Economics and Real Estate Conditions and Trends

Transcription

Plan Half Moon Bay
Economic and Real Estate
Conditions and Trends
Revised July 2014
planhmb.org
Half Moon Bay Economic and
Real Estate Conditions and Trends
Prepared for:
City of Half Moon Bay
Prepared by:
Economic & Planning Systems, Inc.
July 15, 2014
Table of Contents
INTRODUCTION AND FINDINGS ......................................................................................... 1 1. SOCIO-ECONOMIC CONTEXT .................................................................................... 5 Demographics .......................................................................................................... 5 Commute Patterns .................................................................................................. 10 Employment Trends ................................................................................................ 10 Growth Constraints ................................................................................................. 14 2. RESIDENTIAL USES ............................................................................................. 15 3. TOURISM AND HOSPITALITY USES ............................................................................ 21 Travel Expenditure Trends ....................................................................................... 22 Hospitality Uses ...................................................................................................... 24 4. RETAIL USES .................................................................................................... 35 5. OTHER COMMERCIAL USES AND ACTIVITIES ................................................................. 41 Office and Industrial Uses ........................................................................................ 41 Agricultural Uses ..................................................................................................... 45 Commercial Fishing and Related Activities .................................................................. 49 6. LONG-RANGE OUTLOOK ........................................................................................ 52 * This report has been revised since its initial publication in May 2014 to add clarification
on camping and a discussion on hotel classes to the Tourism and Hospitality Uses
analysis. These changes may be found in underlined text on the following pages:
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27
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33
List of Figures
Figure 1 Population, Household, and Income Trend ........................................................... 6 Figure 2 Median Age ..................................................................................................... 7 Figure 3 Age Distribution ............................................................................................... 7 Figure 4 Educational Attainment ..................................................................................... 8 Figure 5 Household Income Distribution .......................................................................... 9 Figure 6 Employment in Half Moon Bay ......................................................................... 11 Figure 7 Employment in Half Moon Bay (Top Industries) .................................................. 12 Figure 8 Occupations by Place of Work .......................................................................... 13 Figure 9 Housing Profile .............................................................................................. 15 Figure 10 Half Moon Bay Residential Units by Housing Format ............................................ 16 Figure 11 Half Moon Bay Residential Building Permits (new homes) .................................... 17 Figure 12 Half Moon BayAnnual Residential Sales Volume Trend (re-sales and new) .............. 18 Figure 13 Half Moon Bay Residential Sales Prices (re-sales and new) .................................. 19 Figure 14 Half Moon Bay Residential Sales Prices Per Square Foot (re-sales and new) ........... 20 Figure 15 US Travel Expenditure Trend and Forecast (2012$) ............................................ 22 Figure 16 California Travel Expenditure Trend and Forecast (2012$) ................................... 23 Figure 17 Hotel Occupancy Trends in the Coastside Market and San Francisco Bay Area ........ 25 Figure 18 Hotel Rates in the Coastside Market and San Francisco Bay Area (nominal) ........... 26 Figure 19 Half Moon Bay Hotels by Class ......................................................................... 27 Figure 20 Half Moon Bay Major Lodging Establishments ..................................................... 27 Figure 21 City of Half Moon Bay Taxable Hotel Room Revenue (nominal) ............................. 28 Figure 22 Room Night Demand Estimate ......................................................................... 34 Figure 23 Half Moon Bay Retail Clustering ....................................................................... 35 Figure 24 Retail Sales Distribution 2013 .......................................................................... 36 Figure 25 Sales Tax Revenue Trend (nominal) ................................................................. 37 Figure 26 Half Moon Bay Retail Real Estate Market Trend .................................................. 38 List of Figures (continued)
Figure 27 Half Moon Bay Retail Real Estate Market Statistics .............................................. 39 Figure 28 Downtown Retail Character ............................................................................. 39 Figure 29 Proposed Downtown Project ............................................................................ 40 Figure 30 Half Moon Bay Office Real Estate Market Trend .................................................. 41 Figure 31 Half Moon Bay Office Real Estate Market Statistics.............................................. 42 Figure 32 Miramonte Point Office Development ................................................................ 43 Figure 33 721 Purissima Office Development ................................................................... 43 Figure 34 Half Moon Bay Industrial Market Statistics ......................................................... 44 Figure 35 San Mateo County Agricultural Production Value (nominal) .................................. 45 Figure 36 San Mateo County Agricultural Value by Commodity (nominal $000’s) .................. 46 Figure 37 Aerial Image of Rocket Farms Half Moon Bay Facility .......................................... 47 Figure 38 Image of Bay City Flower Company Half Moon Bay Facility .................................. 48 Figure 39 California Landings by Pounds and Value (2013$) .............................................. 49 Figure 40 Bay Area Landings by Pounds and Value (2013$) ............................................... 50 Figure 41 Top California Fishing Ports in 2011 .................................................................. 51 Figure 42 Summary of Land Use Demand Outlook ............................................................ 53 INTRODUCTION AND FINDINGS
This report provides an overview of demographic and economic conditions and trends in Half
Moon Bay, to inform the General Plan Update study process. It has been prepared by Economic
& Planning Systems (EPS) as a sub-consultant to Dyett & Bhatia. The key findings are presented
below followed by more detailed analysis and data.
1. Half Moon Bay’s primary economic asset is the “quality of place” created by the
quaint beachside city’s small-town feel and sense of community, unique coastal
environment and recreation opportunities, and proximity to the broader San
Francisco Bay Area and nearby job centers.
Residents and workers in the Half Moon Bay community enjoy the tight-knit community,
open space, historic downtown, local businesses, and quality schools, among the many other
positive attributes of this Northern California city. The unique built and natural environments
of Half Moon Bay, centered on a traditional downtown center, attract a diversity of
inhabitants and workers, ranging from artists and academics to technology workers and
executives. Residents commonly report a “sense of real community” and exhibit pride in
their city. Visitors are well received in Half Moon Bay, where tourism is the leading local
economic engine (accommodations and food service is the top sector for employment). The
variety of lodging and eating establishments, shopping and recreation activities, and natural
beauty give Half Moon Bay great competitive strength in attracting tourism dollars.
2. The pace of development in Half Moon Bay has slowed in recent decades, the
population has aged, and household income growth has lagged behind San Mateo
County overall due to natural resource and infrastructure constraints as well as
restrictive local growth control policies.
Between 1980 and 2000 the population of Half Moon Bay increased by over 70 percent.
However, with development constraints resulting from the presence of natural resources and
infrastructure and the introduction of a more restrictive local growth control policy, growth
waned. Population decreased between 2000 and 2010. As young adults left the city for
education or to find work elsewhere, the median age of the city’s population increased more
rapidly than countywide. Middle-age Half Moon Bay residents suffered job losses during the
2008-09 recession and have struggled to get back into the labor force, at a point in their
careers when they should be enjoying peak earnings. The median household income in Half
Moon Bay in 2010 was about $18,000 less (in real terms) than in 2000.
3. Half Moon Bay remains a highly desirable residential community, but for a variety
of reasons homebuilding has been sluggish in recent years, with an average of only
24 new home permits issued annually 2003 through 2012 (versus an average of
about 56 annually since 1980).
As evidenced by historical population growth and home appreciation within the city, Half
Moon Bay is a very desirable place to live. Residents are attracted to a variety of city
characteristics, including the small-town feel, ocean and open space, downtown, and local
business community. Despite the demand for housing, residential development in recent
years has been relatively slow. Barriers to entry include cost of water supply connections,
1
City of Half Moon Bay Economic Analysis
regulatory hurdles, and financial feasibility constraints attributable to the high cost of
development.
4. While job growth in the City of Half Moon Bay’s traditional economic sectors
(agriculture and tourism) has not occurred in recent years, the city has supported
growth in professional and technical services, suggesting a potential transition in
the local economy.
Citywide employment trends between 2005 and 2012 reveal volatility in tourism-related
industries including accommodations, food services, and retail trade, primarily attributable to
the recession in 2008-09. The trend in agricultural employment over the same period is
consistently negative, including before and after the recent recessionary period. A notable
bright spot in the industry-level employment data is the professional, scientific, and technical
services sector, in which strong growth occurred between 2011 and 2012.
5. Half Moon Bay has not established the necessary critical mass of office and
industrial commercial space to become a job center, though the city has proven to
be a good location for a variety of small businesses and startup commercial
enterprises.
Half Moon Bay is commonly characterized as a bedroom community. Available data indicate
that approximately four out of five working residents commute out of the city for their job.
However, the city is home to hundreds of small businesses and does support a healthy
market for the roughly 320,000 square feet of office space and 100,000 square feet of
industrial space. Some additional workspace development may be needed in the future,
potentially to support a growing professional services industry or other growth sectors of the
local and regional economy. However, similar to the residential sector, development
constraints likely will continue to remain a major impediment to business growth.
6. While a small proportion of the Half Moon Bay economy may be benefiting from
regional growth in niche sectors, worker occupations continue to reflect the city’s
tourism-based and agrarian landscape.
While significant portions of Half Moon Bay’s workers serve as office administrators, sales
people, and executives/managers, tourism and agriculture jobs are relatively concentrated in
the city as compared to San Mateo County overall. Local workers are more likely to be
engaged in food service occupations, farm occupations, and personal services occupations
than countywide. Conversely, without a hospital or other major medical facility in the city, a
lesser proportion of workers are engaged in health care occupations.
7. The tourism outlook is positive and Half Moon Bay is well positioned to attract more
visitors and associated spending in the local economy.
The San Mateo Coastside Market (Pacifica to Half Moon Bay) could see net new demand for
roughly 200 new lodging rooms by 2017. While the projected hotel room growth might be
accommodated anywhere within the Coastside area, Half Moon Bay is a competitive location
given that it currently makes up more than 50 percent of the Coastside Market. In addition,
the city features an established downtown shopping district, numerous restaurants, existing
high-end accommodations, and good access to beaches, parks, and trails.
2
8. Typical of tourism-supported communities, educational attainment and household
income are relatively concentrated at the low and high ends of the spectrum due to
limited local job and housing opportunities.
While Half Moon Bay residents are well educated on average, there is a relatively high share
of the adult population (over 16 percent compared to 11 percent countywide) that does not
possess a high school diploma. At the other end of the educational spectrum, more than 21
percent of the city population has received an advanced degree (e.g., Master’s Degree,
professional degree, Ph.D.), compared to 17 percent countywide. Household income follows
a similar pattern, with a share of total households earning an annual income in the $25,000
to $50,000 range and $200,000 plus range that is greater than that observed countywide,
while the share earning $50,000 to $200,000 is lower than countywide.
9. Half Moon Bay offers a diverse mix of local- and visitor-serving retail that exhibited
resiliency during the recent recession and may expand gradually along with the city
economy over time.
Half Moon Bay retailers attract roughly $220 million in sales annually, with food stores,
miscellaneous retailers (e.g., florists, galleries, antiques), and food service/drinking
establishments leading the way. Most of the retail establishments are independent, local
tenants, and there are no true “big box” general merchandise retailers to be found. Largeformat retail development in Half Moon Bay is unlikely, given transportation constraints,
demographics, and local opposition, but the city can expect to add to the existing retail
offerings through small-format infill retail projects that complement existing shopping
opportunities in the city.
10. Though many agricultural businesses in high-cost areas of Northern California are
struggling in the face of increased competition, Half Moon Bay companies are
national leaders in floriculture, and the agrarian landscape is important to the look
and feel of the city.
Flower cultivation and sales are big locally, with at least two national-scale operators based
there. While these businesses remain vital, industry data suggest that there are challenges
to growth. In addition to contracting sales, employment trends are negative, and the city’s
monthly flower market, a long-standing venue for local growers to sell their own floral crops,
has been canceled in past years “amid a lack of interest among both farmers and
consumers.”1 However, the economic importance of agriculture exceeds its production
value. In the Coastside region, agriculture is an integral part of the landscape and culture.
Residents and visitors to the region enjoy the open space and locally-grown food and farm
products offered by local agriculture. Some farms welcome visitors, and the annual Pumpkin
Festival is the Coastside region’s biggest event. In addition, smaller events such as Farm
Day and Tour des Fleurs connect residents and visitors with local agriculture.
1
Half Moon Bay Review, Thursday, May 22, 2008.
3
11. Due to the decline of the commercial fishing industry in California over the last
several decades, seafood-related business expansion is unlikely to be a major
economic driver in Half Moon Bay, although there may be opportunities for smallscale, local-serving specialty seafood projects or ventures.
Pillar Point Harbor, to the north of Half Moon Bay in unincorporated San Mateo County, is the
second most significant commercial fishing port in the Bay Area, with over $10 million in
landings in 2011. Nonetheless, commercial fishing is a narrow-margin business that is
continually struggling to remain profitable, serving consumer markets now dominated by
international suppliers. Princeton remains a viable commercial fishing port primarily because
of the strength of the crab fishery. While Princeton had at one time been home to numerous
seafood processing and distribution businesses, today there is only one. However, there is a
growing seafood product niche that focuses on local and sustainable seafood products. For
businesses focused on seafood sourced directly from local fishermen, including restaurants
and specialty food markets, Half Moon Bay may be an attractive location.
12. Though it is difficult to know with certainty how real estate market demand and
supply dynamics will evolve in the future, particularly since regulatory factors will
continue to play a key role in determining development entitlements and growth in
Half Moon Bay, a “business as usual” scenario in which growth continues to follow
trends over the last decade suggests the city can plan for the addition of roughly
775 new housing units, 215,000 new square feet of commercial space (retail and
office), and 245 new hotel rooms by 2035.
Residential development is anticipated to continue at the growth rate observed between 2000
and 2010, the decade after passage of a restrictive local growth management policy
(Measure D). While the development cap allows up to 1 percent growth (1.5 percent if
development is downtown), residential development averaged 0.7 percent annual growth
during the 2000s. In comparison to this recently-observed and projected level of household
growth, the Association of Bay Area Governments (ABAG) projects only 0.2 percent growth
over coming decades, through 2035. Retail development is anticipated to continue at a rate
that reflects the growing consumer market,
including new households and visitors to Half
Development Projection 2010 -‐ 2035
Moon Bay. Using a blended local and visitor
growth rate of 1 percent per year, this
Annual analysis estimates that the city may
Land
Percent
experience demand for 160,000 additional
Use
Change
Change
square feet of retail by 2035. Office
development is anticipated to continue at the
growth rate observed over the past decade,
Housing Units
776
0.7%
between 2004 and 2013. At 0.6 percent
annual growth, the office space increase would
be consistent with the relatively small scale,
Retail SF
163,174
1.0%
incremental development that has occurred
historically in the city. The long-run outlook
Office SF
51,943
0.6%
for hotel rooms assumes 1.5 percent annual
growth, consistent with the statewide travel
Hotel Rooms
244
1.5%
volume (person trips) trend observed from
2002 through 2008.
4
1.
SOCIO-ECONOMIC CONTEXT
Demographics
During the 1980s and 1990s, the City of Half Moon Bay experienced strong population growth.
Even with growth control Measure A which passed in 1991 (which limited residential growth to 3
percent per year), between 1980 and 2000 the city’s population increased by over 70 percent
(about 2.7 percent annually). Real household incomes grew rapidly during this period as well, as
the city increasingly served as a bedroom community supporting Silicon Valley and San Francisco
job centers.
Measure D, a growth control measure adopted by city voters in 1999, limited residential growth
to 1 percent per year (1.5 percent downtown). This measure and other factors have had a
notable effect the city’s growth trajectory in recent years. Between 2000 and 2010, the city
experienced population decline, despite an increase in households, likely due at least in part to
young adults leaving the city to go to college or find work elsewhere (residents age 20 to 34 are
a smaller share of total population now, as compared with 2000). During this decade Half Moon
Bay changed from being one of the fastest growing cities in the county to one that is growing at
or below the county average, as shown in Figure 1. It also is notable that during the 2000s,
real household income fell by almost 17 percent in Half Moon Bay, versus only 12 percent
countywide.
Today, unemployment among Half Moon Bay residents is similar to the county overall (6.8
percent versus 6.7 percent in San Mateo County). Labor force participation also is comparable
(68.3 percent in the city versus 68.9 percent countywide). However, an in-depth examination
reveals that labor force participation by younger individuals (16-24) and older individuals (55+)
is notably higher in the City of Half Moon Bay (52 percent versus 47 percent). Individuals age
45 to 54, those in their prime earning years, have lower labor force participation in Half Moon
Bay as compared with the county (86 percent versus 81 percent).
Median age citywide has increased dramatically over the past four decades, by nearly twice the
rate as in San Mateo County overall. Back in 1980, the median age in the city was 32 while
today it is nearly 44, an increase of about 38 percent, compared to about 20 percent in San
Mateo County. As shown in Figure 2, median age increased at an average annual rate of
slightly less than 1 percent during the 1980s and 1990s, but since 2000 citywide aging has
accelerated. While in 1980 the median age of the city’s population was less than countywide, by
2010 the median age of city residents had increased to 43.6, which is notably greater than the
median age of 39.7 oberserved in San Mateo County overall.2
Considering the age distribution of residents of Half Moon Bay versus the county, it is clear that
the city is relatively heavily populated by older generations, including Baby Boomers. The city’s
population of young adults is relatively small as a share of total population. Figure 3 presents
presents the age distribution of the population of Half Moon Bay and San Mateo County.
2
Note that San Mateo County’s population is somewhat older than the population of the Bay Area and
California overall, where median ages are 38.3 and 35.6, respectively.
5
Figure 1
Population, Household, and Income Trend
Category
1980-1990
Annual
Growth
Change
Rate
1990-2000
Annual
Growth
Change
Rate
2000-2010
Annual
Growth
Change
Rate
1980
1990
2000
2010
6,777
8,421
11,559
11,324
1,644
2.2%
3,138
3.2%
-235
-0.2%
586,879
649,627
707,190
718,451
62,748
1.0%
57,563
0.9%
11,261
0.2%
2,469
2,949
3,785
4,074
480
1.8%
836
2.5%
289
0.7%
254,102
263,781
272,405
257,837
9,679
0.4%
8,624
0.3%
-14,568
-0.5%
Population
Half Moon Bay
San Mateo County
Households
Half Moon Bay
San Mateo County
Median Household Income (2014$)
Half Moon Bay
$72,295
$98,008
$106,621
$88,711
$25,713
3.1%
$8,612
0.8%
-$17,910
-1.8%
San Mateo County
$63,010
$76,768
$96,774
$84,936
$13,758
2.0%
$20,005
2.3%
-$11,838
-1.3%
Source: AGS
6
Figure 2
Median Age
1980
1990
2000
2013
Half Moon Bay
10-‐Year Annual Growth Rate
31.7
34.7
37.6
43.6
-‐ 0.9%
0.8%
1.1%
San Mateo County
10-‐Year Annual Growth Rate
33.0
34.8
36.8
39.7
-‐ 0.5%
0.6%
0.6%
Source: AGS
Figure 3
Age Distribution
10%
More Baby Boomers in HMB
9%
8%
Fewer Young
Adults in HMB
7%
6%
5%
4%
3%
2%
1%
0%
Half Moon Bay
San Mateo County
Source: AGS
7
Residents of Half Moon Bay are well educated on average, though there is a relatively high share
of the population (over 16 percent) that does not possess a high school diploma. At the other
end of the educational spectrum, over 21 percent of the city population has received an
advanced degree (e.g., Masters degree, professional degree, Ph.D.), higher than the county (17
percent), Bay Area (17 percent), and state (11 percent). Figure 4 presents the distribution of
educational attainment among city and county residents (age 16+).
Figure 4
Educational Attainment
40%
35%
30%
25%
20%
15%
10%
5%
0%
No High School Diploma
High School (incl. some
college)
Associate Degree
Half Moon Bay
San Mateo County
Source: AGS
8
Bachelor's Degree
Advanced Degree
Median household income in the City of Half Moon Bay is healthy at about $90,000. However,
the city is not exclusively comprised of affluent households. It is notable that the share of
households with annual income in the $25,000 to $50,000 range is higher than that observed
countywide, while the share earning $50,000 to $200,000 is lower. It is the relatively small
segment of low income households (household income less than $25,000 per year) and the
greater prevalence of high income households (more than $200,000 per year) that push the
median income level in Half Moon Bay above that seen in San Mateo County overall. Figure 5
presents the distribution of income among city and county households.
Household Income Distribution3
Figure 5
30%
25%
20%
15%
10%
5%
0%
<$25,000
$25,000-‐$50,000
$50,000-‐$100,000
Half Moon Bay
$100,000-‐$200,000
$200,000+
San Mateo County
Source: AGS
3
Note that median household income in San Mateo County is 12 percent higher than in the ninecounty Bay Area and 36 percent higher than in California.
9
Commute Patterns
While Half Moon Bay has a wellbalanced jobs/housing ratio of
about one job for every working
resident, in- and out-commuting is
significant. In 2011, approximately
80 percent of the city’s workers
commuted out of town to their
place of work (up from 75 percent
in in 2002). According to data from
the US Census Bureau’s LED-LEHD
Program (On the Map), residents
commonly commute to San
Francisco, Palo Alto, Redwood City,
and San Jose (see resident
employment location heat map at
right). Almost half of the working
residents commute between 10 and
25 miles. Meanwhile, workers flow
in from San Francisco and San
Mateo, as well as from nearby
communities such as El Granada
and Pacifica. This pattern is
common in resort communities that
have significant service sector jobs
combined with relatively high
housing costs.
Source: Census Bureau LED-LEHD
Employment Trends
The number of jobs in the City of Half Moon Bay has not recovered to pre-recession levels.
According to the most recent data available from the State of California Economic Development
Department (EDD), employment in the city peaked in 2007 and as of 2012 remained roughly 20
percent below that figure. EDD tracks employment for establishments participating in the
California Unemployment Insurance Program. Employment estimates are developed from payroll
data that includes private and government entities. The estimates generally exclude selfemployed workers and undercount agricultural workers. According to the EDD data, employment
rose above 5,000 in Half Moon Bay in 2007 then fell and hovered around 4,000 from 2009
through 2012.
10
Figure 6
Employment in Half Moon Bay
6,000
5,000
4,000
3,000
2,000
1,000
0
2005
2006
2007
2008
2009
2010
2011
2012
Source: State of California, Economic Development Department
As of 2012, the industries that support the greatest numbers of jobs in Half Moon Bay include:
•
•
•
•
Accommodation and Food Services;
Professional, Scientific, and Technical Services;
Retail Trade; and
Agriculture, Fishing, and Hunting.
Tracing employment trends in these industries over an eight-year period (2005-12) that includes
the 2008-09 recession reveals volatility in tourism-related industries including Accommodation
and Food Services and Retail Trade. The trend in Agriculture is negative both before and after
the recessionary period. The notable bright spot in the industry-level employment data is the
Professional, Scientific, and Technical Services trend, which shows very strong growth between
2011 and 2012. Though establishment-level information is unavailable from EDD (confidential
business information), local sources indicate that GoPro, a local startup sports camera company
that has since moved out of Half Moon Bay, may have contributed to this trend.4
4
GoPro experienced explosive growth during 2011 and 2012, growing from about 70 to 300
employees, before leaving Half Moon Bay for San Mateo in 2013.
11
Figure 7
Employment in Half Moon Bay (Top Industries)
1,200
1,000
800
Accommodation and Food
Services
Professional, Scientific,
and Technical Services
600
Retail Trade
Agriculture, Forestry,
Fishing and Hunting
400
200
0
2005
2006
2007
2008
2009
2010
2011
2012
Source: State of California, Economic Development Department
Similar to within San Mateo County, significant numbers of office/administrative support workers,
sales people, and executives/managers work in Half Moon Bay. The occupations that are
relatively well represented in the city are reflective of the local economy’s industry composition,
which is heavily focused on tourism and agriculture compared to San Mateo County overall.
Accordingly, local workers are more likely to be engaged in food service occupations, farm
occupations, and personal care occupations than countywide. Conversely, without a hospital or
other major medical facility in the city, there are fewer workers engaged in health care
occupations. Figure 8 presents worker occupations and compares common occupations in Half
Moon Bay to San Mateo County overall.
12
Figure 8
Occupations by Place of Work
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Half Moon Bay
San Mateo County
Relatively Common in Half Moon Bay
Relatively Common in San Mateo County
Food Preparation/Serving
Farming/Fishing/Forestry
Personal care and service
Sales
Building and Grounds maintenance
Executive, Managers, & Administrators
Health Technologists/Technicians
Legal
Healthcare support
Life/Physical/Social Science occupations
Health Diagnosing and Treating Practitioners
Architecture and e ngineering
Source: AGS and EPS
13
Growth Constraints
Half Moon Bay is considered a challenging location for entitlement of major new development
projects, primarily due to natural resource constraints, infrastructure, regulation, and local
opposition. Due to the city’s location in the coastal zone, there are a variety of environmentally
sensitive areas including habitat, riparian areas, wetlands, and hillsides. Water availability in the
city is limited and there is a moratorium on new connections in some areas. Sometimes, unused
water rights may be purchased from the private parties who hold them, but anecdotal
information suggests that these permits can trade for $50,000 per unit.
Development infrastructure, particularly roadways, also is a development constraint for the city.
There is severe congestion on US 1 and Route 92, and the intersection of these two important
roads does not provide an acceptable level of service. Sewer and water lines are a limitation for
new development in some cases.
Lastly, the regulatory environment is particularly challenging, with many project opposed by
public agencies and the general public. Much of the zoning on vacant land in the city is “Planned
Unit Development” (PUD), which requires an extensive Specific Plan process and approval by the
City and the Coastal Commission. This process is costly and lengthy, and there is a high risk
that a proposed project will be highly modified or denied.
14
2.
RESIDENTIAL USES
As evidenced by past population growth within the city, Half Moon Bay is a desirable place to
live. Residents are attracted to a variety of local characteristics, including the small-town feel,
ocean and open space, downtown, and local business community. Despite the demand for
housing, residential development in recent years has been minimal. Barriers to entry include
water supply, infrastructure shortcomings, regulatory hurdles, and financial feasibility constraints
attributable to the high cost of development.
Residential Uses
Residential uses in Half Moon Bay are well occupied, similar to the San Mateo County overall.
The vacancy rate is only 3 percent, which is generally indicative of a supply-constrained market
despite the fact that some homes are vacation units.5 More than 2/3rds of residential units are
owner occupied in Half Moon Bay, notably more than in the San Mateo County overall, consistent
with the high proportion of older residents.
Figure 9
Housing Profile
Housing
Status
Vacant
Owner-‐Occupied
Renter-‐Occupied
Total Units
Half Moon Bay
Count Distribution
150
2,964
1,203
4,317
3%
69%
28%
100%
San Mateo County
Count Distribution
7,906
156,562
107,219
271,687
3%
58%
39%
100%
Source: AGS
5 Note that Census data consider vacation homes “vacant” since they are not a primary residence.
15
The high degree of home ownership in Half Moon Bay also is related to the building stock, which
is comprised largely single-family homes. About 75 percent of homes in Half Moon Bay are
single-family units (detached homes and townhomes), versus about 66 percent countywide.
Further, there are very few large multi-family apartment and condominium structures. In fact,
only about 16 percent of Half Moon Bay’s units are in structures with 2 or more units, versus 33
percent of units countywide. Nearly one in ten housing units in Half Moon Bay is a mobile home,
the de facto affordable housing available to low income households.
Figure 10
Half Moon Bay Residential Units by Housing Format
Housing Structure
Single Family Detached
Townhome
Duplex
3 or 4 Units i n Structure
5 to 9 Units i n Structure
10 to 19 Units i n Structure
20 to 49 Units In Structure
50 or more Units i n Structure
Mobile home
Boat, RV, van, e tc.
Total
Half Moon Bay
Count Distribution
2,874
511
92
353
104
14
73
86
424
9
4,540
63%
11%
2%
8%
2%
0%
2%
2%
9%
0%
100%
San Mateo County
Count Distribution
154,827
23,012
6,447
13,186
17,214
15,645
17,456
19,315
3,085
480
270,667
57%
9%
2%
5%
6%
6%
6%
7%
1%
0%
100%
Source: U.S. Census Bureau, 2008-2012 American Community Survey
More than 30 years of residential building permit data also document the market dominance of
single-family homes in Half Moon Bay. Between 1980 and 2012, the City permitted 1,249 singlefamily homes, versus only about 593 units in structures of 2 or more units. In some years
(1983, 1989, 1985, 2002, and 2012) multi-family permitting in Half Moon Bay did exceed singlefamily permitting. The notable multi-family permitting activity in 2012 is partially attributable to
the development of affordable senior housing proximate to downtown Half Moon Bay.
16
Figure 11
Half Moon Bay Residential Building Permits (new homes)
200
180
160
140
120
100
80
60
40
20
0
Units in Single-‐Family Structures
Units in All Multi-‐Family Structures
Source: SOCDS permits database
17
Similar to regional residential market conditions, Half Moon Bay’s housing market deteriorated
with the recession in 2008-09 but has recovered somewhat since then. Available data
concerning the city housing market reveal that annual sales volume and pricing have rebounded
from the lows seen in recent years. However, the market recovery has been tepid compared
with many other Bay Area cities, particularly those that are better connected to the major job
centers.
Residential sales volume in Half Moon Bay bottomed out in 2008. That year there were only
about 130 sales, including single-family and multi-family homes. Driven by an improving market
for single-family homes, sales volume had increased to over 200 homes by 2012. Residential
pricing hit a cyclical low between 2009 and 2011. As of 2012, single-family homes were selling
for about $670,000 and multi-family homes were selling for about $370,000 on average (both
formats were priced at about $350 per square foot).
Figure 12
Half Moon BayAnnual Residential Sales Volume Trend
(re-sales and new)
400
350
300
250
200
150
100
50
0
2002
2003
2004
2005
2006
2007
Single-‐family Homes
2009
Conominiums and townhouses
Source: RAND Statistics
2008
18
2010
2011
2012
Figure 13
Half Moon Bay Residential Sales Prices (re-sales and new)
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
2002
2003
2004
2005
2006
2007
Single-‐family homes
2008
2009
Condominiums and townhouses
19
2010
2011
2012
Figure 14
Half Moon Bay Residential Sales Prices Per Square Foot
(re-sales and new)
$600
$500
$400
$300
$200
$100
$0
2002
2003
2004
2005
2006
2007
Single-‐family homes
2009
Condominiums and townhouses
2008
20
2010
2011
2012
3.
TOURISM AND HOSPITALITY USES
The Coastside region of San Mateo County, including the City of Half Moon Bay and surrounding
unincorporated communities, is a popular recreation and tourism destination for day and overnight,
leisure and business visitors. The Half Moon Bay Coastside Chamber of Commerce and Visitors’
Bureau estimates that there were nearly 3.8 million visits to the region in 2012, with over 60
percent coming from Northern California. Coastal San Mateo County also is a common stop for
domestic and international visitors traveling California’s famed State Route 1 Pacific Coast Highway.
The Coastside region is host to a variety of events each year, from weddings and conferences to
special events such as the Pumpkin Festival, Mavericks Invitational international surf
competition, and the Dream Machines show. Even with the significant tourism present in the
Coastside region today, a Sunset Magazine article recently suggested that “the San Mateo
County stretch of Highway 1 is its most underrated. Unjustly.”6 If growth can be
accommodated in Half Moon Bay, there is great market potential to grow the tourism economy
there.
The Coastside region offers visitors a variety of
recreational activities, including:
•
•
•
•
•
•
•
•
•
•
•
Beach recreation and surfing
Boating, fishing, whale watching
Hiking, walking, sightseeing
Camping
Spas and yoga
Golf
Farm visits and farmers markets
Horseback riding
Dining
Shopping
Music, theater, events
A diversity of hotels, restaurants, and shops draw tourists to the Half Moon Bay area. In
particular, the historic downtown, which features a wide range of boutique retail stores,
restaurants, cafes, and unique accommodation facilities, draws tourists in large numbers. The
Half Moon Bay State Beach is located within walking distance of downtown as is a concentration
of overnight accommodations. There are coastal walking trails and other popular beaches for
surfing, bird watching, and numerous other activities.
Anecdotal information from the Half Moon Bay Airport suggests that the airport is increasingly a
“destination airport” for recreational aviation. There is significant “fly-in activity” that generates
visits to Half Moon Bay businesses, including restaurants, shops, and Johnson Pier. The FAA
estimates that the airport supports 40,000 to 60,000 runway uses (i.e., takeoffs and landings)
per year, including air ambulance/medevac, law enforcement/homeland security, Coast Guard,
6
Ultimate California Highway 1 Road Trip, Sunset Magazine, 2013.
21
business, and recreation operations.7 Business and recreation uses include charter operations
and private flights. The airport offers transient aircraft parking (i.e., tie downs) for visiting
planes. Planned investments onsite at the airport include a camping area and a bicycle share for
visitor use.
Travel Expenditure Trends
Along with stabilizing economic growth in the US and world economy, the US travel industry has
steadily rebounded from a cyclical low in 2009. Spending in the US by domestic and
international travelers reached over $800 billion in 2011. The US Travel Association projects
that US tourism growth is sustainable. With annual real spending growth of over 5 percent from
2009 to 2011 and recent and future annual growth forecasted to be 2 to 3 percent, the US Travel
Association forecast indicates that travel expenditures in the US could reach nearly $940 billion
(2012$) by 2016, a real increase of roughly 13 percent over 2011.
Figure 15
US Travel Expenditure Trend and Forecast (2012$)
$1,000.00
$950.00
Forecast
Travel Expenditures in the US (Billions, 2012$)
$900.00
$850.00
Historic Trend
$800.00
$750.00
$700.00
$650.00
$600.00
$550.00
$500.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: US Travel Association
7
Personal Communication with Half Moon Bay Airport staff.
22
2009
2010
2011
2012
2013
2014
2015
2016
Figure 16
California Travel Expenditure Trend and Forecast (2012$)
$130.00
$120.00
Travel Expenditures in California (Billions, 2012$)
$110.00
$100.00
$90.00
$80.00
$70.00
$60.00
$50.00
2000
2002
2004
Historic Trend
2006
2008
Optimistic Growth Forecast
2010
2012
2014
2016
Conservative Growth Forecast
Source: Dean Runyan Associates; Tourism Economics; USTA; and EPS
In California, the travel industry also has grown to levels above the spending lows of the recent
recession, though real (constant dollar) estimates of 2012 travel spending are only slightly above
2007. Travel spending in California was about $104 billion (2012$) in 2011. If travel spending
in the state keeps pace with the US Travel Association forecast for the US, expenditures could
rise to about $117 billion (2012$) by 2016, a 13 percent real increase over 2011. However, a
more optimistic forecast by Tourism Economics (conducted for Visit California) indicates that
tourism spending could grow even faster, to approximately $125 billion (2012$) by 2016, a
roughly 20 percent growth in real spending over 2011.
In San Mateo County, travel expenditures have trended similarly to the state overall, with the
county as a whole capturing about three percent of total California travel spending. Travel
expenditures in San Mateo County were about $2.9 billion in 2011. If the tourism spending in
the county continues to keep pace with statewide tourism growth, annual travel expenditures
could grow by as much as $600 million (2012$) by 2016, over 2011 spending levels.
23
Hospitality Uses
Consistent with the trends in travel spending, the hotel industry in the San Francisco Bay Area
and Coastside hospitality market has rebounded from the recent recession and appears to be
poised for growth.8 Both occupancy and average daily room rates in 2012 were higher than in
2007, within the Coastside market and broader region.
Market Trends and Characteristics
EPS analyzed data from a sample of hotels located in the Coastside Market (including Pacifica)
and the Bay Area overall.9 The data include major lodging establishments but do not capture
smaller accommodations such as inns, bed and breakfasts, or vacation rentals. The sample
provides adequate data for analysis of market trends and characteristics, despite the lack of
smaller-scale visitor accommodations.10
The occupancy rate in the Coastside Market is now over 70 percent, well above the average of 64
percent observed between 2002 and 2012, and just above the cyclical high in occupancy reached in
2007. The overall trend in the broader Bay Area Market is very similar, with the occupancy rate
about 72 percent in 2012 reaching (see Figure 17).11
8
Note that the travel expenditure trends discussed above reflect day and overnight visitors, including
campers. This section focuses on exclusively hospitality uses (lodging establishments) and does not
include an analysis of camp site demand.
9 The Coastside Market was defined for the purposes of this study, based on market characteristics
and data availability. The Coastside Market analyzed here includes the City of Pacifica. Data sample
limitations related to confidential business information prevent analysis of a more localized market
area.
10 Independent research identified only 12 vacation rental homes in the City of Half Moon Bay.
11 Stabilized occupancy of 70 percent is generally considered strong by hospitality industry
professionals.
24
Figure 17
Hotel Occupancy Trends in the Coastside Market and San Francisco
Bay Area
80%
70%
60%
50%
40%
30%
20%
10%
0%
2002
2003
2004
2005
2006
2007
Coastside Hotel Sample
2008
2009
2010
2011
2012
Bay Area Hotel Sample
Source: Smith Travel Research and EPS
The trend in the average daily room rate is also positive for the hotel industry, both in the
Coastside Market and across the Bay Area. Available data reveal that room rates locally and
throughout the metro area have exceeded 2008 highs (unadjusted for inflation). The average
daily room rate for the Coastside Market area was over $200 in 2012 (see Figure 18).
The relatively high average daily room rate of over $200 in the Coastside Market area reflects
hotel product orientation that is somewhat more upscale and tourist-oriented than the broader
Bay Area market. About 22 percent of the rooms in the Coastside Market area are considered
“luxury,” versus about 12 percent in the larger Bay Area market, while only 17 percent of rooms
in the Coastside market are rated “economy class,” as compared with roughly 34 percent in the
Bay Area.
25
Figure 18
Hotel Rates in the Coastside Market and San Francisco Bay Area
(nominal)
$250
$200
$150
$100
$50
$0
2002
2003
2004
2005
2006
2007
Coastside Hotel Sample
2008
2009
2010
2011
2012
Bay Area Hotel Sample
Coastside Region and Half Moon Bay Overview
The Half Moon Bay Chamber of Commerce and Visitors’ Bureau estimates that there are over 900
rooms in lodging establishments in the Coastside region (excluding Pacifica), more than 540 of
which are in the City of Half Moon Bay. The hotel data sample reveals that the Coastside rooms are
relatively high-quality compared to the metro market, but still well distributed across the price
scale, with roughly 1/5th economy, 2/5ths midscale, 1/5th upscale, and 1/5th luxury class. However,
the Half Moon Bay hotel market skews more towards the upscale and luxury market. As shown in
Figure 19, only about 5 percent of rooms are considered economy class while nearly 3/5ths of hotel
rooms are luxury class. 12
12 These data exclude small inns, Bed & Breakfast (B&B) establishments, and vacation rentals, which
also tend to be more upscale in Half Moon Bay.
26
Figure 19
Hotel
Class
Economy
Midscale
Upper Midscale
Upscale
Upper Upscale
Luxury
Total
Half Moon Bay Hotels by Class
Number of
Rooms
Percent of
Total
27
52
67
0
80
315
541
5.0%
9.6%
12.4%
0.0%
14.8%
58.2%
100.0%
Sources: Smith Travel Research and EPS
The major Half Moon Bay hospitality establishments include seven facilities built from 1934 to 2001,
each with between 13 and 261 rooms. These include The Ritz-Carlton, Half Moon Bay Inn, Half
Moon Bay Lodge, America’s Best Value Inn & Suites, Beach House Hotel, Coastside Inn, and the
Comfort Inn. Smaller establishments, including the Mill Rose Inn, Cameron’s Inn, the Old Thyme
Inn, and other inns and B&Bs provide rooms in the city. In addition, an informal EPS survey of
vacation rentals on three major internet websites revealed 12 unique properties available for rent
on a short-term basis within the city. Figure 20 presents a summary of the major lodging
establishments in the city.13
Figure 20
Half Moon Bay Major Lodging Establishments
Hotel Name
Half Moon Bay Inn
America’s Best Value Inn & Suites
Coastside Inn
Beach House Hotel
Comfort Inn
Half Moon Bay Lodge
Ritz-Carlton
Total
Year
Built
Number of
Rooms
1934
1991
1991
1996
1999
1976
2001
13
27
52
54
54
80
261
541
Hotel Class
Upper Midscale
Economy
Midscale
Luxury Class
Upper Midscale
Upper Upscale
Luxury Class
Sources: Smith Travel Research and EPS
13
Hotel data acquired from Smith Travel Research protect confidential business information, which
prevents detailed analysis of hotel performance by class. However, as shown in Figure 19 the supply
of rooms skews toward upscale/luxury classes. Local experts have indicated that the mid- to-low end
of the hotel quality spectrum may be underserved, which is generally consistent with the data.
27
There are 15 entities reporting and remitting transient occupancy tax (TOT) in the City of Half Moon
Bay.14 Based on TOT collections data, the city has seen healthy growth in room revenue, with a
modest setback attributable to the 2008-09 recession. Figure 21 presents room revenue,
calculated from TOT data provided by the City of Half Moon Bay, unadjusted for inflation.15 Unlike
the broader Coastside and Bay Area, Half Moon Bay room revenues did not decline markedly during
the recent recession, but remained flat between 2007 and 2009. Room revenue trended upward
over the past three years as room rates and occupancy rose marketwide.
Figure 21
City of Half Moon Bay Taxable Hotel Room Revenue (nominal)
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$-‐
2003-‐04
2004-‐05
2005-‐06
2006-‐07
2007-‐08
2008-‐09
2009-‐10
2010-‐11
2011-‐12
2012-‐13
Source: City of Half Moon Bay and EPS
14
Note that State Park camping is exempt from Transient Occupancy Tax.
15
City TOT data is converted to room revenue based on TOT rate of 10 percent through 2006-07, and
12 percent thereafter.
28
Half Moon Bay Hotel Profiles
Ritz-Carlton is a 261 room luxury hotel that opened in 2001. It is located south of downtown Half
Moon Bay at Miramontes Point and offers views of the coast and two championship golf courses on
the property. The hotel commonly hosts weddings and other events, with both indoor and outdoor
areas available for a wide variety of all types and sizes. For business groups, the Ritz includes over
17,000 square feet of indoor function space and three outdoor function areas that can
accommodate up to 400 people. A comprehensive business center, experienced conference
services managers, and conference concierge are available. Dining options include the Navio
restaurant, the Conservatory Lounge, ENO wine bar, and the Ocean Terrace. There is also a 16,000
square foot day spa, six lighted tennis courts, a basketball half-court, indoor heated swimming pool,
and a fitness center within the hotel.
Ritz-Carlton in Half Moon Bay
29
Half Moon Bay Lodge is located on the Cabrillo Highway adjacent to the Half Moon Bay Golf Links.
Built in 1976, the Lodge features 80 hacienda-style rooms (many with fireplaces), a 3,600 square
foot meeting space, heated outdoor pool, sauna and whirlpool, and an exercise room. In addition,
massages and other spa treatments are available at the nearby Cloud 9 Spa.
Half Moon Bay Lodge
Beach House Hotel is a 54-room luxury boutique hotel with views of Pillar Point Harbor and the
Pacific Ocean. The Beach House Hotel is located on El Granada beach adjacent to the Cabrillo
Highway. In addition to four meeting rooms (which feature natural light and fireplaces) there is
a 1,800 square foot function space that can accommodate up to 50 people, available for
meetings and events. Massage and other spa facilities also are available onsite. A number of
outdoor recreation activities can be coordinated through the hotel, including kayaking, surfing,
mountain biking, and horseback riding.
Beach House Hotel
30
Comfort Inn is a 54-room, upper midscale accommodation facility built in 1999. The Comfort Inn
is located a on the Cabrillo Highway to the north of downtown Half Moon Bay. It is within walking
distance of the beach and provides easy access to Pillar Point, Half Moon Bay shopping, and a
number of restaurants. An exercise room and business services are available onsite.
Comfort Inn
Coastside Inn is a 52 room hotel built in 1991. Featuring midscale amenities and access to both
the downtown shopping district and the beach, the Coastside Inn provides an affordable and
convenient accommodation option in Half Moon Bay.
Coastside Inn
31
America’s Best Value Inn & Suites features 27 economy rooms located on the Cabrillo Highway,
just south of El Granada. The facility offers affordable rates and provides easy access to the beach,
nearby restaurants, Pillar Point, and Purissima Creek Redwoods Open Space Preserve.
America’s Best Value Inn & Suites
Half Moon Bay Inn is a 13-room, upper midscale hotel located on Main Street in Half Moon Bay’s
historic downtown. The Half Moon Bay Inn was built in 1934 and features accommodations ranging
from a conventional queen room to a two-bedroom villa with full kitchen. The Inn‘s location
provides easy access to a number of restaurants and shops and is within walking distance of coastal
trails and Half Moon Bay State Beach.
The Half Moon Bay Inn
32
Hotel Demand Outlook
Based on historic hotel performance trends and generally consistent with forecasts for state and
national travel spending, this analysis provides a planning-level projection of hotel demand in the
Coastside Market. The projection is an estimate of market-supportable hotel room nights from
2013 to 2017. The analysis estimates the Coastside Market Area could add nearly 73,000 room
nights by 2017.16 The Market Area forecast reflects 3.5 percent annual room night growth,
consistent with the historical trend. Under this forecast, demand for roughly 200 new rooms would
be achieved by 2017. Figure 22 presents the forecast, exhibiting room night demand (assuming
70 percent occupancy is sustained) over and above the supply of room nights provided by existing
hotel properties.17
The projected hotel room growth could occur anywhere within the Coastside Market, though Half
Moon Bay is particularly well positioned to attract hotel room development given that it currently
makes up more than 60 percent of the Coastside market. In addition, Half Moon Bay features an
established downtown shopping district, numerous restaurants, access to the beach and other local,
regional and state parks, and a regional airport. These amenities position Half Moon Bay well for
capturing new demand in the accommodations and other tourist-oriented industries.
16
The Hotel Demand Outlook relies on historic room night demand to project future demand. The
projection does not reflect camping demand, which likely would be in addition to room night demand.
Typically demand for overnight stays is highly market segmented, and competition between camping
and lodging is minimal.
17
Stabilized occupancy of 70 percent is generally considered strong by hospitality industry
professionals.
33
Figure 22
Room Night Demand Estimate
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2002
2003
2004
2005
2006
2007
2008
2009
Room Supply
34
2010
2011
Room Demand
2012
2013 (f) 2014 (f) 2015 (f) 2016 (f) 2017 (f)
4.
RETAIL USES
Half Moon Bay currently supports an appealing mix of retail and restaurant uses, both in its historic
downtown as well as along the major thoroughfares. Retail and restaurant establishments are
market-positioned for visitors to Half Moon Bay, residents, and the daytime worker population.
Shopping and dining is clustered on Main Street and at the junction of Highway 1 and Highway 92,
including Strawflower Village.
Half Moon Bay retailers attract roughly $220 million in sales annually, with food stores,
miscellaneous retailers (e.g., florists, galleries, antiques), and food service/drinking establishments
leading the way. Stores in the city are commonly independent, local stores, and there are no largeformat, “big box” general merchandise retailers to be found. Large-format retail development in
Half Moon Bay is unlikely, given access, demographics, and local opposition, but the city can expect
to add to the retail offerings through small-format infill retail projects that complement the existing
shopping experience.
Figure 23
Half Moon Bay Retail Clustering
Source: CoStar Group and EPS
35
Over 20 percent of retail sales are attributable to food and beverage stores. Another major
category of retail sales is Miscellaneous Store Retailers, which includes stores with unique
characteristics like florists, used merchandise stores, and pet and pet supply stores. These are the
unique and quirky stores that Half Moon Bay is famous for. Other major categories of retail sales
are the Food and Drinking Places (i.e., restaurants and bars) as well as Health and Personal Care
Stores (i.e., pharmacies).
Figure 24
Retail Sales Distribution 2013
Sale Category
Value
Distribution
Food and Beverage Stores
$47,595,219
22%
Miscellaneous Store Retailers
$37,054,107
17%
Food Services and Drinking Places
$30,303,485
14%
Health and Personal Care Stores
$29,743,775
14%
Motor Vehicle and Parts Dealers
$23,947,304
11%
Building Material and Garden Equipment and Supplies Dealers
$17,052,233
8%
Electronics and Applicance Stores
$11,198,191
5%
Furniture and Home Furnishings Stores
$5,067,055
2%
General Merchandise Stores
$4,770,483
2%
Sporting Goods, Hobby, Book, and Music Stores
$4,639,541
2%
Gasoline Stations
$4,561,422
2%
Clothing & Clothing Accessories Stores
Total Retail Sales
Source: AGS and EPS
36
$3,210,930
1%
$219,143,745
100%
Retail sales tax revenue in Half Moon Bay reveals a strong recovery from the deep recessionary
period experienced in 2008 and 2009.18 Sales tax revenue has increased at an average annual rate
of about 5.3 percent between 2004 and 2012 (unadjusted for inflation), almost 3 percentage points
above average annual inflation of 2.5 percent.
Figure 25
Sales Tax Revenue Trend (nominal)
$3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $-‐ 2003-‐04 2004-‐05 2005-‐06 2006-‐07 2007-‐08 2008-‐09 2009-‐10 2010-‐11 2011-‐12 2012-‐13 Source: City of Half Moon Bay
18
It is important to note that the 2012-2013 data reflect a ½-cent increase in the final quarter of
FY12-13. This increase explains, to some degree, the steep revenue increase in revenue over FY1112. Note that the ½-cent increase is a three-year increase with revenue earmarked for capital
projects.
37
Retail real estate market data tell a similar story of recovery. Vacancy peaked in 2009 at about 4.5
percent and has since fallen to 2.5 percent, through a combination of space demolition and net
absorption. Lease rates have nearly climbed all the way back up to the 2009 peak of $28 per
square foot per year (NNN – excluding expenses). While consistently low vacancy rates commonly
suggest constrained real estate supply, relatively flat lease rates have not justified new
development.
Figure 26
Half Moon Bay Retail Real Estate Market Trend
20,000
5.0%
15,000
4.5%
4.0%
10,000
3.5%
5,000
(10,000)
Vacancy Rate
2013
2012
2011
2010
2009
2008
(5,000)
2007
2.5%
2006
Square Feet 3.0%
-‐
2.0%
1.5%
(15,000)
1.0%
(20,000)
0.5%
(25,000)
0.0%
Year
Change in Inventory
Net Absorption
38
Vacancy Rate
Figure 27
Year
2006
2007
2008
2009
2010
2011
2012
2013
Half Moon Bay Retail Real Estate Market Statistics
No. of
Buildings
105
105
105
105
103
103
103
103
Inventory
Square
Feet
607,262
607,262
607,262
607,262
602,372
602,372
602,372
602,372
Vacancy
Square
Vacancy
Feet
Rate
Change in
Inventory
5,134
11,194
4,392
26,657
19,043
18,483
20,155
15,573
(4,890)
-
0.8%
1.8%
0.7%
4.4%
3.2%
3.1%
3.3%
2.6%
Net
Absorption
Average
Lease
Rate
14,478
(6,060)
6,802
(22,265)
2,724
560
(1,672)
4,582
$24.18
$25.06
$26.62
$28.02
$24.94
$21.44
$22.32
$27.71
A truly unique feature of Half Moon Bay is the historic downtown shopping district. Located at
the center of downtown Half Moon Bay, Main Street offers restaurants, boutiques, antique shops,
bookstores, wine tasting, jewelry, home furnishings, and more. Historic buildings, many from the
late 1800s, create an authentic town center ambiance. This shopping district is walkable, and
visitors and locals alike enjoy strolling along the four-block shopping corridor.
Figure 28
Downtown Retail Character
Source: Tom Sulcer
With more hotel rooms and increased levels of visitation to the Coastside region, market demand
for retail, restaurant, and recreation uses will grow. Half Moon Bay has established itself as a
popular stop for coastal visitors and recent retail sales growth has been very healthy. This
39
strongly positive trend suggests that retail in Half Moon Bay is viable and that there is
momentum for additional retail sales if tourism trends increase in demand from current levels.
For example, a retail/office project poised for development downtown is representative of the type
of infill commercial redevelopment that may be viable in Half Moon Bay in the near future. The
project plans call for demolition of a former auto shop and remodeling of a vacant building next door
at 435 Main Street. The project would create approximately 8,300 square feet of space. The
developer is seeking to lease the space for $27 to $36 per square foot per year (excluding
expenses).
Figure 29
Proposed Downtown Project
40
5.
OTHER COMMERCIAL USES AND ACTIVITIES
Half Moon Bay is commonly characterized as a bedroom community. Available data indicate that
approximately four out of five working residents commute out of the city for their job. However,
the city is home to hundreds of small businesses and does support a healthy market for the
roughly 320,000 square feet of office space and 100,000 square feet of industrial space. There
are also over one million square feet of greenhouse space for the agricultural operations located
in the city. Some additional workspace development may be needed in the future, potentially to
support a growing professional services industry or other growth sectors of the local and regional
economy.
Office and Industrial Uses
With 322,000 square feet of office space in 68 buildings, the average office building in Half Moon
Bay is a modest 4,700 square feet. The available small-format office space is well suited to the
needs of the many small businesses that are located in the city. The vacancy rate in the office
market is relatively health at about 8 percent. Roughly 26,000 square feet of space was
available for lease in 2013. Lease rates were slightly below 2008-2009 cyclical peak levels in
2013.
Figure 30
Half Moon Bay Office Real Estate Market Trend
Office Market Trends -‐ Half Moon Bay
25,000
14.0%
20,000
12.0%
15,000
10.0%
10,000
0
-‐10,000
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
6.0%
1998
-‐5,000
Vacancy Rate
8.0%
1997
Square Feet 5,000
4.0%
-‐15,000
2.0%
-‐20,000
-‐25,000
0.0%
Year
Change in Inventory
Net Absorption
41
Vacancy Rate
Half Moon
Office
Trends
Figure
31 BayHalf
Moon
Bay Office Real Estate Market Statistics
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
No. of
Buildings
Inventory
Square
Feet
64
65
65
66
68
68
69
69
69
69
69
70
70
68
68
68
68
260,582
268,947
268,947
290,947
305,847
305,847
323,350
323,350
323,350
323,350
323,350
326,380
326,380
322,144
322,144
322,144
322,144
Change in
Inventory
8,365
22,000
14,900
17,503
3,030
(4,236)
-
Vacancy
Square
Vacancy
Feet
Rate
250
440
6,345
15,640
18,573
37,212
22,522
9,478
9,799
16,002
11,561
16,456
17,971
25,797
0.0%
0.0%
0.1%
0.0%
0.1%
2.1%
4.8%
5.7%
11.5%
7.0%
2.9%
3.0%
4.9%
3.6%
5.1%
5.6%
8.0%
Net
Average
Absorption Lease Rate
8,365
(250)
22,250
14,460
(5,905)
8,208
(2,933)
(18,639)
14,690
13,044
2,709
(6,203)
205
(4,895)
(1,515)
(7,826)
Source: CoStar;
Economic
Planning Systems, Inc.
Source:
CoStar Group
and &
EPS
Examples of relatively new office development in Half Moon Bay include modest-sized office
projects such as 2450 South Cabrillo Highway (Miramonte Point Building) and 721 Purissima.
The Miramonte Point Building, built in 2003, is a two-story multi-tenant office building with
roughly 18,000 square feet of gross leasable space. Space in the fully-leased building has sublet
space available for about $30 per square foot per year (full service – including expenses). Built
in 2001, 721 Purissima is a small owner-occupied project of about 3,900 square feet located in
the downtown area.
42
$29.68
$29.67
$29.98
$27.00
$33.97
$19.12
$19.65
$21.25
$21.28
$19.98
$29.07
$27.46
$25.80
$24.66
$24.87
$26.73
Figure 32
Miramonte Point Office Development
Figure 33
721 Purissima Office Development
43
There is very little industrially zoned land in Half Moon Bay. Consequently, the city only offers
about 100,000 square feet of built industrial space. Available data indicate that the quantity of
industrial space has remained essentially unchanged for nearly 20 years (with the exception of a
small amount of demolition that occurred in 2010). Currently, about 5,200 square feet are
available for lease, yielding a vacancy rate of five percent citywide.
Industrial
Trends
Bay Market Statistics
Figure
34Market
Half
Moon- Half
Bay Moon
Industrial
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
No. of
Buildings
Inventory
Square
Feet
10
10
10
10
10
10
10
10
10
10
10
10
10
9
9
9
9
109,937
109,937
109,937
109,937
109,937
109,937
109,937
109,937
109,937
109,937
109,937
109,937
109,937
101,957
101,957
101,957
101,957
Change in
Inventory
(7,980)
-
Source: CoStar Group
44
Vacancy
Square
Vacancy
Feet
Rate
5,190
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
5.1%
Net
Average
Absorption Lease Rate
(7,980)
(5,190)
-
Agricultural Uses
In the Coastside region, agriculture is an integral part of the economy, landscape, and culture.
Countywide, the total value of agricultural production was $140 million in 2012. While significant,
agricultural production is down from more than $180 million in 2004.19 At $137 million, production
value in 2011 was the lowest in a decade. Over the past 10 years, floral and nursery products and
vegetable crops have decreased in value by $47 million in San Mateo County. However, the value of
field crops, fruit and nut crops, forest products, and livestock and apiary products has increased by
nearly $3.9 million over this period, offsetting losses slightly.
Figure 35
San Mateo County Agricultural Production Value (nominal)
$200,000,000
$180,000,000
$160,000,000
$140,000,000
$120,000,000
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: San Mateo County Department of Agriculture & Weights and Measures
19
While detailed data on agricultural production value is only available at the countywide level,
anecdotal evidence suggests that the Coastside region of San Mateo County accounts for the bulk of
agricultural activity.
45
Figure 36
San Mateo County Agricultural Value by Commodity (nominal $000’s)
Agricultural Commodity
2002
2012
Change
Value
Percent Floral And Nursery Crops
Vegetable Crops
Field Crops
Fruit And Nut Crops
Livestock
Apiary Products
Forest Products
$144,035
$34,170
$778
$1,131
$1,580
$278
$1,176
$113,844
$17,385
$933
$1,764
$2,459
$1,668
$1,979
($30,191)
($16,785)
$155
$633
$879
$1,390
$803
-‐21%
-‐49%
20%
56%
56%
500%
68%
Total
$183,148
$140,032
($43,116)
-‐24%
Source: San Mateo County Department of Agriculture & Weights and Measures
The economic importance of agriculture exceeds its production value. Residents and visitors to the
region enjoy the open space and locally-grown food and farm products offered by local agriculture.
Some farms welcome visitors, and the annual Pumpkin Festival is the Coastside region’s biggest
event. In addition, smaller events such as Farm Day and Tour des Fleurs connect residents and
visitors with local agriculture.
Half Moon Bay’s agricultural specialization is in floriculture. Flower cultivation and sales are big
business for the city, with at least two national-scale operators based there. While these businesses
remain vital, the data regarding the industry do suggest that there are challenges to growth. In
addition to contracting sales, employment trends are negative (as described in the employment
overview above), and the city’s monthly flower market, a long-standing venue for local growers to
sell their own floral crops, has been canceled in past years “amid a lack of interest among both
farmers and consumers.”20
There are over one million square feet of agricultural greenhouse space in the City of Half Moon
Bay. In an effort to revitalize agricultural production in the city, the Planning Commission passed a
resolution in 2010 that broadened the allowed uses of A-1 zoned land, from strictly floriculture to
include other agriculture-related uses, including food and other crops, accessory workforce housing,
and ancillary retail. This increased zoning flexibility is anticipated to help agricultural businesses
adapt to changing market conditions and new opportunities.
While agriculture is not likely to be an economic driver or growth industry for Half Moon Bay,
continued farmland conservation and local food production activities benefit the region through
aesthetic, cultural, and economic contributions that benefit residents, local businesses, and visitors.
20
Half Moon Bay Review, Thursday, May 22, 2008.
46
The section below describes two well-known agricultural operations in the City of Half Moon Bay.
Rocket Farms
With about 130 employees, Rocket Farms is one of the most significant employers in the City of Half
Moon Bay. The company reports that it is among the largest grower of indoor flowers, fresh cut
herbs, and potted edibles in the country. Rocket Farms products are distributed to grocery stores,
home and garden centers, and independent retailers. Based in Half Moon Bay, the company
operates 10 growing facilities with 7.5 million square feet of greenhouse space, located throughout
the San Francisco Bay Area and Salinas Valley.
Figure 37
Aerial Image of Rocket Farms Half Moon Bay Facility
Source: Rocket Farms and Google Maps
47
Bay City Flowers
Bay City Flower Company is a fourth-generation family-owned business that dates back more than
100 years. The company moved to Half Moon Bay in 1960, when more space was needed to
expand. At the Half Moon Bay site, the company operates five different ranges within a few miles of
each other, some of which offer unique microclimates that support specialty crops. The company
ships products to independent, local garden centers, florists, and supermarkets across the country.
Figure 38
Image of Bay City Flower Company Half Moon Bay Facility
Source: Bay City Flower
48
Commercial Fishing and Related Activities
California’s commercial fishing industry grew rapidly in the first half of the 20th Century, initially
focused on sardines and later sustained by tuna. Today California’s commercial fishermen seek a
variety of marketable Pacific Ocean fish. Since 1970, however, the commercial fishing catch
(“landings”) in California has fallen by about 50 percent. Market value has declined by nearly 70
percent in constant dollars. After a precipitous decline during the early 1980s, California’s fisheries
appear to have stabilized to some degree. In the Bay Area, the current real value of landings is
above 1970 levels but about 30 percent lower than the real value peak achieved in the early 1980s.
Figure 39
California Landings by Pounds and Value (2013$)
1,200,000,000
$1,400,000,000
$1,200,000,000
1,000,000,000
$1,000,000,000
Pounds
$800,000,000
600,000,000
$600,000,000
Ex-‐Vessel Value ($2013)
800,000,000
400,000,000
$400,000,000
200,000,000
$200,000,000
-‐
$0
1970
1975
1980
1985
Pounds
1990
1995
2000
2005
2010
2011
Sources: Department of Fish and Wildlife and EPS
Pillar Point Harbor in Princeton, located north of Half Moon Bay in unincorporated San Mateo County,
is the second-most significant commercial fishing port in the Bay Area, with over $10 million in
landings in 2011. Despite the significant product value, commercial fishing is a narrow-margin
business that is continually struggling to remain profitable, serving consumer markets now
dominated by international suppliers. Princeton remains a viable commercial fishing port primarily
because of the strength of the crab fishery. In addition, the San Mateo County Harbor District allows
and supports direct-to-consumer sales at Pillar Point which allow fishermen to get top dollar for more
specialty fish, such as wild Salmon.
49
Similar to statewide, the Bay Area has seen commercial fish landings and value decline dramatically
in recent decades. The current real value of landings is above 1970 levels but over 30 percent lower
than the real value peak achieved in the early 1980s. Data from recent years reveal an upswing
trend in landings and value, but the long run data indicate significant volatility.
Figure 40
Bay Area Landings by Pounds and Value (2013$)
40,000,000
$60,000,000
35,000,000
$50,000,000
30,000,000
Pounds
20,000,000
$30,000,000
15,000,000
$40,000,000
25,000,000
$20,000,000
10,000,000
$10,000,000
5,000,000
-‐
$0
1970
1975
1980
1985
Pounds
1990
1995
2000
2005
2010
2011
While demand for seafood continues to grow, imported seafood also continues to gain market share.
San Francisco has benefited to some degree from this market globalization, enjoying employment
growth in seafood processing and distribution, largely because the city is centrally located in the Bay
Area, well connected to supply networks (airports, inter-state highways), and due to low-rent space
offered by the Port Commission. Meanwhile, Princeton had at one time been home to numerous seafood processing and distribution businesses, and today there is only one. However, there is a
growing seafood product niche that focuses on local and sustainable seafood products. For
businesses focused on seafood sourced directly from local fishermen, the San Mateo Coast may be
an attractive location.
50
Figure 41
Top California Fishing Ports in 2011
180,000,000
$60,000,000
160,000,000
$50,000,000
140,000,000
120,000,000
$40,000,000
$30,000,000
Value
Pounds
100,000,000
80,000,000
60,000,000
$20,000,000
40,000,000
$10,000,000
20,000,000
0
$0
Eureka
Fort Bragg
Bodega Bay San Francisco Monterey
Pounds
Morro Bay
Santa
Barbara
Los Angeles
San Diego
Value [1]
Due to the decline of the commercial fishing industry in California of the last several decades,
seafood-related business expansion is unlikely to be a major economic driver on the Half Moon
Bay going forward, although there may be niche opportunities for small-scale, local-serving
specialty seafood projects or ventures.
51
6.
LONG-RANGE OUTLOOK
The Half Moon Bay General Plan Update endeavors to provide planning guidance through the
year 2035. It is difficult to know with certainty how real estate market demand and supply
dynamics will evolve in the future, particularly in a highly-localized and supply-constrained area.
In Half Moon Bay, regulations, physical development constraints, and entitlements have been
and likely will continue to be primary factors affecting growth.
Recognizing the uncertainty associated with forecasting long-run land use trends in a small
geography that must respond to a variety of physical, regulatory, and community-related
factors, this section provides order-of-magnitude estimates of land use demand through 2035.
The projections reflect a “business as usual” growth scenario in which land use patterns continue
to follow development trends observed since 2000. The projections do not envision any radical
policy changes, but do suppose a land use regulation and political environment in which new
development continues to be feasible.
•
Residential development is anticipated to continue at the growth rate observed between 2000
and 2010, the decade after passage of the restrictive local growth management policy
Measure D. If the recent historic growth rate of 0.7 percent persists through 2035, there
would be approximately 775 new homes built in Half Moon Bay 2010 through 2035. By
comparison, the Association of Bay Area Governments (ABAG) projects a 0.2 percent annual
growth rate that would yield 261 new households over the same time horizon.
•
Retail development is anticipated to continue at a rate that reflects the growing consumer
market in Half Moon Bay, including households and visitors. The retail market outlook
assumes a blended local and visitor growth rate of 1 percent per year. The current 600,000
square feet of retail space would grow by roughly 160,000 square feet, to a total of 765,000
square feet by 2035. The additional retail likely would be in small format stores, offering
goods and services targeted toward resident convenience shopping and tourism spending.
•
Office development is anticipated to continue at the growth rate observed over the past
decade, between 2004 and 2013. This level of space growth is consistent with the relatively
small scale, incremental development that has occurred historically in the city. While there
has been some discussion of the local need for larger-scale commercial space, there are two
primary reasons that a larger office project is unlikely to materialize. For one, it is
improbable that investors would pursue speculative development of a major office project
since the city is not established as a job center. Second, if a local company grows to the
point where a large-format office is required, labor force needs and the lead time necessary
to build to-suit space locally likely will be significant deterrents to pursuing a major office
project.
•
The hotel analysis (Section 3 above) is a coast-wide look at the near-term market gap for
lodging. The projected unmet demand (approximately 200 rooms over the next five years)
could be satisfied in Princeton or even Pacifica, should one of these locations move first. To
project long-run hotel room demand in Half Moon Bay, the outlook assumes 1.5 percent
annual growth, consistent with the statewide travel volume (person trips) trend observed
52
between 2002 to 2008 (a cyclical peak-to-peak trend).21 A 1.5 percent annual growth rate in
room demand would add 244 new rooms to the current Half Moon Bay inventory between
2010 and 2035.
Figure 42
Summary of Land Use Demand Outlook
2010 -‐ 2035
Annual Percent
Change
Change
2010
2015
2020
2025
2030
2035
4,074
4,219
4,368
4,523
4,684
4,850
776
0.7%
Retail SF
602,000 631,581 662,616 695,176 729,336 765,174
163,174
1.0%
Office SF
322,000 331,777 341,850 352,229 362,924 373,943
51,943
0.6%
244
1.5%
Housing Units
Hotel Rooms
21
540
582
627
675
727
784
D.K. Shifflet and Associates California Domestic Travel Reports (2004-2009).
53
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54

Economics and Real Estate Conditions and Trends

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