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
![Rent premium percentage by grocer](/sites/default/files/inline-images/rent%20premiu%2C%20by%20grocer%20chart.jpg)
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
Cultural Facilities | Jun 10, 2015
Artists turn oil tankers into architecture
Four Dutch artists propose transforming tankers into monuments with mixed-use space.
Wood | Jun 2, 2015
Michael Green Architecture designs world's tallest wood building for Paris competition
“Just as Gustave Eiffel shattered our conception of what was possible a century and a half ago, this project can push the envelope of wood innovation with France in the forefront," said architect Michael Green of the project.
Smart Buildings | May 28, 2015
4 ways cold-climate cities can make the most of their waterfronts
Though cold-climate cities pose a unique challenge for waterfront development, with effective planning waterfront cities with freezing winter months can still take advantage of the spaces year-round.
Sponsored | Coatings | May 14, 2015
Prismatic coatings accent the new Altara Center
This multi-use campus will contain a university, sports facilities, medical center, and world-class shopping
Mixed-Use | May 10, 2015
Construction on Orlando’s massive ‘innovation hub’ is finally starting
The $1 billion Creative Village development will create a business and education hub.
High-rise Construction | May 6, 2015
Two new designs submitted for New York City Riverside Center
Both designs reference the cantilevers and other elements featured in architect Christian de Portzamparc’s original masterplan for the complex, which has now been scrapped.
Building Owners | May 6, 2015
Hackathons and RFCs: Why one developer killed the RFP
In lieu of an RFP process, Skanska Commercial Development hosted a three-week "hackathon" to find an architect for its 2&U tower in Seattle.
Mixed-Use | May 5, 2015
Miami ‘innovation district’ will have 6.5 million sf of dense, walkable space
Designing a neighborhood from the ground-up, developers aim to create a dense, walkable district that fulfills what is lacking from Miami’s current auto-dependent layout.
Hotel Facilities | Apr 30, 2015
Atlanta Braves partner with Omni Hotels & Resorts to build hotel near new Suntrust Park
The Omni Atlanta Northwest Hotel will feature 16 floors with 260 guest rooms and suites, rooftop hospitality suites, 12,500 sf of meeting space, a signature restaurant, and an elevated pool deck and bar overlooking the plaza and ballpark.
Hotel Facilities | Apr 29, 2015
OMA unveils design for the Netherlands' largest hotel
Once completed, and if approved, the structure will add three stacked cubes to the Amsterdam skyline.