Whole Foods, Other Grocery Stores Are Hot Property
Global real-estate investment manager Hines is paying $112 million for a suburban New York shopping center featuring a Whole Foods, the largest grocery-anchored retail sale in the U.S. since September.
The sale of the 262,000-square-foot property in White Plains, N.Y., shows how demand for grocery-store complexes persists, despite rising interest rates and slowing activity for other property types. These outlets have become increasingly attractive as the pandemic winds down and consumers return to shopping in person.
“We’re confident in retail, we’re confident in New York,” said
Alfonso Munk,
chief investment officer of the Americas for Houston-based Hines, which closed on the property last week.
Retail was the only real-estate sector where sales grew last year compared with 2021, according to data firm MSCI. Sales activity, which totaled $85.7 billion in 2022, was mostly front-loaded in the first half of the year, with transactions declining as interest rates rose. Shopping-center sales similarly declined, but to a lesser degree than single-tenant retail space, said
Jim Costello,
chief economist for MSCI’s real-assets team.
Mr. Munk said grocery-anchored shopping centers have held up well during recent economic headwinds and will be a focus for Hines moving forward, along with housing and industrial acquisitions. “We’re staying away from malls, office for now,” he said.
Grocery stores have proved relatively resilient to both interest rates and inflation. Foot traffic at mid- and low-tier grocers in January topped 2019 levels, according to data-analytics firm Creditntell’s Real Estate Intelligence platform.
“Even with inflation, you’re still going to buy milk, you’re still going to buy eggs, you’re still going to buy butter,” said
Anjee Solanki,
national director of retail services and practice groups, U.S., for real-estate firm Colliers. “You’re still going to go to the grocery store.”
The proliferation of online grocery-delivery services like Fresh Direct has cut into some stores’ business. But Mr. Munk said most shoppers still prefer to buy their groceries in person.
“There’s a very strong number of people that like to go to the grocery store, like to seek fresh produce,” he said.
Whole Foods and its neighbor Dick’s Sporting Goods recently signed 10-year lease renewals at the White Plains, N.Y., complex called the Source.
Photo:
Ryan Bowlby for Hines
Grocery is also a high-volume, low-margin business, which has historically proven less prone to disruption by e-commerce, Mr. Munk said. Transportation costs make it difficult for delivery companies to turn profits and customers don’t like paying large delivery fees.
Foot traffic to high-end grocers dipped in January when some shoppers traded down amid rising prices. But overall, people are visiting more grocery stores and shopping more frequently than they did in previous decades, according to Colliers. The recent increase in workers returning to offices doesn’t appear to have dented grocery-store foot traffic, particularly in the suburbs, Ms. Solanki said.
“Even though they’re coming into the office, it doesn’t mean they’re leaving at five,” she said. “There’s still that weird flexibility of, ‘I’ll leave at 4, pick up stuff on the way home.’”
On a recent Thursday afternoon in White Plains, the parking lot outside Whole Foods was humming as people pushed shopping carts inside and workers from nearby offices dashed in to buy lunch. The complex, called the Source, houses the U.S. headquarters of
Danone SA,
a French food company, and the offices of Hudson Gateway Association of Realtors.
Melvin Kohn,
77 years old, walked out with frozen blueberries and spring rolls, a salad for lunch and a bottle of green tea. The White Plains resident, who is retired, said he visits the store every other day to pick up items as needed.
“I enjoy coming here and shopping,” he said. “I know the quality is good. It’s convenient.”
Whole Foods and its upstairs neighbor Dick’s Sporting Goods, another pandemic winner as people stocked up on athletic and outdoor gear, recently signed 10-year lease renewals, according to Hines. The Cheesecake Factory, furniture retailer Raymour & Flanigan and a Department of Motor Vehicles branch are also tenants.
Hines paid $41 million less than the previous owner, UBS Realty Investors LLC, paid for the property in 2005, according to MSCI. A spokeswoman for UBS declined to comment.
Mr. Munk said he believes investors are overlooking the New York metro area in their zeal to snap up Sunbelt properties. White Plains has thousands of housing units under construction.
“You’ll see Hines doing more of these [deals] going forward, taking advantage of the arbitrage that exists between more favored and less favored markets,” Mr. Munk said.
Write to Kate King at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Global real-estate investment manager Hines is paying $112 million for a suburban New York shopping center featuring a Whole Foods, the largest grocery-anchored retail sale in the U.S. since September.
The sale of the 262,000-square-foot property in White Plains, N.Y., shows how demand for grocery-store complexes persists, despite rising interest rates and slowing activity for other property types. These outlets have become increasingly attractive as the pandemic winds down and consumers return to shopping in person.
“We’re confident in retail, we’re confident in New York,” said
Alfonso Munk,
chief investment officer of the Americas for Houston-based Hines, which closed on the property last week.
Retail was the only real-estate sector where sales grew last year compared with 2021, according to data firm MSCI. Sales activity, which totaled $85.7 billion in 2022, was mostly front-loaded in the first half of the year, with transactions declining as interest rates rose. Shopping-center sales similarly declined, but to a lesser degree than single-tenant retail space, said
Jim Costello,
chief economist for MSCI’s real-assets team.
Mr. Munk said grocery-anchored shopping centers have held up well during recent economic headwinds and will be a focus for Hines moving forward, along with housing and industrial acquisitions. “We’re staying away from malls, office for now,” he said.
Grocery stores have proved relatively resilient to both interest rates and inflation. Foot traffic at mid- and low-tier grocers in January topped 2019 levels, according to data-analytics firm Creditntell’s Real Estate Intelligence platform.
“Even with inflation, you’re still going to buy milk, you’re still going to buy eggs, you’re still going to buy butter,” said
Anjee Solanki,
national director of retail services and practice groups, U.S., for real-estate firm Colliers. “You’re still going to go to the grocery store.”
The proliferation of online grocery-delivery services like Fresh Direct has cut into some stores’ business. But Mr. Munk said most shoppers still prefer to buy their groceries in person.
“There’s a very strong number of people that like to go to the grocery store, like to seek fresh produce,” he said.
Whole Foods and its neighbor Dick’s Sporting Goods recently signed 10-year lease renewals at the White Plains, N.Y., complex called the Source.
Photo:
Ryan Bowlby for Hines
Grocery is also a high-volume, low-margin business, which has historically proven less prone to disruption by e-commerce, Mr. Munk said. Transportation costs make it difficult for delivery companies to turn profits and customers don’t like paying large delivery fees.
Foot traffic to high-end grocers dipped in January when some shoppers traded down amid rising prices. But overall, people are visiting more grocery stores and shopping more frequently than they did in previous decades, according to Colliers. The recent increase in workers returning to offices doesn’t appear to have dented grocery-store foot traffic, particularly in the suburbs, Ms. Solanki said.
“Even though they’re coming into the office, it doesn’t mean they’re leaving at five,” she said. “There’s still that weird flexibility of, ‘I’ll leave at 4, pick up stuff on the way home.’”
On a recent Thursday afternoon in White Plains, the parking lot outside Whole Foods was humming as people pushed shopping carts inside and workers from nearby offices dashed in to buy lunch. The complex, called the Source, houses the U.S. headquarters of
Danone SA,
a French food company, and the offices of Hudson Gateway Association of Realtors.
Melvin Kohn,
77 years old, walked out with frozen blueberries and spring rolls, a salad for lunch and a bottle of green tea. The White Plains resident, who is retired, said he visits the store every other day to pick up items as needed.
“I enjoy coming here and shopping,” he said. “I know the quality is good. It’s convenient.”
Whole Foods and its upstairs neighbor Dick’s Sporting Goods, another pandemic winner as people stocked up on athletic and outdoor gear, recently signed 10-year lease renewals, according to Hines. The Cheesecake Factory, furniture retailer Raymour & Flanigan and a Department of Motor Vehicles branch are also tenants.
Hines paid $41 million less than the previous owner, UBS Realty Investors LLC, paid for the property in 2005, according to MSCI. A spokeswoman for UBS declined to comment.
Mr. Munk said he believes investors are overlooking the New York metro area in their zeal to snap up Sunbelt properties. White Plains has thousands of housing units under construction.
“You’ll see Hines doing more of these [deals] going forward, taking advantage of the arbitrage that exists between more favored and less favored markets,” Mr. Munk said.
Write to Kate King at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Denial of responsibility! Techno Blender is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.