Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
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RET AILING TODA Y store closures," said Naveen Jaggi, senior managing director of brokerage retail services at CBRE. "You're not going to find a major grocery chain operate at a loss just to go urban." Municipalities across the country are clamoring for downtown grocery stores in the belief that these will attract people to the urban center. But though economic incentives are often dangled in front of grocery operators, experts say this is no key to long-term success. "Peo- ple in grocery store development know that you can build a free food store and give it to a retailer and they still can't afford to operate it if they don't have enough volume," Kilduff said. "You can't force it where it can't go." In fact, it turns out the real estate cost is not a primary concern for grocery chains, which pay at most 5 percent of sales in such costs. "At some point, even free rent is too expensive," said Lund. "They are not big rent payers. The actual operation of the store is labor-intensive and the shelf life of fresh produce is very short. Downtown customers are upper- income people, and they want high-qual- ity produce. The turnover of produce requires new product twice a week, and you've got to get the volume of custom- ers to support that. It's really frustrating getting the economics of these to work." The situation developing in San Anto- nio is sounding a familiar theme among cities these days. "We are actively trying to find a way to bring a grocery store to downtown San Antonio," said Mark Bro- deur, the city's director of downtown de- velopment. "The marketing people say we don't have enough people living down- town to support a traditional grocery store. But the combination of office work- ers and tourists creates a larger market." Brodeur, who hails from California and has some 30 years of urban-planning ex- perience, knows the urban mind-set is dif- ferent from that of the suburbs. The city is looking at nontraditional types of gro- cery stores, he says. "Everyone is used to a 20,000-square-foot store, but we believe it would be a smaller footprint and not of- fer everything that a larger grocer would offer. I believe people will still get in their car to buy 17 rolls of paper towels." To those seeking the next great op- portunity for downtown grocery devel- opment, Kilduff says he would look at the top metro areas. "I would sift through them, and I would take a look at a few," he said. "It won't have to be the Sun Belt, because that's where all the people are moving. We will go where the people are now and find the cities that have the demographic that we're looking for and then test the thesis there." SCT Your Florida Partner www.crec.com The Trails Shopping Center Ormond Beach, FL From fashion to flambé Join Ann Taylor Loft, Coldwater Creek, Talbots, White House/Black Market, Publix, Panera Bread & others Leasing Inquiries: Joshua Busby, Vice President 407.472.2732 jbusby@crec.com AUGUST 2012 / SCT 33