SAN FRANCISCO, CA -- Grocery Anchored centers, have been considered recession-resilient. However, the darling of retail investors -- institutional and private -- has lost its lustre. That's the core thesis of a Retail Traffic post, "Grocery-Anchored Shopping Centers No Longer the Safest Bet in Retail.".
But it doesn't apply to all grocers or grocery anchored centers. High-end grocers are expanding (and forcing major mid-market grocers to adapt.)
"traditional mid-market grocers as a group have all but stopped growing, notes Ryan McCullough, real estate economist with the research firm the CoStar Group. According to an index McCullough put together, since 2007, the amount of new leasing traditional supermarkets have done by square footage has declined approximately 60 percent. During the same period, high-end grocers expanded their square footage by 72 percent. Earlier this week, Whole Foods executives talked about growing to as many as 1,000 stores in the U.S., including in smaller markets.
While we believe the RT assessment of mid-market grocers doesn't apply to all regions, it does serve as a barometer of the CRE market. Namely, all real estate investment decisions must include a thorough review of the local retail market -- which should include sales tax analysis, always a useful tool in this regard.