Yes, we need to have a look at the map to get an idea whether you are on the right track. However, it seems that you follow the most appropriate structure for this task which is "Introduction, Overview , Details".
The local statehas planning to establish a supermarket in the one part of two potential areas.
... wrong grammar here;The local state is planning/ The local state has planned/ The local state plans
What is more, S2 is situated in a traffic-free zone. However, running along S1 and S2 is the railway line.
... your tone should be more formal and not personal because this task is aimed at assessing your report writing skills.
Upload the map and we would give you more relevant and useful comments :)