Informational 2 - Palisade Fremont Boulevard Economic Analysis

STRATEGIC ECONOMICS | 2991 SHATTUCK AVE., STE 203, BERKELEY, CA. 94705 | 510.647.5291

MEMORANDUM
To: James Willis, Senior Planner, City of Fremont
From: Derek W. Braun, Principal
Date: September 23, 2024
Project: Fremont Palisade Fremont Boulevard General Plan Amendment Economic Analysis Subject: Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard

EXECUTIVE SUMMARY

PURPOSE AND SITE CONTEXT
The City of Fremont retained Strategic Economics to conduct a market assessment and an analysis of the fiscal and economic benefits associated with a proposed development project at 43900 Fremont Boulevard and adjacent unaddressed parcels, with the analysis including:

1. The market potential to develop retail uses currently allowed under the site’s zoning and General Plan land use designation;

2. The market potential for development of industrial uses at the site, including the likely types of tenants that would locate at the site;

3. The economic and City fiscal benefits associated with the proposed North Palisade Partners’ development, consisting of 69,872 square feet of industrial space and ancillary office uses allowable under the City of Fremont’s “Tech Industrial” zoning designation.

The “Subject Site” consists of 4.17 acres and contains an unutilized 4,760 square foot single story office building which is proposed for demolition . The site had a prior structure that was demolished sometime between 1998 and 2000, when the existing adjacent retail uses were built.

The Subject Site owner, North Palisade Partners, is proposing development of a one-building, two-story industrial development project at the Subject Site that consists of approximately 69,872 of space with seven loading docks and approximately 5,000 square feet of office use.

The proposed development project requires a zoning amendment. North Palisade Partners is therefore also requesting that the City of Fremont amend the site’s General Plan land use and zoning to Tech Industrial from its current designation as Regional Commercial . The Tech Industrial land use designation is primarily intended to create space for “research and development activities, ‘clean and green’ tech, and semi -conductor, computer hardware, software and related technological, administrative, sales, and engineering facilities .” Within this land use type, manufacturing and Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 2 research activities necessitating the use of certain hazardous materials are permitted, though regulated to minimize the possibility of off-site impacts. This characteristic is common within the Tech Industrial District , as well as adjacent industrial facilities. Due to the allowable use of hazardous materials within Tech Industrial , only nonsensitive assembly, business service, and nonsensitive recreational uses are allowed in this land use.1

FINDINGS AND CONCLUSIONS
Although existing shopping centers are generally performing well in Fremont, multiple significant barriers exist for retail development at the Subject Site:
• The rise of e-commerce is leading to a reduction in the square feet of retail space required per household, a trend reflected in declining or stabilized square feet of space per household in Fremont, surrounding communities, and in Alameda and Santa Clara Counties. Instead, trends favor reinvestment at existing retail centers, including incorporation of non-retail uses such as residential, often by reducing existing retail space. This trend in Fremont is evidenced by the re-development proposal replacing some of the retail with a mixed -use residential project at the Fremont Hub shopping center.2

• A future large, regionally oriented shopping center at the Subject Site would need to compete with a substantial existing supply of retail serving customers from within the same regional trade area, further limiting the likelihood of a developer pursuing a regional retail destination at the Subject Site.

• The Subject Site is also unlikely to attract demand for smaller, local -serving retail uses allowable under the current zoning . New housing development in the Warm Springs/South Fremont Community Plan area is adding a substantial number of new households within one mile of the Subject Site that will also generate demand for local retail (e.g., groceries, personal services, dining). However, these new housing units will not substantially improve prospects for adding retail at the Subject Site since the Community Plan also a ccommodates up to 45,000 square feet of complementary retail uses to serve the new households.3

• While the Subject Site itself does feature positive attributes as a retail location, such as proximity to Auto Mall Parkway and large retailers including Home Depot and Walmart, the site is challenged by lack of visibility from Auto Mall Parkway, limited access to existing retail, and poor connections to nearby residential populations.

Demand for industrial space is strong in Fremont, including advanced manufacturing, and warehouse and distribution space. Fremont is uniquely well positioned to attract advanced manufacturing tenants due to the city’s central location and the city’s access to a workforce with a diverse range of education and specialized skills. Fremont’s ability to attract advanced manufacturing uses is demonstrated by both recent tenant leasing trends and significant venture capital investments in innovation -oriented businesses located in southern Alameda County.

1 City of Fremont General Plan, December 2011 and Fremont Municipal Code, Chapter 18.50. 2 San Francisco Business Times, 2022.
3 Warm Springs/South Fremont Community Plan, 2020.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 3 New industrial space at the Subject Site would be well-positioned to attract a diverse set of businesses, including businesses engaged in advanced manufacturing, and warehouse and distribution activities.

The proposed industrial development project would provide between $ 482,000 and $ 510,000 in required one-time impact fees to mitigate the project’s impacts, as shown in Figure 2. The City of Fremont imposes impact fees to ensure development projects mitigate their own impacts on the City’s capital facilities, fire facilities, traffic, and affordable housing needs. Figure 2 shows the estimated range of the project’s required one -time impact fee payments based on whether the City chooses to charge fees to the project as a warehouse use or manufacturing use.

FIGURE 1: ONE-TIME IMPACT FEE REVENUE AFTER ACCOUNTING FOR CREDITS Warehouse Manufacturing
Capital Facilities $9,368.27 $25,368.96
Fire Facilities $9,161.75 $9,790.60
Traffic $84,821.51 $41,151.51
Affordable Housing $406,655.04 $406,655.04
Total $510,006.57 $482,966.11
Note: The fee calculation included credits for Capital Facilities, Fire Facilities, and Traffic fees based on prior existing uses at the site.

Source: City of Fremont Fee Schedule, Effective July 8, 2024; Strategic Economics, 2024.

The City of Fremont is also estimated to receive between $7 8,517 to $82,131 in recurring annual revenue upon buildout and stabilized occupancy of the proposed industrial development project, depending on the type of tenant that occupies the space. This amount represents $ 783,733 to $819,873 over the following ten -year period (in 2024 dollars), as shown in Figure 1. The Fremont Unified School District would also receive nearly $452,000 in the same ten-year period. In contrast, if the industrial development project does not move forward and the site instead remains largely vacant, then the City of Fremont and Fremont Unified School District would only receive minimal property taxes based on the assessed value of the vacant land and existing relatively small structure. The City is also unlikely to attract significant sales tax revenue even if a retail shopping center were built at the site, given the weak market demand for this use and difficulties in attracting successful tenants.

FIGURE 2: REVENUE, YEAR 1 OF BUILDOUT AND STABILIZED OCCUPANCY, AND TEN-YEAR REVENUE (2024 DOLLARS) Tax Revenue Source
Warehouse Tenant

Advanced Manufacturing Tenant
Year 1 Total, Years 1-10
(2024 Dollars) Year 1 Total, Years 1-10
(2024 Dollars)

Property Tax: All Jurisdictions $226,603 $2,141,912 $226,603 $2,141,912 Property Tax: Fremont Only $30,054 $284,081 $30,054 $284,081 Property Tax: Fremont Unified
School District Only $47,785 $451,679 $47,785 $451,679 Business Tax: Advanced Manufacturing N/A N/A $3,679 $36,790 Business Tax: Warehouse $65 $650 N/A N/A
Sales Tax $48,397 $499,002 $48,397 $499,002
Total Annual Revenue, Fremont Only $78,517 $783,733 $82,131 $819,873 Total One-Time Impact Fee Revenue $510,007 $482,966
Source: Strategic Economics, 2024.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 4 Strategic Economics estimated that approximately 155 jobs would be associated with North Palisade Partners’ development proposal for the Subject Site if an advanced manufacturing tenant occupies the space, or approximately 69 jobs if a warehouse tenant occupies that space. The proposed zoning of Tech Industrial allows distribution and warehousing uses and advanced manufacturing uses. The Subject Site’s location and building plans are suitable for either use, so Strategic Economics analyzed two scenarios: one in which the building is used for advanced manufacturing, and one in which the building is used for warehouse and distribution . Actual job counts will depend on the tenant that occupies the proposed building. The development applicant has expressed interest in targeting advanced manufacturing tenants.

Strategic Economics’ analysis showed that the development proposal for the site could accommodate a diverse mix of jobs by occupatio n, depending on the building’s use. A warehouse and distribution tenant would be associated with a significant share of jobs in transportation and material moving occupations. An advanced manufacturing tenant would be associated with a significant share of jobs in computer and mathematical occupations . Potential new jobs at the Subject Site would also be associated with a diverse range of average annual wages, with overall average wages higher for jobs in advanced manufacturing than in warehouse. Entry-level education requirements for jobs would vary significantly depending on the use.

Businesses and workers located in the industrial development project would also support additional sales tax revenues, unsecured property tax revenue, and retail spending at adjacent businesses.

Although Strategic Economics did not quantify these revenues, th e on-site workers would support additional spending at the nearby Walmart and other businesses in shopping centers adjacent to the site. This spending would generate additional sales tax revenue for the City of Fremont. The City of Fremont would also receive additional unsecured property tax revenue based on the assessed value of business equipment, fixtures, and furniture.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 5 INTRODUCTION
The City of Fremont retained Strategic Economics to conduct a market assessment and an analysis of the fiscal and economic benefits associated with a proposed development project at 43990 Fremont Boulevard. Specifically, Strategic Economics examined:

1. The market potential to develop retail uses currently allowed under the site’s zoning and General Plan land use designation;

2. The market potential for development of industrial uses at the site, including the likely types of tenants that would locate at the site;

Strategic Economics prepar ed this memo’s findings and conclusions to help inform the City of Fremont’s decisions regarding whether to allow North Palisade Partners ’ proposed changes to the site’s existing land use and zoning.

SITE INFORMATION
The “Subject Site” consists of 4.17 acres and is located east of Interstate 880, west of Interstate 680, and sits along Fremont Boulevard and Ice House Terrace.4 The Subject Site was previously developed with a 4,760 square foot office building that would be demolished. The site also had a 41,495 square foot warehouse structure that was demolished sometime between 1998 and 2000, when the existing adjacent retail uses were built.

The site is adjacent to retail and industrial uses , including an adjacent business whose operations require use of hazardous materials for ice production. The General Plan currently designates the Subject Site’s land use as Regional Commercial. The General Plan specifies that “Regional Commercial areas include large-scale commercial uses serving a citywide or regional market, typically on large sites along freeways or major arterials.” 5 Previously, the site was under a commercial industrial overlay zone, a designation the City of Fremont used in the past for areas that were primarily industrial but in which some commercial uses were allowed. This overlay zone was replaced with the current system that resulted in the Regional Commercial designation which is primarily used near major highway interchanges. Despite the current commercial zoning, the industrial character of this area has remained intact with many adjacent industrial uses and some commercial properties nearby.

4 Based on architectural plans provided by the City of Fremont, the overall site consists of assessor parcel numbers 525 1390 009 and 525 1390 010.

5 City of Fremont General Plan, December 2011.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 6 REQUESTED LAND USE CHANGE AND DEVELOPMENT PROPOSAL
North Palisade Partners is requesting approvals for a proposed one -building industrial development project at the Subject Site that is approximately 69,900 square feet, including a rezoning, discretionary design review, increase in Floor Area Ratio (FAR), lot combination, and environmental impact assessment. The proposed development project consists of the uses described in Figure 3.

FIGURE 3: NORTH PALISADE PARTNERS PROPERTIES’ DEVELOPMENT PROPOSAL FOR SUBJECT SITE Use Square Feet
Industrial: Either Warehouse or Manufacturing 64,874
Office 4,998
Total 69,872
Source: Architectural plans authored by HPA Architecture for North Palisade Partners, provided by the City of Fremont, 2023.

A variety of tenants could potentially use the building for diverse manufacturing, warehouse, and distribution activities , as has occurred in similar development projects in Fremont. Strategic Economics evaluated the proposed development based on two potential industrial uses: advanced manufacturing and warehouse. The development applicant has expressed interest in targeting advanced manufacturing tenants.

North Palisade Partners is also requesting that the City of Fremont amend the site’s General Plan land use and zoning to Tech Industrial from its current designation as Regional Commercial . The Tech Industrial land use designation is primarily intended to create space f or “research and development activities, ‘clean and green ’ tech, and semi -conductor, computer hardware, software and related technological, administrative, sales, and engineering facilities .” Within this land use type, manufacturing and research activities necessitating the use of certain hazardous materials are permitted, though regulated to minimize the possibility of off -site impacts. This characteristic is common within the Tech Industrial District, as well as adjacent industrial facilities. Due to the allowable use of hazardous materials within Tech Industrial, only nonsensitive assembly, business service, and nonsensitive recreational uses are allowed in this land use. 6 MEMO ORGANIZATION
The remainder of this memo consists of the following sections:

1. Market and Development Viability Assessment : Provides detailed analysis and findings regarding the Subject Site’s market potential for retail or industrial development

2. Potential Economic and City Fiscal Benefits of Proposed Industrial Use : Describes the likely economic and City fiscal benefits associated with development of the site as proposed by North Palisade Partners. This section presents the potential benefits separately under two scenarios.

Scenario 1 assumes that all the space is used for warehouse, and Scenario 2 assumes that all the space is used for advanced manufacturing.

6 City of Fremont General Plan, December 2011 and Fremont Municipal Code, Chapter 18.50.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 7 MARKET AND DEVELOPMENT VIABILITY ASSESSMENT
The ability of the Subject Site to contribute economic and fiscal benefits for the City of Fremont will first depend on achieving buildout of a new development project and on the types of tenants that then occupy that project. Strategic Economics examined market conditions and trends to identify the Subject Site’s likelihood of succeeding as a retail development project versus an industrial development project. Strategic Economics also assessed the likely types of tenants that would occupy an industrial project at the site, based on Fremont’s market position within the Bay Area and recent development activity and tenanting trends.

Retail Market and Development Assessment
Strategic Economics assessed retail market conditions and trends to gauge the viability of the Subject Site for retail use. As with any development project, the success of a new shopping center depends on the ability of the site to attract and retain tenants capable of reliably paying sufficient rents to cover operating costs and the costs of land acquisition, financing, and construction. The market assessment focused on broader shifts in the retail marketplace due to the growth of e -commerce uses , the competitive retail supply currently serving the site, and site-specific characteristics that affect the site’s potential to succeed as a s hopping center that attracts customers from a citywide or r egional trade area.

BROADER RETAIL TRENDS IMPACTING DEVELOPMENT POTENTIAL AT THE SUBJECT SITE At the most basic level, growth in demand for additional retail space within a given “trade area” served by a shopping center is primarily driven by increases in spending power due to growth in additional households. This pattern explains the first major wave of shopping center development in Fremont and neighboring communities as their populations rapidly grew between 1960 and 1990. The retail industry has typically responded to any first wave of new development by building new shopping centers of various shapes and sizes depending on the population size and other existing competition already in the trade area.

Development of new shopping centers was also historically driven by evolution of the retail industry itself, as developers created new store and shopping center formats in response to changing demographic patterns, changing availability of consumer goods, and various profitability models for both retailers and real estate developers. In broad terms, this pattern can be viewed as a contin uum going from the invention of department stores in the late 19 th century, to shopping centers in the early
1920s, to sho pping malls in the 1950s, to the big box centers of the 1990s, etc. For many years, changing retail trends drove construction of new shopping centers or projects as much as new consumer demand did. In some cases, new shopping centers would merely capture demand from an existing shopping district or center, sometimes leaving the older facility largely vacant.

Today, the internet is the primary transformational force affecting the retail industry. Total retail sales in the United States increased 15 percent from the last quarter of 2020 to the last quarter of 2021 , and e-commerce sales grew by 10 percent during the same time period ; e-commerce growth was especially high in 2020 and 2021 due to the COVID -19 pandemic---with 46.7 percent growth in e- commerce from the first quarter of 2020 to the first quarter of 2021 ---but this relatively rapid growth of e-commerce sales continued a long-term trend of an increasing share of total retail sales going to online stores. E-commerce still accounts for only about 16 percent of total retail sales in the United States, but the overall demand for retail space in both existing and new retail areas is starting to Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 8 decline.7 In addition, because the retail development industry kept building new format shopping centers without necessarily closing older centers, total retail space inventory is widely considered to be overbuilt within the commercial real estate industry.

As a result of these converging trends, retail expansion in brick -and-mortar space is happening in limited and specific locations that offer extraordinary household growth or access to households, and many existing retail centers are contracting in size. Former retail spaces are being used for many non- retail uses including office space, gyms, medical facilities, and housing. Moreover, even successful shopping malls are seeking to diversify their land use mix to include new uses such as housing, offices, hotels, and a wider range of dining options, as is occurring at the Fremont Hub shopping center and at the former Vallco Shopping Mall in Cupertino.

The most significant growth in retail activity in recent years is in a category commonly referred to as experiential retail. This trend reflects the consumer preferences of younger households who tend to spend less money on goods and more money on “experiences” including personal services, restaurants, drinking establishments, and recreation and entertainment. But places that cater to this experiential retail also require having the right kind of physical environment: a place that is lively and pedestrian-oriented so people can park their cars and walk to their destinations.

These converging retail industry trends are playing out at the local level in Fremont, suggesting ongoing challenges for adding retail space and supporting development of new shopping centers:
• Total s quare feet of retail space per household is declining in Fremont and stagnant in neighboring communities: Based on retail inventory data from CoStar and household data from the U.S. Census, the square feet of retail space per household in Fremont declined from 119 to 117 between 2018 and 2022 (Figure 4). Of the cities examined, only Milpitas saw an increase in its retail inventory per household, which has since held steady at 212 square feet.

Within the combined area of Fremont, Milpitas, Newark, and Union City —which better represents a larger trade area that would be served by a regional retail center at the Subject Site—square feet per household declined from 147 to 144 over the same period. Within Alameda and Santa Clara counties combined, square feet per household remained stable at 126. Although this is a relatively short time period , the trends in declining or stagnant retail space per household consistently occurred across all geographies.

FIGURE 4: CHANGE IN RETAIL INVENTORY (SQUARE FEET) PER HOUSEHOLD, 2018 TO 2022 2018 2019 2020 2021 2022
Fremont 119 119 118 118 117
Milpitas 209 212 212 212 212
Union City 96 96 96 96 96
Newark 255 255 255 255 235
Fremont, Milpitas, Newark, Union City 147 147 146 146 144 Alameda County 132 132 132 132 131
Santa Clara County 120 120 121 121 121
Alameda and Santa Clara Counties 126 126 126 126 126
Source: 2018-2022 ACR; CoStar, 2024; Strategic Economics, 2024.

7 Quarterly E-Commerce Report, United States Census Bureau, 2022.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 9 • Reinvestment at shopping centers near Fremont includes additions of non-retail uses: Recent reinvestment activity at shopping centers in and near Fremont demonstrates the retail industry’s response to declining demand per household through conversion of space to other uses, including placement of additional housing and jobs at shopping centers to provide additional local demand for the remaining retail space. For example, the owners of Fremont Hub shopping center (approximately four miles from the Subject Site) have proposed a partial redevelopment of the site with 314 housing units and 27,000 square feet of updated retail space replacing existing 70,000 square feet of retail. Similarly, the nearby Warm Springs/South Fremont Community Plan area is expecting a more mixed -use, pedestrian friendly environment that integrates small amounts of neighborhood serving retail into other uses rather than a large, regional retail center.

COMPETITIVE RETAIL SUPPLY
Development and tenanting of a new shopping center at the Subject Site will require competing for demand against the existing supply of shopping centers serving customers from within the same trade area. Large shopping centers, such as regional malls, lifestyle centers, power centers, and community centers, serve a large trade area by drawing customers from within three miles or beyond. A range of retail centers exists within Fremont and along the I -880 corridor, each serving a unique trade area.

The retail center categories are described in more detail below and summarized in Figure 5.

Figure 6 shows the locations of power centers, community centers, and neighborhood centers located within approximately three miles of the Subject Site. Definitions of these shopping center types follow:
• Regional and super regional malls are enclosed shopping malls that include large anchor stores such as Macy’s. Regional malls typically consist of at least 400,000 square feet of space and serve a trade area of approximately five to 15 miles. Malls near the Subject Site include NewPark Mall in Newark and the Great Mall in Milpitas.
• Power centers (often known as “big box” centers) are characterized by several large anchor stores, such as discount department stores, and are usually between 250,000 to 600,000 square feet. Examples near the Subject Site include Pacific Commons less than three miles away, the Fremont Hub, and McCarthy Ranch Marketplace in Milpita s. The trade area for a power center is typically between five to 10 miles.
• Community centers typically serve trade areas of between three and six miles and are often anchored by grocery stores or “big box” stores. These centers are usually between 125,000 to 400,000 square feet in size. Examples near the Subject Site include Fremont Times Square less than three miles south of the Subject Site, and the Walmart and Home Depot adjacent to the site.
• Neighborhood centers typically serve trade areas of three or fewer miles and consist of 30,000 to 125,000 square feet. These centers are typically anchored by a grocery store and consist of convenience retail serving the day -to-day needs of nearby residents, such as dry cleaning, pharmacies, etc.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 10 FIGURE 5. TYPICAL U.S. SHOPPING CENTER TYPES AND CHARACTERISTICS Type of
Shopping Center
Typical
Size (sf)
Acres Typical Anchors Trade Area
Size/
Drive-time
Examples
Regional and
Super Regional
Malls
400,000 to
800,000
40 to
100
General merchandise or fashion-
oriented anchors, may include
department stores, mass
merchants, and/or fashion apparel
5-15 miles/
15-20
minutes
NewPark Mall
(Newark), Great
Mall (Milpitas)
Power Centers 250,000 to
600,000
25 to
80 Category-dominant anchors, often
in more than one freestanding
structures, with only a few small
tenants
5-10 miles/
15-20
minutes
Pacific Commons,
Fremont Hub,
McCarthy Ranch
Marketplace
(Milpitas)
Community
Center
125,000 to
400,000
10 to
40 General merchandise or
convenience-oriented anchors,
may include discount stores,
grocery stores, drug stores, and/or
large specialty stores (home
improvement/ furnishings, sporting
goods, etc.)
3-6 miles/
10-15
minutes
Walmart, Home
Depot, Fremont
Times Square

Neighborhood
Center
30,000 to
125,000
3 to 5 Convenience-oriented, typically
anchored by a grocery and/or drug
store
3 miles/
5-10
minutes
Warm Springs
Plaza
Source: International Council of Shopping Centers, January 2017; CoStar, January 2017; Strategic Economics 2024.

The Subject Site ’s surrounding trade area is already well served by existing regional retail and therefore not well-positioned to attract a new regional shopping center, as envisioned by the existing Regional Commercial land use designation. As shown in Figure 6, the Subject Site is already well- served by regional retail destinations, including The Hub and Pacific Commons, both of which feature comparable freeway access and visibility.

The Subject Site is also not well positioned to attract local-serving retail uses, given the existing supply of retail space meeting these needs. As shown in Figure 6, multiple “neighborhood centers” exist within the three-mile radius of the Subject Site. These centers already include a range of grocery store anchors targeting different demographic segments, including FoodMaxx, Grocery Outlet, Trader Joe’s, Lucky, Safeway, and Whole Foods.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 11 FIGURE 6: ALL RETAIL SHOPPING CENTERS LOCATED ADJACENT TO SUBJECT SITE

RETAIL MARKET CONDITIONS
Although broader retail trends and the existing supply of space serving the Subject Site suggest challenges for developing a new shopping center at the Subject Site, Strategic Economics also examined local real estate market data to assess the strength of overall demand for new retail space.

Existing retail space in and near Fremont performs well, but inventory growth and absorption of space have been relatively slow over the past decade. As shown in Figure 7, overall retail vacancy rates in Fremont have held stable at a healthy three to five percent since 2011, including during the COVID- 19 pandemic. Overall retail rents also rose during that period as shown in Figure 8, but have modestly declined since 2023. Retail inventory has not significantly grown in Fremont since 2014 due to a lack of developers pursuing and completing new projects, and there was a decline in inventory in 2017 that has not been replaced (see Figure 9). The increase in retail space between 2011 and 2013 is largely attributable to The Block at Pacific Commons, and the decrease in retail space in 2017 is largely attributable to the demolition of the Connolly Center. Annual net absorption of retail space (space occupied minus space vacated) has been uneven, as shown in Figure 10 (although absorption was likely constrained by limited availability of vacant space).

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 12 FIGURE 7: FREMONT RETAIL VACANCY RATE

Source: CoStar, 2024; Strategic Economics, 2024.

FIGURE 8. FREMONT MONTHLY RETAIL RENT PER SQUARE FOOT (NNN)

Source: CoStar, 2024; Strategic Economics, 2024.

FIGURE 9: FREMONT RETAIL INVENTORY (SQUARE FEET)

Source: CoStar, 2024; Strategic Economics, 2024.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD
Retail Vacany Rate
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD
Monthly Rent (NNN) per Sq Ft
8,400,000
8,500,000
8,600,000
8,700,000
8,800,000
8,900,000
9,000,000
9,100,000
9,200,000
9,300,000
9,400,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD
Total Retail Inventory (Sq Ft)
Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 13 FIGURE 10: NET ABSORPTION OF RETAIL SPACE IN FREMONT (SQUARE FEET)

Source: CoStar, 2024; Strategic Economics, 2024.

RETAIL SITE ASSESSMENT
While current retail industry trends and local indicators suggest weak retail development potential at the Subject Site, site-specific location and physical characteristics also indicate how well the Subject Site could successfully function as a big box store or small shopping center. Retail tenants, especially retail tenants serving a large regional trade area, generally prefer sites with high visibility, locations with high automobile traffic volume, easy accessibility, and co-location with adjacent compl ementary tenants.

The Subject Site’s greatest strength as a potential shopping center consists of access via I-880, I-680, and Fremont Boulevard. The Subject Site is accessible via these high automobile traffic areas, and there is existing retail nearby—including Walmart, Home Depot, and REI—whose customer traffic could potentially be leveraged by retail at the Subject Site.

The Subject Site’s weaknesses as a potential shopping center include limited visibility, inadequate connections from major thoroughfares , and limited immediate proximity to larger concentrations of complementary retail uses . The Subject Site is not located directly adjacent to either of the major interstates and has relatively limited opportunities for signage visible from the freeway. The Subject Site also lacks access and visibility from heavily trafficked Auto Mall Parkway, which connects Interstates 680 and 880. The site is instead oriented toward Fremont Boulevard. The Subject Site is also at the periphery of existing retail uses, and otherwise surrounded by industrial uses.

The Subject Site is not well suited to serve the existing and planned residential populations. There is not a large concentration of residents immediately surrounding the site, as shown in Figure 11, and the greatest nearby concentration of residents is across Auto Mall Parkway. This road does not allow for convenient pedestrian or vehicular access to the site due to the roadway’s design. Residential growth at the nearby Warm Springs/South Fremont area is drawing more residents within .5 to 1-mile of the Subject Site, but these residents’ retail needs are likely to largely be met by the planned retail within the same neighborhood.
(400,000)
(300,000)
(200,000)
(100,000)
0 100,000
200,000
300,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD
Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 14 FIGURE 11. POPULATION DENSITY VERSUS SUBJECT SITE AND EXISTING RETAIL LOCATIONS

SUMMARY OF KEY RETAIL CONCLUSIONS
Although existing shopping centers are generally performing well in Fremont, multiple significant challenges exist for retail development at the Subject Site:
• The rise of e-commerce is leading to a reduction in the square feet of retail space required per household, a trend reflected in declining square feet of space per household in Fremont, and stagnant square feet of space in surrounding communities, a s well as in Alameda and Santa Clara Counties. Instea d, trends favor reinvestment at existing retail centers, including incorporation of non-retail uses by removing some existing retail space.

• A future shopping center at the Subject Site would need to compete with a substantial existing supply of existing retail that serves customers within the same regional and local trade areas.

• While the Subject Site itself does feature positive attributes as a retail location, including access to I-880, I-680, and Fremont Boulevard , the site is at the periphery of existing complementary retail concentrations and is closer to industrial uses . The site also lacks immediate access to more heavily trafficked Auto Mall Parkway and lacks visibility from I-680.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 15 Industrial Market and Development Assessment
The drivers of demand for an industrial development project differ from drivers of demand for a retail project. While a successful retail project depends on the ability to capture sufficient customer sales from within a competitive trade area, the success of an industrial development project relies on capturing demand from businesses seekin g a preferred combination of access to their workforce, building/site configuration, power and other utilities, and/or ease of goods movement for the business inputs and outputs. The following findings assess potential industrial development and tenanting opportunities at the Subject Site based on market indicators of demand for new industrial space in Fremont and based on the factors that attract specific types of industrial tenants to Fremont.

INDUSTRIAL MARKET CONDITIONS AND DEVELOPMENT ACTIVITY IN FREMONT Strong demand for industrial space exists in Fremont , with low vacancy rates , increasing rents for manufacturing space, and rapid absorption of new product. As shown in Figure 12, Fremont’s overall industrial vacancy rate was a low four percent as of May 2024. While this low vacancy rate was partly the result of strong demand for manufacturing, warehouse, and distribution space during the COVID- 19 pandemic, including a strong recovery for warehouse, the vacancy rate trend shown in Figure 13 indicates that vacancy rates have remained at a low level in Fremont since 2016 — particularly for manufacturing space. Figure 14 shows that absorption of industrial space has been limited in most recent years due to limited available inventory and very low vacancy . New space, however, is typically rapidly absorbed, which was the case for warehouse space in 2020 and 2021 when more than two million new square feet were added to the inventory . The limited availability of space caused manufacturing rents to climb , though warehouse rents recently declined (Figure 15).

High and increasing rents are representative of both shell space, which can be used by various types of industrial tenants, and spaces built out for more specialized uses and tenant types.

FIGURE 12: FREMONT INDUSTRIAL INVENTORY, VACANCY RATES, AND RENTS, MAY 2024 Building Type Inventory (sq. ft.) Vacancy Rate (%) Rent (monthly, NNN) Manufacturing 10,810,005 2% $2.00
Warehouse 15,651,696 3% $0.87
Source: CoStar, 2024; Strategic Economics, 2024.

FIGURE 13: VACANCY RATES BY SUB-CATEGORIES OF INDUSTRIAL SPACE, FREMONT, 2010 TO MAY 2024

Source: CoStar, 2024; Strategic Economics, 2024.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Manufacturing Warehouse
Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 16 FIGURE 14: ABSORPTION TRENDS BY SUB-CATEGORIES OF INDUSTRIAL SPACE, FREMONT, 2010 TO MAY 2024

Source: CoStar, 2024; Strategic Economics, 2024.

FIGURE 15: AVERAGE EFFECTIVE RENTS BY SUB-CATEGORIES OF INDUSTRIAL SPACE, FREMONT, 2010 TO MAY 2024

Note: Rents displayed on a triple-net basis.

Source: CoStar, 2024; Strategic Economics, 2024.

Industrial development activity and interest is also strong in Fremont, with growth in building inventory and multiple development proposals for additional industrial space. Due to delivery of new industrial development projects, the inventory of industrial space in Fremont grew by 3.6 million square feet, or 11 percent, from 2014 to 2024. Real estate data service CoStar classified 12 percent of this new inventory as manufacturing space and 72 percent as warehouse space. Local brokers recently interviewed about the Fremont market verified that demand is exceptionally strong for industrial space in Fremont. This trend accelerated during the COVID -19 pandemic, which led to significant e - commerce expansion that increased demand for industrial space . Developers are pursuing multiple new industrial projects in Fremont to meet this demand; as of May 2023, the City of Fremont tracked fourteen industrial development projects representing just over 10 million square feet of new industrial space.
(1,000,000)
(500,000)
0 500,000
1,000,000
1,500,000
2,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Manufacturing Warehouse
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Manufacturing Warehouse
Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 17 FIGURE 16: CHANGE IN INDUSTRIAL INVENTORY BY SUB-CATEGORY OF SPACE, FREMONT, 2010 TO MAY 2024

Source: CoStar, 2024; Strategic Economics, 2024.

DRIVERS OF DEMAND FOR INDUSTRIAL SPACE IN FREMONT
Strategic Economics examined Fremont’s industrial market positioning and tenanting trends to assess the likely mix of tenants that would occupy new industrial space at the Subject Site, thereby indicating whether the space would be used for warehouse and distribution or advanced manufacturing activities. As with any community, Fremont offers a unique mix of assets and advantages that influence the types of industrial business tenants seeking space within the city.

Fremont—and to a lesser extent Newark and Milpitas —occupies a unique regional niche in the types of businesses seeking industrial space, with a focus on product prototyping and specialized smaller - scale production. Local brokers interviewed for this project about the area’s industrial market noted that Fremont competes for industrial tenants within a market area consisting of Fremont, Newark, Milpitas, and northern San Jose. However, Fremont was cited as the most desirable location for advanced manufacturin g, particularly for pharmaceuticals, biotechnology, medical device manufacturing, electronic equipment, computer technology, and sustainability technologies and products. Examples of these businesses include Bloom Energy (renewable energy), Cepheid (medical devices), Enovix (energy storage), Lam Research (semiconductors), and Quanta Computer (electronics manufacturing). Brokers also noted that there is substantial and growing interest in Fremont specifically for R&D and early-stage manufacturing related to electric vehicles and batteries. There are now nearly fifty companies in Fremont related to batteries and clean energy, with spillover effects to neighboring jurisdictions, most prominently seen in Newark. 8 Figure 17 depicts the cycle for
developing a new manufactured product and highlights the type of activities most typical of industrial tenants in Fremont.

8 https://eastbayeda.org/southern-alameda-county/.
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Manufacturing Warehouse
Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 18 FIGURE 17: TYPICAL INNOVATION CYCLE OF A NEW MANUFACTURED PRODUCT

Source: Strategic Economics, 2024.

Recent tenanting activity and venture capital investment provide further evidence of Fremont’s specialization in advanced manufacturing , especially at the size range of North Palisade Partners development proposal:
• As shown in Figure 18, half of the leases signed for spaces larger than 50,000 square feet in Fremont in 2023 and 2024 were for businesses in the technology/manufacturing sectors. The other half of the new leases were signed by warehouse and logistics users.

• The median size of leases signed by technology/manufacturing companies was approximately 70,000 square feet, similar to that of the North Palisade Partners development proposal.

While technology/manufacturing companies are responsible for half of the new leases above 50,000 square feet in the past two years, each lease tends to be smaller in size than the warehouse/logistics leases.

• Fremont and surrounding communities attract substantial venture capital investment in computer technology, the biomedical/biotechnology industry, and CleanTech. As shown in Figure 19, the “Southern Alameda” subarea attracted approximately $1.5 billion in venture capital investment in 2020, which accounted for nearly a quarter of all venture capital investment in the East Bay.

FIGURE 18: MAJOR* NEW LEASES BY TENANT INDUSTRY IN FREMONT, 2023 AND 2024 Sector Number of Leases Median Square Feet** Total Square Feet Technology/Manufacturing 12 70,363 1,077,522 Warehouse/Logistics 12 106,100 1,449,024
Total 34 2,526,546
Note:
* Reflects leases for space larger than 50,000 square feet. ** Median was used due to the presence of two outliers in the data.

Source: City of Fremont, 2024; CoStar, 2024; Strategic Economics, 2024.

1. Concept/Early R&D

2. R&D and Design

3. Advanced/pilot
manufacturing

4. Large-scale
manufacturing
Fremont’s
primary niche
Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 19 FIGURE 19: VENTURE CAPITAL INVESTMENT BY CATEGORY AND EAST BAY SUBAREA, 2020

Source: “East Bay Forward,” East Bay EDA, September 2021 (report authored by Strategic Economics); Pitchbook, 2021.

Fremont offers several competitive assets that support the city’s ongoing strength in attracting innovation-oriented advanced manufacturing businesses to the city’s industrial lands:
• Access to a workforce with diverse skills, education, and training: As seen below in Figure 20, Fremont’s location provides immediate access to the Bay Area’s highest concentrations of workers with advanced degrees, including in Fremont itself and in Silicon Valley communities across the Dumbarton Bridge. At the same time, Fremont enjoys equally stro ng access to a large population of workers to the east and north with a diverse range of education and specialized skills that are required for operating specialized production equipment. Broker interviews highlighted the importance of access to a pool of engineering talent for advanced manufacturing businesses in particular.

• Integration with Silicon Valley businesses via the Dumbarton Bridge: The Dumbarton Bridge provides direct access to the Bay Area’s primary cluster of innovation -oriented technology businesses in Silicon Valley. The bridge essentially integrates Fremont within this innovation ecosystem, allowing Fremont to provide the “scale-up” space for manufacturing uses. Tesla is an example of this symbiotic relationship; the company’s primary corporate offices and former headquarters are in Palo Alto, while manufacturing occurs in Fremont.

• Availability of modern industrial buildings and industrial land: Fremont’s inventory of newer industrial buildings and industrial development opportunities better meet building configuration, access, and power needs of innovation-oriented tenants compared to the older building stock of communities such as San Leandro.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 20 • Efficient City permitting and approvals processes: Brokers recently interviewed noted that Fremont also competes for innovation -oriented industrial tenants based on responsive, efficient, and easy to navigate permitting and approvals processes relative to neighboring communities.

FIGURE 20: CONCENTRATION OF POPULATION WITH ADVANCED DEGREES IN THE BAY AREA, 2022

Fremont also attracts demand for warehouse and distribution space based on proximity to households and businesses and the city’s location along major transportation corridors. Demand for warehouse and distribution space continues to grow in response to e-commerce distribution needs, with demand especially surging during and since the COVID -19 pandemic. Brokers noted that this has reduced vacancy rates and increased land costs, especially in high demand areas, such as Fremont. As shown in Figure 18, over half the square feet of major leases signed in Fremont in the past five years were for warehouse and distribution space. Fremont competes for warehouse and distribution tenants based on the city’s location along the I -880 corridor, including access to the Port of Oakland , and access to numerous businesses and residents. However, surrounding communities offer similar accessibility at potentially lower costs due to reduced competition with technology businesses for industrial space.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 21 SUBJECT SITE ASSESSMENT FOR INDUSTRIAL USE
An industrial development project at the Subject Site is likely to succeed in attracting tenants due to general demand for new modern industrial space, compatibility with surrounding uses, and convenient access to existing amenities. The Subject Site could be successful in attracting and retaining industrial tenants due to strong demand for industrial space in Fremont, ongoing strength of the workforce and locational amenities, and by providing a smaller site suitable for a single-tenant which is not commonly available in Fremont. Brokers noted that demand is especially strong for buildings between 100,000 and 200,000 square feet; North Palisade Partners ’ proposal is smaller than the sizes in this range, but it is well-suited for a single tenant . The proposed project is also of a similar size as many recent leases by advanced manufacturing tenants. Brokers also noted that although demand is strongest for the larger size range mentioned above, there is a distinct lack of spaces available in the size range of this proposal, and that the proposed building would therefore readily attract tenants.

The Subject Site is well-positioned to attract advanced manufacturing tenants, as well as warehouse and distribution uses. The Subject Site’s location will allow it to function equally well for either use, suggesting that tenanting of new space at the site would follow recent patterns that include warehouse and distribution or advanced manufacturing uses. Brokers interviewed for this study suggested that strongest demand would be from advanced manufacturing users due to the suitable size of the space and the location within Fremont. Brokers suggest that other industrial areas, such as those at or near Pacific Commons, are likely to be slightly more desirable than the Subject Site for distribution and warehouse tenants. Pacific Commons’ desirability derives from that area’s better configuration for large trucks to maneuver.

KEY INDUSTRIAL CONCLUSIONS
Demand for industrial space is strong in Fremont, including advanced manufacturing, and warehouse and distribution space . Fremont is especially well positioned to attract advanced manufacturing tenants due to the city’s direct access to Silicon Valley businesses via the Dumbarton Bridge and the city’s access to a workforce with a diverse range of education and specialized skills. The city’s ability to attract advanced manufacturing uses is demonstrated by both recent tenanting trends and significant venture capital investments in innovation-oriented businesses located in and near the city.

New industrial space at the Subject Site would be well-positioned to attract a diverse set of businesses, including businesses engaged in advanced manufacturing, and warehouse and distribution activities.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 22 POTENTIAL ECONOMIC AND FISCAL BENEFITS OF PROPOSED

INDUSTRIAL USE
Strategic Economics assessed the likely economic and fiscal benefits associated with buildout of North Palisade Partners ’ industrial development proposal for the Subject Site. Based on the preceding analysis of likely tenant types that would occupy industrial space at the Subject Site, Strategic Economics assumed that either an advanced manufacturing tenant or a warehouse tenant might occupy the space. Because of this, Strategic Economics conducted the analysis with two scenarios: 1) all of the space is occupied by a warehouse tenant or 2) all of the space is occupied by an advanced manufacturing tenant. The results differ in terms of number of jobs produced, potential occupation mix, and estimated wages. Although t he project plans indicate the breakdown of space between industrial use and office as demonstrated below, both scenarios of the analysis were run as if all square footage is applicable to the industrial use. This method accounts for the fact that data sources that describe jobs by industry sector a lready include the entire range of occupations present at businesses in a given sector (including office and administration jobs). The following sections present and compare the analysis results for the two scenarios.

FIGURE 21: BUSINESS ACTIVITY ASSUMPTIONS APPLIED IN THE ECONOMIC AND FISCAL ANALYSIS Use Square Feet
Industrial 64,874
Office 4,998
Total: Analyzed as Warehouse or Manufacturing 69,872
Source: Architectural plans authored by HPA Architecture for North Palisade Partners, provided by the City of Fremont, 2024.

Employment and Workforce Opportunities
This section summarizes the wages, occupations, and entry-level educational requirements for jobs at businesses matching the warehouse and advanced manufacturing uses assumed to locate at the Subject Site. The results are based on recent data for the Oakland-Hayward -Berkeley Metropolitan Division. This section first presents a subsection of results assuming a warehouse tenant, followed by a subsection of results assuming an advanced manufacturing tenant.

The text box on the following page describes t he methodology used for this analysis . Strategic Economics estimated workforce outcomes including the number of jobs, worker occupation mix, average worker incomes, and entry -level education requirements for new jobs at North Palisade Partners’ proposed development project.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 23 OVERVIEW OF METHODOLOGY
The employment and workforce analysis summarized in this memorandum ties land uses (manufacturing and warehouse) to industries in order to estimate the typical wages, occupational mix, and entry -level educational requirements of jobs associated with different land uses. This makes it possible to draw broad conclusions about the likely occupations and entry -level educational requirements of new jobs associated with the development proposal , based on patterns in the surrounding region. The data sources used a nd the steps followed for this analysis are described below.

Data sources. Findings were based on data provided by the California Economic Development Department (EDD) for the San Jose-Sunnyvale-Santa Clara MSA. Two main EDD data sources were used:
• Findings related to industries, wages, and occupations are based on the EDD Industry to Occupation Matrix for the first quarter of 2021.
• Findings related to entry -level educational requirements we re based on the EDD Occupation Projections dataset for 2016-2026. Note that the data on entry -level educational requirements by occupation may not always reflect what is required of new workers in a highly competitive job market such as the San Francisco B ay Area. Nonetheless, when summarized at a high -level, this data is helpful to assess the general education and skills required for different occupational categories.

Step 1. Define land use categories by industry groups. As a first step, the three land uses assumed for the development proposal were defined based on the following industry groups, as categorized by the North American Industry Classification System (NAICS):
• Manufacturing: Printing and Related Support Activities (323), Chemical Manufacturing (325), Nonmetallic Mineral Product Manufacturing (327), Fabricated Metal Product Manufacturing (332), Machinery Manufacturing (333), Computer and Electronic Product Manufacturing (334), Electrical Equipment and Appliances (335), Transportation Equipment Manufacturing (336), Furniture and Related Product Manufacturing (337), Miscellaneous Manufacturing (339) , Computer Systems Design and Related Services (5415)
• Warehouse: Wholesale Trade (42), Couriers and Messengers (492), Warehousing and Storage (493), Electronic Shopping and Mail-Order Houses (4251) Step 2. Link industry groups to occupations and wages (MSA level). Based on these industry group definitions, the Industry to Occupation Matrix dataset was used to associate each land use with an occupational mix, categorized using major Standard Occupational Classification (SOC) codes. This same dataset was also used to associate each land use to an average annual wage. In both cases, results obtained are reflective of the MSA overall.

Step 3. Link occupations to entry-level educational requirements (MSA level). The occupational mix of each land use was then linked to the EDD Occupation Projections dataset in order to obtain the typical mix of educational levels required by major SOC Code. Again, these results are reflective of the MSA overall.

Step 4. Apply the MSA’s relative shares of occupations by land uses and educational requirements by land uses to the job estimates. The relative shares of occupations and educational requirements by land use derived from the MSA datasets were applied to the number of jobs by land use for the overall development proposal. This made it possible to estimate the projected number of jobs by occupation and entry -level education required.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 24 Employment and Workforce Opportunities Assessment:

Warehouse Tenant Scenario

ON-SITE JOBS
Based on general job density assumptions by land use, Strategic Economics estimated that approximately 69 jobs would be associated with the development proposal if occupied by a warehouse tenant. The job density assumptions and estimated new jobs are shown in Figure 22.

FIGURE 22: EMPLOYMENT DENSITY ASSUMPTION AND ON-SITE JOBS Land Use Square Feet
Sq. Ft. per Job
Assumption (a) New Jobs
Warehouse 69,872 1,000 69 (a) The analysis applied generalized assumptions of ranges of jobs per square foot, based on Strategic Economics’ ongoing review of available literature and past project experience. Actual outcomes will depend on the specific tenants that occupy any future industrial space at the site.

Source: Strategic Economics, 2024.

OCCUPATION MIX
The development proposal for the Subject Site would accommodate a diverse mix of jobs by occupation, with the greatest numbers of jobs in transportation and material moving occupations for a warehouse tenant . Figure 23 shows the breakdown of new jobs by occupation for a warehouse tenant at the Subject Site. Of the 6 9 jobs at the Subject Site, 47.8 percent would consist of transportation and material moving occupations, 14.5 percent in sales and related occupations, and

12.8 percent in office and administrative support occupations. The remaining 2 4.9 percent of jobs would consist of jobs in a variety of occupations.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 25 FIGURE 23: PROJECTED NEW JOBS BY OCCUPATION FOR A WAREHOUSE TENANT AT NORTH PALISADE PARTNERS’

SUBJECT SITE DEVELOPMENT PROPOSAL
Major Occupation Category Number of Jobs Percent of Jobs Management 5 7.6%
Business and Financial Operations 3 5.0%
Computer and Mathematical 1 2.1%
Architecture and Engineering 0 0.6%
Life, Physical, and Social Science 0 0.3%
Community and Social Service 0 0.0%
Legal 0 0.1%
Educational Instruction and Library 0 0.0%
Arts, Design, Entertainment, Sports, and Media 1 1.0%
Healthcare Practitioner and Technical Occupations 0 0.2% Healthcare Support 0 0.0%
Protective Service 0 0.0%
Food Preparation and Serving 0 0.0%
Building and Grounds Cleaning and Maintenance 0 0.4%
Personal Care and Service 0 0.0%
Sales and Related 10 14.5%
Office and Administrative Support 9 12.8%
Farming, Fishing, and Forestry Occupations 0 0.1%
Construction and Extraction 0 0.2%
Installation, Maintenance, and Repair 3 4.0%
Production 2 3.2%
Transportation and Material Moving 33 47.8%
Note: Number of jobs are projected proportionally to the occupational mix of the MSA. Occupation categories which have a stated number of jobs as 0 have a small number of jobs within the MSA which, when estimated for this size development, constitute less than 1 job but which may still exist. Job counts do not sum to 69 due to rounding.

Source: California Economic Development Department for the San Jose-Sunnyvale-Santa Clara MSA, Industry to Occupation Matrix for Q1 2022; Strategic Economics, 2024.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 26 AVERAGE INCOME
Potential new jobs at the Subject Site are also associated with a variety of average annual wages .

Figure 24 shows the average annual wages associated with the mix of occupations within each major occupation category. The overall average annual wage for warehouse occupations is $76,921 but has a range between $21,000 and $167,000.

FIGURE 24: AVERAGE ANNUAL WAGES FOR OCCUPATIONS FOR WAREHOUSE TENANT FOR NORTH PALISADE PARTNERS’

SUBJECT SITE DEVELOPMENT PROPOSAL
Major Occupation Category
Warehouse
Share of Warehouse Jobs Mean Annual Wage
Management 7.6% $166,441.16
Business and Financial Operations 5.0% $104,642.52
Computer and Mathematical 2.1% $137,026.00
Architecture and Engineering 0.6% $112,315.32
Life, Physical, and Social Science 0.3% $86,516.92
Community and Social Service 0.0% $84,225.00
Legal 0.1% $128,878.00
Educational Instruction and Library 0.0% $84,638.80
Arts, Design, Entertainment, Sports, and Media 1.0% $101,316.52 Healthcare Practitioner and Technical Occupations 0.2% $98,483.89 Healthcare Support 0.0% $63,715.40
Protective Service 0.0% $65,570.40
Food Preparation and Serving 0.0% $44,925.93
Building and Grounds Cleaning and Maintenance 0.4% $58,048.29 Personal Care and Service 0.0% $33,342.33
Sales and Related 14.5% $76,923.75
Office and Administrative Support 12.8% $56,268.29
Farming, Fishing, and Forestry Occupations 0.1% $21,273.22 Construction and Extraction 0.2% $69,100.83
Installation, Maintenance, and Repair 4.0% $55,739.02
Production 3.2% $47,250.53
Transportation and Material Moving 47.8% $53,151.64
Calculated Total, All Occupations 100% $76,921.85
Notes:
(a) Land uses are defined based on the following NAICS industries: Wholesale Trade (42), Couriers and Messengers (492), Warehousing and Storage (493).
(b) Occupation categories which have a stated annual wage but 0 percent share of jobs have a very small number of jobs that constitute less than 1 percent but which still exist within the industry.

Source: California Economic Development Department for the San Jose-Sunnyvale-Santa Clara MSA, Industry to Occupation Matrix for Q1 2022; Strategic Economics, 2024.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 27 ENTRY-LEVEL EDUCATION REQUIREMENTS
Entry-level education requirements for warehouse jobs provide opportunities for workers at a variety of education levels. As shown in Figure 25, an estimated 16 percent of jobs in industries associated with a warehouse space would require a bachelor’s degree or higher, compared to 74 percent jobs in which a high school diploma or equivalent or no formal educational credential would be required.

FIGURE 25: ENTRY LEVEL EDUCATION REQUIREMENTS FOR JOBS ASSOCIATED WITH WAREHOUSE USE

Source: California Economic Development Department for the Oakland-Hayward-Berkeley MD, Industry to Occupation Matrix for Q1 2022; California Economic Development Department for the San Jose-Sunnyvale-Santa Clara MSA Occupation Projections for 2020- 2030; Strategic Economics, 2024.

Employment and Workforce Opportunities Assessment:

Advanced Manufacturing Tenant Scenario

ON-SITE JOBS
Based on general job density assumptions by land use, Strategic Economics estimated that approximately 155 jobs would be associated with the development proposal if occupied by a n advanced manufacturing tenant. The job density assumptions and estimated new jobs are shown in Figure 26.

FIGURE 26: EMPLOYMENT DENSITY ASSUMPTION AND ON-SITE JOBS Land Use Square Feet
Jobs per Sq. Ft.

Assumption (a) New Jobs
Advanced Manufacturing 69,872 450 155
(a) The analysis applied generalized assumptions of ranges of jobs per square foot, based on Strategic Economics’ ongoing rev iew of available literature and past project experience. Actual outcomes will depend on the specific tenants that occupy any future industrial space at the site.

Source: Strategic Economics, 202.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Percent of Warehouse Land Use Jobs
Doctoral or professional
degree
Master's degree
Bachelor's degree
Associate's degree
Some college, no degree
Postsecondary non-degree
award
High school diploma or
equivalent
No formal educational
credential
Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 28 OCCUPATION MIX
The development proposal for the Subject Site would accommodate a diverse mix of jobs by occupation, with the greatest numbers of jobs in computer and mathematical occupations for a manufacturing tenant. Figure 27 shows the breakdown of new jobs by occupation for a n advanced manufacturing tenant at the Subject Site. Of the 155 jobs at the Subject Site, 23.4 percent would consist of computer and mathematical occupations, 22.8 percent in production occupations, 13.9 percent in management occupations, and 1 1.3 percent in business and financial occupations. The remaining 28.7 percent of jobs would consist of jobs in a variety of occupations.

FIGURE 27: PROJECTED NEW JOBS BY OCCUPATION FOR ADVANCED MANUFACTURING TENANT FOR NORTH PALISADE PARTNERS’ SUBJECT SITE DEVELOPMENT PROPOSAL
Major Occupation Category Number of Jobs Percent of Jobs Management 21 13.9%
Business and Financial Operations 17 11.3%
Computer and Mathematical 36 23.4%
Architecture and Engineering 10 6.7%
Life, Physical, and Social Science 1 0.6%
Community and Social Service 0 0.0%
Legal 0 0.3%
Educational Instruction and Library 0 0.0%
Arts, Design, Entertainment, Sports, and Media 1 0.8%
Healthcare Practitioner and Technical Occupations 0 0.1% Healthcare Support 0 0.0%
Protective Service 0 0.0%
Food Preparation and Serving 0 0.0%
Building and Grounds Cleaning and Maintenance 0 0.2%
Personal Care and Service 0 0.0%
Sales and Related 7 4.2%
Office and Administrative Support 13 8.6%
Farming, Fishing, and Forestry Occupations 0 0.0%
Construction and Extraction 2 1.1%
Installation, Maintenance, and Repair 4 2.6%
Production 35 22.8%
Transportation and Material Moving 5 3.5%
Notes: Number of jobs are projected proportionally to the occupational mix of the MSA. Occupation categories which have a stated number of jobs as 0 have a small number of jobs within the MSA which, when estimated for this size development, constitute less than 1 job but which may still exist. Job counts do not sum to 155 due to rounding.

Source: California Economic Development Department for the San Jose-Sunnyvale-Santa Clara MSA, Industry to Occupation Matrix for Q1 2022; Strategic Economics, 2024.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 29 AVERAGE INCOME
Potential new jobs at the Subject Site are also associated with a variety of average annual wages .

Figure 28 shows the average annual wages associated with the mix of occupations within each major occupation category. The overall average annual wage for advanced manufacturing occupations is $79,119 but has a range between $54,000 and $178,000.

FIGURE 28: AVERAGE ANNUAL WAGES FOR OCCUPATIONS FOR ADVANCED MANUFACTURING TENANT FOR NORTH PALISADE PARTNERS’ SUBJECT SITE DEVELOPMENT PROPOSAL
Major Occupation Category
Manufacturing
Share of Manufacturing Jobs Mean Annual Wage
Management 13.9% $177,848.33
Business and Financial Operations 11.3% $105,372.96
Computer and Mathematical 23.4% $124,571.95
Architecture and Engineering 6.7% $112,983.97
Life, Physical, and Social Science 0.6% $93,610.29
Community and Social Service 0.0% $100,581.00
Legal 0.3% $118,405.00
Educational Instruction and Library 0.0% $89,165.00
Arts, Design, Entertainment, Sports, and Media 0.8% $95,550.39 Healthcare Practitioner and Technical Occupations 0.1% $129,780.60 Healthcare Support 0.0% $61,428.00
Protective Service 0.0% $81,712.86
Food Preparation and Serving 0.0% $44,840.00
Building and Grounds Cleaning and Maintenance 0.2% $54,969.20 Personal Care and Service 0.0% $36,897.25
Sales and Related 4.2% $82,501.81
Office and Administrative Support 8.6% $54,097.95
Farming, Fishing, and Forestry Occupations 0.0% $22,470.50 Construction and Extraction 1.1% $54,207.54
Installation, Maintenance, and Repair 2.6% $58,092.02
Production 22.8% $42,269.61
Transportation and Material Moving 3.5% $63,617.63
Calculated Total, All Occupations 100% $79,118.66
Notes:
(a) Land uses are defined based on the following NAICS industries: Computer Systems Design and Related Services (5415), Printing and Related Support Activities (323), Chemical Manufacturing (325), Nonmetallic Mineral Product Manufacturing (327), Fabricated Metal Product Manufacturing (332), Machinery Manufacturing (333), Computer and Electronic Product Manufacturing (334), Electrical Equipment and Appliances (335), Transportation Equipment Manufacturing (336), Furniture and Related Product Manufacturing (337), Miscellaneous Manufacturing (339). (b) Occupation categories which have a stated annual wage but 0 percent share of jobs have a very small number of jobs that constitute less than one percent but which still exist within the industry.

Source: California Economic Development Department for the San Jose-Sunnyvale-Santa Clara MSA, Industry to Occupation Matrix for Q1 2022; Strategic Economics, 2024.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 30 ENTRY-LEVEL EDUCATION REQUIREMENTS
Entry-level education requirements for advanced manufacturing jobs provide opportunities for workers at a variety of education levels but are overall skewed towards workers with a college degree. As shown in Figure 29, an estimated 50 percent of jobs in a n advanced manufacturing space would require a bachelor’s degree or higher, compared to 43 percent of jobs in which a high school diploma or equivalent or no formal educational credential would be required.

FIGURE 29: ENTRY LEVEL EDUCATION REQUIREMENTS FOR ADVANCED MANUFACTURING USE

Source: California Economic Development Department for the Hayward-Oakland-Fremont MD, Industry to Occupation Matrix for Q1 2022; California Economic Development Department for the San Jose-Sunnyvale-Santa Clara MSA Occupation Projections for 2020- 2030; Strategic Economics, 2024.

Employment and Workforce Opportunities Assessment: Comparison of Uses
Fewer jobs would be associated with a warehouse use than an advanced manufacturing use. A warehouse tenant could be expected to produce roughly 69 jobs compared to the 155 from advanced manufacturing. This is due to the greater space requirements relative to the number of warehouse workers. The development applicant has expressed interest in targeting advanced manufacturing tenants. Actual job counts will vary depending on the actual tenant and their operations.

Average worker wages are higher for the advanced manufacturing use. Warehouse uses have a n estimated average wage of $77,000, while advanced manufacturing exceeds this with an estimated average wage of $ 79,000. Advanced manufacturing uses also have a higher maximum wage range than warehouse uses. Both uses provide for a diverse mix of jobs with a large range of estimated wages.

Entry-level education requirements for jobs vary significantly by land use, with warehouse jobs providing the greatest diversity of opportunities for workers at a variety of education levels. While both potential uses provide a range of opportunities available at varying educational levels, the projected jobs for advanced manufacturing have a much higher percentage of jobs requiring a bachelor’s degree or higher.
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Percent of Advanced Manufacturing Land Use
Jobs
Doctoral or professional
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Master's degree
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Some college, no degree
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High school diploma or
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No formal educational
credential
Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 31 Fiscal Contributions to the City of Fremont
Strategic Economics estimated public gross revenues associated with North Palisade Partners ’ proposed industrial development project at the Subject Site. Estimated annual recurring revenues included property tax (accruing both to Fremont and other applicable tax jurisdictions), sales tax, and business license tax. The analysis estimated these revenues for a single year upon full buildout and stabilized occupancy of the development project, as well as a ten-year projection of these revenues.

Strategic Economics also estimated one -time impact fee revenue with assistance from the City of Fremont. All dollar amounts are expressed in 202 4 dollars unless stated otherwise . Strategic Economics assumed that either a warehouse tenant or an advanced manufacturing tenant could occupy the space. Due to differences in estimated workers, wages, and fees associated with these use types, the analysis was conducted using two scenarios. The following section presents the results first by scenario 1: all square footage is occupied by a warehouse tenant, followed by the results for scenario 2: all square footage is occupied by an advanced manufacturing tenant.

Fiscal Contributions: Warehouse Tenant

SECURED PROPERTY TAX
The proposed industrial development project at the Subject Site was estimated to generate approximately $226,603 in annual secured property tax revenue, with the City of Fremont receiving $30,054 of this revenue and the Fremont Unified School District receiving approximately $47,785 of this revenue. The distribution of this property tax is shown in Figure 30. This property tax revenue reflects revenue based on the assessed value of “secured” property ( i.e., the value of land and improvements). The City of Fremont would also receive additional unsecured property tax revenue levied on the value of property such as business fixtures and equipment; unsecured property tax revenue could vary widely depending on the types of businesses that locate at the Subject Site, but these revenues could be significant for some businesses. If the industrial development project does not move forward and the site instead remains vacant, the City of Fremont would only receive minimal property taxes based on the assessed value of the vacant land and existing relatively small commercial building. The following assumptions were incorporated in the analysis:
• The analysis assumed an assessed value of the property at $288 per square foot of building area. This valuation was based on an estimated total cost of land and the hard costs of improvements provided by North Palisade Partners . Excluding land, the estimated cost of improvements was approximately $1 84 per square foot of building area. For additional context, a review of assessed values for the improvements on industrial properties that were built in recent years in Fremont found average values within the range of $100 to $224 per square foot.

• The applicable overall ad valorem tax rate for all applicable jurisdictions is 1. 1272 percent.

Fremont receives 14.58 percent of the base one percent property tax rate as of 2024, after adjusting for Educational Revenue Augmentation Fund shifts to the state . Fremont also receives an additional .0037 percent of assessed value for voter-approved debt service.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 32 FIGURE 30: WAREHOUSE TENANT: PROPERTY TAX REVENUE ASSUMPTIONS AND CALCULATION Total Building Area in Square Feet 69,872
Assessed Value of Land and Improvements @ $245 per Square Foot $20,103,142

Ad Valorem Property Tax
Ad Valorem Property Tax Revenue, All Jurisdictions
General Levy @ 1.0% of Assessed Value $201,031
Additional Voter-Approved Property Tax for Debt Service @ .127% $25,571 Total Property Tax Revenue, All Jurisdictions $226,603

Ad Valorem Property Tax Revenue, City of Fremont
City of Fremont Share of General Levy @ 14.58% of 1% $29,310 City of Fremont Voter-Approved Property Tax for Debt Service @ .0037% $744 Total $30,054

Ad Valorem Property Tax Revenue, Fremont Unified School District Only Fremont Unified School District Share of General Levy @ 19.2% of 1% $38,598 Fremont Unified School District Voter-Approved Tax @ .0457% $9,187 Total $47,785
Note: Numbers may not sum due to rounding.

Source: City of Fremont, 2024; Strategic Economics, 2024.

BUSINESS TAX
Businesses at the proposed industrial development project at the Subject Site were estimated to generate $65 in annual business tax revenue with a warehouse tenant . Figure 31 shows the calculation basis, inputs, and business license tax revenue associated with the assumed warehouse land use.

FIGURE 31: WAREHOUSE TENANT: ANNUAL BUSINESS TAX REVENUE AND CALCULATION BASIS Land Use Calculation Basis Annual Business Tax Revenue
Warehouse $65 per 50,000 sq. ft. $65
Source: City of Fremont Fee Schedule, effective March 13, 2024; Strategic Economics, 2024.

SALES TAX
The proposed industrial development project at the Subject Site was estimated to generate $48,397 in annual sales tax revenue for the City of Fremont. This estimate was based on sales tax data provided the City of Fremont, which showed that the City receive d $25,157,372 of sales tax revenue from its industrial zones over the past four quarters. This was divided by the total industrial square footage in Fremont for an estimate of $0.69 per square foot.

The approximately 69 workers at the proposed industrial development project with a warehouse tenant would also generate additional spending at retail adjacent to the Subject Site. For example, the International Council of Shopping Centers estimates that office workers in urban areas spent an Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 33 average of $135 per week at retail and food establishments as of 2012.9 Workers at the Subject Site would support vitality of existing retail and generate additional sales tax revenue.

TOTAL TEN-YEAR OPERATING REVENUES
Based on the preceding estimates of property tax, business tax, and sales tax revenue, the City of Fremont was estimated to receive $78,517 in recurring annual revenue upon buildout and stabilized occupancy of the proposed industrial development project with a warehouse tenant , representing more than $783,733 over the following ten-year period (in 2024 dollars). Assumptions incorporated in the estimate included:
• Assessed values grow at two percent annually, based on the maximum allowable increase under Proposition 13
• Gross payroll increases by 3. 3 percent annually for purposes of calculating business taxes, based on the average of quarterly year -over-year wage and salary increases tracked by the Bureau of Labor Statistics for the San Jose-San Francisco-Oakland region • Sales tax revenue increases four percent annually, based on the California Department of Tax and Fee Administration average growth in All Other Outlet taxable sales (a proxy for business- to-business transactions) in Fremont for the 2014-2020 period10 • Annual inflation of 2.8 percent, approximately based on the average year-over-year change in the Bay Area Consumer Price Index from 2014 to 2023
FIGURE 32: WAREHOUSE TENANT: REVENUE, YEAR 1 BUILDOUT AND STABILIZED OCCUPANCY, AND TEN-YEAR REVENUE (2024 DOLLARS)
Tax Revenue Source Year 1
Total, Years 1-
10 (2024
Dollars)
Property Tax: All Jurisdictions $226,603 $2,141,912
Property Tax: Fremont Only $30,054 $284,081
Property Tax: Fremont Unified School District $47,785 $451,679 Business Tax: Warehouse $65 $650
Sales Tax $48,397 $499,002
Total Annual Revenue, Fremont Only $78,517 $783,733
Source: Strategic Economics, 2024.

9 “Office-Worker Retail Spending in a Digital Age,” International Council of Shopping Centers, 2012. 10 Years after 2020 were not included in this calculation due to the unusual variability in sales tax revenue resulting from the COVID -19 pandemic, followed by an inadvertent overestimate and overpayment by CDTFA in fiscal year 2022 -2023, and the first of two corrective reductions in payments that took place in the following year.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 34 ONE TIME IMPACT FEE REVENUE
The proposed industrial development project would provide $510,007 in required one-time impact fees to mitigate the project’s impacts if fees are charged based on a warehouse use . The City of Fremont imposes impact fees to ensure development projects mitigate their own impacts on the City’s capital facilities, fire facilities, traffic, and affordable housing needs.

FIGURE 33: WAREHOUSE TENANT: ONE-TIME IMPACT FEE REVENUE Fees Fee Basis Square Feet Fee Amount Owed
Estimated Fees Owed Before Credits
Capital Facilities (per 1,000 sq ft) $543 69,872 $37,940.50 Fire Facilities (per 1,000 sq ft) $449 69,872 $31,372.53 Traffic (per 1,000 sq ft) $4,171 69,872 $291,436.11
Affordable Housing (per sq ft) $5.82 69,872 $406,655.04 Total Fees Owed Before Credits $767,404.18

Estimated Fee Credits for Prior Uses
Demolished Warehouse Building
Capital Facilities (per 1,000 sq ft) $543 41,495 -$22,531.79 Fire Facilities (per 1,000 sq ft) $449 41,495 -$18,631.26 Traffic (per 1,000 sq ft) $4,171 41,495 -$173,075.65
Affordable Housing (per sq ft) n/a n/a n/a
Extant Office Building
Capital Facilities (per 1,000 sq ft) $1,269 4,760 -$6,040.44 Fire Facilities (per 1,000 sq ft) $752 4,760 -$3,579.52 Traffic (per 1,000 sq ft) $7,046 4,760 -$33,538.96
Affordable Housing (per sq ft) n/a n/a n/a
Total Fee Credits -$257,397.61

Estimated Fees Owed After Credits
Capital Facilities (per 1,000 sq ft) $9,368.27
Fire Facilities (per 1,000 sq ft) $9,161.75
Traffic (per 1,000 sq ft) $84,821.51
Affordable Housing (per sq ft) $406,655.04
Total Fees Owed After Credits $510,006.57
Source: City of Fremont Fee Schedule, Effective July 8, 2024; Strategic Economics, 2024.

Fiscal Contributions: Advanced Manufacturing Tenant

The distribution of this property tax is shown in Figure 34. This property tax revenue reflects revenue based on the assessed value of “secured” property (i.e., the value of land and improvements). The calculation methodology, assumptions, and resulting property tax revenues match the previous scenario in which a warehouse tenant occupies the space, since the tenant will not significantly impact the value of the property.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 35 FIGURE 34: ADVANCED MANUFACTURING TENANT: PROPERTY TAX REVENUE ASSUMPTIONS AND CALCULATION Total Building Area in Square Feet 69,872
Assessed Value of Land and Improvements @ $245 per Square Foot $20,103,142

Ad Valorem Property Tax Revenue, City of Fremont
City of Fremont Share of General Levy @ 14.58% of 1% $29,310 City of Fremont Voter-Approved Property Tax for Debt Service @ .0037% $744 Total $30,054

Source: City of Fremont, 2024; Strategic Economics, 2024.

BUSINESS TAX
Advanced manufacturing businesses at the proposed industrial development project at the Subject Site were estimated to generate $ 3,679 in annual business tax revenue. Figure 35 shows the calculation basis, inputs, and business license tax revenue associated with the assumed advanced manufacturing land use.

FIGURE 35: ADVANCED MANUFACTURING TENANT: ANNUAL BUSINESS TAX REVENUE AND CALCULATION BASIS Land Use Jobs Average Wage Calculation Basis
Annual Business
Tax Revenue
Manufacturing 155 $79,119 $.3 per $1,000 of gross payroll $3,679 Source: City of Fremont Fee Schedule, effective March 13, 2024; Strategic Economics, 2024.

SALES TAX
The proposed industrial development project at the Subject Site was estimated to generate $48,397 in annual sales tax revenue for the City of Fremont. As with the warehouse tenant scenario, t his estimate was based on sales tax data provided by the City of Fremont, which showed that the City receives $0.69 of sales tax revenue from “Industrial” businesses per square foot of industrial space in Fremont.

The approximately 155 workers at the proposed industrial development project with an advanced manufacturing tenant would also generate additional spending at retail adjacent to the Subject Site.

Since an advanced manufacturing tenant was estimated to include 86 more workers on-site than a comparable warehouse tenant, the manufacturing use will generate a greater impact on worker spending and sales tax revenue.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 36 TOTAL TEN-YEAR OPERATING REVENUES
Based on the preceding estimates of property tax, business tax, and sales tax revenue, the City of Fremont is estimated to receive $82,131 in recurring annual revenue upon buildout and stabilized occupancy of the proposed industrial development project with an advanced manufacturing tenant , representing over $819,873 over the following ten -year period (in 2024 dollars). Assumptions incorporated in the estimate included match those of the warehouse 10 -year revenue estimate described earlier.

FIGURE 36: ADVANCED MANUFACTURING TENANT: REVENUE, YEAR 1 BUILDOUT AND STABILIZED OCCUPANCY, AND TEN-YEAR REVENUE (2024 DOLLARS)
Tax Revenue Source Year 1
Total, Years 1-
10 (2024
Dollars)
Property Tax: All Jurisdictions $226,603 $2,141,912
Property Tax: Fremont Only $30,054 $284,081
Property Tax: Fremont Unified School District $47,785 $451,679 Business Tax: Advanced Manufacturing $3,679 $36,790
Sales Tax $48,397 $499,002
Total Annual Revenue, Fremont Only $82,131 $819,873
Source: Strategic Economics, 2024.

ONE TIME IMPACT FEE REVENUE
The proposed industrial development project would provide $482,966 in required one -time impact fees to mitigate the project’s impacts if fees are charged based on an advanced manufacturing use.

The City of Fremont imposes impact fees to ensure development projects mitigate their own impacts on the City’s capital facilities, fire facilities, traffic, and affordable housing needs.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 37 FIGURE 37: ADVANCED MANUFACTURING TENANT: ONE-TIME IMPACT FEE REVENUE Fees Fee Basis Square Feet Fee Amount Owed
Estimated Fees Owed Before Credits
Capital Facilities (per 1,000 sq ft) $772 69,872 $53,941.18 Fire Facilities (per 1,000 sq ft) $458 69,872 $32,001.38 Traffic (per 1,000 sq ft) $3,546 69,872 $247,766.11
Affordable Housing (per sq ft) $5.82 69,872 $406,655.04 Total Fees Owed Before Credits $740,363.71

Estimated Fees Owed After Credits
Capital Facilities (per 1,000 sq ft) $25,368.96
Fire Facilities (per 1,000 sq ft) $9,790.60
Traffic (per 1,000 sq ft) $41,151.51
Affordable Housing (per sq ft) $406,655.04
Total Fees Owed After Credits $482,966.11
Source: City of Fremont Fee Schedule, Effective July 8, 2024; Strategic Economics, 2024.

Market Assessment and Economic Benefits Analysis for Change of Use at 43990 Fremont Boulevard 38 Comparison of Fiscal Contributions by Tenant Type
The fiscal contributions differ based on whether the space is occupied by a warehouse user or an advanced manufacturing user. The primary drivers of the differences are different business tax and impact fee structures which vary by use. As shown below in Figure 38, an advanced manufacturing user would contribute more revenue to the City of Fremont over time. Figure 38 also shows the estimated range of the project’s required one -time impact fee payments based on whether the City chooses to charge fees to the project as a warehouse use or manufacturing use.

FIGURE 38. COMPARISON OF ESTIMATED YEAR 1 AND TOTAL REVENUE BY TENANT TYPE (2024 DOLLARS) Tax Revenue Source
Warehouse Tenant

Advanced Manufacturing Tenant
Year 1 Total, Years 1-10
(2024 Dollars) Year 1 Total, Years 1-10
(2024 Dollars)

Fremont City CouncilJanuary 14, 2025

Fremont City Council
January 14, 2025