Sunday, March 9, 2014

Why Didn't Trader Joe's Pick Another Site?

That's the question that is being asked by a lot of people in Greensboro today. What we're seeing here is a complete misunderstanding of how grocery stores and other large retailers end up in any given location.

The process begins with a developer who buys the property then contacts the retailer-- in this case, Trader Joe's-- and says, "Hey, I've got this great location you should put one of your stores in and for $X dollars per square foot I'll make room for your store on my property."

The developer only shows the retailer properties owned by said developer and at this point the city is far from being involved in the project.

If the retailer likes the pitch they'll ask for studies that show the proposed location is a good site. And if the retailer has never before done business with said developer the retailer may even pay for a study of their own. But if the retailer has placed several successful stores with this same developer before the retailer may skip their own study in the interest of saving a few thousand dollars.

The site may or may not need rezoning. In this instance rezoning was necessary.

Unlike manufacturers and other large employers, most City Economic Development Departments are not usually involved in the recruiting of retail outlets. The City might be involved in recruiting say a Trader Joe's Distribution Center but a grocery store would almost always be left up to developers.

The City has nothing to do with pitching retail sites and if the City starts pitching retail sites then the City is picking one developer over another developer. (Something they actually do all the time but if they get caught doing would get them in very hot water.)

And lastly, why would any developer recommend any site that developer does not own and does not stand to make any money on? There's no money in putting a Trader Joe's or any other store on property you don't own and cannot collect rent from. I'm not absolutely certain but I think the site on Hobbs is the only site in Greensboro owned by that particular South Carolina developer.