GlobeSt.com: Why will San Francisco retail do welldespite the national downturn?

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Holmes: When you have national retailers that arerolling out and making mass generalizations about slowing downgrowth due to the economy, our area is ill-affected by those kindsof decisions made. Why it's less pertinent in San Francisco and theBay Area is that it's such an infill environment, you usually haveto be 24 to 30 months ahead of your requirement. Today my effortsare being spent on delivery dates of 2011 and 2012. Unless you're atotal pessimist, all of the work we're doing today isforward-thinking and, hopefully, post-recession.

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GlobeSt.com: How will area changes in transit helpretailers?

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Holmes: The big way it helps is allowing forgreater densification of current lots. It's allowing for largerfootprint stores to get in because they are part of larger projectsthat are being densified. I think in general it helps retail. Fromthe standpoint of developers, it also reduces the parkingrequirement. The city is frowning upon parking as a necessary evilfor retail. It's a more cost-effective way because transit linesare getting denser and there are less parking requirements.

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GlobeSt.com: Are retailers able to get over nothaving their traditional parking requirements?

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Holmes: There's a real education about it. Whatwe're having to do now more than ever is go back and look at otherareas that are transit-heavy and draw a great parallel to marketslike Boston, New York and Washington DC, that have much moreeffective transit than we do. We need to let the retailer know thatthis is not a suburban Sacramento market where people are not usedto walking and taking transit. This is still a pretty transit-heavycity. There are 220,000 riders a day going down Market Street onall of the various lines. It's one of the most transit-friendlystreets in the US. When we came up with this data, a lot ofretailers were amazed with all of the traffic going down thatstreet.

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GlobeSt.com: Are there any retailers not in themarket that you expect to see soon?

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Holmes: We're very much on the radar of new chainscoming in. I'd say we're one of the top three or four markets inthe US that chains will look to as an entry point, particularly theurban brands. New York and LA are the first stop, and I'd say we'rein the top three to five.

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GlobeSt.com: What kind of impact will PropositionG have on the market?

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Holmes: A very negative impact. You have to be sowell ahead of your requirement because it puts a layer ofadministrative review onto a project, which is both time consumingand expensive for the applicant to go through. It takes about 24months to get to a place where you even get your day in court inSan Francisco. For the landlords that are scheduling the typicallease renewal with a six-month notice, we're telling all of ourownership clients they should push it back to two years because youneed a two-year head start now finding a tenant for theadministrative process also.

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It's also going to really force retailers to becommunity-oriented when they come into San Francisco. The twolargest industries in San Francisco are government, followed bynon-profits. It's larger than banking here. If you look at the twomost powerful segments in San Francisco, both of those very muchneed to be addressed when doing business here as a retailer.

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GlobeSt.com: Are mixed-use projects prevalentright now?

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Holmes: Anything along transit is going mixed use.There is a pretty large initiative right now from the city, whichis studying all surface parking lots and single-level retail sites,about potential reuse. We're not far from the day when everythingis going to be mandated mixed-use. In the City of Berkeley, youpretty much can't build without mixed use.

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GlobeSt.com: And there is a big push forsustainable development as well?

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Holmes: San Francisco was offering an incentive todevelopers. If they could post a bond, they would get expeditedtreatment in the planning department if they processedLEED-certified projects. That got backloaded so quickly thatthey've decided to discontinue that program. But I understand thereis legislation being discussed that would mandate LEEDcertification or some green point system on all new construction inSan Francisco. Even satellite cities are pushing green initiatives.It's becoming a reality in all of Northern California.

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