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Mr. John 1. Jermanis City of San Leandro May 31, 2000 Page II SEDWAY GROUP Real Estate and Urban Economics Market-Supported Uses Based on information presented in the analysis on preceding pages, the following conclusions of market-supported uses at the San Leandro Marina are summarized below. Restaurants. Research shows that an additional one to two restaurant uses would likely receive market support at the Marina. Interviews with managers of the existing restaurants indicate that additional restaurant uses could potentially assist their business and would enhance the overall draw of the marina. A restaurant offering different dining fare, such' as an 'ethnic restaurant or brewery/restaurant, would be optimal. Potential chain restaurants that might be appropriate for the Marina include Benihana, Claim Jumper, Cucinal Cucinal, Macaroni Grill, Mimi's Cafe, and Outback Steakhouse. Sedway Group believes that the parcel north of El Torito is the most appropriate site for a new restaurant uses. The site of the former Blue Dolphin and the Boat Works site would also be appropriate for a restaurant, although such a use would represent an underutilization of both parcels. All sites would benefit from existing parking in the area, as well as excellent view corridors. Assuming sales per square foot on par with the performance to date of the existing restaurants, each restaurant could generate annual ground rent ranging from $100,000 to $200,000. A more specific estimate of revenue potential would depend upon the size and nature of each additional restaurant, as well as lease deal points. Hotel. The viability ofa hotel faces serious near term challenges in light of the substantial number of hotel rooms planned, proposed and under construction, both in the primary market area as well as the greater Oakland metropolitan area, Furthermore, financing for new hotels nationally has become increasingly difficult to acquire and is not expected to ease in the near future. Despite this, the owners of the Marina Inn have expressed a desire to develop an additional hotel product at the Marina of a different type and quality than the existing Marina Inn. In addition, other developers have expressed an interest in building hotel product at the Marina. Sedway Group believes that the greatest potential for additional hotel rooms at the Marina lies in a mid-range, full service product that offers relatively generous meeting space and packages with the San Leandro Golf Complex. This hotel would target both the business and meetings markets, taking advantage of the Marina's proximity to Oakland International Airport, tranquil setting and nearby golf. By targeting this niche, the potential hotel would be able to differentiate itself from the slew of competition in the market area. Potential hotel chains that might be appropriate at the Marina include Crowne Plaza, Doubletree, Radisson and Ramada. The most appropriate site for this hotel would be the Blue Dolphin site. This site has been the subject of many hotel proposals, including a substantial conference center and "four-star" products. Sedway Group believes that reserving the Blue Dolphin site for a high-end or upscale hotel development is not realistic as the overall area has limited potential to attract a significant leisure market. Instead, Sedway Group recommends focusing efforts regarding this site OIl a smaller, mid-range, full-service product with meeting space. If a new hotel is pursued at the San Leandro Marina, Sedway Group cautions that expectations should be tempered by the understanding that given expected future market conditions, as well as the economics of conference hotels, public assistance may be required in order to realize a hotel development. Even so, such a process may require a considerable amount of time to reach fruition. '.