Supermarkets a Go-Go
Even at my most optimistic, I wouldn’t say that the grocery-anchored format has remained unscathed. The recession’s coverage has been so complete that it hasn’t spared even one segment of retail development. But yet there are bright spots.
The neighborhood shopping center has continued to perform, albeit not without struggles, and that is due in large part to its necessities-driven retailers – among them, the neighborhood grocer.
It is this segment of retail development, the grocery-anchored center that we focus on in the July issue of Chain Store Age, in the real estate supplement.
“If you’ve got a better grocer in a better center, you are less impacted than any other form of retail real estate.” That’s what Adam Ifshin, president of DLC Management (and newly minted ICSC board of trustees member), told me. DLC’s “better grocer” is Kroger in the case of its Lawrenceville (Ga.) Town Center, anchored by a newly renovated Kroger and a brand-new Kroger fuel station.
At Beach Shopping Center, in Peekskill, N.Y., Super Stop & Shop got the anchor nod, after the existing grocer anchor went bankrupt. What could have been a disastrous deal -- acquiring a center only to have the anchor go belly-up -- turned rosy for DLC when it was able to structure a 25-year lease with Stop & Shop for a 65,000-sq.-ft. flagship store that, in addition, covered the cost of redeveloping the center.
When the numbers make that kind of sense, the center will likely fly – even in the face of a downturn. But there’s another strategy that bodes well for grocery-anchored health, and that is a partnership between developer and the expanding supermarket retailer. I talked with Richard Dube, president of Tri-Land Properties in Westchester, Ill., and he told me he makes it his business to understand a supermarket’s network of stores in a market.
“We have to know the mindset that the grocer is in – whether it is currently geared toward capital asset expansion,” said Dube. In a given town, a particular grocer may or may not have a big expansion plan in mind. “Our plans need to be consistent with theirs, and vice versa,” he said. If the plans mesh, there well may be a center for an anchor, and an anchor for a center.
Tri-Land will hunt down an older supermarket (“15 or 20 years old,” Dube says) with an outdated format but volumes that approach 70 or 80% of the chain’s per-sq.-ft. average in that market. “If the store can’t be expanded, we start looking for a new location, usually within a mile of the existing site,” said Dube. “Once we find the right site, we contact the grocer and start a conversation.” Some of Tri-Land’s most impressive redevelopment projects have followed that scenario with great success.
In July, I covered a couple of Tri-Land redevelopment projects -- The Crossing in Smyrna, Ga., anchored by Kroger Marketplace, and Brywood Centre in Kansas City, Mo., which features the expansion of a 60,000-sq.-ft. Price Chopper in addition to a full center renovation.
Check out these centers, as well as grocery-anchored projects Blue Mountain Commons in Susquehanna Township, Pa., and Gloucester Crossing near Boston, in the grocery-anchored supplement in July. And for more grocery real estate updates, follow me on Twitter at twitter.com/KFieldcsa.
P.S. Following are a couple of corrections I want to mention. In the May issue, in the real estate feature on the Fastest-Growing Third Party Managers (beginning on page 48), Fameco Management Co. is listed as being headquartered in Conshohocken, Pa. It’s not -- this year’s No. 3 fastest-growing manager is headquartered in Plymouth Meeting, Pa.
Also, I just saw in the July issue, page 48, that The Sembler Co. is repeatedly referred to as The Sembles Co. (page 68, “Moving Mountains”). A HUGE apology to Sembler -- and to Lowe’s (misspelled) and T.J. Maxx (misspelled) -- for the errors. Chain Store Age doesn’t often fall asleep at the wheel, but we were definitely snoozing.