Properties Near ALDI Perform Better Than Whole Foods
Properties near an ALDI had an average gross flipping ROI of 58 percent.
If you’re thinking about investing in a rental property, you might want to look at buying near an ALDI, according to ATTOM Data Solutions’ annual 2020 Grocery Store Wars analysis.
Properties near an ALDI had an average gross flipping ROI of 58 percent, compared to properties near a Whole Foods, which had an average gross flipping ROI of 36 percent and Trader Joe’s at 30 percent, according to ATTOM.
If you look at home seller NOI, the order flips a little bit. Investors with properties near an ALDI are gaining an average home seller ROI of 41 percent. By comparison, the average home seller ROI for properties near a Trader Joe’s is 51 percent, and 43 percent for properties near a Whole Foods.
The average home seller ROI for all zip codes with these grocery stores nationwide is 43 percent.
Overall, the average home value for a home near Trader Joe’s is $644,558, while Whole Foods and ALDI yield values of $532,224 and $250,850, respectively. The average equity in houses near Whole Foods was 37% ($255,066). In homes near Whole Foods, the average equity was 33% ($191,380), and ALDI was 26% ($71,204).
Other high-end groceries have a similar effect.
In a September report, RCLCO found that apartment communities with Whole Foods on the ground floor earn, on average, a rental rate premium of 5.8% above comparable apartment communities in the immediate local area.
Trader Joe’s also scored well. Buildings with that retailer also commanded a 5.8% rent premium. Buildings with other grocers fell behind Trader Joe’s and Whole Foods but still fetched a rent premium of 3.3%.
Properties with a Whole Foods that achieved the highest premiums also experienced the most substantial rent growth, which RCLCO said reflected a positive linear relationship between rent premium and rent growth. On the other hand, in communities with a Trader Joe’s, higher premiums did not correspond with more robust rent growth.
When a premium grocer is an apartment building, that community will often capture more than its fair share of market demand, according to RCLCO.
“We profiled the absorption performance of eight of the case studies with ground-floor premium grocers,” wrote Derek Wyatt, Vahe Avagyan and Nicholas Stefanoni. “A new building with a ground-floor, premium grocer can expect to lease-up units at a pace at least on par with—but frequently above—its fair share capture of submarket absorption during the lease-up period.”