Grocery chain to build own retail plaza
STATER BROS.: The Grand Terrace shopping center will become one of 40 owned and maintained by the company.09:27 PM PDT on Thursday, September 2, 2010
Stater Bros. is building a shopping center in Grand Terrace that will include a 43,000-square-foot supermarket and additional retail space for other tenants.
It will be among dozens of shopping centers owned and managed by the San Bernardino-based company, an unusual business model among grocery chains.
Jack Brown, chairman, and CEO of Stater Bros. Markets, said the company already owns about 40 of the shopping centers it operates in, and manages about 50 others on behalf of the owner. The company also handles development and construction of new stores in-house.
Skip Crane, senior vice president of Grubb & Ellis Retail Services in Ontario, said Stater Bros.' in-house real estate development may help keep costs in check, and taking ownership of the centers is a way to ensure they are clean and well maintained.
Stater Bros.' business model is similar to a formula previously employed by Safeway, Crane said, but it's a rarity among other chains. "Stater Bros. is more unique in the grocery industry in that respect."
David Livingston, a grocery industry consultant based in Wisconsin, said there are other grocery chains that own shopping centers but they are more likely to lease store space.
Owning and developing the property means you can call your own shots, Livingston said, but it is expensive in the short-term, so it could restrict the pace of growth. Most grocery chains are publicly held and have to worry about short-term profits, whereas privately held chains can manage for the long term.
Stater Bros. is privately held. It is purchasing 8 acres for the $17.5 million Grand Terrace center, a project Brown said the city brought to him as early as 2001 when Stater Bros. was still headquartered next door in Colton. Since then, land and construction costs have escalated, he said. (Brought to him by Schwab/Jacobsen)
CITY INVESTS $1.2 MILLION
The new store will replace an existing 26,000-square-foot Stater Bros market, offering a full-service deli, hot bakery, large fish and floral departments, a pharmacy, expanded produce and meat departments and wider aisles, Brown said. It will make better use of natural light during the day, cutting down on energy use.
The city has agreed to contribute $1.2 million to the project over five years in exchange for a guarantee the store will generate at least 140 construction jobs and will employ at least 77 people full time. The new store is expected to generate $105,000 a year in additional property tax revenue, and 22 percent more in sales taxes than the current store. ( that is under 200.00 more sales tax revenue to Grand Terrace).
Brown said the city would recoup its investment in less than five years.
Brown said the company has not determined how much additional retail space will accompany the store. Work will begin once permits have been obtained, he said.
The grocery store is scheduled to open in October 2011, which is Stater Bros.' 75th anniversary month.
"We'll probably have signs on the property very soon announcing we're coming," Brown said.
The company has operated in Grand Terrace since 1974.
Stater Bros. has 167 stores and more than 19,000 employees throughout its footprint. The company's 2009 sales totaled $3.77 billion.
Reach Tiffany Ray at 951-368-9559 or tray@PE.com.
