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2022 Highway 111 Corridor Specific Plans Market Demand Analysis by LWC, Inc (Lisa Wise Consulting) 2022-08-11MEMO To: Jonathan Linkus and Todd Tregenza, GHD From: Lisa Wise Consulting, Inc. Date: August 11, 2022 Subject: La Quinta Highway 111 Specific Plan: Market Demand Analysis Introduction This memo summarizes the Market Demand Analysis (Task 4.2.3), which describes the city's demographic, economic, and real estate market conditions and trends and evaluates existing constraints to future development through the lens of market supply and demand. The memo also provides an estimate of future demand for retail, office, hotel, and residential space in the Highway 111 Project Area. Key Findings Residential Demand • By the year 2045, La Quinta could have a citywide demand for approximately 4,439 to 5,743 new housing units, or between 193 and 250 new housing units each year. Among the 2045 citywide demand, there could be demand for between 3,520 to 4,554 single-family units and 919 to 1,189 multifamily units. • From 2022 to 2045, the Highway 111 Plan Area could have demand for approximately 644 to 833 new housing units, or between 28 and 36 new housing units each year. Office Demand • By the year 2045, the City of La Quinta could have demand citywide for approximately 24,307 to 81,025 square feet of office space, and the Highway 111 Pan Area could have a demand for approximately 10,209 to 34,030 square feet of office space. Hotel Demand • Based on a review of the Highway 111 Plan Area amenities, commercial uses, urban form, and the siting of previous hotel development, it was determined that the Plan Area would most likely attract mid -tier hotels in the future assuming there are no structural changes in the Plan Area. • By the year 2045, La Quinta may have demand for between one and three mid -tier hotels with 100 to 150 rooms, and the Plan Area could absorb up to one mid -tier hotel through the year 2045. Retail Demand • By the year 2045, La Quinta could have demand for between 332,886 and 388,290 square feet of retail, and the Highway 111 Plan Area, could have demand for between 163,114 and 190,262 square feet of retail. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 11 Demographic and Household Conditions This section describes characteristics of La Quinta's population using data from the American Community Survey (ACS) and HUD's Comprehensive Housing Affordability Strategy (CHAS). The analysis compares La Quinta with the nine cities represented by the Coachella Valley Association -Government (CVAG)1 and Riverside County to provide a relative understanding of conditions in La Quinta. Population and Households • In 2020, La Quinta had an estimated 41,650 residents and 16,292 households (Table 1). • In the last decade, La Quinta's population grew at a slightly faster pace than in Riverside County and the CVAG Cities. From 2010 to 2020, La Quinta's population grew by 16.8 percent compared to 15.6 percent in Riverside County and 14.9 percent in the CVAG Cities. During this period, the number of households increased by 19.3 percent in La Quinta, 10.4 percent in the county, and 24 percent in the CVAG Cities. • La Quinta households are slightly larger than households across the CVAG Cities, but households in La Quinta and the CVAG Cities are much smaller compared to the county overall. In 2020, the average household size was 2.55 in La Quinta, 2.41 for the CVAG Cities, and 3.26 for Riverside County. 1 The CVAG Cities include Desert Hot Springs, Palm Springs, Cathedral City, Rancho Mirage, Palm Desert, Indian Wells, La Quinta, Indio, and Coachella. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 12 Table 1: Population and Household Trends, 2010 to 2020 2010 2020 Change 2010 to 2020 Number Number Number Percent La Quinta Total Population Total Households Average Household Size CVAG Cities Total Population Total Households Average Household Size Riverside County Total Population Total Households Average Household Size 35,661 41,650 5,989 16.8% 13,658 16,292 2,634 19.3% 2.61 2.55 -0.06 -2.3% 336,693 386,873 50,180 14.9% 128,779 159,722 30,943 24.0% 2.60 2.41 -0.20 -7.5% 2,109,464 2,437,864 328,400 15.6% 666,906 736,413 69,507 10.4% 3.12 3.26 0.14 4.5% Source: American Community Survey, 5 -Year Est., 2010, 2020. Race and Ethnicity • La Quinta is less racially and ethnically diverse than Riverside County and the CVAG Cities. In 2020, about 54 percent of La Quinta's residents identified as Non -Hispanic White compared to 34 percent in the county and 41 percent in CVAG Cities (Table 2). • The Hispanic/Latino population is the second-largest racial and ethnic group in La Quinta (36.2 percent) but is less represented in La Quinta than in the county (49.4 percent) and CVAG Cities (49.6 percent). Table 2: Race and Ethnicity, 2020 Non -Hispanic White Hispanic/Latino Non -Hispanic Black/African American Non -Hispanic Asian Other Race/Ethnicity 22,594 15,080 714 1,802 1,460 54.2% 36.2% 1.7% 4.3% 3.5% 159,142 191,743 11,927 14,566 9,495 41.1% 837,847 34.4% 49.6% 1,204,521 49.4% 3.1% 148,003 6.1% 3.8% 159,004 6.5% 2.5% 88,489 3.6% Source: American Community Survey, 5 -Year Est., 2020. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 3 Educational Attainment • Educational attainment is higher in La Quinta than in the county and the CVAG Cities. In La Quinta, an estimated 33.4 percent of residents who are 25 years or older have earned a bachelor's degree or higher compared to 23.2 percent in Riverside County and 27.2 percent in the CVAG Cities (Table 3). Table 3: Educational Attainment, 2020 Nu La Quinta CVAG Citie Percent Numbe Riverside Count Num High School Degree or Less Some College Bachelor's Degree Advanced Degree Total Population 25 Years or Older 9,081 10,752 6,364 4,048 30,245 30.0% 35.5% 21.0% 13.4% 125,512 83,180 46,935 30,911 286,538 43.8% 697,174 43.9% 29.0% 521,489 32.8% 16.4% 236,902 14.9% 10.8% 132,238 8.3% 1,587,803 Universe: Population 25 Years or Older. Source: American Community Survey, 5 -Year Est., 2020. Age Distribution • La Quinta has a relatively large population of elderly residents (age 65 or older). In 2020, 27.1 percent of La Quinta residents were 65 and older, compared to 24.3 percent in CVAG cities and 14.5 percent in Riverside County (Table 4). • La Quinta and the CVAG Cities also have a somewhat smaller population of teens and children (age under 18). In 2020, 20.1 percent of La Quinta's population was under 18 years old compared to 18.6 percent in the CVAG Cities and 25.2 percent in Riverside County. Table 4: Age Distribution, 2020 La Quinta CVAG Cities Number Percent Number Percent Riverside County Number Percent Under 18 18 to 24 25 to 44 45 to 64 65 and older 8,368 3,037 7,597 11,348 11,300 20.1% 7.3% 18.2% 27.2% 27.1% 71,812 28,523 89,172 103,475 93,891 18.6% 7.4% 23.0% 26.7% 24.3% 613,823 236,238 654,005 581,423 352,375 25.2% 9.7% 26.8% 23.8% 14.5% Source: American Community Survey, 5 -Year Est., 2020. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 14 Household Type and Tenure • Families with children are less represented in La Quinta and the CVAG Cities than in the county. In 2020, 23.6 percent of households in La Quinta were families with children, which was slightly higher than in the CVAG Cities (20.8 percent) but lower than in Riverside County (37.2 percent) (Table 5). • Families without children comprise 43.7 percent of the households in La Quinta, which is a higher share than in the CVAG Cities (35.6 percent) and Riverside County (36.1 percent). • La Quinta has a slightly higher percentage of owner -occupied households (72.4 percent) than the CVAG Cities (67.2 percent) and Riverside County (67.5 percent) (Figure 1). Table 5: Household by Type, 2020 La Quinta CVAG Cities Riverside County Number Percent Number Percent Number Percent Families with Children Families without Children Single -Person Household Other Non -Family Household 3,852 7,127 4,517 796 23.6% 43.7% 27.7% 4.9% 33,144 20.8% 56,940 35.6% 58,422 36.6% 11,216 7.0% 273,902 265,556 156,654 40,301 37.2% 36.1 % 21.3% 5.5% Source: American Community Survey, 5 -Year Est., 2020. Figure 1: Housing Tenure, 2020 w 100% 0 a 80% = 60% a- ) a 40% U U O 20% 0 0% N La Quinta N CO CVAG Cities Riverside County • Owner Occupied Renter Occupied Source: American Community Survey, 5 -Year Est., 2020. Income • In 2020, La Quinta's median income was $75,724 (Table 6). La Quinta's median income was higher than the CVAG Cities median income of $54,916 and somewhat higher than Riverside County's median income of $70,732. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 5 • La Quinta also has a larger share of households earning $125,000 or more annually and a smaller share of households earning less than $30,000 per year than the CVAG Cities and Riverside County. In 2020, 17 percent of La Quinta households earned less than $30,000 per year compared to 29 percent of households in the CVAG Cities and 21 percent of households in Riverside County (Table 7). In the same year, 29 percent of La Quinta households earned $125,000 or more each year compared to 19 percent of households in the CVAG Cities and 24 percent of households in Riverside County. • When controlling for household size, La Quinta has a higher percentage (70.6 percent) of moderate and above moderate -income households (earning 80 percent of the area median income or greater) than CVAG Cities (55.8 percent) and Riverside County (63.3 percent) (Figure 2). Likewise, the shares of households that are low income (14.1 percent), very low income (7.5 percent), and extremely low income (7.8 percent) are less in La Quinta than in the CVAG Cities and Riverside County. Table 6: Median Income, 2020 Median Income La Quinta CVAG Cities Riverside County $ 75,724 $ 54,916 $ 70,732 Source: American Community Survey, 5 -Year Est., 2020. Table 7: Households by Annual Income, 2020 Less than $30,000 $30,000 to $49,999 $50,000 to $74,999 $75,000 to 124,999 $125,000 or More La Quinta Number Perce 2,725 17% 46,358 29% 2,825 17% 27,657 17% 2,545 16% 26,084 16% 3,458 21% 29,632 19% 4,739 29% 29,991 19% 151,767 21% 111,238 15% 124,844 17% 172,337 23% 176,227 24% Source: American Community Survey, 5 -Year Est., 2020. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 16 i % Occupied Households 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 0 N Figure 2: Households by Adjusted Income, 2018 Extremeley Low (0-30% AMI) • La Quinta 0 co N - Very Low (30-50% AMI) CVAG Cities Source: HUD, Comprehensive Housing Affordability Strategy, 2018. CO O CO - - 0 M O Low Moderate and Above (50-80%) Moderate (>80% AMI) • Riverside County Demographics and Households Conclusions • There is likely a demand for a variety of new housing in La Quinta. Overall demand for housing is demonstrated by the significant growth in population and households in La Quinta and by the regional pressures for housing exacerbated by the ongoing housing crisis. (The extent of demand for housing in La Quinta is further explored in the Residential Market Demand Section). • La Quinta's household demographics suggest there is a demand for a mix of larger housing types to accommodate families with children and smaller housing types to accommodate families without children and single -person households. However, La Quinta has a relatively large population of families without children, which may require less space and drive demand for smaller units. Demand for smaller units may also be driven by La Quinta's senior and aging population. And while most city residents are homeowners, a significant portion of households rent their home, indicating demand for both ownership and rental housing. Single-family homes and large condominiums, townhomes, and rental multifamily units are likely needed to support families with children in La Quinta. Smaller for -sale and rental multifamily units would also be needed for families without children, single -person households, and seniors. Economic Conditions This section describes La Quinta's employment trends compared to Riverside County. The analysis uses the publicly available data source, Longitudinal Employer -Household Dynamics (LEHD) and HdL data provided by the city. 983 Osos Street, San Luis Obispo, CA 93401 1(805) 595 1345 1 lisawiseconsulting.com 1 7 Employment Overview • In 2019, there were an estimated 11,672 jobs in La Quinta, and 56 percent of these jobs (6,488 jobs) are estimated to be in the Highway 111 Plan Area (Table 8).1 • The total number of jobs in La Quinta accounts for 8.8 percent of total jobs in the CVAG Cities and 1.6 percent of total employment in Riverside County (Table 9). • From 2011 to 2019 total employment in La Quinta decreased by 8 percent, while employment grew by 11 percent in the CVAG Cities and by 28 percent in Riverside County (Table 10). Table 8: Total La Quinta Employment, 2019 Total Jobs % La Quinta Highway 111 Plan Area La Quinta 6,488 11,672 56% 100% Note: The Highway 111 Plan Area is approximated using the Census Block Group 1, Census Tract 451.21 and Block Group 3, Census Tract 452.15, Riverside County, California. Source: LEND, 2019. 'The Highway 111 Plan Area is approximated using the Census Block Group 1, Census Tract 451.21 and Block Group 3, Census Tract 452.15, Riverside County, California. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 8 Table 9: Total Employment, CVAG Cities and Riverside County, 2019 Total Job % Riverside County La Quinta Desert Hot Springs Palm Springs Cathedral City Rancho Mirage Palm Desert Indian Wells Indio Coachella CVAG Cities Riverside County 11,672 3,687 28,521 9,934 16,175 29,284 3,862 20,767 8,973 132,875 745,957 8.8% 2.8% 21.5% 7.5% 12.2% 22.0% 2.9% 15.6% 6.8% 100.0% N/A 1.6% 0.5% 3.8% 1.3% 2.2% 3.9% 0.5% 2.8% 1.2% 17.8% 100.0% Note: The Highway 111 Plan Area is approximated using the Census Block Group 1, Census Tract 451.21 and Block Group 3, Census Tract 452.15, Riverside County, California. Source: LEHD, 2019. Table 10: Employment Growth, CVAG Cities and Riverside County, 2011 to 2019 2011 Number 2019 Change 2011 to 20191 Number Number % Change La Quinta 12,721 Desert Hot Springs 3,232 Palm Springs 24,016 Cathedral City 9,489 Rancho Mirage 15,033 Palm Desert 28,565 Indian Wells 4,724 Indio 15,067 Coachella 7,105 CVAG 119,952 Riverside County 581,470 11,672 3,687 28,521 9,934 16,175 29,284 3,862 20,767 8,973 132,875 745,957 -1,049 455 4,505 445 1,142 719 -862 5,700 1,868 12,923 164,487 5% 8% 3% -18% 38% 26% 11% 28% Note: The Highway 111 Plan Area is approximated using the Census Block Group 1, Census Tract 451.21 and Block Group 3, Census Tract 452.15, Riverside County, California. Source: LEHD, 2011, 2019. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 9 Employment by Industry Sector • La Quinta's largest industries include Accommodation & Food Services, Educational Services, Retail Trade, and Health Care & Social Assistance (Table 11). These four industry sectors are also the top industries in Riverside County, although the relative share of employment differs between the city and county for each sector. In 2019, Accommodation & Food Services jobs accounted for 27.7 percent of total jobs in La Quinta and 12.5 percent of jobs in Riverside County. Educational Services jobs accounted for 17.8 percent of jobs in La Quinta and 10.1 percent of jobs in the County. Retail Trade jobs accounted for 15.9 percent of jobs in La Quinta and 11.1 percent of jobs in the county. Lastly, Health Care & Social Assistance jobs account for 9.2 percent of jobs in La Quinta and 14.5 percent of jobs in the county. • Although the top three industry sectors employing the most people (Accommodation & Food Services, Educational Services, and Retail Trade) remained the largest sectors in La Quinta from 2011 to 2019, the number of jobs in each sector decreased during this period in La Quinta. From 2011 to 2019 the Accommodation & Food Services sector lost 1,107 jobs (25.5 percent decrease), Educational Services lost 151 jobs (6.8 percent decrease), and Retail Trade lost 725 jobs (28.1 percent). • Health Care & Social Assistance is a large and growing industry in La Quinta. From 2011 to 2019, the sector grew by 674 jobs, an increase of 168.5 percent. La Quinta's growth in the Health Care & Social Assistance sector outpaced growth in Riverside County where Health Care & Social Assistance employment increased by 76.8 percent from 2011 to 2019. • Arts, Entertainment, and Recreation employment is highly concentrated in La Quinta. While the sector represents a moderate amount of employment in La Quinta (7.6 percent of total jobs) Arts, Entertainment, and Recreation jobs in La Quinta represent an outsized share of jobs in the sector for the county. In 2019, La Quinta's total employment accounted for 1.6 percent of total employment for the county. However, Arts, Entertainment, and Recreation jobs in La Quinta account for 5.4 percent of jobs in the sector for the county (Figure 3). Accommodation & Food Services is also notably concentrated in La Quinta. Accommodation & Food Services jobs accounted for 3.5 percent of jobs in the sector across the county. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 110 Table 11: La Quinta Employment by Industry Sector, 2011 to 2019 2011 2019 Change 2011 to 2019 Number Percent Number Percent Number Percent Accommodation & Food Services Educational Services Retail Trade Health Care & Social Assistance Arts, Entertainment, & Recreation Administration & Waste Management Construction Other Services Professional & Technical Services Real Estate Finance & Insurance Information Public Administration Wholesale Trade Manufacturing Utilities Transportation & Warehousing Agriculture & Forestry Mining Management of Companies 4,342 2,225 2,582 400 667 460 370 425 347 165 193 49 136 148 46 91 39 34.1% 17.5% 20.3% 3.1% 5.2% 3.6% 2.9% 3.3% 2.7% 1.3% 1.5% 0.4% 1.1% 1.2% 0.4% 0.7% 0.3% 24 0.2% 0.0% 12 0.1% 3,235 2,074 1,857 1,074 892 511 440 350 321 217 148 114 114 104 91 77 31 22 27.7% 17.8% 15.9% 9.2% 7.6% 4.4% 3.8% 3.0% 2.8% 1.9% 1.3% 1.0% 1.0% 0.9% 0.8% 0.7% 0.3% 0.2% 0.0% 0.0% -1,107 -25.5% -151 -6.8% -725 -28.1% 674 168.5% 225 33.7% 51 11.1% 70 18.9% - 75 -17.6% - 26 -7.5% 52 31.5% -45 -23.3% 65 132.7% -22 -16.2% -44 -29.7% 45 97.8% - 14 -15.4% - 8 -20.5% - 2 -8.3% 0 0.0% -12 -100.0% Source: LEHD, 2011, 2019 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 111 Table 12: Riverside County Employment by Industry Sector, 2011 to 2019 2011 2019 Change 2011 to 2019 Number Percent Number Percent Number Percent Health Care & Social Assistance Accommodation & Food Services Retail Trade Educational Services Construction Administration & Waste Management Transportation & Warehousing Manufacturing Public Administration Wholesale Trade Professional & Technical Services Other Services Arts, Entertainment, & Recreation Agriculture & Forestry Finance & Insurance Real Estate Information Utilities Management of Companies Mining 61,087 10.5% 68,997 11.9% 82,169 14.1% 67,761 11.7% 33,602 5.8% 35,130 6.0% 20,453 3.5% 39,733 6.8% 34,922 6.0% 22,625 3.9% 18,789 3.2% 29,384 5.1% 19,543 3.4% 13,783 2.4% 10,944 1.9% 7,613 1.3% 7,105 1.2% 4,488 0.8% 2,937 0.5% 405 0.1% 107,974 93,546 82,809 75,087 72,131 52,394 48,728 45,291 32,683 26,617 23,064 21,593 16,588 12,430 10,360 10,311 6,527 4,359 3,049 416 14.5% 12.5% 11.1% 10.1% 9.7% 7.0% 6.5% 6.1% 4.4% 3.6% 3.1% 2.9% 2.2% 1.7% 1.4% 1.4% 0.9% 0.6% 0.4% 0.1% 46,887 76.8% 24,549 35.6% 640 0.8% 7,326 10.8% 38,529 114.7% 17,264 49.1% 28,275 138.2% 5,558 14.0% -2,239 -6.4% 3,992 17.6% 4,275 22.8% -7,791 -26.5% -2,955 -15.1% -1,353 -9.8% - 584 -5.3% 2,698 35.4% - 578 -8.1% - 129 -2.9% 112 3.8% 11 2.7% Source: LEHD, 2011, 2019 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 112 Figure 3: La Quinta Industry Employment Share of Riverside County Industry Employment, 2019 La Quinta Industry % of County Industry '4^60, PGG 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% N N 0 08-2 N co r` co o c iiii i —1'1 H —.1- O O o 0 o eo M M CV oci o I I 1 ■ O ■ . . ci _ 0 0 cq ,\°‹, \G°5 \G�5 •tae �`°5°c `G�5 �Ge \G°5 �G° O.0'�•\°c aa° • i6(‘�`\� co- y\�� ,\�� ° 5 ��° °°a 0 mea a \s reg �� `m �P ?pc, 0—°\°�a .cc ��• °����° �G° P\� O �CGe °Gr��°o� �\. �r \`GP ���J q� ° o�m\ Gay° o e P °� 0�- Q�°\G �0 •0 •S`� a Source: LEND, 2019 Firms by Industry Sector • There are an estimated 1,340 firms in La Quinta (Table 13). • Nearly half of the businesses in La Quinta (48.9 percent of total firms) are involved in Retail Trade. Accommodation & Food Services comprise 11.9 percent of all firms, and Manufacturing is the third most represented industry sector at 6.6 percent of total firms. • According to the city's most recent comprehensive annual financial report (CAFR, fiscal year 2019/2020), La Quinta's largest private firms are large retailers, including Wal-Mart, Costco, Home Depot, Lowe's Home Improvement, and Target (Table 14). Other top employers in La Quinta include the La Quinta Resort and Club and Traditions Golf Club. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 13 Table 13: La Quinta Businesses by Industry Sector, 2022 Industry Sector # Firms % Firms Retail Trade Accommodation & Food Services Manufacturing Professional & Technical Services Arts, Entertainment, & Recreation Wholesale Trade Other Services (except Public Admin) Other Industry Health Care & Social Assistance Administration & Waste Management Real Estate Educational Services Construction Agriculture & Forestry Information Transportation & Warehousing Finance and Insurance Utilities Total Firms 655 48.9% 160 11.9% 88 6.6% 84 6.3% 77 5.7% 70 5.2% 67 5.0% 27 2.0% 21 1.6% 18 1.3% 17 1.3% 17 1.3% 15 1.1% 8 0.6% 8 0.6% 3 0.2% 3 0.2% 2 0.1% 1,340 Source: City of La Quinta, 2022. Table 14: La Quinta's Top Private Employers FY 2019/20 Firm Employees La Quinta Resort & Club/PGA West Walmart Supercenter Costco Wholesale The Home Depot Target Lowe's Traditions Golf Club 1,412 300 290 212 180 150 120 Source: City of La Quinta CAFR, fiscal year 2019/2020 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 114 Residential Market Demand This section reviews La Quinta's housing inventory, sales prices and rents, and trends in housing development compared to the CVAG Cities and Riverside County. This section also provides an estimated number of housing units that will be in demand by 2045 in the Highway 111 Project Area. The analysis relies on data from ACS, Redfin, Zillow, and the Southern California Association of Governments (SCAG) growth forecasts, and residential pipeline data from the city. Residential Market Conditions • Home prices in La Quinta are much higher than in the overall county. As of April 2022, the median sale price in La Quinta was $821,750, and the median sales price in Riverside County was $602,500 (Figure 4). • Condominiums in La Quinta are also more expensive than in Riverside County, and as of 2022, the median sales of La Quinta condominiums were slightly higher than single-family homes in Riverside County. • Over the last decade, the median sales price for single-family homes increased by 91 percent in La Quinta and 101 percent in Riverside County. Prices for condominiums increased at a similar rate during this period. From 2012 to 2022, the median sales price increased by 87 percent in La Quinta and by 106 percent in Riverside County. • Rents are also higher and increasing at a faster pace in La Quinta than in Riverside County. The average rent in La Quinta is $3,650 compared to $2,518 for Riverside County (Figure 5). From 2014 to 2022, average rent has increased by 116 percent in La Quinta and by 72 percent across all of Riverside County. Figure 4: Median Single -Family and Condominium Sales Prices, 2012 to 2022 Nominal Dollars $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- $821,750 • • • $619,000 $602,500 $445,750 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD La Quinta Single -Family Riverside County Single -Family Riverside County Condo — - - • La Quinta Condo Source: Redfin, April 2022. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 115 Figure 5: Average Rent, 2014 to 2022 Nominal Dollars $4,000 $3,500 $3,650 $3,000 $2,500 $2,518 $2,000 $1,500 $1,000 $500 $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 —La Quinta Riverside County Note: Data is based on the Zillow Observed Rent Index (ZORI) aggregated by zip code. See www.zillow.com for methodology details. Source: Zillow, 2022. Residential Development Trends and Projected Growth This section examines La Quinta's estimated share of housing units in the Coachella Valley Region, recent housing unit development trends in the city, and projections for future housing units. • La Quinta's 2020 occupied -housing unit count of 16,292 units account for 10.2 percent of units in the CVAG Cities and 2.2 percent of Riverside County's occupied -housing stock (Table 15). • Over the last decade, La Quinta added 2,634 occupied -housing units and the CVAG Cities together added 30,943 units (Table 16). La Quinta's housing unit growth represents 8.5 percent of the total CVAG unit growth from 2010 to 2020. • La Quinta has a relatively large number of housing units that are used as a second homes or seasonal housing. In 2020, the CVAG Cities' share of total housing that was used as secondary/seasonal housing was 16.9 percent compared to six percent for Riverside County (Table 17). La Quinta's share of secondary/seasonal housing is even larger than the CVAG Cities at 21.2 percent. • From 2010 to 2021, La Quinta granted 1,973 new housing unit construction permits (Table 18). 79.3 percent of permits were for single-family residences and 20.7 were for multifamily units. The share of single-family permits for multifamily units in La Quinta is similar to the share in the CVAG Cities where 83.7 percent of permits were for single-family homes and Riverside County where 81.6 percent of permits were for single-family units. • There are currently new 20 developments containing a total of 2,080 housing units that are proposed, approved, or under construction in La Quinta (Table 19). • From 2016 through 2045, SCAG estimates that the CVAG Cities will add 96,700 more households, which would represent a 71 percent increase from the 2016 household count (Table 20). 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 116 Riverside County Growth Table 15: Total Occupied -Housing Units, 2020 La Quinta CVAG Cities Riverside County 16,292 159,722 736,413 10.2% 100.0% N/A 2.2% 21.7% 100.0% Source: American Community Survey, 5 -Year Est., 2020. Table 16: Occupied -Housing Units Growth, 2000 to 2020 Growth 2020 2010 to 2020 % CVAG Growth La Quinta CVAG Cities Riverside County 13,658 128,779 666,906 16,292 159,722 736,413 2,634 30,943 69,507 8.5% 100.0% N/A 3.8% 44.5% 100.0% Source: American Community Survey, 5 -Year Est., 2020. Table 17: Secondary/Seasonal Housing Units, 2020 Occupied Secondary/ Other Units Seasonal Vacant Units Units s % Secondary/ Seasonal of Total Unit La Quinta CVAG Cities Riverside County 16,292 159,722 736,413 5,479 36,865 50,655 4,104 21,384 57,998 25,875 217,971 845,066 21.2% 16.9% 6.0% Note: "Other Vacant" includes units that are vacant and not used, vacant due to transition period between tenants, vacant and for sale, and vacant but used for migrant workers. Source: American Community Survey, 5 -Year Est., 2020. Table 18: La Quinta Building Permits for New Housing Construction, 2010 to 2021 Single -Family Units Multifamily Total a um umber Percent 1,565 79.3% 408 20.7% 1,973 100.0% 11,906 2,315 14,221 83.7% 16.3% 100.0% verside County Number Percent 67,947 15,347 83,294 81.6% 18.4% 100.0% Source: Source: HUD SOCDS, 2022 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 117 Table 19: La Quinta Residential Pipeline Projects, 2022 Mixed -Use nits Projects Residential Units Projects Proposed Approved Under Construction Total 733 8 741 2 1 3 101 245 993 1.339 2 5 10 17 Total Mixed -Use and Residential Units Total Mixed -Use and Residential Projects 2.080 20 Source: City of La Quinta, 2022 Table 20: SCAG Household Projections, 2016 to 2045 CVAG Cities Riverside County 135,800 716,000 232,500 1,086,000 96,700 370,000 71% 52% Source: Southern California Association of Governments, 2020 Residential Market Demand Market Demand Methodology This section describes the methodology used to estimate the demand for additional housing units in the Highway 111 Plan Area by the year 2045. The analysis is based on the latest household projections by SCAG and relies on household trends data from the American Community Survey (ACS) described previously in this report. The first step for calculating residential demand for the Plan Area was to create a citywide residential demand estimate. To calculate the future residential demand for the entire city, SCAG projections for future households were aggregated by city to create a total estimate for the CVAG Cities Region. To create an estimate for new housing units, one household was assumed to equal one residential unit. Next, SCAG projections were adjusted from their original projection timeline of 2016 to 2045. A new timeline for 2022 to 2045 was created by taking an annual average and multiplying the result by the number of years between 2022 and 2045. From the CVAG Cities estimate for future housing units, an estimate for demand for new units in La Quinta was calculated as a low and high range, which were based on two potential scenarios of future housing unit growth in La Quinta as described below. • The low estimate assumes that through the year 2045, housing unit growth in La Quinta will be proportionate to its share of the CVAG Cities occupied -housing unit growth from 2010 to 2020. During this period, La Quinta's share of the CVAG Cities occupied -housing unit growth was 8.5 percent. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 118 • The high estimate assumes that through the year 2045, housing unit growth in La Quinta will remain proportionate to its current share of the CVAG Cities occupied -housing units. In 2020, La Quinta occupied -housing units accounted for 10.2 percent of units in the CVAG Cities. Units from La Quinta residential pipeline projects (Table 18), were assumed to reduce the estimated future demand for housing. The total number of units in projects that are proposed, approved, and under construction were subtracted from the low and high demand estimates to create a final citywide demand estimate. From the citywide demand estimate, an estimate of the demand for different housing types was created. An estimate of the share of citywide demand for single-family and multifamily development assumed that the city maintained its trend in residential permitting from the previous decade, in which 79.3 percent of total residential development was permitted for single-family homes and 20.7 percent was permitted for multifamily (Table 17). A final demand estimate for the Highway 111 Plan Area was created by assuming the share of citywide units allocated to the Plan Area would be proportionate to the Plan Area's current share of the maximum allowed residential densities across the city. The maximum allowed residential densities by parcel are established by the city's zoning code, which includes the standards set forth by the Mixed -Use Overlay District that applies to most of the Plan Area. Approximately 14.5 percent of the city's maximum allowed residential density is located in the Plan Area. Market Demand Estimate • By the year 2045, La Quinta could have a citywide demand for approximately 4,439 to 5,743 new housing units, or between 193 and 250 new housing units each year (Table 21). • Among the 2045 citywide demand, there is an estimated demand for between 3,520 to 4,554 single- family units and 919 to 1,189 multifamily units (Table 22). • From 2022 to 2045, the Highway 111 Plan Area could have demand for approximately 644 to 833 new housing units, or between 28 and 36 new housing units each year (Table 23). • The Highway 111 Plan Area could absorb up to 70 percent of the estimated demand for multifamily units in the city by 2045. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 119 Table 21: La Quinta Residential Market Demand Estimate, 2022 to 2045 CVAG Cities Assumptions 2016 to 2045 Projected Net New Households 2016 to 2045 Average Annual Projection 2022 to 2045 Net New Households 96,700 3,334 76,693 La Quinta Assumptions 2010 to 2020 City Share of CVAG Household Growth 2020 City Share of CVAG Households La Quinta Pipeline Project Units 8.5% 10.2% 2,080 La Quinta Demand Estimate 2022 - 2045 Low Estimate, Net New Housing Units Annual Average High Estimate, Net New Housing Units Annual Average 4,439 193 5,743 250 Table 22: La Quinta Single -Family and Multifamily Demand Estimate, 2022 to 2045 Share Low Estimate High Estimate Single -Family Units Multifamily Units 79.3% 20.7% 3,520 919 4,554 1,189 Table 23: Highway 111 Plan Area Residential Market Demand Estimate, 2022 to 2045 ighway 111 Plan Area Assumptions Share of Citywide Multifamily Demand 14.5% Highway 111 Plan Area Demand Estimate 2022 - 2045 Low Estimate, Net New Housing Units Annual Average High Estimate, Net New Housing Units Annual Average 644 28 833 36 Office Market Demand This section reviews La Quinta's employment in office -based industries and provides an estimate of demand for office square feet through the year 2045. The analysis relies on data from LEHD and development pipeline data from the city. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 20 Office -based Employment • Office jobs account for a small percentage of total jobs in La Quinta. Office -based jobs generally include jobs in professional and technical services, information, finance and insurance, real estate, and management of companies. Together jobs in these sectors represented 6.9 percent of total jobs in La Quinta (Table 24), which was comparable to the share in Riverside County where office - based jobs account for 7.1 percent of total jobs (Table 12). Office -based firms in La Quinta account for 8.4 percent of total firms in the city. • Office -based jobs in La Quinta are typically in small professional offices such as design firms, accountants, realtors, and attorneys. • In the Highway 111 Plan Area, there are an estimated 332, which account for 42 percent of the city's total office jobs (Table 25). Table 24: La Quinta Office -based Jobs and Firms, 2019 Jobs % Jobs Firms % Firms Information Finance & Insurance Real Estate Professional & Technical Services Management of Companies Total 114 148 217 321 0 800 1.0% 1.3% 1.9% 2.8% 0.0% 6.9% 8 0.6% 3 0.2% 17 1.3% 84 6.3% 0 0.0% 112 8.4% Source: LEHD 2019; City of La Quinta, 2022. Table 25: Office -based Jobs, Highway 111 Plan Area, 2019 Office - based Jobs % La Quinta Highway 111 Plan Area La Quinta 332 800 42% 100% Note: The Highway 111 Plan Area is approximated using the Census Block Group 1, Census Tract 451.21 and Block Group 3, Census Tract 452.15, Riverside County, California. Source: LEHD, 2019. Office Development Trends and Projected Growth • Data from the city shows that there are no office development projects that are currently planned or under construction in La Quinta. • According to SCAG, the total projected employment for the CVAG Cities is 67,300 net new jobs from 2016 to 2025 (Table 26). 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 21 Table 26: SCAG Employment Projections, 2016 to 2045 Jobs Jobs Net New Jobs 2016 2045 2016 to 2045 Number Number Number Percent CVAG Cities Riverside County 165,200 743,000 232,500 1,103,000 67,300 360,000 41% 48% Source: Southern California Association of Governments, 2020 Office Demand Estimate Market Demand Methodology This section describes the methodology used to estimate the demand for net new office space in the Highway 111 Project Area by the year 2045. The analysis is based on the latest employment projections by SCAG and relies on LEHD employment data described previously in this report. The first step for calculating office space demand for the Plan Area began with creating a citywide demand estimate. To calculate the future office demand for the entire city, SCAG projections for future employment were aggregated by city to create a total estimate for the CVAG Cities Region. Next, SCAG projections were adjusted from their original projection timeline of 2016 to 2045. A new timeline for 2022 to 2045 was created by taking an annual average and multiplying the result by the number of years between 2022 and 2045. Using the adjusted CVAG employment projections, an estimate of future new office jobs in La Quinta was created assuming that La Quinta's share of total CVAG Cities employment (8.8 percent, Table 9) would remain constant in the future and that the share of office -based jobs in La Quinta (6.9, Table 23) would also remain constant. From the estimate of future La Quinta office jobs, a demand estimate for office square feet was calculated as a low and high range, which were based on two potential scenarios of office growth. The low estimate assumes that each employee will require 75 square feet of office space, and the high estimate assumes that each employee will require 250 square feet of office space. Lastly, the demand estimate for office space in the Highway 111 Plan Area was calculated assuming that the Plan Area's share of the city's office jobs (42 percent, Table 24) would remain constant. Office Market Demand Estimate • By the year 2045, the City of La Quinta could have demand citywide for approximately 24,307 to 81,025 square feet of office space (Table 28). • From 2022 to 2045, the Highway 111 Pan Area could have a demand for approximately 10,209 to 34,030 square feet of office space (Table 29). • Based on existing office -based employment in La Quinta, the low end of the office demand estimate may be more likely as demand for future office space will likely be limited to smaller office spaces that service small professional firms. The likelihood of needing office space for large employers appears low. However, the exception to this is the potential for La Quinta to attract large medical offices. Based on La Quinta's older and aging population (Table 4) and the growth of the health care industry sector (Table 11), La Quinta may attract medical offices, such as Kaiser or any other medical group, with large space requirements. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 122 Table 27: La Quinta Office -based Job Projections, 2022 to 2045 CVAG Cities Assumptions 2016 to 2045 Projected Net New Jobs 2016 to 2045 Average Annual Projection 2022 to 2045 Net New Jobs 67,300 2,321 53,376 La Quinta Assumptions 2019 La Quinta Total Jobs Share of Total CVAG Jobs 2019 La Quinta Office -based jobs Share of La Quinta Total Jobs 8.8% 6.9% Projected La Quinta Net New Office -based Jobs Net New Jobs 2022 to 2045 324 Source: Southern California Association of Governments, 2020; LWC, 2022. Table 28: La Quinta Office Demand Estimate, 2022 to 2045 Projected La Quinta Net New Office -based Jo Net New Jobs 2022 to 2045 324 Office Sf. Assumptions Low Estimate Office sf. per Employee High Estimate Office sf. per Employee 75 250 La Quinta Demand Estimate 2022 - 2045 Low Estimate, Net New Office Sf. High Estimate, Net New Office Sf. 24,307 81,025 Table 29: Highway 111 Plan Area Office Demand Estimate, 2022 to 2045 Share of Citywide Office Jobs 42% Highway 111 Plan Area Demand Estimate 2022 - 2045 Low Estimate, Net New Office Sf. 10,209 High Estimate, Net New Office Sf. 34,030 Hotel Market Demand This section reviews trends in La Quinta's hotel room inventory and hotel development compared to Riverside County and cities within Coachella Valley. This section also provides opportunities for hotel development in the form of an estimated number of net new hotel rooms that will be in demand in La Quinta by 2045. The analysis relies on data from the Visit Greater Palm Springs Visitor Bureau, Transient Occupancy Tax Revenues (TOT), and residential pipeline data from the city. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 23 Hotel Room Inventory • La Quinta has an estimated 1,214 hotel rooms, which accounts for approximately 6.4 percent of the total number of hotel rooms for the Greater Palm Springs Region' (Table 30). • Lodgings in La Quinta are driven by seasonal, leisure -based tourism with the high season generally beginning in November and ending in May.2 Visitors to La Quinta play golf, attend the Coachella and Stagecoach Music Festivals, engage in outdoor recreational activities, and visit shops and restaurants. • La Quinta's largest hotel property is the La Quinta Resort & Club, which contains 785 rooms and represents 65 percent of all hotel rooms in the city. The La Quinta Resort & Club is also the city's oldest hotel and was built in 1926 (Table 31). • From 2006 to 2020, La Quinta added a total of five hotels, which together added a total of 429 hotel rooms to La Quinta, an increase of 55 percent in the city's total hotel inventory. • Three of the hotels (the Embassy Suites, the Homewood Suites, and the Residence Inn) are mid - tier hotels with between 100 and 150 rooms. One property, Casitas Rosas consists of 13 rental condos. And the Chateau at Lake La Quinta is a small, boutique property with 24 rooms. • La Quinta's newest hotel, the Residence Inn, was built in 2020 and is the only hotel property within the Highway 111 Plan Area. The Home Suites property is located nearby and sits just outside the northwest corner of the Plan Area boundaries. 1 Greater Palm Springs includes the CVAG Cities expect for the City of Coachella. The Greater Palm Springs cities include La Quinta, Desert Hot Springs, Palm Springs, Cathedral City, Rancho Mirage, Palm Desert, Indian Wells, and Indio. 2 Urban Land Institute, TAP Report, 2018. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 24 Table 30: Greater Palm Springs Hotel Inventory, 2022 Hotel Rooms Share La Quinta Palm Springs Palm Desert Rancho Mirage Indio Indian Wells Cathedral City Desert Hot Springs Total 1,214 6,243 4,378 2,016 1,979 1,506 1,061 627 19,024 6.4% 32.8% 23.0% 10.6% 10.4% 7.9% 5.6% 3.3% Note: Greater Palm Springs includes the cities of La Quinta, Desert Hot Springs, Palm Springs, Cathedral City, Rancho Mirage, Palm Desert, Indian Wells, and Indio. Source: Visit Greater Palm Springs, 2022. Table 31: La Quinta Hotel Inventory, 2022 Year Opened Rooms La Quinta Resort & Club, Curio Collection by Hilton Embassy Suites La Quinta Hotel & Spa by Hilton Homewood Suites La Quinta by Hilton Casitas Las Rosas The Chateau at Lake La Quinta Residence Inn La Quinta by Marriott Total 1926 2006 2007 2009 2011 2020 785 155 129 13 24 108 1.214 Source: Visit Greater Palm Springs, 2022. Performance and Development Activity • Visitation to the Coachella Valley Region has decreased since the COVID-19 Pandemic and has not yet recovered to previous levels. From 2019 to 2020, the total number of visitors to the Coachella Valley shrank from 14.1 million to 8.6 million (Figure 6). From 2020 to 2021, visitation rebounded but was still 1.3 million visitors less than in 2019. • The most recent city budget actuals show that during the 2020/2021 fiscal year, La Quinta collected approximately $12 million in transit occupancy taxes (TOT), which includes collections from hotels, bed and breakfasts, and short-term rentals such as Airbnb rented properties (Figure 7). • TOT revenues during the 2019/2020 fiscal year show a notable drop from the previous year, paralleling trends in visitation to the Coachella Valley and revealing the impacts of the COVID-19 Pandemic on lodging in La Quinta. However, in the 2020/21 fiscal year, TOT revenues in La Quinta 983 Osos Street, San Luis Obispo, CA 93401 I (805) 595 1345 I lisawiseconsulting.com 125 rebounded higher than revenues prior to the pandemic. During the 2018/19 fiscal year La Quinta TOT revenues totaled $10.7 million compared to $12 million in the 2020/21 fiscal year. • From the 2011/2012 fiscal year to the 2020/2021 fiscal year, La Quinta TOT revenues grew by $6.9 million, an increase of 136 percent. • In recent years, TOT revenues collected from short-term rentals and bed and breakfasts have grown significantly while TOT revenues from hotels decreased somewhat. From the 2016/17 fiscal year to the 2020/21 fiscal year, TOT revenues from short-term rental and bed and breakfasts increased by 152 percent, and TOT revenues from hotels and resorts decreased by 12 percent (Figure 8). In the 2020/21 fiscal year, revenues for short-term rental and bed and breakfasts surpassed those for hotels and resorts. • There are two luxury hotels under construction in La Quinta: a 134 -room luxury hotel and a 200 - room lifestyle hotel (Table 32). Both hotels are on the SilverRock Resort property. Additionally, a previously proposed 2.8 hotel acre site was recently sold to a developer and the land may still be positioned for hotel development.' The hotel site was to be a part of the Centre at La Quinta, an approved development within the Highway 111 Plan Area and west of the Walmart. The hotel development was envisioned to be an extended stay hotel with a nationally recognized hotel brand. Figure 6: Greater Palm Springs Visitors, 2015 to 2021 Visitors (millions) 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 12.9 13.4 13.6 13.9 14.1 8.6 I 12.8 2015 2016 2017 2018 2019 2020 2021 Source: Visit Greater Palm Springs, 2022 https://www.prnewswire.com/news-releases/shopoff-realty-investments-sells-2-8-acre-hotel-parcel-in-la- q u i nta-ca-301509200. h tm I 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 26 Figure 7: La Quinta Total Transient Occupancy Tax, FY 2011/12 to FY 2020/21 Nominal Dollars (Millions) $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 $9.8 $10.7 $8.9 $6.6 $7.4 $7.6 $5.1 $5.7 $6.3 $12.0 ��0'` ��O�ti ��0�0 ��0,�� ��O,�h ��O,\co ��0,�'l ��0�(b ��0,�0 ��090 Source: City of La Quinta, 2022. Figure 8: La Quinta Transient Occupancy Tax by Source Nominal Dollars (Millions) $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 1 N K3 rn M fA ft N FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 FY 2020/21 • Hotels and Resorts Short Term Rentals and Bed and Breakfasts Source: City of La Quinta, 2022. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 127 Table 32: La Quinta Hotel Development Pipeline Property Name Status Details Hotel Rooms Former Centre at La Quinta Hotel Site SilverRock Proposed Under Construction Previously proposed 2.8 -acre hotel site that was recently sold to a developer and the land may still be positioned for development of a mid -tier hotel. Two hotels are currently being built. A 134 -room luxury hotel and a 200 -room lifestyle hotel. 125 334 Source: City of La Quinta, 2022. Hotel Demand Estimate Hotel Market Demand Methodology This section describes the methodology used to estimate demand for future hotel rooms in the Highway 111 Plan Area by the year 2045. The hotel demand analysis was based on hotel room inventory data provided by the Visit Greater Palm Springs Visitors Bureau and supplemented by data for hotel listings online. Historic hotel inventory trends were analyzed to determine the pace at which hotel rooms were added and for what types of hotel markets. Based on a review of the Highway 111 Plan Area amenities, commercial uses, urban form, and the siting of previous hotel development, it was determined that the Plan Area would most likely attract mid -tier hotels in the future assuming there are no structural changes in the Plan Area. The historic trend of development of mid -tier hotels in La Quinta and the Plan Area was used to estimate future demand in the city. The final demand estimate reflects impacts on future demand from hotel pipeline projects, which were assumed to reduce demand for hotel rooms. Data on TOT revenues were also considered as a factor for impacting future hotel inventory demand. Hotel Market Demand Estimate • Based on hotel room inventory trends from 2006 to 2020, La Quinta is estimated to add a 100 to 150 -room mid -tier hotel every five years (Table 33). • A 125 -room mid -tier hotel was recently proposed in the Highway 111 Plan Area and is likely still planned for development (Table 32). This hotel would likely absorb demand for a mid -tier hotel in La Quinta for the immediate next five years. • The growing popularity of short -stay vacation rental properties may reduce future demand for mid - tier hotel rooms and may change past trends of demand for a 100 to 150 -room mid -tier hotel in the city to beyond every five years. • By the year 2045, La Quinta may have demand for between one and three mid -tier hotels with 100 to 150 rooms. Based on the Highway 111 Plan Area's current share of mid -tier hotels located in the city, the Plan Area may absorb up to one mid -tier hotel through the year 2045. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 28 Table 33: La Quinta Mid -Tier Hotel Trends Assumption/Estimate Mid -Tier Hotel Room Growth, 2006 to 2020 Average Annual Room Growth Average 5 -year Room Growth 392 28 140 Retail Demand Estimate This section reviews La Quinta's retail sales and trends in retail development. This section also provides an estimate of demand for retail square feet by 2045 in the Highway 111 Project Area. The analysis relies on data from the California Department of Tax and Fee Administration, HdL, Esri, and residential pipeline data from the city. Retail Market Conditions National Retail Trends • La Quinta's local retail market is influenced by larger -scale national trends. Over the last decade, retail markets have been shifting and reorganizing in large part due to the growth of e-commerce. However, while increased online sales have reduced the demand for in-store sales, there has been an increased demand for experiential retail such as restaurants, bars, and gyms. • Over the last two years, the COVID-19 pandemic disrupted brick and mortar retail stores of all types and accelerated the shifting demand for online sales of physical goods. While the details of the long-term recovery from COVID-19 for the retail market are uncertain, the market will likely rebound while perhaps also changing to accommodate new trends enabled by new technologies and consumer expectations regarding convenience such as contactless shopping.' Retail Sales Trends • Taxable sales per household are higher in La Quinta than in the CVAG Cities. In 2018, La Quinta's taxable sales per household were estimated at $53,405 compared to $45,758 in the CVAG Cities (Figure 9). From 2015 to 2018, taxable sales per household remained higher in La Quinta than in the CVAG Cities. Taxable sales also grew at a faster rate of 10 percent compared to 3 percent for the CVAG Cities. • High taxable sales per household may demonstrate spending from regional shoppers and tourists in La Quinta. The city contains big box retail stores that attract shoppers from outside the city and within the local region. These stores include Costco, Target, Walmart, Lowe's, and Home Depot, which are located within the Plan Area. • Since 2003, La Quinta's sales tax revenues for general consumer goods increased significantly (Figure 10). Revenues from restaurants and hotels also increased steadily over the last two decades. There is a noticeable drop in revenues for most revenue categories in 2020, which aligns with trends due to the COVID pandemic. However, revenues appear to recover or exceed 2019 levels in 2021. lhttps://www2.deloitte.com/content/dam/Deloitte/us/Documents/consu mer-busi ness/us-cb-covid-recession-2020.pdf 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 29 Figure 9: Taxable Sales per Household, 2015 to 2018 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 Nominal Dollars $53,405 $45,758 $- 2015 2016 2017 2018 —La Quinta —CVAG Cities Note: Data is displayed through the year 2018 due to 2019 data reporting changes by the California Department of Tax and Fee Administration (CDTFA). Source: American Community Survey 5 -year Est. 2015, 2016, 2017, 2018; California Department of Tax and Fee Administration, 2022. Figure 10: Sales Tax Revenues by Spending Category, 2003 to 2021 Sales Tax Revenues $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 re re O� le re ee re re ec e0e ,�� ^� rb � h ^0 A 4> 0 O N re rLe rye re re rLe rLe 15)'\ re rLe `19'\ `19'\ 12' rye `19r\ (15)t\ rL00 15)1' — Autos And Transportation Business And Industry - Fuel And Service Stations — Restaurants And Hotels Source: HdL, 2022. Building And Construction Food And Drugs General Consumer Goods 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 30 Retail Demand per Household and Worker Estimate • Taxable spending per La Quinta household is estimated at approximately $27,363 per year (Table 34). • Due to the city's high level of taxable sales per household as described previously (Figure 9), and the presence of large retail stores in the city, it is likely that a large share of La Quinta household spending is spent within the city boundaries. The total estimated spending per La Quinta household within the city is estimated at $13,810.86 per year. • Workers employed in La Quinta but living elsewhere likely make purchases within the city during their workday or before or after they commute. Annual retail spending per worker is estimated to be 3,598 (Table 35). • Retail sales per square foot of space are typically around $325. Assuming average retail sales per square foot is $325, then the amount of square of retail generated per La Quinta household is approximately 42.49 and the amount of space per worker is 11.07 square feet (Table 36). Table 34: La Quinta Retail Spending per Household Estimate, 2022 Household -Serving Retail Category Spending per Capture Local Spending Household Rate per Household Groceries Restaurants Alcoholic Beverages Smoking Products Drug stores Pets Home Furnishings and Equipment Apparel and Services Computer, TV/Audio Education and Other Entertainment Total $8,470.96 65% $5,892.92 60% $1,001.78 60% $509.24 60% $2,829.50 60% $1,058.93 25% $3,106.54 25% $3,256.71 25% $416.93 25% $819.59 25% $27,363.10 $5,506.12 $3,535.75 $601.07 $305.54 $1,697.70 $264.73 $776.64 $814.18 $104.23 $204.90 $13,810.86 Source: Retail Goods and Services Expenditures, ESRI, 2022 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 31 Table 35: Retail Spending per Worker Estimate Retail Catego Weekly Weekly Annual Worker per Spending per Spending pet Spending (2022 $)2 Worker (2012 Worker 12 22 S1 Food & Beverage Stores Eating & Drinking Places Drug Stores Total $21.58 $28.86 $7.60 $58.04 $26.76 $35.79 $9.42 $71.97 $1,337.96 $1,789.32 $471.20 $3,598.48 Source: ICSC Research, 2012; Bureau of Labor Statistics, 2022. Note: An inflation factor of 1.24 was applied to the 2012 figures. 2Assumes there are 50 work weeks in a year. Table 36: Retail sf. per Household and Worker Estimate ssumptions/Estimate Local Spending per Household Local Spending per Worker Average Retail Sales per Sf. Demand Estimate Retail Sf. per Household Retail Sf. per Worker $13,810.86 $3,598.48 $325.00 42.49 11.07 Retail Demand per Visitor Estimate • As described in the previous Hotel Market Demand Section, Figure 6 shows that between 2015 and 2019 total visitors to the Greater Palm Springs Region increased from 12.9 million to 14.1 million. The average annual growth during this period before the COVID-19 pandemic was 300,000 net new visitors (Table 37). Assuming La Quinta reestablishes its average annual growth in new visitors prior to COVID-19, and La Quinta captures the same share of Greater Palm Springs visitors as the city's share of hotel rooms, then La Quinta could see an additional 441,600 annual visitors by the year 2045. • Visitor retail spending across the Greater Palm Springs Region totaled $2.58 billion in 2021 and averaged $201.56 per visitor. Assuming that retail sales average $325 per square foot of retail space, then each new visitor to La Quinta would generate demand for 0.62 square feet of retail (Table 38). 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 32 Table 37: Estimated Net New Visitors to La Quinta 2022 to 2045 Assumption/Estimate 2015 Greater Palm Springs Visitors 2019 Greater Palm Springs Visitors Annual Average Growth Projected Greater Palm Springs Visitors 2022-2045 La Quinta Share of Hotels La Quinta Visitors 12,900,000 14,100,000 300,000 6,900,000 6.4% 441.600 Table 38: Retail per sf. Visitor Estimate Assumption/Estimate Visitor Spending 2021 ($ billions) Food & Beverage Retail Total Greater Palm Springs Visitors 2021 Annual Retail Spending per Visitor Average retail sales per Sf. Demand Est. Sf. of Retail per Visitor $1.46 $1.12 $2.58 12,800,000 $201.56 $325.00 0.62 Source: Visit Greater Palm Springs, 2022, LWC Retail Development Trends • There are currently three retail developments in the La Quinta development pipeline that together total 137,672 square feet (Table 39). • The Panera Drive -Through is the only project of the three retail developments that is located in the Highway 111 Plan Area. The Pavilion Palms Shopping Center is proposed at the location 1.5 miles south of the Plan Area. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 33 Table 39: La Quinta Retail Pipeline Development Property Name Status Details Sf. of Retail Pavilion Palms Shopping Center Approved 125,000 square -foot shopping center including 12 pads for various commercial, retail, and restaurant uses, including drive-throughs 125,000 Caleo Bay Park Commercial Center Approved 8,337 Panera Drive Thru Under construction 4,335 square foot drive- through Panera restaurant 4,335 Total Sf. of Retail 137,672 Source: City of La Quinta, 2022. Retail Market Demand Estimate This section describes the methodology used to estimate demand for future retail space in the Highway 111 Plan Area by the year 2045. The analysis is based on data from Esri, ICSC Research, and Visit Greater Palm Springs. The first step in the analysis began by creating a citywide retail demand estimate, which was calculated as a low and high range. The upper and lower limit of the estimate is based on the ranges of projected future housing units presented earlier in the report. The demand estimate is also based on previously described projections for future La Quinta workers and visitors. • The citywide low estimate assumes that by the year 2045, La Quinta could have demand for 4,544 net new housing units, 324 net new office workers, and 441,600 annual visitors. • The citywide high estimate assumes that by the year 2045, La Quinta could have demand for 5,848 net new housing units, 324 net new office workers, and 441,600 annual visitors. A citywide estimate was created by multiplying the projected number of net new housing units, workers, and visitors by the respective demand per square foot assumptions (Table 36, Table 38). Retail pipeline projects were assumed to reduce demand for future retail square footage, and any square footage of retail projects that are proposed, approved, or under construction were subtracted from the low and high citywide estimates. From the citywide estimate range, a low and high estimate for the Highway 111 Plan Area was created by assuming that the Plan Area would capture a share of citywide demand based on the Plan Area's current share of citywide retail and service industry employment. Retail Demand Estimate • By the year 2045, La Quinta could have demand for between 332,886 and 388,290 square feet of retail (Table 40). • By the year 2045, the Highway 111 Plan Area, could have demand for between 163,114 and 190,262 square feet of retail (Table 41). This demand could be absorbed by an additional large big box store or supercenter. 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 34 Table 40: La Quinta Retail Demand Estimate, 2022 to 2045 Demand per Sf. Assumptions per Household/Housing Unit per Worker per Visitor 42.5 11.1 0.54 Net New Shoppers Estimates, 2022 - 2045 Households Low Estimate High Estimate Office Workers Visitors 4,544 5,848 324 441,600 Pipeline Development Retail Sf. proposed, approved, or under construction 137,672 La Quinta Demand Estimate 2022 - 2045 Low Estimate, Net New Retail Sf. Annual Average High Estimate, Net New Retail Sf. Annual Average 332,886 11,889 388,290 13,867 Table 41: Highway 111 Plan Area Retail Demand Estimate, 2022-2045 Highway 111 Plan Area Assumptions Share of Citywide Retail and Service Jobs 49% Highway 111 Plan Area Demand Estimate 2022 - 2045 Low Estimate, Net New Retail Sf. High Estimate, Net New Retail Sf. 163,114 190,262 983 Osos Street, San Luis Obispo, CA 93401 1 (805) 595 1345 1 lisawiseconsulting.com 1 35