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
Mixed-Use | Apr 7, 2023
New Nashville mixed-use high-rise features curved, stepped massing and wellness focus
Construction recently started on 5 City Blvd, a new 15-story office and mixed-use building in Nashville, Tenn. Located on a uniquely shaped site, the 730,000-sf structure features curved, stepped massing and amenities with a focus on wellness.
Affordable Housing | Mar 14, 2023
3 affordable housing projects that overcame building obstacles
These three developments faced certain obstacles during their building processes—from surrounding noise suppression to construction methodology.
Mixed-Use | Mar 11, 2023
Austin mixed-use development will provide two million sf of office, retail, and residential space
In Austin, Texas, the seven-building East Riverside Gateway complex will provide a mixed-use community next to the city’s planned Blue Line light rail, which will connect the Austin Bergstrom International Airport with downtown Austin. Planned and designed by Steinberg Hart, the development will include over 2 million sf of office, retail, and residential space, as well as amenities, such as a large park, that are intended to draw tech workers and young families.
Sports and Recreational Facilities | Feb 27, 2023
New 20,000-seat soccer stadium will anchor neighborhood development in Indianapolis
A new 20,000-seat soccer stadium for United Soccer League’s Indy Eleven will be the centerpiece of a major neighborhood development in Indianapolis. The development will transform the southwest quadrant of downtown Indianapolis by adding more than 600 apartments, 205,000 sf of office space, 197,000 sf for retail space and restaurants, parking garages, a hotel, and public plazas with green space.
Retail Centers | Feb 24, 2023
Santiago Calatrava unveils plans for a luxury retail and office complex in Düsseldorf, Germany
Renowned architect and engineer Santiago Calatrava, along with the CENTRUM Group, has unveiled plans for Calatrava Boulevard, a luxury retail and office complex in Düsseldorf, Germany. Running parallel to Königsallee and connecting with the Steinstrasse station, Calatrava Boulevard will incorporate and connect to the boulevard’s existing buildings.
Mixed-Use | Feb 23, 2023
7 mixed-use developments that don't sacrifice housing affordability
Here are seven mixed-use, multifamily projects dedicated to providing affordable housing.
Multifamily Housing | Feb 21, 2023
Watch: DBA Architects' Bryan Moore talks micro communities and the benefits of walkable neighborhoods
What is a micro-community? Where are they most prevalent? What’s the future for micro communities? These questions (and more) addressed by Bryan Moore, President and CEO of DBA Architects.
Multifamily Housing | Feb 16, 2023
Coastal Construction Group establishes an attainable multifamily housing division
Coastal Construction Group, one of the largest privately held construction companies in the Southeast, has announced a new division within their multifamily sector that will focus on the need for attainable housing in South Florida.
Affordable Housing | Feb 15, 2023
2023 affordable housing roundup: 20+ multifamily projects
In our latest call for entries, Building Design+Construction collected over 20 multifamily projects with a focus on affordable housing. Here is a comprehensive list of all projects in alphabetical order.
Multifamily Housing | Feb 11, 2023
8 Gold and Platinum multifamily projects from the NAHB's BALA Awards
This year's top BALA multifamily winners showcase leading design trends, judged by eight industry professionals from across the country.
