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4 Real Estate Tips for Grocers in a Post-Pandemic World

Now is the time for grocers to rethink their real estate opportunities as we slowly emerge from the pandemic.

It’s true that grocers, unlike other industries, did exceedingly well at the height of COVID-19. As the public stocked up and stayed home, grocery stores saw a drastic increase in weekly purchase volume, curbside pick-ups, and home grocery deliveries.

As vaccination numbers continue to rise, we are seeing the pendulum of consumer spending swing back toward restaurants, travel, and other forms of in-person entertainment. That means many grocers will need to revisit certain aspects of their in-store experience and omnichannel infrastructure; issues they were able to put aside during the pandemic.

4 Real Estate Tips For Grocers to Consider as the Economy Heats Up

  1. Revisit Your Consumer Offerings & Growth Plans

Commercial real estate is absurdly cheap… for the moment. 

Landlords lost a lot of money as a result of COVID-19. So grocers have a golden opportunity to negotiate their leases or potentially purchase nearby properties for a lower cost.

So look around your area for real estate opportunities to expand your customer offerings and grow your business. Consider ways to optimize and integrate your supply chain and omnichannel capabilities by adding the likes of micro-fulfillment centers (micro or mini-warehouses), dedicated parcel pickup lanes, and parking spaces for fulfilling online orders. 

This way, you make the most of your main location’s footprint, and perhaps, create new opportunities to expand into several stores served by a single micro-warehouse. Our McMurray Stern consultants can help you find opportunities in your area.

  1.    Negotiate Your Lease Today & Bring Innovative Ideas to the Table

Let’s say you have a high-performing location and are looking to expand certain customer offerings (same-day delivery, in-store pick up, drive thru lanes, etc.) or explore micro-fulfilment potential.

Grocers can bolster their chances of success in lease negotiations if they present these growth opportunities to the landlord early in the planning process. In other words, give your landlord great incentive to provide rent concessions, contribute capital to a remodel and/or make improvements to the center.

You should also be prepared to demonstrate your flexibility in prioritizing your remodel capital spending, based on the landlord’s cooperation.

  1. Closures are Coming

Landlords can’t afford to mess around with poor performing locations. They spent more than a year taking a huge financial hit as commercial real estate plummeted to all time lows. They’re going to want out quickly. 

That means potentially selling properties altogether or seeking out new tenant opportunities. If you’re considering adding a property to improve your fulfilment, our McMurray Stern experts can help you examine all your automated and micro-fulfilment options to make a new space integrate seamlessly with your current operations. We have micro-fulfilment options for as little as 5,000 square feet of space.

  1. This Much Leverage May Not Last 

To maximize the productivity and value of grocery-anchored properties, landlords are scrambling to add outparcels, drive-thru lanes and other convenience-oriented amenities. 

But due to protective lease restrictions commonly enjoyed by grocers, landlords are often unable to pursue such plans without their permission.

With this powerful bargaining chip, you stand to secure lower rents and more favorable terms in exchange for granting the landlord greater freedom to redevelop the property and repurpose common areas. Again, bring your ideas and innovations to the table! McMurray Stern can help you outline a plan for growth through micro-fulfilment and other automated solutions.

Just make sure that you fully understand your rights under the lease and receive appropriate value for agreeing to those modifications. You’ll also need to adequately protect your own visibility,parking and customer access as part of allowing any such changes to the property.

If you liked this McMurray Stern blog article, check out some related articles:

Cold Storage Space Solutions by McMurray Stern

Micro-fulfillment: Meeting Customer Demand for Same-day Delivery

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