N40 Phase 1 - Staff Report Exh.7-9
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North 40 Project Summary and Justification
Summary:
Phase I of the North 40 is a comprehensive proposal by Grosvenor, SummerHill Homes, Eden
Housing, and Lexor Builders on 20.69 acres (including .13 acres for public right-of-way
dedication) to realize the Town’s vision for the areas described as the Lark and Transition
Districts. The proposal allows for continuity with the development of the future phases within
the overall 44 acres of the North 40 Specific Plan Area, including the Northern District. In this
proposal we believe that we have brought The Town’s Specific Plan to life.
Approximately 66,791 gross square feet (59,320 net leasable) of retail and restaurant offerings
are proposed in the Transition District to serve this new community as well as the existing
surrounding neighborhoods. This first phase will be anchored by a 20,920 +/- gross square foot
specialty market (16,380 net leasable).
The residential homes proposed include diverse residential types that target the Town’s unmet
needs for young professionals and seniors. These include 50 senior affordable apartments
directly above the specialty market, 80 courtyard condominiums, 180 garden cluster and
rowhome residential units designed with the young professional or couple in mind, 2 live-work
lofts, and 8 one and two-bedroom apartments above a portion of the retail. All new homes will
be complimented by and provide convenient access to goods and services in the new
neighborhood retail shops.
A network of community gardens and orchard trees are linked together by paseos and a
multimodal path. Overall, the agrarian-inspired open space plan is well over 30% of the project
area, with beautiful view corridors and places for residents and the community to come
together.
The proposed community is a celebration of the Los Gatos quality of life, and focuses on the
Specific Plan’s Vision Statement and Guiding Principles:
Town Council Vision Statement:
The North 40 reflects the special nature of our hometown. It celebrates our history, agricultural
heritage, hillside views and small town character. The North 40 is seamlessly woven into the
fabric of our community, complementing other Los Gatos residential and business
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neighborhoods. It is respectful of precious community resources and offers unique attributes
that enrich the quality of life of all our residents.
Guiding Principles:
• The North 40 will look and feel like Los Gatos
• The North 40 will embrace hillside views, trees, and open space.
• The North 40 will address the Town’s residential and/or commercial unmet needs.
• The North 40 will minimize or mitigate impacts on the Town’s infrastructure, schools,
and other community services.
Open Spaces
The Draft Specific Plan requires a minimum of 30% of each application to be dedicated as open
space, which is more open space than is found in most existing Los Gatos communities.
Because the open space requirements are such a prominent element of the Specific plan, the
open spaces created within the proposed community are more than merely green areas or
parks to meet a minimum requirement. Instead, the greens have been thoughtfully designed as
buffers between existing roadways, connecting paseos, community gardens, gathering places,
and view corridors. The open space elements will be a prominent feature, linking the districts
and future residents while gaining inspiration from the agricultural history of the property. In
addition, the amenities provided within the open spaces will not only appeal to the young
professionals, seniors and move-down buyers but will also complement the existing open space
offerings within the Town. Overall, the proposal includes over 39% of the area as open space
(30% is required) and almost 23% as “green” open space (20% is required), which demonstrates
the focus that these spaces have been given in driving the design of the community.
The applicant has enlisted the nonprofit Garden to Table’s founder Zach Lewis to advise on the
design, maintenance and programming of community gardens and orchard treatments.
Together with the project’s landscape architects, the vision for the proposed open space
programming has been established, and includes the following:
Orchard Buffers and Plantings: A 30’ orchard buffer is proposed both along Lark Avenue and
Los Gatos Boulevard along the property frontage. The area along Lark Avenue will include a
multi-use trail that can be utilized by pedestrians and bicyclists, and offers path through the
orchard trees. A vineyard will greet community members as they enter the neighborhood
serving retail area in the Transition District.
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The majority of the almost 550 orchard trees are fruit-bearing, and will provide opportunities
for harvesting. Based on recommendations of our technical advisors and the agrarian history of
the region, a number of varietals are proposed, which work together to maintain long-term soil
fertility as well as a diverse offering of produce, including walnut, cherry, apricot, apples,
peaches, plum, figs, citrus, persimmons and pomegranate. In addition being located within the
buffer along existing roads, the orchard treatments are continued along A Street and within the
paseos.
All Common Open Space Trees within the Lark District are in the design guidelines with one
exception: Arbutus menziesii, Pacific Madrone, although beautiful it does not transplant or grow
well in a cultivated or garden setting. Arbutus x ‘Marina’ as a cultivated garden variety substitute
for A.menziesii, which we have included in the tree palette.
Orchard/fruiting trees listed were recommended by a community garden consultant. In the
Transition District the tree list reflects that of the Specific Plan, with a few noted exceptions. Olea
europaea was added as a street tree because of its significance as an important rural and
agricultural tree in California. Prunus domestica, Prunus avium ‘Rainier’, Prunus avium ‘Bing’,
Prunus armeniaca ‘Moorpark’, Citrus x limon ‘Meyer’, were all added as orchard trees to give
additional fruiting species as recommended as viable fruiting orchard species by Les Kishler of
Agro Ecology (Los Gatos fruiting tree specialist).
Central Park and Community Gardens: Transition and Lark District residents will be able to
connect in the community gardens in the Central Community park. Thirty nine plots are
programmed in the community park and will be available for community members to adopt.
The gardens strive to bring together the multi-generational community in one location.
Additional smaller raised garden beds will be included in the open space plaza of the Eden
building to provide more gardening opportunities for the seniors. Eden has had great success
with a similar program in their other projects.
A Demonstration Garden is proposed for onsite restaurant use or adoption by a local
restaurant. This garden will not only grow produce that can be utilized in the restaurant, but
will also offer a staging area for cooking demonstrations.
Garden Retreat Public Space: The residential and the commercial come together to frame the
Garden Retreat open space within the Transition District. Approximately 9,000 square feet of
open space is demised into intimate gathering spaces, including semi-private areas for
neighborhood picnicking, canopied passage ways, a movie screen wall for warm evening
screenings, fireplaces, and flexible outdoor furnishings. The restaurant building has been
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designed to have a dining area that looks into the park, further strengthening the connection
between the uses.
Paseos and View Corridors: In addition to the Grand Paseo found on the southeast portion of
the property which boasts serene seating areas and resting spaces, numerous paseos (in
connection with right-of-ways) have been strategically situated to unite the residents and
provide view sheds towards the hillsides. In addition to A Street, there are three paseos that
offer southern hillside views, and multiple paseos and pedestrian corridors that provide views
to the eastern hills. Further, these paseos offer connectivity throughout the districts, which will
encourage pedestrian and bicycle use within the North 40.
Bicycle Connectivity: The Central Park and Garden Retreat open spaces have been connected
through not only the shared bicycle/vehicular A Street, but also through an 8’ wide multi-use
path that runs from Lark to the north, through a green paseo, and connects then to the east to
Los Gatos Boulevard. Bicycle amenities such as equipment vending, tuning areas, bike racks,
and signage are found along this multi-use path and encourage ridership to, from, and within
the North 40.
Additional Amenities: A variety of additional passive, active and vibrant open space amenities
are proposed. These include places to gather with neighbors, unwind, relax, and embrace the
outdoor lifestyle that Los Gatans relish. A bocce court in the Central Community Park, multiple
fire pits, large outdoor communal grilling and dining areas, a dog park and path for four legged
friends, turf areas with sun shades and hammocks can all be found in the park and paseo areas.
The retail portion of the property will host a vineyard, café seating and relaxing plaza spaces.
Together, the districts will provide a synergy of amenities.
Residential Program:
Between the Lark and Transition Districts, four distinct residential programs will be offered, all
tailored to meet the Town’s unmet needs for places for young professionals and income-
restricted seniors to live. These include 50 senior affordable apartments directly above the
specialty market, 80 courtyard condominiums, 180 garden cluster and rowhouse residential
units designed with the young professional or couple in mind, 2 live-work lofts, and 8 one and
two-bedroom apartments above a portion of the retail. The floor plans are as diverse as the
people that will live in them, with a range of square footages and creative design. Focus has
been given to what this buyer will seek in their home, including media spaces and offices for
the young professionals. Exteriors have also been carefully designed to include elements that
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are both contemporary while remaining true to the agrarian roots of the property. Finishes
such as wood trim, corrugated metal, and barn doors compliment grand windows and terraces.
Senior Affordable Apartments: A community’s senior residents are often unable to maintain
their long time residences within a community and they must move into a home designed to fit
their needs and budget. Unfortunately, the ability of these residents to stay within the
community they know and love can be very difficult. The senior affordable apartments
proposed with this plan will provide this opportunity, with elevator access and direct proximity
to the neighborhood serving retail in the Transition district. Accessibility will be provided by
elevators and drive up parking, and the community garden on the plaza will provide an
opportunity to grow food and get to know your neighbors. Easy walkability to goods and
services complete the ease of what could otherwise be a difficult transition. While 40 units are
required to fulfil the Town’s BMP program requirements, 50 affordable senior units are
proposed (25% more BMPs than are required for the project). Additional information on the
senior affordable apartments and Eden’s extensive experience in programming this product
type is attached in the BMP program details.
Young-Professional Residences: 260 rowhomes, flats, and condominiums in three product
designs are proposed with the young professional in mind. Averaging 1.9 bedrooms and
approximately 1,500 square feet, these homes offer a place that the next generation of young
Los Gatans will want to live. The Specific Plan requires 15% of the units to be two story;
however, this plan far exceeds this requirement with over 28% of the homes having two-story
elements. A range of product types include the Garden Cluster, Rowhome, and Courtyard
Condominium Homes. Nineteen floor plans provide this buyer with the options and variety
that they desire. Media rooms, home offices, open floor plans, loft living, and large screen
walls for gaming and movie watching offer a work at home, play at home lifestyle. Bedrooms
on separated levels provide for roommate opportunities, home offices, or space for visitors.
Contemporary finishes such as open-tread stairs, concrete countertops, and large windows
provide bright, current, and comfortable living. Exterior spaces range from intimate living-level
open spaces (which are fenced for a dog) to gracious terraces and second story porches. These
private open spaces feed off the main living area to allow for additional space to hang out and
relax with friends.
Of these residences, Lexor Builders will construct and own 7 of these young professional
condominiums, which will blend seamlessly with the project with consistent architecture and
landscaping. These units will also participate in the community’s HOA.
Condominium Tandem Parking: Some of the young-professional residences have tandem
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parking garages. While a standard 11’x20’ parking garage provides an additional 2’ for access
and storage around a clear vehicle parking area of 9’x18’, with two vehicles parked in
tandem, a second 2’ is not required leading to a 38’ garage depth for two 9’x18’ vehicle spaces.
While Los Gatos does not have tandem parking size requirements, many local and regional
jurisdictions have tandem spaces specified with 35’ to 38’ garage depths, with the 38’
depth providing extra storage space for trash containers. Sunnyvale, for example, allows for
a 36’ tandem garage depth and South Pasadena has a 10’x35’ minimum garage size. Dhalin
Group has several approved projects in the Bay Area with 36’ to 38’ tandem garage
depths. Some examples include Rancho Laguna in Moraga (a SummerHill Homes community),
Terra Mia in Morgan Hill and Capella in San Ramon.
To assist in achieving 20 units per acre in this project, we have provided a 36’ minimum
depth clearance for parking in garages where trash is stored in alcoves to the side of the
parking area. Garages with trash storage to the rear of the garage are provided with
additional garage depth.
Shuffle stalls were considered, but because these are ownership condominiums with each unit
having direct access to their garage, it was determined that they were not needed for a project
of this type. The lifestyle of living in a home with tandem parking is one of shared access to
both vehicles in a two vehicle household. Residents will have two sets of keys and take
whichever car is available as they leave the home. Further, with the distribution of guest stalls
throughout the project, when a vehicle swap is needed, the second vehicle can be parked
temporarily in a nearby guest stall before it is returned to the garage.
Live Work and Apartment Residences: Two live-work units and eight apartment residences are
located in the heart of the Transition District above retail uses. Rather than build un-authentic
second floor height which we believe is vital to deliver balanced proportionality to the streets,
this limited residential offering will provide a unique living environment for either the millennial
or empty nester.
Retail/Commercial Program:
This application establishes the retail component of the Transition District as the community
hub of the new North 40 neighborhood. The neighborhood serving retail will become a place to
draw this part of Los Gatos together. It features a mix of community focused retail which is
anchored by an approximately 20,000 square foot specialty market that will celebrate the site’s
rich agrarian history. The remaining 45,000 +/- square feet of commercial space will include
personal services, restaurants/cafes, and other neighborhood-serving retail.
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The Transition District works as a stand-alone retail program but is intended to be integrated in
the larger commercial program that is envisioned in the Specific Plan. This retail hub has been
designed in a way that allows it to seamlessly plug into future development in the Northern
District. The program hopes to elevate the quality and design of retail offerings along Los Gatos
Boulevard while complementing recently completed developments in close proximity. The
transformation of this stretch of Los Gatos Boulevard will improve the quality of the experience
of driving along the boulevard while also increasing property values in the areas.
Sustainability:
Sustainability is an essential element to the North 40 development. The project components
will include the following strategies:
• To encourage water conservation, our site will use high efficiency irrigation
systems, while our homes and retail buildings will feature low flow water fixtures
and tank-less hot water heaters.
• To achieve a high level of energy efficiency, we will use Energy Star appliances
and Bath Fans, high efficiency air conditioners, and ample exterior wall framing
for increased wall insulation (R value).
• We promote healthier homes with good air quality by using low VOC paints,
caulking and construction adhesives, environmentally responsible refrigerants,
and MERV 8 HVAC filters. We will also upgrade the electrical panels for each of
the condominiums to offer the option of an electric charge station in each
private garage.
• Construction recycling will be implemented to reduce landfill volume during
construction and Fly Ash and or slag in will be incorporated as environmentally
preferable products in our concrete foundation.
North Forty Specific Plan - Sustainability Guidelines
The Specific Plan includes specific guidelines for a project application. Below are these
guidelines and how the Phase I Application conforms to each of these guidelines:
Guideline: Promote use of native and/or drought tolerant plants in parking lot islands and
other landscaped areas, where feasible. A licensed landscape architect shall certify that all
landscape plans include drought tolerant plants and meet Water Efficient Landscape
Ordinance requirements.
• Response: The plant palette includes a majority of drought tolerant and native
plants. A licensed landscape architect will certify final landscape plans include
drought tolerant plants and meet Water Efficient Landscape Ordinance
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requirements.
Guideline: Utilize natural drainage systems to the maximum extent practical.
Guideline: Non-structural Best Management Practices (BMP’s) should be used unless they
are infeasible in which case the infeasibility shall be documented and structural BMP’s
implemented.
Guideline: Pre-treat stormwater as currently defined by National Pollutant Discharge
Elimination System (NPDES) Guidelines prior to infiltration or discharge from site.
Guideline: Site development should comply with all applicable Regional Water Quality
Control Board and Santa Clara County regulations for water quality and quantity.
• To address these four categories above: Stormwater runoff is directed into
landscaped bioretention areas prior to entering the storm drain system thereby
providing natural treatment (i.e. filtering stormwater through select soil, plant
uptake, infiltration, etc.). In addition, a stormwater hydromodification system
controls the offsite discharge rate into Los Gatos Creek such that post-
development flows match pre- development flows for a select range of storm
events thereby minimizing erosion potential.
Guideline: Minimize impervious area to the maximum extent practical.
• The site design aims to minimize impervious surface area. The project’s green
open space exceeds what is called for in the Specific Plan (22.8%, exceeding the
20% required).
Guideline: Design buildings with pedestrian oriented building entries facing onto common
space, streets paseos and plazas.
• Our buildings are oriented to the streets with pedestrian walks. We have, where
possible with careful consideration, introduced common spaces and passes to
create interests and vitality between our buildings.
Guideline: Design neighborhoods and projects with strong pedestrian connections to
sidewalks, parks, pathways and existing or future bike facilities.
• The Phase I Application is designed to facilitate and encourage multiple modes of
transportation, with a focus on pedestrian and biking friendly routes. Detached
sidewalks with planting buffers, “sharrows” bike route on A Street South, and a
multi-modal path are provided throughout the North 40 with major connections
at Market Hall & the Community Park.
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Guideline: Include bicycle parking facilities and on-site showers in major non-residential
development projects.
• In the Lark District, bicycle facilities shall include short term guest bicycle parking
distributed throughout the district. In addition a bicycle repair and tune-up
station will be located on A Street South adjacent the round-a-bout and publicly
accessible.
• In the Transition district, there are four locations with bicycle parking facilities.
Two bicycle parking facilities are located near the front door to Market Hall, one
is located at the intersection of Neighborhood and South A Street, and one is
located next to the demonstration garden.
• During further development with we are evaluating the implementation of an
on-site shower at Market Hall and Phase II future facilities.
Guideline: Encourage sustainable building practices to reduce energy use through solar
orientation that takes advantage of shade, prevailing winds, landscaping and sun
screens.
• We will upgrade the electrical panels for each of the condominiums to offer
the option of an electric charge station in each private garage.
Guideline: Design new buildings and parking lots to include or allow for the easy, cost-
effective installation of future solar energy systems, where feasible.
• For Summer Hill Home’s residential for-sale condominiums, the rooftops will be
pre-wired for solar and the structural built in during construction for future solar
energy systems.
Guideline: Encourage the integration of community gardens and urban farm sites into
neighborhoods where appropriate.
• 39 Community Garden Plots are proposed in the Community Open Space, and
approximately 2 acres of orchard trees are proposed both on the perimeter as
well as throughout the property. Almost 90% of these orchard trees will produce
a variety of fruits. A demonstration garden is proposed, as well as a community
garden above the podium for the Senior Affordable units.
In the Retail areas the integration of the community garden and urban farm sites around
the buildings help promote the farm to table life style.
Density Bonus:
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A density bonus will be applied for with this application. Because far more than 11% of the
project (49 of the 50 senior apartments) will be rented to very-low income seniors (with one
additional moderate rate manager’s unit), the project qualifies for the State35% density bonus.
The 237 baseline units (50 senior affordable and 187 market rate) plus the 35% density bonus
unit (83 additional units) results in an overall residential program consisting of 320 for-sale and
for-rent market rate and affordable homes.
Conclusion:
The Phase I North 40 application has thoughtfully applied the North 40 Specific Plan’s Vision
Statement and Guiding Principles in its design. The North 40 proposes a new community that
celebrates the Los Gatos lifestyle. The commercial/retail component provides much needed
restaurant and retail offerings to the new neighborhood and surrounding community on the
north end of Los Gatos, featuring goods and services that are appealing for Millennials and
seniors. The residential program feeds off common community amenities with a mix of housing
styles that target young adults, empty nesters and seniors with further affordability needs.
Finally, tying all of these components together, the carefully designed open space and public
realm have been inspired by the agrarian roots of the site and the Town of Los Gatos.
February 2, 2016
RE: North 40, Los Gatos CA PROJECT No: 09039
Narrative in Response to Staff Technical Review and Larry Cannon Comments
From Staff Technical Review comments dated May 21, 2014, Item 26:
“Describe the proposed architectural design of each building and alternate elevation being
proposed, and why the design is in keeping with the Town’s character.”
From Larry Cannon’s comments dated July 23, 2014:
“Achieving the Town Council’s vision of developing the North 40 so that it will ‘look and feel
like Los Gatos’ will be a special challenge.”
INTRODUCTION
When we think about “in keeping with the Town’s character”, a range of contrasting images
comes to mind. The Town maintains a strong reverence for local, historic structures, its
agricultural past and its downtown fabric, as it simultaneously evolves as the seat of a 21st
century library and of world class technology companies. There are large stretches of
established, well-landscaped residential neighborhoods and newer townhomes that contrast
Los Gatos Boulevard’s commercial centers with their open parking lots. Framing the ensemble,
there are the natural hillsides that create a picturesque backdrop, evoking the feel of a retreat
from the Silicon Valley. All together, the Town’s character is established by a blend of these
diverse elements.
Following the Guiding Principles of the Specific Plan, the site and building design will create a
place that has an authentic feel and avoids the earmarks of “project”. The buildings are meant
to work as a blended collection. As such, the design objectives go beyond attention to the
aesthetics and detail of each building. The public realm and buildings are planned together to
create a harmonious whole. As in other areas of Los Gatos, it’s the sum of diverse parts that
creates place and community.
Addressing the look and feel of Los Gatos goes beyond the reference to any single
neighborhood; rather it is a quality and pride that each individual neighborhood brings to the
overall community. Our approach considers how all the elements come together as a holistic
ensemble to create genuine community, a place that feels welcoming and may evolve with time
like other parts of Los Gatos have over its history.
At the North 40, a commitment to quality and diversity of materials, articulation and
landscaping is consistent with the high standards of Los Gatos. The buildings feature a range of
complementary but not identical styles. Each building makes reference to particular local
characteristics, but not necessarily the same ones, so that we avoid a homogenous aesthetic.
The objective is that the new neighborhood will be in keeping with the character of Los Gatos in
more fundamental ways than copying a detail or resurrecting a style from another era.
Los Gatos North 40 Narrative
February 2, 2016
Page 2 of 7
SITE DESIGN
Residents and visitors alike would agree that Los Gatos is perceived as one of the most walkable communities in
the region, an attribute that sets it apart from much of the Silicon Valley. This relaxed and pedestrian friendly
atmosphere is one of the Town’s character-defining features. The North 40 is located at the northernmost edge of
the Town, and interfaces with the largely commercial Los Gatos Boulevard and Highways 17 and 85. In spite of the
large-scale street character within the immediate context, there is an opportunity in the North 40 to make
reference to Los Gatos’ walkable neighborhoods.
A walkable community is one in which residents can make some of the daily trips on foot, or can find services
clustered to reduce dependence on the automobile. What aspects of land planning make a community walkable
and welcoming? There are many factors, but three elements present in Los Gatos are:
- modest block sizes
- well-designed streets and sidewalks
- frequent building entrances
Los Gatos has great examples of these three elements in many parts of town. But there are also areas, such as the
auto-oriented commercial stretch of Los Gatos Boulevard, that can be discouraging to foot traffic. So when we are
planning for a community that is “in keeping with the Town’s character” our focus is on the areas that are
welcoming to pedestrians.
Modest block sizes: if a neighborhood is organized with mega blocks, there are long stretches of streets unbroken
by intersections. Generally speaking this discourages pedestrians and favors vehicles. Small block sizes and
frequent intersections promote walkability and create a foot-friendly, welcoming atmosphere.
At the North 40, the modestly-sized blocks compare favorably to other pedestrian-oriented communities, both in
the block sizes and through the further introduction of pedestrian paseos that create attractive and convenient
access for residents and visitors. More frequent intersections also afford framed views of neighboring hills. In
planning practice, a key gauge of block sizes is the block’s lineal perimeter measurement. The North 40 parcels are
comparable to the range of Los Gatos block sizes present in nearby residential areas and in the district that
includes downtown.
Well-designed streets and sidewalks: the design of the streets and sidewalks must give pedestrians a feeling of
safety and enjoyment. Landscape (planting, street furniture, etc.) promotes a pleasing atmosphere, and parallel
parking that divides the pedestrian from vehicular traffic promotes a feeling of safety, as does the slowing of
vehicle speeds through traffic-calming measures such as curb bulb-outs at intersections, special paving, and
modest traffic lane widths.
In keeping with the Town character, the well-designed residential streets of the Lark District have slow traffic,
pleasant landscape, and opportunities for shade which all promote pedestrian activity. Similarly in the mixed -use
Transition District, slow traffic, shaded sidewalks, and a compact (not sprawling) area with establishments that
serve multiple, daily needs of North Los Gatans, promote pedestrian activity, and reduce dependency on the
automobile.
Frequent building entrances: sidewalks flanked by blank walls or parking lots discourage pedestrian traffic.
Conversely, frequent entrances, whether to residential or commercial uses, encourage foot traffic and feel inviting.
Los Gatos North 40 Narrative
February 2, 2016
Page 3 of 7
Similar to other areas of Los Gatos (and unlike much of the surrounding Silicon Valley), the North 40 has been
designed with building entrances lining the streets. In the Lark District, streets are lined with residential entrances
since garages are tucked behind. The streets of the Transition District are lined with neighborhood-serving
commercial establishments that will accommodate unmet needs for the northern part of Los Gatos, as well as
foster activity and the sense of “welcome” for which Los Gatos is known.
LANDSCAPE
The landscape palette for the North 40 integrates the Los Gatos agricultural heritage by incorporating a variety of
fruit bearing orchard trees in both formal and informal groupings at the perimeter and within the site. Vineyard
planting, a reference to more recent agricultural traditions, frames Los Gatos Boulevard and creates a welcoming
gateway for those entering the Town from the north. Within the site, buildings have been located to feature a
number of existing, mature live oak trees that will provide a direct link to the site’s past.
In the Transition District, shaded sidewalks and small plazas with attractive street furniture invite shops and cafes
to open up so residents and shoppers can enjoy the year-round, exceptional climate that affords Los Gatos its
relaxed lifestyle. Large, high canopy street trees are proposed to provide shade and frame views to the
surrounding hillsides. The local coast redwood s, which can be seen in the downtown, parks and surrounding hill
areas, will be used on the westerly perimeter as a buffer to the surrounding highways. In the heart of the district,
the specialty market will highlight local farm-to-table products, a theme that’s become a signature of Los Gatos
daily life. A plaza in front of the Market Hall with flexible seating, lounge type furniture, and small areas of lawn
will invite people to gather and linger, or enjoy food and drink procured at the Market Hall. An outdoor lounge
space adjacent to the restaurant along North A Street will feature an outdoor fire place and lounge seating under a
trellis of grape vines. A garden retreat at the rear of the restaurant and in front of the residences will create a lush
green buffer between the two uses, and will provide gathering and relaxation space for the nearby residents in a
shady garden setting. A working garden with kitchen gardens for the restaurants at the heart of the North 40
further reinforces the agricultural theme. This demonstration garden is yet another place to relax: featuring
outdoor seating under the shade of a trellis.
Similarly recalling the site and region’s agricultural past, the Lark District’s frontage features fruiting orchard trees
to frame the edges of Lark Avenue. Lark District’s planting palette includes a variety of familiar and locally
characteristic water-wise ornamental canopy shade trees and shrubs. Oak woodlands provide shade and respite,
and evoke a sense of place that’s consistent with Los Gatos’ parks. The central green creates an opportunities for
social interaction and outreach to surrounding Los Gatos neighborhoods. A series of inviting pedestrian paseos,
seating areas and intimate garden courts compliment park-like areas. The landscape design is intended to create a
seamless transition between the North 40 and established Los Gatos residential communities by continuing a
familiar plant palette and enhancing the pedestrian walkability to and from the surrounding community.
BUILDING DESIGN and MATERIALS
The Town has a wide variety of building types, established and new residential districts, historic buildings, strip
commercial development and important 21st century buildings. A sense of quality ties together this mixture of
architectural styles and uses that include residential, commercial, hospitality, civic and office, ranging in height
from one to four stories. There is more variety than uniformity, both in scale, mass an d heights, which contribute
to the character-defining core of the Town.
Los Gatos North 40 Narrative
February 2, 2016
Page 4 of 7
While downtown there’s a mix of older and contemporary designs, such as the Cañada Building and Apple store,
portions of Los Gatos Boulevard feature strip commercial centers and larger establishments such as car
dealerships, box retailers and automotive repair shops. There are historic buildings like Forbes Mill and the classic
feel of the downtown. In contrast, the 21st century library stands as an attractive example of thoughtful
contemporary architecture and anchors the Town’s civic hub. The size and scale of the Beckwith Block is large
enough to frame East Main Street yet feel welcoming. The “look and feel of Los Gatos” incorporates a mix of
buildings and uses, just as the Town has a variety of distinct neighborhoods within its boundary, and this eclectic
blend is a part of the Town’s appeal.
The North 40 also has a variety of structures and uses reflecting the Town’s current profile. Each North 40 building
has a specific way in which it is “in keeping with the Town’s character”, while meeting today’s energy and
sustainability standards, and acknowledging that their period in history is the early 21st century. Maintaining the
high quality for which Los Gatos is known and following the Guiding Principles of the Specific Plan, the building
designs will create a place that feels genuine and that speaks “neighborhood” rather than “project”. From the
rustic earth tones of agricultural buildings and the elegant downtown storefronts to the crisp lines and pastels of
the new library, the North 40 draws upon diverse Los Gatos references. The buildings are meant to work together,
featuring a cluster of complementary and high-quality, but not identical styles. Each building makes reference to
elements found in Los Gatos while together the new neighborhood exemplifies “what it’s like to live in Los Gatos”
in its own unique way.
TRANSITION DISTRICT
The two buildings that face Los Gatos Boulevard make notable reference to the site’s and to Los Gatos’ agricultural
roots. They are not literal copies of historic structures, but are designed to be strongly evocative of the region’s
rural heritage. The Town has a kind of “rustic elegance”, one of the guiding principles for the North 40’s aesthetic
design, and these two buildings continue that tradition.
Building A2 – Retail:
This modestly sized retail building is designed to recall a small barn with simple form and pitched roof. The pattern
of wood walls with large, simple doors and windows makes reference to the generous square openings of old barn
doors. The eave at Los Gatos Boulevard has a low, single-story profile in line with the character of older and
smaller wood structures. Proposed materials reinforce the agricultural roots: weathered wood horizontal siding
(we will seek reclaimed sources), natural zinc standing seam roof, and dark metal window frames (that meet
today’s energy standards).
Building B2 – Dining:
Intended for use as a restaura nt, this is the smallest free-standing building in Phase I and presents an even lower
eave to Los Gatos Boulevard. Its scale and form evoke imagery that is more farmhouse than barn. The extended
dining porch along Los Gatos Boulevard could be imagined as the (theoretical) family’s screened porch, when the
road was a cart path, re-vitalized as a 21st century dining terrace. The materials include natural wood vertical siding
and a stone accent wall that could be imagined as the remnants of a retaining wall that once framed the grade
change between the road and the yard. The standing seam metal roof will have a more widely spaced pattern than
the barn and have a neutral painted finish. An old farmhouse would probably have had three-tab composition
shingles or rusty corrugated metal. The intent is to bring the roof form into an appropriate current interpretation
that also suggests quality and longevity.
Los Gatos North 40 Narrative
February 2, 2016
Page 5 of 7
Together, Buildings A2 and B2 present a soft edge to Los Gatos Boulevard, providing an inviting suggestion of
historic farm structures. As we move away from Los Gatos Boulevard, the next two buildings, A1 and B1, take on a
different scale and character. The site slopes down into the heart of the neighborhood and the sense of activity
and presence grows.
Building A1 – Retail and 2nd Floor Residential:
This L-shaped retail and residential building has four architectural palettes. It has two stories, which well frames
Neighborhood Street, and also makes reference to the old notion of the proprietor living above the shop . The
blend of palettes and two-story arrangement promote the Los Gatos image of “small-town” while providing
flexibility for tenanting. The L form has two intermediate breezeways, natural points for pedestrian access from
parking in the rear, and for changes in design and material palettes. The size and scale of these elements is very
much in keeping with the look and size of many buildings in downtown Los Gatos.
The first eastern-most element appears stand-alone (connected only at the rear, upper level). The stone panel on
its east façade and paned window reflect prominent elements of Forbes Mill. Its roof ridge is turned perpendicular
to the Boulevard buildings reflecting the variety found in Los Gatos. The second-floor residential terraces
overlooking the neighborhood street add scale and 24/7 liveliness.
West of the breezeway is a brick-faced building with classical proportions and parapet roof. This building recalls
what might have been a modest mercantile structure that could have housed a general or hardware store. A
simple frame façade, with brick tones that evokes older commercial Los Gatos brick structures, is nearly identical in
scale to the Beckwith Block on East Main.
Turning the corner, the next element steps back a bit to provide more sidewalk space, an ideal spot for shops to
spill out with displays in fair weather. The material palette changes, and this element presents a slightly higher
parapet, to contrast with adjoining elements, reinforcing the notion that the building was built over time. Its
storefront is very simple since at this prominent corner location we anticipate that the tenant may design a quality,
custom window system. A residential terrace over the corner reinforces the activity and mix of uses in the
Transition District.
Even though each element of the L-shaped A1 Building has a unique palette, the ground floor internal space is
contiguous to create flexibility for retail tenants.
The southerly live-work element next to the second breezeway recalls a simple, barn-like, traditional form
interpreted with contemporary detailing: barn-scaled openings, paned windows, walls of board-formed textured
concrete (or materials that evoke the concept), and pitched standing-seam metal roof. It’s a small element with its
own identity, in keeping with the concept of unique, non-repetitive buildings that characterize both downtown
and the civic district on East Main Street.
Building B1 – Mixed use: Market, Affordable housing and Parking:
This building has three uses – the specialty market, two floors of affordable housing, and an internal four-level
parking garage (one floor is subterranean), which is wrapped and hidden by the other uses. This larger building,
like A1, has more than one architectural expression, but has goo d variation of height, as does the eclectic Los
Gatos downtown and civic district on East Main. As outlined in the Specific Plan, taller buildings within the North
Los Gatos North 40 Narrative
February 2, 2016
Page 6 of 7
40 site should be located toward the center where the site topography is significantly lower than the Los Gatos
Boulevard grade, not at the periphery, and the steps in massing of this building respect that guidance.
The easterly portion of the buildings toward Los Gatos Boulevard is one- and two-story and composed of three
elements. Each of the elements has a slightly different design and the sizes are very much in keeping with town
character relative to size and scale of Los Gatos’ smaller commercial spaces. The materials make reference to
agricultural buildings: weathered or recycled natural wood siding, and simple bold farm forms, but with a 21 st
century interpretation.
The portion of the building with two stories of affordable housing is set further back from Los Gatos Boulevard,
and most of the residential element faces the rear of the parcel or overlooks a podium courtyard deck. The roof of
the senior housing features a mix of gable and flat roofs, creating a sense of residential scale and proportion. The
colors are chosen from a forest and landscape palette of neutrals, grey-green, gold and browns making reference
to the hills that frame the Town.
Building C1 – Free-standing retail / restaurant:
Anchoring the visual axis of Neighborhood Street, this structure occupies a key location at the fulcrum of the plan.
Designed for dining and retail that can spill out onto the sidewalk, this building will provide both a focal point of
activity and visual accent at the core of the District. The natural timber-framed sun-shade creates depth and
richness on the façade, while the reverse shed roof anchors the view and helps define the heart of the mixed use
area. To provide connection between the commercial use and the mid-block garden beyond, the building features
windows on the rear side. The timber and wood siding materials complement the palettes on nearby buildings,
and are accented by a contrasting plaster element to continue the theme of a district that’s been built over time.
The Transition District structures will all have a sense of quality and a rich, complementary palette of materials that
embraces the “look and feel” of Los Gatos. The mixture of heights, from one to four stories, is compatible with the
existing range in the Town, and the variety of architectural styles reflects the local diversity of neighborhoods.
LARK DISTRICT
Garden Clusters:
The main point of connection between the Lark District and the existing residential community off of Highland
Oaks occurs along Lark Avenue, an area defined by a number of existing residences and small commercial
buildings. The Garden Clusters have been designed to keep this edge soft and welcoming by presenting a
pedestrian scale frontage that transitions the existing neighbors and users of the multi-modal path into the new
neighborhood. To encourage this scale and relationship with the surrounding homes, the Garden Clusters have
been designed with a strong but welcoming two story detached presence that steps up to three stories at the rear,
where carriage units are designed over tuck-under garages. Front doors line three sides of these buildings, further
enhancing the pedestrian connection to the existing neighborhood and providing residents’ access to the lushly
landscaped paseos that weave through the homes and connect to the Transition District.
Rowhomes:
Entering South ‘A’ Street from Lark Avenue, one is greeted by neighborhood streets lined with orchard trees
recalling the North 40’s and Los Gatos’ agricultural past. Behind the shade of these trees are the front entries and
patios of the Rowhomes. Garages are tucked behind these homes to minimize driveways dividing the streetscape
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February 2, 2016
Page 7 of 7
and to continue the pedestrian oriented paseos that begin at the Garden Clusters. Above the neighborhood
sidewalks are expansive terraces where residents can connect with those below as they enjoy the Los Gatos
weather. Like all the homes in the Lark District, which are geared towards the Millennial buyer, once you enter the
home from the terraces a media-based great room centered on as entertaining kitchen is revealed. The
“traditional” dining room is a thing of the past.
Courtyard Clusters:
The Courtyard Clusters continue the emphasis on creating a pedestrian-oriented community by designing each
building with a single driveway and shared auto-court. Since the garages are internal to the cluster, the perimeter
is highly articulated and lined with resident entries spilling into the surrounding streets, sidewalks and paseos The
building corners have significant two story elements, further enriching the facades. . As elsewhere in the Lark
District, frequent entrances to individual homes and stepped forms create the residential character that echoes
look and feel of Los Gatos. A unique home that spans the entryway to the auto -court acts to further remove the
garages visually from the streetscape.
Architectural Character:
As noted above, the existing fabric of Los Gatos is an eclectic blend of architectural styles ranging from rural and
traditional to clean-lined contemporary, that when taken as a whole can be described as “rustic elegance”. What
binds all of these unique styles together is the high quality of the architecture and materials. With this in mind, the
Lark District has been designed to reflect the culture and vibrancy of the younger generation of Los Gatos and the
surrounding Silicon Valley, and draw residents who desire a fresh, quality, and contemporary aesthetic. The
architectural character seeks to combine the concept of “rustic elegance” (the “look and feel of Los Gatos”) with
the desires of the Millennial buyer.
With this concept in mind, and the Specific Plan’s encouragement to reflect the agrarian heritage of the North 40
and Los Gatos, the architectural styles used in the Lark District combine the colors, materials, roof lines and
proportions of a historical agricultural heritage, while reducing the detailing of this style down to its roots. The
result is a neighborhood based in tradition with a contemporary and clean aesthetic.
The overall massing of the homes is simple with abundant deep eaves, awnings and terraces that create strong
shadow lines typical of barn structures. In keeping with the Valley’s agrarian roots, the material palette consists of
weathered and stained wood siding, corrugated metal siding and plaster, as well as metal bracing and bracketing
that are all painted in a consistent palette of warm earth tones.
path: Z:\09039 Los Gatos North Forty\3 REGULATORY\3.12 Planning Department\151012_Narrative\160202_N40 Design Narrative.docx
ADMINISTRATIVE DRAFT
NORTH 40 PHASE 1
ECONOMIC REPORT
Prepared for:
Grosvenor Americas
Prepared by:
Keyser Marston Associates
November 2015
TABLE OF CONTENTS
EXECUTIVE SUMMARY ........................................................................................................... 1
NORTH 40 PHASE 1 ................................................................................................................. 5
DOWNTOWN CORE ................................................................................................................. 7
NORTH 40 PHASE 1 PROJECTED SALES .............................................................................10
TRADE AREA EXPENDITURE POTENTIAL ...........................................................................12
COMPARISON RETAIL ASSESSMENT ..................................................................................15
FOOD AND BEVERAGE ASSESSMENT .................................................................................17
MARKET HALL ASSESSMENT ...............................................................................................19
DOCUMENTS REFERENCED .................................................................................................20
APPENDIX ...............................................................................................................................21
FIGURES AND TABLES
Figures
Figure 1: North 40 Phase 1 Site Aerial ....................................................................................... 5
Figure 2: Location of Downtown Core in Relation to North 40 .................................................... 7
Figure 3: Downtown Los Gatos Sales (2014) and North Phase 1 40 Projected Sales (2020) ....11
Figure 4: Map of Residential Trade Area ...................................................................................12
Tables
Table 1: Downtown Los Gatos Retail Sales- Select Categories (2014) ...................................... 8
Table 2: Estimated Gross Sales at North 40 Phase 1 Project (2020) ........................................10
Table 3: Downtown Los Gatos Sales (2014) and North Phase 1 40 Projected Sales (2020) .....10
Table 4: Trade Area Demographics in Comparison With Town, Standard Rings (2015) ............13
Table 5: Residential Trade Area Expenditure Potential through 2020 .......................................14
Table 6: North 40 Phase 1 Share of Comparison Retail Trade Area (2015-2020) .....................15
Table 7: North 40 Phase 1 Share of Food and Beverage Trade Area (2015-2020) ...................18
Appendix Tables and Figures
Table A- 1: Taxable to Gross Sales Conversion for Sales in Downtown Los Gatos ...................21
Table A- 2: Expenditure Potential of Workforce within 1 Mile of North 40 ..................................21
Figure A- 1: Grocery Stores Located Within 1 Mile of North 40 and Downtown .........................22
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EXECUTIVE SUMMARY
The Town of Los Gatos requires an economic report assessing the competitiveness of the North
40 Phase 1 (“Phase 1”) retail development program in relationship to the retail businesses in the
Downtown Core. The purpose of the analysis is to evaluate if the Phase 1 retail will have an
adverse impact on the retail environment in the Downtown Core.
Downtown Core
To create a framework in which to evaluate how the Phase 1 retail development program might
impact the Downtown, Downtown Core businesses were grouped into three major categories.
The purpose of the groupings was to provide a measure of Downtown Core sales to compare
with the proposed Phase 1 retail and to allow for a discussion of the Downtown Core retail
environment while protecting the confidentiality of individual businesses. As agreed upon with
the Town, the groupings of retailers in the Core are:
Comparison goods retail (apparel, home furnishings, and other specialty retail)
Food and beverage
Grocery (including food and liquor stores)
Within the three groupings, the Downtown Core (“the Core”) is comprised of approximately 247
businesses. Taxable sales for businesses in the Core were provided by the Town’s sales tax
consultant for each of the categories. Estimated 2014 gross sales (taxable and non-taxable) in
the Core are:
Comparison goods retail: $96.9 million
Food and beverage: $76.9 million
Food and liquor stores: $10 to $15 million
Summary of Approach
The analysis evaluates if the anticipated Phase 1 sales can be achieved without having an
adverse impact on sales of the existing Downtown Core businesses. KMA’s approach to the
assignment included the following:
1. Downtown Core Sales: Review of 2014 sales in the Downtown Core provided on a
confidential basis
2. Projected Sales for Phase 1 Retail: Projected by three retail groupings provided by
Grosvenor
3. Trade Area Identification: Defining the trade area for each of the retail groupings
4. Trade Area Expenditure Potential: Estimating expenditure potential using data provided
by Census and state information
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5. Market Share Estimate for Phase 1 Retail: Estimating the market share of trade area
expenditure potential that Phase 1 retail would achieve
6. Differentiation in Market Position between Phase 1 and the Downtown Core
North 40 Phase 1 Retail Development Program
The Phase 1 retail development program is anticipated to be up to 66,000 square feet as of the
writing of this report. The following is a summary of KMA’s findings and conclusions.
A. Comparison Goods Retail
Phase 1 Comparison Retail
Anticipated to have up to 26,000 square feet
Anticipated tenants: apparel, shoes, home furnishings, and specialty shops
Estimated annual sales of approximately $15.6 M
Downtown Core Comparison Retail
Achieved retail sales of approximately $96.9 million in 2014
Comprises 172 businesses offering a diversity of merchandise
Strong regional destination with high image retailers in a pedestrian oriented
shopping district
The Phase 1 residential trade area for comparison goods is strong for reasons including
Population Density: approximately 400,000 residents and nearly 150,000 households
with excellent regional access via Hwy 85 and Hwy 17
Affluence: Median household income of $104,000 in the trade area overall, and
$139,000 within the Town of Los Gatos
Expenditure Potential: Over $1.5 billion annual expenditure potential for comparison
goods and the growth between 2015 and 2020 is estimated to be $164 M, including
potential for visitors from beyond the trade area
Conclusion
Phase 1 projected sales of $15.6 M can be achieved while only capturing a small
share of the trade area expenditure potential
Downtown Core comparison goods retailers enjoy a unique retail environment with
strong sales approaching $100 million; the high volume of economic activity, in
combination with approximately $80 million in food and beverage sales, ensures the
Core will continue to be a regional destination
Phase 1 comparison goods retail program can be achieved without having an
adverse impact on the sales of the existing Downtown Core businesses.
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B. Food and Beverage
Phase 1 Food and Beverage
Anticipated to have up to 20,000 square feet
Anticipated tenants: restaurants, cafes, and a wine bar or brewery
Estimated annual sales of approximately $15 M
Downtown Core Food and Beverage
Achieves sales of approximately $76.9 million in 2014
Comprised of 62 establishments
Strong regional destination for food and beverage in a pedestrian oriented shopping
district
Phase 1 Trade Area for Food and Beverage
Employment within 1 mile supports an estimated $10 M in annual expenditure
potential
Residential trade area expenditure potential growth between 2015 and 2020 is
estimated to be $89.7 million
Conclusion
Phase 1 projected sales of $15 M can be achieved while only capturing a small
share of the trade area expenditure potential
Downtown Core food and beverage establishments achieve strong sales of almost
$80 million
Phase 1 food and beverage retail program can be achieved without having an
adverse impact on the sales of the existing Downtown Core businesses.
C. Grocery/Specialty Foods
Phase 1 Grocery/Specialty Foods
Anticipated to have up to 20,000 square feet
Anticipated tenants: Market Hall Grocer (anchor), envisioned as a collection of
specialty and gourmet food vendors which may include meat and fish shops,
produce markets, wine shops, florists, bakeries, and confectionary
Estimated annual sales of $15 million
Downtown Core Grocery/Specialty Foods
Achieves taxable sales of approximately $7.7 M in 2014; estimated to be
approximately $10 to $15 million in gross sales
Comprised of 13 stores: 3 wine shops/liquor stores and 10 convenience/ specialty
Wine shops and liquor stores account for over half of taxable sales
No existing sales in the Core for produce, fish and meat markets
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Downtown Core Trade Area for Grocery/Specialty Foods
Downtown Core specialty food offer is neighborhood-oriented and does not serve as
a destination location for grocery/specialty foods
Neighborhood trade area within 1 mile of the Core supports annual food store
expenditure potential of approximately $46 M versus $10 - $15 million in existing
sales by Downtown Core businesses
Neighborhood trade area within 1 mile of the Core does not overlap with a similarly
sized trade area around North 40
Conclusion
Phase 1 grocery/specialty foods retail program can be achieved without having an
adverse impact on sales on the existing Downtown Core businesses
Downtown Core grocery/specialty food stores do not serve as a destination location
for grocery/specialty foods
Tenant categories commonly associated with market hall grocers, including produce,
meat and fish markets, are not found in the Core
Beyond the study area, Phase 1 grocery/specialty foods could enhance Los Gatos
Boulevard position as a grocery destination and thus attract additional shoppers to
Los Gatos.
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NORTH 40 PHASE 1
North 40 Phase 1 (“Phase 1”) is located in the North 40 Specific Plan Area adopted by the Los
Gatos Town Council in June 2015. The specific plan area is an approximately 40 acre site within
the Town at the intersection of Highway 85 and Highway 17. The area has been approved for
commercial uses, including office, retail, and hotel, and housing. New commercial projects
within the specific plan area must submit an Economic Impact Study to the Conceptual
Development Advisory Committee evaluating the potential impact of the project on the
economic competitiveness of the Downtown Core. The subject analysis is meant to fulfill this
requirement for Phase 1.
Figure 1: North 40 Phase 1 Site Aerial
Source: Google Earth, Town of Los Gatos, Grosvenor Americas
The proposal for North 40 Phase 1 submitted by Grosvenor Americas, SummerHill Homes, and
Eden Housing covers approximately 20 acres of the site (see boundaries above). Phase 1 is
anticipated to include up to 66,000 square feet of retail. Currently, the site plan application allots
60,000 square feet for retail uses. At the direction of the applicant, KMA has assumed a 10%
increase in the retail square footage to account for modifications to the development program
that may occur prior to the project’s approval.
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The tentative distribution of the 66,000 square feet of retail space is as follows:
Up to 26,000 square feet for comparison retail
Up to 20,000 square feet for food and beverage
Up to 20,000 square feet for a market hall grocer
The applicant provided KMA with a preliminary list of targeted tenant categories. According to
this information, comparison retail space would consist of apparel, shoes, home furnishings, and
other specialty stores (bicycle shop, book store, jeweler). A portion of comparison retail space
may also be dedicated to personal and financial services (gym, bank, hair salon). Food and
beverage retail would include a mixture of restaurant and related tenants such as cafes,
brewery or wine venues. Finally, the 20,000 sq. ft. market hall is envisioned by the applicant as
a cluster of specialty and gourmet food vendors with common customer seating. Similar markets
have been developed elsewhere in the Bay Area including Oakland, Emeryville, San Francisco
and San Jose. Typical market hall tenant categories include meat and fish shops, produce
markets, wine shops, florists, bakeries, and confectionary, with tenants varying in size from 400
sq. ft. to 3,000 sq. ft.1
1 Based on KMA’s review of Rockdridge Market Hall retail program.
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DOWNTOWN CORE
The Town of Los Gatos contains several retail districts, including Downtown, Los Gatos
Boulevard, and several neighborhood centers. Downtown has historically supported
approximately half of total retail sales in the Town of Los Gatos (BAE 2013, 41). Downtown is
further divided into Downtown North, the Blossom Hill/University district and the Downtown Core
(“the Core”), where approximately three quarters of Downtown retailers are located (BAE 2013,
24).
As agreed upon by the Town and the applicant, the subject analysis focuses specifically on the
potential impacts of North 40 Phase 1 on the Downtown Core. The Core is located primarily
along North Santa Cruz Avenue, East Main Street, and University Avenue, approximately 2
miles south of North 40 (see map). A historic, pedestrian-oriented, main street commercial
district, the Core is comprised of approximately 160,000 square feet of restaurants and 350,000
square feet of specialty stores and personal services serving the Town and the region at-large,
according to a 2014 estimate prepared for the Town Council (McLaughlin, 4).
Figure 2: Location of Downtown Core in Relation to North 40
Source: Google Earth, Town of Los Gatos, Grosvenor Americas
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To create a framework in which to evaluate how the Phase 1 retail development program might
impact the Downtown Core, existing businesses in the Core were grouped into three major
categories. The purpose of the groupings was to provide a measure of Downtown Core sales to
compare with the proposed Phase 1 retail and to allow for a discussion of the Core retail
environment while protecting the confidentiality of individual businesses. As agreed upon with
the Town, the groupings of retailers in the Core are:
Comparison goods retail (apparel, home furnishings, and other specialty retail)
Food and beverage
Grocery (including food, wine and liquor stores)
Within the three groupings, the Downtown Core is comprised of approximately 247 businesses,
which generate approximately $181 million in annual taxable sales. Taxable sales were
provided by the Town’s sales tax consultant for each of the categories. Sales by retail category
are summarized in the table below.
Table 1: Retail Sales in the Downtown Core - Select Categories (2014)
Downtown Core
Total
Establishments
2014
Taxable
Sales 2014
Gross Sales
2014
Comparison Retail (1)
172
$96,942,000
$96,942,000
Food and Beverage
62
$76,878,200
$76,878,200
Grocery/Specialty Food (2)
13
$7,777,400
$12,962,400
Source: Town of Los Gatos 2015
Figures rounded
(1) Includes apparel, home furnishings, electronics and appliance stores; miscellaneous stores; sporting
goods, hobby, book, and music stores.
(2) Includes grocery stores, specialty food stores, and liquor/wine stores. Conversion to gross sales
assumes 60% of category sales are taxable. See appendix table A-1.
The above table demonstrates that the Downtown Core’s strengths are in the comparison retail
and food and beverage categories, which together contribute more than 90% of sales in the
selected categories. High volumes of comparison and food and beverage sales substantiate the
common perception of the Downtown Core as a regional-serving retail destination. Approaching
$100 million in sales, the comparison retail offer is comprised of destination retailers with a high
image. Primary tenant types include clothing, jewelry, sportswear, and specialty gifts, many of
which are local boutiques. Formula retail tenants include Anthropologie, Chico's, Gap/Banana
Republic, J. Crew, Apple Store, Restoration Hardware, Sur La Table, and Williams Sonoma.
The food and beverage offer in the Core is also significant, with close to $80 million in sales.
The Core features a wide selection of restaurants, bars, and cafes, a number of which appear in
surveys of the top dining establishments in the South Bay.
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In contrast with the above retail categories, the specialty food offered in the Downtown Core is
limited. Estimated gross sales between $10 million and $15 million ($8 million taxable) are
distributed across 13 establishments, including three wine shops/liquor stores and ten food/
convenience stores, with one-third to half of sales deriving from the wine/liquor shops. The
foregoing sales figures indicate that the majority of demand for food products is being met
outside the Downtown Core, even for residents living within 1 mile of the Downtown Core,
where resident expenditure potential for grocery goods is estimated to be $46 million (ESRI
Business Analyst 2015). As highlighted by the market and urban decay studies for the North 40
Specific Plan, there are no reported sales in the Core for meat, fish and produce markets, all of
which are tenant categories targeted by the Phase 1 market hall (BAE 2011, 67).
While the Downtown Core’s grocery and specialty food offer is limited, the prior market study
indicates that on the whole, the Town of Los Gatos has a substantial surplus of grocery sales.
Downtown Safeway is reported to be the closest supermarket to Monte Sereno and portions of
Saratoga (BAE 2011, 67), and sales figures indicate that the cluster of grocery stores along Los
Gatos Boulevard draws customers from far beyond the Town’s boundaries. For a map of
grocery stores within 1 mile of the Downtown Core and North 40, see appendix Figure A-1.
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PROJECTED SALES FOR NORTH 40 PHASE 1
Projected Sales
KMA estimates that North 40 Phase 1 will achieve approximately $45.6 million in gross (taxable
and non-taxable) annual sales by its build-out in 2020. Gross annual sales were calculated by
applying estimates of sales per square foot for newly constructed space to the anticipated
development program. Sales benchmarks are derived from a variety of public and confidential
sources, including surveys of shopping centers published by the International Council of Shopping
Centers, annual financial reports of representative tenants, and feedback from the applicant.
Table 2: Estimated Gross Sales at North 40 Phase 1 Project (2020)
North 40 Phase 1 at Build-Out (2020)
North 40 Phase 1
Estimated
Sq. Ft. (1)
Sales
Per Sq. Ft. (2)
Est. Gross
Annual Sales
Comparison Retail 26,000 $600 $15,600,000
Food and Beverage 20,000 $750 $15,000,000
Grocery/Specialty Foods (3) 20,000 $750 $15,000,000
Source: Grosvenor 2015, KMA 2015.
(1) Current development Phase 1 development program includes 60,000 sq ft of retail. At the
direction of the applicant, the retail GLA was increased by 10% to account for any subsequent
increase once the program is finalized.
(2) Based on industry benchmarks for newly constructed space.
(3) Includes both taxable and non-taxable sales.
Comparison with Downtown Core
Sales by category within Phase 1 are projected to be significantly less than existing sales in the
Downtown Core for comparison and food and beverage categories, but greater than Downtown
Core food stores, where the Downtown Core’s offer is more limited. Comparison goods sales in
Phase 1 are projected to be $15.6 million versus $97 million in the Core. Food and beverage
sales are projected to total $15 million by 2020 in Phase 1, compared to existing sales the Core
of $77 million. On the other hand, grocery and specialty food store sales in Phase 1 are
projected to be greater than existing sales for the same categories in the Core.
Table 3: Downtown Core Sales (2014) and North 40 Phase 1 Projected Sales (2020)
Downtown Core (1)
North 40 Phase 1 (2)
Gross Sales 2014
2020-Projection
Comparison Retail $96,900,000
$15,600,000
Food and Beverage $76,900,000
$15,000,000
Food Stores $13,000,000
$15,000,000
(1) See Table 1.
(2) See Table 2.
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Figure 3: Downtown Core Sales (2014) and North 40 Phase 1 Projected Sales (2020)
$97
$77
$13 $16 $15 $15
$-
$20
$40
$60
$80
$100
$120
Comparison
Retail
Food and
Beverage
Food StoresMillions Downtown Core
North 40 Phase 1
Source: Town of Los Gatos 2015, California Board of Equalization, Grosvenor 2015.
Includes taxable and non-taxable sales.
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TRADE AREA EXPENDITURE POTENTIAL
Definition of Residential Trade Area
The residential trade has been defined to encompass the project’s primary customer base for
comparison and food and beverage categories upon full build-out of the Phase 1 retail program.
KMA determined the residential retail trade area for the project in consideration of (a) the likely
drawing-power of comparison and food and beverage retailers anticipated at the project, (b)
regional access, and (c) the location and nature of existing and planned competition. The
residential trade area is shown in the figure below. The trade area is primarily contained within a
five mile radius of the subject site, and includes the communities of Los Gatos, Saratoga, Monte
Sereno, Cambrian Park, Fruitdale, and Lexington Hills, as well as portions of San Jose and
Cupertino. As illustrated below, the trade area extends beyond five miles along key
transportation corridors including Highway 85, Highway 17, Route 9 and the Almaden
Expressway, where superior access is likely to draw customers living farther from the project
site.
Figure 4: Map of Residential Trade Area
Source: Google Maps
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Trade Area Demographics
As of 2015, the residential trade area contains a population of nearly 400,000. The trade area
population is greater than the population living within five miles of the subject site, due to the
modifications to the five-mile ring primarily along Highway 85, described above. While median
household incomes of the residential trade area ($104,000) are below those of the Town of Los
Gatos ($139,000), trade area incomes are higher than the county and region overall. Aggregate
income of trade area residents is estimated to exceed $20 billion, of which the Town of Los
Gatos contributes approximately 10%.
Table 4: Trade Area Demographics in Comparison With Town, Standard Rings (2015)
Town of
Los Gatos Rings from North 40
Residential
Trade Area (1)
3 miles 5 miles
Population
30,301
132,192 342,647
396,120
HH
12,701
50,957 129,482
147,368
Median HH Income
$138,557
$107,782 $101,792
$103,669
Per Capita Income
$71,308 $54,647 $51,463
$51,660
Aggregate Income ($ million)
$2,161
$7,224 $17,634
$20,464
Source: ESRI Business Analyst 2015
(1) Residential trade area consists of a modified 5-mile radius from the site, with the trade area extending
along key transportation corridors including Highway 85, Highway 17, Route 9, and the Almaden
Expressway. (See Figure 2.)
Expenditure Potential
Over the next five years, the trade area is projected to grow by nearly 19,000 residents, while
per capita income is projected to increase at 1% per year (in real terms), based on projections
published by ESRI Business Analyst, a private demographic firm. Population and income growth
in the trade area will add approximately $1.8 billion to aggregate income (Table 5).
KMA calculated growth in the trade area expenditure potential for comparison and food and
beverage retail categories between 2015 and 2020, when the project is anticipated to be built-
out. The likely share of aggregate income to be spent on comparison and food and beverage
categories was determined using data from the California Board of Equalization and the US
Census. It is estimated that residents have the potential to spend 7.6% of their incomes on
comparison retail and 4.9% on food and beverage. Applying these factors to growth in
aggregate income, KMA estimates that comparison retail expenditure potential will increase by
$139 million and food and beverage expenditure potential will increase by $90 million over the
next five years (Table 5). This increment represents expenditure potential not currently captured
by retailers in the Downtown Core or elsewhere in the residential trade area.
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Table 5: Residential Trade Area Expenditure Potential through 2020
Residential Trade Area (1) 2015 2020 Growth 2015-2020
I. Trade Area Demographics
Trade Area Residents
396,120 414,832 18,712
Households
147,368 154,682 7,314
Per Capita Income
$51,700 $53,800 $2,100
Aggregate Income (2)
$20,479,404,000 $22,317,962,000 $1,838,558,000
II. Retail Expenditure Potential
Comparison Retail 7.6% of income (3) $1,550,128,000 $1,689,292,000 $139,164,000
Food and Beverage 4.9% of income (3) $998,832,000 $1,088,503,000 $89,671,000
Source: ESRI Business Analyst 2015, California Board of Equalization (BOE) 2013
(1) Refer to Map of Trade Area.
(2) 2020 income projections prepared by ESRI adjusted for inflation assuming 1.9% per year. (3) Share of aggregate income spent on goods within each category, based on a comparison of taxable sales
reported by the California Board of Equalization (BOE) for the county and aggregate income reported by the US
Census. Shares reflect gross sales.
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COMPARISON RETAIL ASSESSMENT
Expenditure Potential
Residential expenditure potential on comparison goods is projected to increase by $139 million
between 2015 and 2020 (Table 5, above). The comparison retail category includes apparel,
home furnishings, electronics and appliance stores, miscellaneous stores, and other specialty
stores including sporting goods, hobby, book, and music stores. Assuming that 15% of trade
area sales derive from visitors living beyond the trade area, total trade expenditure potential is
estimated to increase by approximately $164 million over the next five years (Table 6).
Phase 1 Projected Sales and Capture Rate
With up to 26,000 square feet of space dedicated to comparison retail, Phase 1 comparison
retail sales are anticipated to be $15.6 M (Table 2). This level of sales would require a capture
rate of approximately 10% of the growth in comparison goods expenditure potential, including
trade area residents and visitors from beyond the trade area, and less than 1% of the total trade
area comparison goods expenditure potential projected in 2020 (Table 6).
In other words, projected sales in Phase 1 can be achieved without having an adverse impact
on the sales of the existing Downtown Core businesses. Furthermore, by 2020, roughly $150 in
comparison retail expenditure growth would remain available to support other shopping districts
in the trade area, after accounting for Phase 1 sales at build-out.
Table 6: North 40 Phase 1 Share of Comparison Retail Trade Area (2015-2020)
North 40 Phase 1 - Comparison Retail 2015-2020
Est. Gross Annual Comparison Retail Sales at North 40 Phase 1 (1) $15,600,000
Comparison Retail Expenditure Potential
Residential Trade Area Growth (2015-2020) (2) $139,164,000
Sales Inflow (3) 15% $24,555,000
Trade Area Expenditure Potential Including Visitors $163,700,000
North 40 Phase 1 Share of Comparison Retail Exp. Potential 10%
(1) Table 2.
(2) See Table 5.
(3) Refers to sales to customers from outside the trade area.
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Comparison Retail Conclusions
KMA concludes that 26,000 square feet of comparison retail at North 40 Phase 1 would have no
impact on the Downtown Core:
The Downtown Core is a well-established, pedestrian friendly shopping district, which
draws customers from a regional trade area,
Current Downtown Core sales volumes in comparison retail categories ($97 million)
significantly exceed what is anticipated to be generated by North 40 Phase 1,
There is sufficient growth projected within the trade area to support comparison retail
development in Phase 1 without having an adverse impact on the sales of existing
Downtown Core businesses.
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FOOD AND BEVERAGE ASSESSMENT
Expenditure Potential
Residential expenditure potential on food and beverage is projected to increase by
approximately $90 million between 2015 and 2020 (Table 5). Factoring in expenditure potential
by visitors from beyond the trade area (assumed to comprise 15% of sales), trade area
expenditure potential by residents and visitors is estimated to increase by approximately $106
million over the next five years.
In addition to trade area residents and visitors, the project is likely to draw customers from the
sizable daytime population working near the project. More than 10,000 workers are employed
within 1 mile of the project, anticipated to increase to approximately 12,000 by 2020. Major
employers include Netflix, Roku, and Good Samaritan Hospital. Based on food and beverage
spending patterns of office and clerical workers, KMA estimates that local workers have the
potential to contribute an additional $10 M million in annual expenditure potential (see detailed
analysis in appendix Table A-2), Including growth in resident and visitor expenditures, detailed
above, combined trade area expenditure potential is estimated to be $116 million (Table 7).
Expenditure potential for workers is defined in terms of total expenditures, as opposed to
growth, considering that North 40 is a more convenient destination than the Downtown Core for
workers within the daytime trade area. Additionally, it unlikely that workers within one mile of
North 40 represent a significant share of the approximately $80 million in existing sales for
restaurants in the Downtown Core, given that the Core is two or more miles from most
employers within the Phase 1 daytime trade area, and office workers, more so than residents,
are likely to prioritize convenience in their dining choices.
Phase 1 Projected Sales and Capture Rate
Food and beverage sales are anticipated to reach $15 million upon build out of Phase 1, which
includes 20,000 square feet of food and beverage uses (Table 2, above). This level of sales
represents approximately 13% of the combined residential and worker trade area expenditure
potential as defined above.
As with comparison retail, projected food and beverage sales at Phase 1 can be achieved
without having an adverse impact on the sales of the existing Downtown Core businesses.
Furthermore, by 2020, roughly $100 million in food and beverage expenditure potential within
the trade area would remain available to support other shopping districts in the trade area, after
accounting for new sales in Phase 1.
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Table 7: North 40 Phase 1 Share of Food and Beverage Trade Area (2015-2020)
North 40 Phase 1 - Food and Beverage 2015-2020
Estimated Gross Annual F&B Sales at North 40 Phase 1 (1)
$15,000,000
Food and Beverage Exp. Potential
Residential Trade Area Growth (2015-2020) (2)
$89,671,000
Sales Inflow (3) 15% $15,825,000
$105,500,000
Office Employee Expenditure Potential (2020) (4)
$10,271,000
$115,771,000
North 40 Phase 1 Share of F&B Expenditure Potential 13%
(1) Table 2.
(2) See Table 5.
(3) Refers to sales to customers from outside the trade area.
(4) Accounts for expenditure potential from local office workers. See Table A-2.
Food and Beverage Conclusions
The Phase 1 food and beverage retail program can be achieved without having an adverse
impact on sales on the existing Downtown Core businesses:
Downtown Core food and beverage establishments currently achieve strong
sales of almost $80 million
Phase 1 projected sales of $15 M can be achieved while only capturing a small
share of the trade area expenditure potential.
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MARKET HALL / GROCERY ASSESSMENT
Grocery is the only retail category in which sales at Phase 1 are projected to exceed the
Downtown Core. Given the limited offer and neighborhood orientation of food stores in the
Downtown Core, however, KMA has concluded that projected sales at the Phase 1 market hall
can be achieved without having an adverse impact on sales of the existing Downtown Core. In
large part, the Phase 1 market hall concept is not anticipated to be competitive with nor
comparable to the specialty food store offer in the Downtown Core. The proposed market hall
has the potential to bolster the Town’s position as a regional food destination by complementing
existing supermarkets clustered along Los Gatos Boulevard.
Market Hall Conclusions
The Phase 1 grocery/specialty foods retail program can be achieved without having an adverse
impact on sales on the existing Downtown Core businesses:
The Core’s food store offer is limited. The above analysis of Downtown Core sales
demonstrates that the Core’s strength lies in food and beverage and comparison retail
categories, whereas its specialty food store offer is limited. Many of the common market
hall tenants, such as fish, meat and produce markets, are not found in the Core. The
nearest grocery store, Safeway, is located just outside the Core, while the majority of
grocery stores in Town are clustered along Los Gatos Boulevard (see Appendix Fig. A-1).
The Core’s food store offer is neighborhood-oriented. The volume of sales at existing
Downtown Core food stores suggests an orientation toward a neighborhood trade area.
If defined traditionally as a 1 mile radius from each site, neighborhood trade areas of the
Downtown Core and Phase 1 do not overlap; in other words, primary customer bases for
neighborhood-serving food stores in the Core and Phase 1 are distinct. Moreover, most
of the $46 M in expenditure potential of residents living within 1 mile of the Core is
currently spent outside the district.
Beyond the Downtown Core, an urban market could strengthen Los Gatos Boulevard’s position
as a grocery destination and thus attract additional shoppers to Los Gatos. As highlighted in the
market study and urban decay studies prepared for the North 40 Specific Plan, the lack of
specialty food stores in Town represents “an opportunity to broaden the retailing mix and
enhance the Town’s strong position in this category” (BAE 2011, 76). Grocery stores clustered
along Los Gatos Boulevard are reported to draw from a regional customer base. By offering
unique, specialty foods not found in traditional grocery stores, the market hall planned for Phase
1 can complement the existing supply, as is seen with similar market halls located elsewhere in
the Bay Area. For example, Rockridge Market Hall in Oakland is located several blocks from a
Trader Joe’s and within a half-mile of two Safeway supermarkets.
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DOCUMENTS REFERENCED
The following technical reports previously prepared for the North 40 Specific Plan are
referenced in this report:
BAE Urban Economics. Market Study & Business Opportunities Assessment Town of Los
Gatos. August 12, 2011.
BAE Urban Economics. Urban Decay Analysis North 40 Specific Plan. November 20, 2013
McLaughlin, Ralph. Retail Resilience in Downtown Los Gatos: Potential Impact of Alternative
North 40 Development Scenarios. 2014.
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APPENDIX
Table A- 1: Taxable to Gross Sales Conversion for Sales in the Downtown Core
Downtown Core Taxable Sales 2014 Conversion Factor(1) Gross Sales
Comparison Retail $96,941,974 100% $96,941,974
Food and Beverage $76,878,230 100% $76,878,230
Grocery/Specialty Food (2) $7,777,431 60% $12,962,385
Source: Town of Los Gatos 2015, KMA 2015, California Board of Equalization 2012, US Business Census 2012
(1) Based on a comparison of taxable sales reported by the Board of Equalization for Santa Clara County and
corresponding gross sales reported by the US Census.
(2) Sales factor determined based on weighted average of specialty food and beer/ wine/ liquor store factors.
Table A- 2: Expenditure Potential of Workforce within 1 Mile of North 40
Food and Beverage Expenditure Potential
Workforce Within 1 Mi. of North 40 2015 Estimate (1) 2020 Projection (1)
Total Workers, 1 mile from site 10,710 12,190
Bachelor's or Higher 4,859 6,269
Remaining Workers 5,851 5,921
Commute Adjustment (2) @ 12% 9,425 10,727
Bachelor's or Higher 4,276 5,517
Remaining Workers 5,149 5,210
Per Capita Food & Beverage Spending (3)
Bachelor's Or Higher $1,250 $1,380
Remaining Workers $460 $510
Expenditure Potential by Nearby Workers
Food and Beverage $7,714,000 $10,271,000
Source: US Census, ICSC
(1) Estimates and projections based on 2013 data reported by Census adjusted using historical 2002-2013
growth rate. 2020 projection also incorporates estimate of expected growth at Netflix and Roku campuses.
(2) Based on share of local workforce living in communities contained by the trade area (US Census).
(3) Based on employee food and beverage spending in the vicinity of the office, as reported in the ICSC
report, "Office-Worker Retail Spending in a Digital Age" (2012), for suburban workers. It has been assumed
that employees with less than a bachelor's degree will spend in the same range as clerical office workers.
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Figure A- 1: Grocery Stores Located Within 1 Mile of North 40 and Downtown Core
[A] Trader Joe’s
[B] Nob Hill Foods
[C] Whole Foods Market
[D] Lunardi’s
[E] Safeway
Source: Google Earth, Database USA 2015