Despite the high population density of New Jersey and New York, both states have fewer supermarkets per 100,000 residents than other areas of the country, and questions not directly related to retail demand are likely the reason. Regulatory issues and the general scarcity of land are the key considerations.
Defined as stores with at least $2 million in annual sales and approximately 1,500 products, supermarkets offer a full line of grocery, health-related, canned or non-food items plus perishable products. New Jersey, which has the highest population density and second highest median income of any state in the United States, has 8.5 supermarkets per 100,000 residents compared with the national average of 11.6 per 100,000. New York also trails behind.
Supermarkets play a key role in the pursuit of high-quality, yet affordable, nutrition, as well as shopping convenience. Most modern supermarkets provide “one-stop” shopping alternatives where constituents can find food and health and beauty products. As a result, consumers have renewed their loyalty to neighborhood supermarkets, which offer competitive pricing, a full range of product choices, organic and fresh foods, as well as pharmaceutical products.
These local centers of commerce provide communities with much-needed convenience services and goods in close proximity to diverse residential neighborhoods, which range from urban high-rise apartment complexes to suburban one- and two-family homes. Instead of traveling lengthy distances to purchase food items, first aid supplies or household cleaners, savvy shoppers value the competitive pricing as well as reduced travel time and decreased gasoline expenses associated with a local supermarket.
As a significant and sustainable segment of any retail business sector, supermarkets offer longevity and are a major source of employment. While jobs have plummeted in certain sectors, such as manufacturing, millions of people are employed by more than 35,000 supermarkets nationwide. In New Jersey, over 67,000 men, women and young adults earn a combined total of more than $1.5 billion in wages annually. Typically, benefits for supermarket employees include health coverage, pension options and career advancement opportunities. In addition to earning their wages locally, employees also tend to spend their money locally.
Not only do supermarkets offer job creation, growth and retention, they also inject much-needed tax ratables into the economy and serve as the catalyst for revitalization. Geographic sections of northern and central New Jersey and southern New York State are prime areas for supermarket growth right now because of an influx of residents. In Somerset County, N.J., the addition of more than 4,000 new homes and a population boom of 8,000+ residents led to the development and opening of a new 70,000-square-foot supermarket through the efforts of Crossroads Companies, the developer. The finishing touches are now being added to an additional 43,000 square feet of retail space on an adjacent site with a free-standing 4,000-square-foot bank branch opened this past May.
There is a clear need and high demand in certain areas for prominent supermarkets and reputable owners/operators who have a demonstrated track-record for success and corporate citizenship. One such area where a new supermarket is rising is Stony Point, N.Y., where Crossroads is developing a 92,000-square-foot neighborhood shopping center. Crossroads notes that a recent study indicated the area’s 48,800 residents were traveling beyond this northern part of Rockland County for not only their groceries, but automobiles, home furnishings, restaurant dining and appliances.
As of this fall, Stony Point will discover the newfound convenience associated with having a 70,000-square-foot ShopRite, with additional service and lifestyle-oriented tenants occupying 22,000 square feet of retail space, literally just around the corner. This particular project also has attracted interest among highly desirable local, regional and national retailers due to its location within a designated Empire Zone, a New York State-sponsored economic development and stimulus program.
Revitalization of inner cities, as well as suburban shopping centers impacted by the difficult economic environment, and in particular the bankruptcy of many category killers, such as electronic, apparel, and bookstores would also benefit from the redevelopment of existing, vacant shopping centers. Many communities desire healthy food choices including organic meats, vegetables, produce and similar related products that often can only be provided in stores with a larger supermarket footprint. The lack of tracts of land large enough to accommodate a modern food store, as well as environmentally “clean” land available for development has lead retailers and builders to explore underutilized sites such as brownfields, odd-shaped and smaller lots with deck or below-grade parking. The fact that developers and food anchor tenants are willing to consider non-conforming sites reflects an imbalance between supply and demand, as a result of aforementioned factors. The end result is that costs associated with building new supermarkets are often more expensive, and time consuming, pushing out an already lengthy entitlement process that can exceed 24 to 36 months.
The ultimate solution is more intelligent planning and coordination between private developers and municipalities to put underutilized tracts of land back on the assessment roles. Local and state governments can also assist by speeding up the approval process. While legislators and citizens have every right to demand that developers be sensitive to environmental and land planning concerns, municipalities and state legislators attract private development and supermarket chains by eliminating unnecessary red-tape and bureaucratic in-fighting. If we continue on the same path, local economies and their constituents will suffer as businesses seek more friendly business environments. Higher pricing for food, clothing and shelter is inevitable, if the cost of land and regulatory environment prevent supply from keeping up with demand.
Stephen L. Hittman is president and founder of Crossroads Companies LLC, a leading regional developer of neighborhood and supermarket-anchored shopping centers, based in Mahwah, N.J. The company’s development expertise extends from project conception to completion. Services include shopping center development, project consulting, management and leasing services. Crossroads’ portfolio is valued at approximately $150 million.
Crossroads Companies, LLC
20 Ridge Road, Suite 210
Mahwah, New Jersey 07430
Media Contact: Evelyn Weiss Francisco/ 201-796-7788 / evelyn@caryl.com
Date: Sept. 8, 2010