In The News

From the Oakland Tribune (Oakland, CA):

Bagging growth
Grocery Outlet unveils expansion throughout east bay
By George Avalos

Grocery Outlet is making good on expansion plans. The discount realtor said Wednesday that it had agreed to leases for new stores in Concord, Dublin, Gilroy and Watsonville, and it is opening a store in Pinole.

“We are in very high gear and expansion mode,” said Marc Drasin, vice president of real estate for Grocery Outlet Inc. “We are signing a record number of leases and opening a record number of stores.”

The retailer, like others, is attempting to capitalize on the tough commercial real estate market, a sector whose property values and rental rates have plunged during the past few years.
“There are opportunities for strong retailers right now,” said Adria Giacomelli, a broker with Colliers International, which helped arrange the Grocery Outlet deal in Concord.

Berkeley-based Grocery Outlet opened five stores in 2009 and expects to open 15 in 2010, Drasin said. One of those stores, in Pinole, is slated to open today. Grocery Outlet operates deep-discount supermarkets.

The deals involving Grocery Outlet and other merchants recently suggest that some retail properties that became vacant during the recession are beginning to attract retailers that are in a more robust position.

Grocery Outlet leased 14,000 square feet in a former Big Five Sporting Goods store at 1840 Willow Pass Road, said James McMasters, director of the retail division for Colliers in Walnut Creek.

That building became available when Big 5 moved to a new location n Concord on Clayton Road in the summer of 2007. The developer of the Willow Pass site ousted Big 5 because the builder wanted to construct a condominium complex. The credit crunch and emerging mortgage meltdown scuttled those plans. By the time Grocery Outlet moves into the site, it will have been empty for three years.Concord also has attracted a Seafood City that opened a big supermarket and retail center in a former Circuit City store, and 99 Ranch Market opened in a one-time OfficeMax store.

“We’re glad to see more shopping choices coming into the central Concord area,” said John Montagh, an economic development official with the city of Concord.

Grocery Outlet intends to spend $1.5 million to upgrade the old Big 5 store in Concord and prepare it for the new uses.

“We have been trying to get into Concord for a long time,” Drasin said. “We have been receiving many e-mails and letters from residents who want us to open a store there.”

Similarly, Grocery Outlet took an existing Anderson’s TV site that closed some time ago during the economic downturn. The grocer is renting 15,000 square feet at 7590 Amador Plaza Road in Dublin.

“We have signed a lease in Dublin and are hoping the property owner will soon sign the lease,” Drasin said. “We are very interested in the Tri-Valley area of Dublin, San Ramon and Pleasanton.”

The Concord and Dublin stores should be open by late summer, he said.

The upcoming stores in Concord, Dublin, Gilroy and Watsonville mean significant hiring. Each store typically employs about 40 people, Drasin estimated.

Those who want to work at the company’s new stores should apply at the individual store locations once construction begins on the properties, Drasin said.

Privately held Grocery Outlet doesn’t disclose the company’s revenues. Recently, though, Supermarket News estimated that in 2009, Grocery Outlet generated a sales volume of $875 million.

Kohl’s and Forever 21 are other retailers that have been taking empty store sites around the Bay Area. More deals are likely to occur, since the old retail properties often are in excellent locations.

Burlington Coat Factory, as an example, recently revealed plans to take over former Mervyn’s stores in Newark and Pinole.

“For retailers that are in a position to expand, it’s a great time for them to do it, whether they lease or buy,” Giacomelli said. “They are in the driver’s seat right now.”


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