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Expect to See Further Grocery Consolidation

IRVINE, CA-Don MacLellan of Faris Lee Investments talks about how potential investors underwrite these centers and how to create value through retenanting a vacant grocery anchor.

By Don MacLellan, Senior Managing Partner, Faris Lee Investments | Updated on March 01, 2013

IRVINE, CA-There has been a lot of change in the demographic profile of Southern California communities, which has in turn impacted traditional grocery-anchored retail centers. Players such as Wal-Mart and Target are expanding their grocery offerings and locations. Club stores continue to compete effectively for consumer dollars relating to grocery products, meaning a decrease in trips to the nearby grocery store. Specialty grocers such as Sprouts, Whole Foods, and Trader Joe’s now attract the higher-end, health-conscious customer.

So what’s in store for certain Southern California grocery-anchored centers, many of which have seen the traditional grocery stores close their underperforming stores? Moreover, how do potential investors underwrite these centers and create value through retenanting the vacant grocery anchor?

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