Key Highlights

  • RCLCO, real estate consulting firm, looked at effect having street-level high-end grocer had on rent premiums, rent increases and absorption rates
  • Having Whole Foods/Trader Joe’s on street levels raises initial rents average of +5.8% in comparable buildings
  • In 2016, initial rents raised average of 4.3%

The real estate consulting firm, RCLCO, just released its latest research on how having high-end grocers as ground-floor tenants affects rent premiums, rent increases and absorption rates in multi-family buildings.

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RCLCO did a similar study in 2016 and found that the presence of a high-end grocer rewarded landlords with initial higher rents of approximately +4.3% if the grocer was Whole Foods and +3.2% if Trader Joe’s. Today, Trader Joe’s has “caught up” with Whole Foods and either company will increase initial rents by approximately +5.8%.

Take a look at RCLCO’s results:

Average Rental Premium

Initial rents higher on average when any high-end grocer on street level of building

Ground Floor Tenant                          2016         2020                         2020

Whole Foods Market                          +4.3%       5.8%

Trader Joe’s                                      +3.2%       5.8%            +5.8%

Other high-end grocer                         NA            3.3%

Average Rental Growth

Whole Foods “beat” Trader Joe’s when it came to garnering sustained rent growth

Building & Location                       Premium           Growth

Whole Foods Market

City Hyde Park, Chicago        4.4%             1.0%

222 Hennepin, Minn.             7.3%             4.1%

Dalian on the Park, Phil.         8.7%            3.9%

Vintage on Selby, St. Paul      3.6%             2.3%

The Beverly, Portland OR        8.1%             3.5%

8th & Grand, Los Angeles        4.7%              0.7%

Trader Joe’s

Continuum, Boston                  4%                5.8%

1600 Vine, Los Angeles           5.1%              -0.3%

The Glendon, Los Angeles        2.7%               1.0%

Harlow Hoboken, Hoboken       9.0%               2.0%

 

Thanks to RCLCO and The New York Times

Also read: Texas and California are Tales of Two State Housing Policies, California’s Median Home Price Jumped +10% to $615,090 in December 2019, Another iBuyer Becomes All-in-One Buyer


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