rss icon

Sunday, 03 March 2013 22:00

Food Follies? Economics, perceptions work against attracting downtown grocery

Written by 
Rate this item
(3 votes)
While many people call for a full-service grocery to locate in downtown Grand Rapids, they may have to rely on the currently available options including Grand Central Market. The reason, developers say, is that the economics don’t make sense for grocery retailers to make the move to the central business district just yet. While many people call for a full-service grocery to locate in downtown Grand Rapids, they may have to rely on the currently available options including Grand Central Market. The reason, developers say, is that the economics don’t make sense for grocery retailers to make the move to the central business district just yet. PHOTO: ELIJAH BRUMBACK

Even a chorus of Grand Rapids urbanites saying they want a downtown grocery will have a hard time convincing most retailers to overlook the current economics of opening a new store in the city’s core business district.

That’s the opinion of several local real estate development professionals who say that despite people’s clamoring, they do not expect Trader Joes or any other grocer to open up shop in the downtown area anytime soon.

The hard truth of the matter is that if a store like Trader Joes were to come to Grand Rapids, the chain would almost certainly pursue a suburban location first, said Earl Clements, retail principal with Colliers International in Grand Rapids.

Clements should know. In recent years, Trader Joes hired him to find a prime location for a store, but the company was never satisfied with its options, he said.

He said he remains positive the retailer will eventually come to West Michigan, but it will likely require that an experienced developer rehab or build a new facility that would be tailored to the chain’s needs.

“We’re just not there yet,” Clements said. “I don’t have the solution, but I know what the problem is.”

In this case, the problem is primarily about the numbers. The amount of square footage, the number of on-site parking spaces and the current number of residents in the central business district cause developers to struggle when putting together a cost-effective development, sources said.

A grocery store development of any type downtown would also certainly be part of a mixed-use project, including space for office and housing options, Clements said.

Clements and local developers such as Jonathan Bradford, the president and CEO of the Grand Rapids-based nonprofit Inner City Christian Federation, have spent countless hours trying to convince potential greengrocers that downtown Grand Rapids is a solid investment, despite decades of flight to the suburbs.

“For a grocery that takes the plunge, they’ll be trying to reverse a trend of about 60 years,” Bradford said. “That doesn’t come easily, especially considering the slim margins of grocery operators.”

At one point, both Meijer and Spartan Stores flirted with small concept ideas, but eventually passed on investing in an experiment, Clements said.

Essentially, a grocer can’t sell bananas downtown for the same price it could in the suburbs. Gaps in cost and efficiency are big hurdles, but consumer shopping habits and downtown population numbers are even bigger reasons for Grand Rapids not having a grocery store downtown, sources said.

“(A downtown grocery store) begs dramatically different social habits,” said Sam Cummings, managing partner of CWD Real Estate Investment. “We’re so used to shopping twice a week, going to Meijer or Kingmas and loading up the cart. You’re not going to pack a week’s worth of groceries into a cart at a downtown market and huff it back to your apartment.”

Stores such as Grand Central Market on Monroe Center and Duthler’s Family Foods on Bridge Street on the city’s west side are about the closest retail offering to a full-service store where produce and meat are available in or near the downtown area. While both stores cater to different demographics with the products they carry, they still don’t entirely fill the void, sources said.

While many may point to the new Downtown Market as filling some of the near “food desert” conditions in downtown Grand Rapids, the project’s leaders say the market’s goals are decidedly different from those of a typical grocery store. The plan to fill its spaces with boutique retailers, restaurants and farm-fresh produce providers doesn’t completely bridge the gap, but the aim of the market goes beyond the just providing staples, said Mimi Fritz, the president of the organization.

“We are not a grocery store, and we’re not intending to be that,” Fritz said. “From a programming and structural standpoint, we’re working in education to farming.”

The market is shaping up as more of a Community meeting ground where people from all walks of life can engage, she said.

“There is huge interest and investment in this area,” Fritz said. “People definitely recognize what’s missing.”

Personally, Fritz said she hopes something like a grocery store or convenience store decides to move in sooner rather than later so she’ll finally have a place downtown where she can count on finding batteries and laundry detergent.

Working in the city’s favor as it tries to attract a grocery or convenience store, Bradford said, is the roughly $203 million in development underway or with approved financing within a several block radius of ICCF’s own sprawling plans near the Division Avenue and Wealthy Street intersection. That investment estimate is in addition to the tens of millions of dollars ICCF has invested.

“This is data to be envied,” he said. “But you can’t come at this corner with your suburban lenses on.”

Echoing Cummings’ sentiments, Bradford said grocery store companies are rooted in strong suburban operations and carry certain assumptions that can’t be applied to urban life.

“We’re worried about getting a grocery operator to take their suburban glasses off first, and that’s not going to happen automatically,” he said. “It’s not tough to understand why they aren’t here yet. They need some education, and we need to go to them and stick their faces in the opportunity and the reality.”

Read 2675 times Last modified on Thursday, 28 February 2013 10:02
Elijah Brumback

Staff Writer

ebrumback@mibiz.com

July 2014
S M T W T F S
29 30 1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31 1 2

CFO of the Year

Follow MiBiz