City of Morgan Hill Economic Blueprint.docx

Retail Trends

The City of Morgan Hill has an inventory of 1.3 million square feet of retail space in eight shopping centers. The City is home to many major national retailers including Target, Home Depot, Wal-Mart, TJ-Max, Ross Dress-for-Less, Dick's Sporting Goods, Hobby Lobby, and DSW. In addition to the existing retail space, two key life-style shopping centers, Cochrane Commons (also known as the Target Shopping Center) and the Madrone Village Shopping Center (home to Peet's Coffee and Five Guys among other life-style tenants) have obtained entitlements for an additional 425,000 square feet of retail that has not yet been built. The types of retailers that Morgan Hill and other local communities can expect are influenced by trends in the national and regional retail industry. The industry has been in flux over the last decade. Some of these wider industry trends include:

• O nline shopping has put pressure on conventional retail businesses. As more retail sales shift online, many national retail brands have consolidated and demand for certain types of brick-and- mortar retail stores – for example, book, music, and video rental, and electronics stores – has declined significantly. In shopping centers across the Bay Area and the nation, demand for new retail space is increasingly driven by stores that face little or no competition from online sales, such as restaurants, groceries, hair communities throughout the nation have struggled with large retail spaces being vacated by retailers that are no longer in existence. For example, Morgan Hill has struggled for years to fill three, vacant, 25,000 square foot retail spaces (currently there are only 2 large spaces available). • Preferences for retail space have evolved. Some of the aging strip retail centers in the South Bay no longer meet the space needs of national and regional chains. These types of tenants tend to favor wide storefronts with high ceilings and highly visible signage, located in concentrated nodes with high traffic, good visibility, and easy vehicle and pedestrian access. Older retail buildings that do not meet those criteria may struggle to attract tenants, although in some instances they may also provide more affordable space for smaller, independent businesses. and nail salons, and other personal services. At the same time, many

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