2 0 8 1 4

Diamond Bar City CouncilJanuary 24, 2023

Diamond Bar City Council
January 24, 2023