Optimizing land usage is becoming an even bigger priority for developers. In some city centers, many large grocery stores sprawl across valuable land. This inefficient use of space doesn't reflect the best possible use for these desirable locations, according to the recent RCLCO report The Supermarket Rental Sweep: Analyzing Multifamily Rent Premiums Generated by Grocery Store Anchors.
One way for grocers and retail outlets to increase interest in a desirable location is by partnering with multifamily developers. The strategy of building housing above a ground floor store not only adds an extra amenity for residents, but increases the rental premium desired by developers.
Rental Rate Premiums from Ground-Floor Grocers
The multifamily performance of such partnerships is nothing to scoff at. The RCLCO analysis finds that apartment communities with a ground-floor Whole Foods achieve a rental rate premium of 6% on average—comparable to similar communities in the immediate area.
A similar figure is present for Trader Joe communities; these premiums average out to 5.6% which is down only slightly from 5.8% in 2020. In other premium grocers like Fairway, Safeway, Sprouts, and Harris Teeter, the above-ground community premium increased from 3.3% in 2020 to 5.2% in the 2023 study.
Rent Premium by Grocer
For its analysis, RCLCO looked at the scale, age, type of construction, quality, and market positioning of nearly 100 mixed-use centers compared to their local counterparts. These include 37 multifamily properties with a ground-floor Whole Foods, 21 with Trader Joe’s, and 30 with other premium grocers.
RCLCO identified two to five similar apartment buildings in each local neighborhood and adjusted the rents to account for size differences. Then, they compared the adjusted rents of these similar buildings to the average rent in the grocer-anchored case study building. The researchers believe this methodology led to a quality-adjusted comparison that could point to the direct impact that a ground-floor grocer has on a community (as opposed to rent prices being higher due to higher quality amenities and finishes).
In general, the strong performance of apartments with ground-floor grocers since RCLCO’s 2016 study indicates that “the momentum for these mixed-use offerings continues to grow.”
Click here to read the full findings of the RCLCO report: The Supermarket Rental Sweep: Analyzing Multifamily Rent Premiums Generated by Grocery Store Anchors
RELATED
Related Stories
| Aug 11, 2010
Arup, SOM top BD+C's ranking of the country's largest mixed-use design firms
A ranking of the Top 75 Mixed-Use Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
10% of world's skyscraper construction on hold
Emporis, the largest provider of global building data worldwide, reported that 8.7% of all skyscrapers listed as "under construction" in its database had been put on hold. Most of these projects have been halted in the second half of 2008. According to Emporis statistics, the United States had been hit the worst: at the beginning of 2008, "Met 3" in Miami was the only U.S. skyscraper listed as being "on hold". In the second half of the year, 19 projects followed suit.
| Aug 11, 2010
Structure Tone, Turner among the nation's busiest reconstruction contractors, according to BD+C's Giants 300 report
A ranking of the Top 75 Reconstruction Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Portland Cement Association offers blast resistant design guide for reinforced concrete structures
Developed for designers and engineers, "Blast Resistant Design Guide for Reinforced Concrete Structures" provides a practical treatment of the design of cast-in-place reinforced concrete structures to resist the effects of blast loads. It explains the principles of blast-resistant design, and how to determine the kind and degree of resistance a structure needs as well as how to specify the required materials and details.
| Aug 11, 2010
New website highlights government tax incentives for large commercial buildings
Energy Retrofit Group (ERG), the subsidiary of 40-year-old, award-winning Adache Group Architects, Inc., has announced the creation of their new energy conservation web site: www.energy-rg.com.
| Aug 11, 2010
Gensler, HOK, HDR among the nation's leading reconstruction design firms, according to BD+C's Giants 300 report
A ranking of the Top 100 Reconstruction Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
The Joule Hotel
Dallas, Texas
The Joule Hotel in Dallas, designed by local firm Coburn & Smith, was constructed in 1927 as the Dallas National Bank Building. Originally one of the finest examples of gothic revival architecture in Texas, it had had most of its gothic elements removed over the years after being converted into an office building and later abandoned. What was left had fallen into disrepair.
| Aug 11, 2010
AECOM, WATG top BD+C's ranking of the nation's 75 largest hotel design firms
A ranking of the Top 75 Hotel Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
