Real Estate

Was Trader Joe’s Window Dressing for a Walgreen’s Deal?

Next Week’s Friendly Avenue rezoning may have more to do with a drug store deal than a site for Trader Joe’s.  The Business Journal reports that Trader Joe’s is passing on this site and on Greensboro.

“We are no longer interested in the proposed site in Greensboro, and we are not interested in any other sites in Greensboro at this time,” said Alison Mochizuki, Trader Joe’s spokeswoman, in an email to The Business Journal.

I’d speculate that the Trader Joe’s deal was window dressing all along for the drug store deal.  Walgreen’s can pay a significant premium (sometimes up to $3-4 million) for a high profile corner, while TJ tends to get cheap deals as the draw/anchor for a shopping center.  Given the developer’s costs in this deal, I’m guessing rents would have been north of $40/sf, while Trader Joe’s is used to rents in the low 20’s in a market like Greensboro.

I would expect the developer to move forward with the rezoning, because it’s not about Trader Joe’s.  The big question is if there will still be the same outpouring of support for a drug store with a drive thru.

Site Plan of the Proposed Friendly Avenue Rezoning

Site Plan of the Proposed Friendly Avenue Rezoning

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14 thoughts on “Was Trader Joe’s Window Dressing for a Walgreen’s Deal?

  1. “The big question is if there will still be the same outpouring of support for a drug store with a drive thru.”

    Likely not.

    Some people think TJ’s will be back, if the right developer offers the right spot. I’m not so sure.

  2. Mark Sutter says:

    I don’t think this makes sense. The developer didn’t publicly reveal that one of the tenants would be Trader Joe’s. It was Trader Joe’s itself that uncharacteristically and inexplicably revealed its interest about a month before the rezoning hearing. Otherwise, the developer would have gone to the hearing and just asked for a rezoning to allow it to build a “gourmet grocery” and pharmacy, wouldn’t they? They needed only to disclose the use, not the tenants, right?

  3. Mark Sutter says:

    Which is not to say that a drug store can’t still make this a profitable deal; I’m questioning the Trader Joe’s as “window dressing” assertion.

  4. Mark – the property owner purchased the large sign that read “Help Bring Trader Joe’s Here.” http://m.news-record.com/blogs/ground_up/article_3af7a9bc-a3f2-11e3-976a-0017a43b2370.html?mode=jqm It’s also my understanding that Trader Joe’s was mentioned to the neighbors and the property owners as part of the rezoning effort.

    N&R has certainly linked Trader Joe’s with the rezoning request multiple times. “Greensboro zoning commission paves way for Trader Joe’s” – N&R’s headline on the zoning commission hearing. http://www.news-record.com/business/local_business/article_db4e9f40-92ba-11e3-afc9-0017a43b2370.html

    Did anyone ask Trader Joe’s or the developer if they had reached mutually acceptable economic terms, subject to zoning?

  5. Mark Sutter says:

    You need to read our paper and online posts. I think you’d have a different view of timelines and who said what, and when.

    That first link you provided, by the way, doesn’t have the developer quoted, just the notion that proof was to be found in a non-comment. I remember it well because it was posted later the same day I posted a blog and Facebook item myself.

    • Mark – I read the N&R daily (print edition via my iPad) and its online feeds as well as the Business Journal digital edition and feeds. Today’s headline in the N&R reads:

      “Trader Joe’s bids aloha to any Greensboro store” then subheading “We don’t get in … political battles … we sell groceries”.

      Biz Journal Headline reads: “Trader Joe’s: We’re no longer interested in Greensboro” and lede “Trader Joe’s Co. on Tuesday told The Business Journal that it is no longer interested in opening a Greensboro location.”

      What their quote said is that they are no longer interested in this site and not currently considering other sites at this time. The assertion made is that Trader Joe’s turned down this site and Greensboro because of controversy, rather than economics or other factors. I understand that makes for a more attention getting headlines. TJ’s isn’t turning down Greensboro because of one zoning case. That’s just silly.

      They’ve been looking at sites in Greensboro since 2007. They held off because of the recession and other cities being a priority. The Friendly Center area is their preferred submarket but as with most retailers, cost is a factor as well. There’s also the issue of the Harris Teeter exclusive, which is why Whole Foods is where it is located in the Sears building.

      There’s more research and less speculation that should go into the news.

    • That was a solid article – only some things missing – map of area restricted by HT – there are other parcels that aren’t covered; the single digit rent per sf that WF paid for the Sears space; the neighborhood covenants; and Starmount’s discussions with the Hobbs neighbors.

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