In an item on tonight’s City Council agenda, Developers and City staff are asking the City Council to relax requirements at the Target shopping center on 2nd Street by Mace. 10 years in, there are still store fronts there that have never held a store. Sadly, the City staff report urging the change has huge glaring problems.
The City of Davis staff report to council states “After 10 years of operation in the city, staff believes it can be empirically deduced that the tenants in the shopping center are not relocating from the downtown area, nor are they causing closure and mass vacancy in the downtown area.” “Empirically deduced” is an exceedingly strong statement given the circumstances.
The City Staff report offers only the 2017 State of the City Report as “empirical” data from which to deduce such a finding. The staff report includes a table taken directly from the 2017 report. The data is from the 4th Quarter of 2016, almost 3 years ago. That is not relevant to the 2nd Quarter of 2019. It makes no sense for the City to rely on such dated data when current data is readily available.
This outdated data has 3 specific limitations. These 3 limitations make it obvious that the staff is either intentionally or accidentally misleading the council.
First, the data only includes information regarding vacancy or occupancy. For example, if a clothing store closes, but the space that was previously occupied by the clothing store is then rented by a restaurant, this does not register as a change. So, if a clothing retailer closes downtown, and the space is filled by a restaurant, as is currently happening on the corner of 2nd and E, this does not register as a change in occupancy, and therefor is not considered by the staff, never mind that the clothing store competed with Target and TJ Max.
The staff report also quotes the following from the 2017 State of the City Report, “The retail market in the city and Davis Core Area is much tighter than the county’s more balanced market. This is evidenced by relatively positive net absorption, vacancy rates of 3.7 and 3.2 percent, compared to the countywide rate of 5.3 percent, and increasing rental rates.” First, this is dated information and the Downtown now has a negative absorption rate, with vacancies increasing. Also, this again only focuses on vacancy, and not types of businesses, so store front conversions from retail goods to restaurants is not captured, yet this is exactly what is happening downtown.
A second limitation is the time frame. The 2016 data in the 2017 state of the City Report predates the closure of the Davis Ace Housewares store, Whole Foods, the Gap and many other stores. These 3 stores alone however account for about 40,000 square feet of newly vacant retail space. These large store closings mark a significant change to the downtown. This newly vacant retail space is about 5% of all available downtown retail space. These stores competed directly with Target and TJ Maxx. These store closing can easily be seen as business being moved to the Target mall location in direct contradiction to the staff report.
It is really outrageous that the staff should use data from a May 2017 report that overlooks the more recent vacancies of 3 large stores all competing with the Target mall.
Radio Shack closed downtown as well, leaving Target on 2nd Street as the only electronics store in Davis, again in stark contradiction to the City staff report.
A third problem with the staff report is the staff has narrowed the parameters to make the bold claim ignoring the retail space on the other side of 2nd Street from the Target mall. By ignoring these properties, the staff overlooks Strelitzia Flower Company. Strelitzia was a long time Downtown Davis business. Strelitzia operated first as a Downtown Davis flower cart starting in 1971, and then as a storefront on G Street starting in the 90s. They then moved from downtown to 2nd Street in July of 2008. It can be “empirically deduced” that Strelitzia moved to 2nd Street from Downtown, exactly contrary to staff’s statement.
City staff needs to cut out the hyperbole and start being straight with the council and the community. The staffs conclusions cannot be “empirically deduced” from the faulty dated data they use. These egregious errors in the staff report leave the council with only one option, this item needs to be sent back to staff for better analysis and more recent data. This current report has completely overlooked potential negative impacts of the Target mall on Downtown Davis.
============= update 5/15/2019 ==============
This screen shot from CoStar was taken on May 13, 2019. This type of data is readily available to commercial property brokers. Note that this report from CoStar still omits the Whole Foods space because Whole foods is still paying rent although the store sits empty.