DATE: April 20, 2026
TO: Mayor and Members of the City Council
VIA: Stefan Chatwin, City Manager
Marlene Subhashini, Assistant City Manager
FROM: Sofia Mangalam, Community Development Director
Ken Hira, Consultant Kosmont Companies
DEPARTMENT: Community Development, City Manager
SUBJECT: UPDATE #1 ON REAL ESTATE ECONOMIC MARKET ANALYSIS
RECOMMENDATION
It is recommended that the City Council, by Minute Order, receive and accept an update on the Real Estate Economic Market Analysis and provide direction to staff on any additional areas for further analysis and opportunity sites to be evaluated for potential development, redevelopment, or repurposing.
EXECUTIVE SUMMARY
The City of Foster City has initiated a Real Estate Economic Market Analysis (“Study”) to provide the City with a clear, data-driven understanding of current and emerging real estate and economic conditions in response to changing market dynamics, evolving demographic trends, and long-term development pressures. The scope of the Study includes five (5) main components, including:
1. Citywide Real Estate Economic Market Assessment
2. Population and Psychographic Analysis
3. Identify Future Economic Development Needs
4. City Council Engagement and Review Process
5. Stakeholder and Community Engagement
This first update (Update #1) includes Task #1 Citywide Real Estate Economic Market Assessment, and summarizes work completed to date. The update includes a population
and psychographic analysis, evaluation of the City’s economic base, assessment of office, industrial/flex (R&D), retail, and hotel market conditions, and analysis of visitation patterns and retail spending leakage. The baseline market conditions and findings presented in this update will inform the next phase of work, which includes projecting future economic development needs, identifying opportunity sites, recommending strategies to strengthen the City’s business environment, and evaluating infrastructure investments needs to support long-term economic vitality.
BACKGROUND
On September 22, 2025, staff issued a Request for Proposals (RFP) from qualified consultants to conduct an independent professional Real Estate Economic Market Analysis to assess market trends and cycles, demographic trends, supply and demand dynamics, economic indicators, evaluate future needs, and provide strong baseline data that will be used to inform actionable strategies to guide sustainable growth and economic development.
On February 2, 2026, the City Council approved an agreement with Kosmont Companies (Kosmont) to conduct an independent professional Real Estate Economic Market Analysis.
On February 10, 2026, during the City Council retreat, Ken Hira, President of Kosmont, presented a brief overview of the study’s scope and methodology. Councilmembers asked questions following the presentation. In March, one-on-one meetings were held with individual Councilmembers and the consultant to better understand their priorities and vision for the study.
Subsequently, Kosmont started work on its data collection pertaining to the City using a variety of sources and analytical tools. As per the scope of work of the RFP, Kosmont will be providing in person updates at City Council meetings to present progress findings and gain Council feedback at key stages of the Study. This staff report is Update #1 from Kosmont following their market and demographic assessment. Please note that some figures and data may be revised prior to the final report as updated information becomes available.
ANALYSIS
As discussed earlier, the scope of the study includes five (5) main components. This staff report details the Kosmont’s work on Tasks 1 and 2 as detailed out below:
1. Citywide Real Estate Economic Market Assessment
Conduct a comprehensive real estate economic market analysis to identify current economic landscape, market trends and cycles including market leakage, demographic profile, supply and demand dynamics across commercial, office, retail, life science, and mixed-use sectors, and business climate indicators.
Develop a baseline inventory of existing properties in these sectors within Foster City.
Evaluate key market indicators such as vacancy rates, lease rates, and tenant mix.
Analyze market leakage to identify opportunities to retain and recapture spending within Foster City.
Identify and evaluate geographic constraints within the regional context that may impact local economic development.
Identify unmet demand, oversupply, and emerging trends across sectors. Identify opportunities for growth and investment.
Benchmark Foster City’s market performance against comparable cities.
2. Population and Psychographic Analysis
Prepare a comprehensive population and psychographic analysis, including a study of demographic profile and trends, evaluating consumer values, interests, lifestyle, etc., to understand consumer needs and behavior. The analysis should evaluate Foster City’s trade area, with a focus on market demand and supply and other constraints for commercial and retail uses, such as, but not limited to, grocery stores and restaurants.
Since meeting with the City Council in February and March, Kosmont used various sources, including CoStar, ESRI, Placer Ai, city documents etc., to conduct a citywide real estate economic market assessment, along with a population and psychographic analysis. This report provides an update on the analysis completed to date. Please note that this is a working draft, and some of the figures and data may get refined as more information becomes available.
Utilizing ESRI and other sources to prepare a population and psychographic analysis including population, household incomes, ethnicity, housing preferences, educational attainment, employment by industry. It utilized ArcGIS Tapestry (advanced demographic dataset) that groups residential areas into 60 different segments based on shared demographic characteristics.
Kosmont conducted a market analysis to define current economic landscape, market trends, including supply and demand dynamics across commercial, office, retail, life science, hospitality sectors. Included are the following subtasks:
oDeveloped baseline inventory of existing properties in referenced sectors and key market indicators, such as vacancy rates, lease rates, and tenant mix.
oBenchmarked economic performance of neighboring Bay Area cities. oUtilized Placer.ai to analyze trade area annual dollar demand for retail goods and services.
Kosmont utilized Placer.ai to analyze resident and visitor spending/travel patterns. Kosmont analyzed sales data to understand relative performance of shopping centers and taxable sales per square foot (PSF) to measure the health of the centers.
Attachment 1 includes the data and analysis compiled so far. A summary of key highlights from the analysis completed to date is included below:
Summary of Findings
Population and Psychographic
oThe City has among the highest average household income (~$250,000) and education levels (~77% college degree) in the County. oWith over 50% of the population identifying as Asian, the majority of restaurants are Asian oriented, presenting opportunities for other type of cuisines such as traditional seafood, steak, and other ethnic offerings. oThe City is characterized as a family friendly community with open space and recreational opportunities.
Economic Base
oThe City has a strong commercial real estate market sector supporting approximately 20,000 high paying jobs, with a moderate job/housing imbalance of 1.8:1.
Office and Industrial/R&D Market
oThe office market was hard hit by the pandemic with vacancy increasing to approximately 15%, but much lower than neighboring areas. oIndustrial/Flex market has seen strong leasing activity, low vacancy and steady rent growth.
Hotel Market
oHotel market within a 3-mile radius has not fully recovered from pandemic- related declines in occupancy and average daily room rates (ADR), making new development challenging. However, current hotels in the City have exceeded pre-pandemic performance levels.
Retail Market
oRetail commercial market space is limited with only 600,000 SF and rents are high (above $40 PSF/yr), creating challenges for small businesses – Costco is the major regional draw generating substantial City retail sales. oCity lacks a defined downtown core and has limited upscale retail, entertainment and dining options. There is limited available space, except for Edgewater and the 58,000 SF former Orchard Supply Store. Multifamily Market Conditions
oStrong 7,000-unit market with average rent of $3,500 per month and only 2% vacancy.
Retail Center Sales trends
oCitywide retail sales have grown 20% (about 4% annually keeping up with inflation)
oFoster Square retail has seen most growth due to its slow lease up after completion in 2020
oMetro Center also showed solid growth in taxable sales (up approximately 42%)
oOther retail centers showed minimal growth over the same period. Opportunities to retain and recapture spending
oA significant portion of resident spending occurs at Bridgepointe Center in San Mateo, which provides a wide range of retail, entertainment and restaurants in close proximity.
oThere is significant retail leakage in spending in clothing, full and limited- service restaurants, bars, and home furnishings.
Consumer Trends
oSales in local stores have grown slowly as online shopping continues to capture a greater share of consumer goods spending.
oE-commerce now captures over 23% of total U.S. retail sales today – reducing demand for brick-and-mortar stores in the City by estimated 250,000 SF or more.
Geographic Constraints
oThe City is geographically constrained, functioning as an island with three main entrances/exits and no direct mass transit options. COVID-19 Impact
oThe pandemic resulted in a 60% drop in visitors and 75% drop in commuters to the City.
oVisitor activity rebounded following the pandemic within about two years, however, onsite workers are still 20-30% below the 2019 level due to the continued prevalence of remote work.
STAKEHOLDER AND COMMUNITY ENGAGEMENT
Community and stakeholder engagement is a critical component of the Study and will help ensure that the analysis and recommendations reflect the needs and priorities of residents, businesses, and the City’s daytime population. The engagement process will begin with an in-person community meeting scheduled for April 27, 2026, followed by an online community meeting to gather broader community input (see Attachment 2- flyer for the meeting). There will be an online community meeting in the month of May for those who are unable to attend the in-person community meeting.
In addition, focus group discussions will be conducted with key stakeholders, including property owners, brokers, and developers; major employers and business groups; and community organizations. Input received through these engagement efforts will be documented, incorporated into the analysis, and presented to the City Council as part of Update #2.
OPPORTUNITY SITES
Another major component of the Study is the evaluation of Opportunity Sites. The consultant team will assess selected sites across the City to identify their potential for development, redevelopment, or repurposing based on market conditions, infrastructure capacity, and community priorities. Staff is seeking input and direction from the City Council on which sites should be included in this evaluation so that the analysis reflects Council priorities and supports identification of locations with the greatest potential to advance the City’s long-term economic development goals.
Policy Direction Questions for the City Council
1. Following the first update from the consultant, are there any areas that the City Council would like staff and consultant team to further explore or refine as we move into the next phase of the Study?
This information will then be accommodated and included in the next update to the City Council, tentatively scheduled for June 2026.
2. Are there any sites/parcels that should be included in the evaluation of Opportunity Sites?
California Environmental Quality Act
This action is exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) (general rule for projects that have no direct or reasonably foreseeably indirect physical change to the environment).
FISCAL IMPACT
There is no fiscal impact associated with receiving Update #1 as the agreement with Kosmont has already been approved and appropriated by the City Council.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Smart Planning, Development, and the Local Economy
ATTACHMENTS:
Attachment 1 – Draft Real Estate Market Analysis Data
Attachment 2 – In-person Community Meeting Flyer