An edited version of this blog was published in the Calgary Herald's NEW CONDOS section on Saturday, August 29th, 2015 titled, "Grocery store placement a tricky business."
Whatever happened to the six grocery stores being planned in Calgary’s City Centre (all of the urban communities within 3 km of downtown office core)? Back in August 2014, Calgary Herald City journalist Jason Markusoff reported that developers of no less than six different condo projects were negotiating with grocery stores to locate in their projects.
Fast forward to August 2015 - Loblaw’s has done a deal for a mega 100,000 square foot (50% will be groceries and 50% other goods) East Village with Rio Can. First Capital Realty recently announced they have inked a deal with Vancouver’s Urban Fare (a subsidiary of the Overwaitea Food Group) as the anchor tenant of the ground floor retail space for The Royal condo on 8th Street and 16th Avenue SW.
Ryan Bosa, President of Embassy Bosa Inc. the developer for The Royal (condos and commercial spaces) is “very excited with Urban Fare being at our doorstep as First Capital’s anchor tenant. Grocery stores help define neighbourhoods and Urban Fare will fill in the last piece to make this a fully amenitized neighbourhood with a massive convenience for the existing community and our homebuyers alike. Without question, the grocery tenant had a huge impact on us going after this site (though Urban Fare was not confirmed at the time we did the deal, we did know there would be a high-caliber grocer).”
Why did it take so long to get two new grocers to locate in the Beltline and East Village? And why is Whole Foods rumoured to be locating in Northland Mall and not in an urban community you ask?”
Perhaps it is because Calgary’s City Centre is already well served with its current nine grocery stores – three Canada Safeway (Mission, Beltline and Kensington), Calgary Co-op Midtown, Sunterra, Community Natural Foods, Bridgeland Market, Amaranth Whole Foods Market and Sunnyside Natural Market.
In chatting with a few grocery store experts, a modern large grocery store like Canada Safeway, Sobey’s, Save-On-Foods or Calgary Co-op needs a minimum customer base of 30,000 to warrant opening up a new store. Given that our greater downtown has four large grocery stores, they alone have the capacity to serve over 120,000 residents. If you add up all of the communities within a 4 km radius of our downtown core, the population only adds up to 75,000. So our greater downtown communities are well served by the existing grocery stores - despite what some might argue!
There is probably room for a couple of other specialty grocers, which is exactly what we have with Community Natural Foods, Bridgeland Market, Sunterra, Amaranth Whole Foods Market and Sunnyside Natural Market.
Proposed sites for new grocery stores
The mega makeover plans of Eau Claire Market includes a grocery store but the population of Eau Claire, Downtown Core and West End won’t even add up to 20,000 people when all the proposed new condos are completed. With the coming of a mega grocery store in East Village, that just about kills any opportunity for a major grocer to set up shop in Eau Claire.
An ambitious three-tower residential project called West Village Towers at 9th Ave SW at 10th Street (old Stampede Pontiac site) is another location looking for a major grocery store to locate there, but with Canada Safeway, Calgary Co-op and Community Natural Foods all just blocks away, this will be a tough deal to negotiate.
Anthem Properties has been sitting on their Mcleod Trail 25th Ave SE land (just west of Erlton LRT Station) since 2007. Its proposed development plan calls for a mixed-use development with four residential towers totaling 570,000 sf, (which translates to 600 condos or about 1,000 people). Their website indicates the commercial podium at street level will be anchored by a 75,000 square foot grocery (there is even a computer rendering showing a generic Grocery sign).
The question one has to ask is “Would Sobeys possibly sell their Canadian Safeway site in Mission and open a modern grocery store in Erlton?” There aren’t sufficient residents in Mission, Erlton and Roxboro to support for two grocery stores even with several new residential developments over the next five to ten years.
Peter Edmonds, Director, Marketing tells me Anthem Properties is “currently working with a national grocer (not Sobeys) on a 38,000 square foot store to open within three years and with construction starting on their Erlton Station mixed-use development in the spring of 2016.”
PBA Land & Development recently announce plans for a 100,000 square foot mixed-use project at the corner of 17th Avenue and 1st Street SE, which would include a 15,000 square foot grocery store at street level. If the Erlton Station deal is inked it would be difficult to imagine another grocery store at this location.
While many Calgary urbanites would love to see more grocery stores locate in new developments, the harsh reality is there are already more grocery stores in our greater downtown communities than in most urban centres. The current Canadian Safeway and Calgary Co-op store sites are economically viable in part because they have only owned their land for a long time and they own the building. Trying to operate a viable grocery store in a high rent urban site with limited vehicular and loading access and expensive indoor parking and without a critical mass of residents is a difficult investment to make for the low margin grocery store business.
One former senior executive with a major international grocery store chain told me "people should be careful what they hope for. If we opened a story in Bridgeland, that would probably mean the end of the local mom and pop stores like, Lukes Drug Mart and the Bridgeland Market and we'd become the big bad corporate store. Despite what many think, we are sensitive to our relationship with the communities we serve - they are our customers."
The addition of a Loblaw’s grocery store in East Village and the Urban Fare in the Beltline will dramatically change Calgary’s urban grocery store culture for the next decade making it difficult for any new players for several years. That is just my opinion and I hope I am wrong!
The public should realize developers are working very hard to ink a deal with new grocery store operators, but it isn’t easy, Nobody is going to sign a deal that doesn’t make economic sense for both the developer and the grocer.
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