Client: Warm Springs Venture, LLC

An investor-developer entered into a purchase and sale agreement for a 4.8 acre redevelopment site located on Warm Springs Boulevard in Fremont, California. The investor-developer hypothesized that retail uses would represent the highest and best use of the site. The investor-developer retained GG+A to provide real estate market research and financial analyses.

In order to identify the size and make-up of retail uses potentially supported at the site, GG+A staff inspected the site and surrounding area and conducted interviews with leading retail real estate brokers and developers (including those representing both traditional and Asian-oriented retailers), the City of Fremont’s Economic Development Director, and representatives of retailers operating in the local area (including Walgreen’s, Ross, and Safeway). We also reviewed secondary market data and identified the competing supply of retail space.

We assessed the competitive advantages and disadvantages of the site for retail and other commercial uses, and evaluated the area’s retail supply, identified a likely primary trade area retail uses at the site would serve, and estimated retail supply-demand balance within the primary trade area.

Because the findings and conclusions did not support the investor-developer’s hypothesis, GG+A screened the site for other potential uses and because of the proximity of the site to Tesla’s headquarters-automobile manufacturing facility, focused on industrial uses. GG+A staff completed interviews with industrial real estate developers and brokers to obtain information and insight about (a) the primary market area, (b) the advantages and disadvantages of the location, (c) the likely types of users attracted, and (d) obtainable rents.  GG+A staff evaluated supply conditions in the primary market area; reviewed market data concerning historical vacancy, absorption, and rent trends of industrial space in the primary market area; and synthesized the results of the research to reach conclusions about the potential for the site to capture demand for industrial space and to attract target users and the product features that would be most market responsive.

GG+A used the results of the industrial market analysis and interviews to obtain development cost estimates and capital markets research to complete a real estate economic analysis to estimate the supportable land value for an identified development opportunity.  This supportable land value and associated development program put the investor-developer in a position to evaluate whether and how to proceed given the acquisition price provided for in the purchase and sale agreement.

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