The plan for a ShopRite supermarket at Green Acres reflects...

The plan for a ShopRite supermarket at Green Acres reflects a larger trend. Credit: Macerich Co.

Exits can bring opportunities.

As retail landlords contend with filling large vacancies created by the exits of department stores, supermarkets are increasingly part of redevelopment plans to draw more foot traffic to the retail sites.

The additions of supermarket tenants often align with mall owners’ plans to redevelop struggling properties or “de-mall” them by converting them to open-air retail centers.

“In the current environment, the universe of department stores and anchors is contracting. The demand in the retail space is not to backfill them with other department stores,” said Eric Bunyan, senior vice president of leasing at The Macerich Co. The Santa Monica, California-based real estate investment trust is planning a redevelopment that will bring an 80,000-square-foot ShopRite supermarket to Green Acres Mall in Valley Stream.

WHAT TO KNOW

  • More supermarkets are coming to malls because of opportunities created by the exits of department stores.
  • A new ShopRite is planned for Green Acres Mall, a Whole Foods Market will open in 2025 at a redeveloped site called The Shops at SunVet, and Asian grocer 99 Ranch Market opened at Samanea New York in Westbury in 2022.
  • Completion of newly built retail spaces in the United States fell to record-low numbers in each of the last four years.

Green Acres performs well in terms of foot traffic and sales, but most of its tenants offer moderately priced goods, Bunyan said. The revamp is needed to bring in higher-end tenants to “elevate our offering in both retail and in food and beverage,” he said.

In the United States, there are about 950 enclosed shopping malls, a decline of 250, or 21%, since 2013, according to data from Green Street Advisors.

Some of the retail changes on Long Island:

  • Macerich announced last week a redevelopment plan for the east side of Green Acres Mall that includes the construction of a free-standing, full-service ShopRite, the demolition of the vacant Sears and Sears Auto stores and the creation an open-air shopping streetscape with the former Kohl’s space and adjacent mall shops.
  • In Holbrook, a 40,000-square-foot Whole Foods Market will be the biggest tenant when it opens in 2025 at the former Sun Vet Mall, a long-struggling property undergoing an $87 million conversion to an open-air shopping center called The Shops at SunVet.
  • In Westbury in 2022, Asian grocer 99 Ranch Market opened its first grocery store in New York at Samanea New York, formerly called The Mall at The Source, a once nearly vacant mall that underwent a $30 million redevelopment in 2021 after being sold in 2017.

Bringing stability

Grocery stores are stable tenants in malls because they don’t face as much online competition as other types of retailers, said Chedly Louis, grocery and retail expert at Moody’s Investors Service in Manhattan.

Furthermore, customers who become acclimated to shopping at supermarkets in malls are more likely to come back to shop at non-grocery stores on the properties, Bunyan said.

Supermarkets in malls is not a new concept — it’s very common in Europe. But they’re not as common in the United States as they were in the 1950s, said Mark Hunter, managing director in the Austin, Texas, office of real estate firm CBRE’s Retail Asset Services in the Americas.

It was common for grocery stores to be at shopping malls decades ago but as people began spending more time buying discretionary goods, such as shoes and clothes, grocery stores moved out of malls and more often into shopping centers because of the convenience, cheaper rent and other factors, he said.

Now grocers and shopping mall operators are again pairing up.

“It’s sort of back to the future, so to speak, in that you’re going to see more and more grocery stores go into malls, like you’re seeing at Macerich,” he said.

A lack of new construction of retail spaces is a factor in the shift, Hunter said.

“There is not a whole lot of new development going on in the country, so grocery stores that want to expand, they have limited options and they a have built-in traffic with the mall they can also benefit from,” he said.

Completion of newly built retail spaces in the United States fell to record low numbers in each of the last four years, with 27 million square feet being finished in 2023, according to CBRE data.

Nationwide, grocers moving into malls include discount chain Lidl, which will open a store in Queens Place Mall this year, and high-end Asian American grocer H Mart opened a store in the American Dream in East Rutherford, New Jersey, in 2023. 

Specialty Italian grocer Eataly has opened several stores in malls, including one in Boston in 2016, Dallas in 2020 and San Jose, California, in 2022.

Not all grocery-mall pairings are successful.

In July, Wegmans closed its 5-year-old 134,000-square-foot supermarket in Natick Mall in Boston that was an experimental store — the first multilevel Wegmans inside a shopping mall — because it was “unable to attract enough customers for” the “business model to work,” an official said.

The success of grocery stores in malls often depends on the caliber of the retail property and its shopper demographics, said Alexander Goldfarb, managing director and senior research analyst at Manhattan-based investment firm Piper Sandler & Co., who covers Macerich and other retail landlords.

“If a mall’s trade area has changed and the traditional composition of fashion, retail tenants are not as desirable anymore, the landlord is going to change to what makes sense,” he said.

Of Macerich’s 44 retail properties, 36% have grocery stores, Bunyan said.

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