Whole Foods no longer a rumor

[BigD]

According to the Crain's article linked above, $4.2 M is coming from "city, state and federal" incentives, $5.4 M from Whole Foods and $5.3 M from the developer.

Add it all up: $14.9 M for a 20,000 sq ft grocery store and even then it won't be open for another eighteen months.

I want to see businesses in Detroit as bad as the next guy, but wow!

Does it *really* cost $15 million to open a flippin' grocery store?

Yes. In fact, Meijer just noted in Crain's today that it costs $15 million to open one of its new "urban" style stores.

[kraig]

Well, according to the article, the City is providing nothing. The incentives are from the State, the Feds, and private foundations. So it will be a net gain for the City.

Let's remember that Snyder has established a pot of $ for just these sort of opportunities. Although he eliminated tax credits, the state has grant $ available through appropriations. So this fits with their strategy of using that $ for targeted opportunities in distressed urban areas.

If the DEGC is involved then the City of Detroit is putting up something. Which is probably the bulk of the 1.2 or 1.5 million that's being labled as "local and community foundation" with the local part of that being the DEGC support.

Like I said earlier, this just shows how far Detroit has to go when 4.2 million has to be put up in order to get a very small [[I'm not talking about WF as a chain, simply the small size the store will be to fit into that lot. It's smaller than the lot for the vacant chase bank next to it.) store to come here. Hell, the City could have gotten a dozen grocery stores like the one on Lafayette for that kind of money. Especially considering that they're only leasing and not buying.

Any mention of who the developer is that's going to build the property to be leased?

[jayclarkreid]

Anti-Union, mediocre wages, asshole customers and no flexibility on hours. That's just from my friends currently and formerly employed by WF in Toronto.

[Eric_c]

Yes. In fact, Meijer just noted in Crain's today that it costs $15 million to open one of its new "urban" style stores.

What's an "'urban' style" store and how big are they compared to a regular big box Meijer?

Or are they the same thing, just with white carpeting and vertical blinds?

[Detroitkid]

Is this enough proof?

The Company has recently signed eight new leases averaging 30,400 square feet in size in Tucson, AZ; Fremont, CA;
Newport Beach, CA; Basalt, CO; Detroit, MI; Columbia, SC; Virginia Beach, VA; and Cheltenham, United Kingdom.
These stores currently are scheduled to open in fiscal year 2012 and beyond.

[Rocko]

July 27. 2011 4:32PM
Whole Foods to set up shop in Detroit's Midtown

Louis Aguilar/ The Detroit News

Whole Foods Inc. plans to open a 20,000-square-foot market on the northwest corner of Mack Avenue and John R in Detroit's Midtown, the national grocer's first store in the city, the Austin, Texas-based national grocer said this afternoon.

The plan is to open the store in 2013 and create between 60 to 75 jobs, according to a statement by the Austin, Texas-based natural and organic food store chain.
The planned store is much smaller than a regular suburban supermarket, but it will be a full-service store and one that reflects the company's goal of supporting quality local suppliers and organic agriculture.

"Detroit's food scene is impressive and vibrant," said Red Elk Banks, Michigan's executive operations coordinator for Whole Foods. "We look forward to celebrating the great producers, food artisans and farmers in the area, giving them a retail space for their quality products while ensuring access to all-natural foods."

Whole Foods has five stores in Metro Detroit — two in Ann Arbor and one each in Rochester Hills, Troy and West Bloomfield.

Whole Foods has been adding Metro Detroit-based suppliers in recent months — such as Detroit granola and snack maker Simply Suzanne and McClure's Pickles, which is based both in Detroit and Brooklyn, N. Y, and Midtown's Avalon International Breads.

The site for the store is a 1.92-acre property near the Detroit MedicalCenter, which is about to undergo a major expansion and add jobs.

Midtown, located just north of downtown, already has a growing affluent and educated population. The area has the city's highest rate of income per acre at $231,961, according to a 2010 study by Social Compact, a Washington, D.C., nonprofit that gathers data to help spark urban development. The study shows
Midtown also has the highest average household income of new Detroit homebuyers at $113,788, followed by downtown at $111,509 and Indian Village at $111,200.

Many city leaders such as Conrad Mallett Jr., president of Sinai-Grace Hospital at the Detroit Medical Center, were anxious to hear the news about whether Whole Foods would make the announcement of a Detroit store.

"That would be very, very, very good news," Mallett said on Tuesday.

Mallet also sits on the board of the city's Economic Development Corp., which is a branch of the Detroit Economic Growth Corp., the quasi-public agency that promotes development. He said he wasn't aware of any financial incentives to lure Whole Foods

"As a healthcare executive, I am thrilled that we increase the access of fresh quality food to city residents. That is a very pressing need," he said. "From a development standpoint, it could make a huge statement that Detroit can support this kind of quality store — and I have no doubt that the area can."

An estimated half-million Detroiters live in neighborhoods characterized as "food deserts," areas that require residents to travel more than twice as far to reach a full-service grocer than an alternative — and often less healthy — food supplier, according to 2009 study sponsored by the DEGC.

Although about 80 full-service stores were shown to exist in the city, an estimated $200 million in unmet demand exists, according to the report, which noted that money is instead spent by city residents in the suburbs.

Whole Foods may soon be joined by Meijer Inc., which plans to sign a lease to build a store in a planned shopping complex on Eight Mile Road and Woodward Avenue. The discount grocer Aldi Inc. has two stores within the city.

Laguilar@detnews.com

From The Detroit News: http://detnews.com/article/20110727/BIZ/107270417/Whole-Foods-to-set-up-shop-in-Detroit’s-Midtown#ixzz1TLIq2400

[Rocko]

Are they talking about the tiny plot of land between the Chase bank and the Ellington or whatever is on the corner of Woodward? Or is the bank going to vacate their property? The currently-vacant patch seems pretty small.

[Fnemecek]

Let's see. This creates up to 75 jobs at a cost of $4.2 million.

That works out to $56,000 per job "created." I don't expect much out of politicians, but this is simply insane.

[kraig]

What's an "'urban' style" store and how big are they compared to a regular big box Meijer?

Or are they the same thing, just with white carpeting and vertical blinds?

It's a store that's about half the size of most Meijer stores. Which would make it about 96,000 square feet and way bigger than the Whole Foods will be. The real trick will be to get the benefit of the outlot businesses that usually come with a Meijers store. Which is usually around a dozen or so businesses. While I don't see that coming from a Whole Foods Store, I could see an area such as, the going down with a bullet, Jefferson Village strip mall being ripe to capitalize on an urban Meijer store concept.

[Fnemecek]

From the article:

"As a health care executive, I am thrilled that we increase the access of fresh quality food to city residents. That is a very pressing need," he said. "From a development standpoint, it could make a huge statement that Detroit can support this kind of quality store — and I have no doubt that the area can."

When we're giving away $4.2 million, the only statement that is made is that a fool and his money are soon parted.

[Eric_c]

It's a store that's about half the size of most Meijer stores. Which would make it about 96,000 square feet and way bigger than the Whole Foods will be. The real trick will be to get the benefit of the outlot businesses that usually come with a Meijers store. Which is usually around a dozen or so businesses. While I don't see that coming from a Whole Foods Store, I could see an area such as, the going down with a bullet, Jefferson Village strip mall being ripe to capitalize on an urban Meijer store concept.

Thank-you. Then I wonder why this Whole Foods is going to be five times smaller than an "urban" Meijer, yet cost the same. If your numbers are correct, kraig, I can't help but wonder.

[Bham1982]

Yes. In fact, Meijer just noted in Crain's today that it costs $15 million to open one of its new "urban" style stores.

Meijer stores average around 150,000-200,000 square feet.

This is a 20,000 square foot market, which is about one-third the size of an average Whole Foods [[or Kroger, for that matter). Probably the smallest Whole Foods in the nation.

Their newer stores tend to be in the 50,000-80,000 square foot range, so I'm speculating this is a goodwill gesture [[similar to the Borders at Compuware) that will earn tons of positive press whether or not the store makes a lick of sense.

So it comes down to whether you think $4.2 million is a worthwhile investment for a small grocery store with a very particular clientele.

I don't see the market for Whole Foods in Detroit, but I tend to be one of the resident pessimists on DYes.

[Eric_c]

Aaaand...wonder how it's gonna fit the lot? Will it be zero lot line with parking in back to match the Ellington, or is it going to go strip mall style? Will this [[and for that matter, other, future projects) be built in such a way that it encourages pedestrians and Woodward streetcar use, or not?

Place yer bets...

[Bham1982]

Let's see. This creates up to 75 jobs at a cost of $4.2 million.

That works out to $56,000 per job "created." I don't expect much out of politicians, but this is simply insane.

What are Whole Foods wages? Minimum wage? I have no clue.

Anyways, this deal was done for the positive press, for Bing, for Midtown, and for Whole Foods. Wayne State can recruit professors skeptical of the neighborhood by saying they have a Whole Foods.

[Eric_c]

"...but I tend to be one of the resident pessimists on DYes."

-Bham1982

You know, since you actually recognize that fact, I promise to try to not tense up as much when I start reading your posts.

[DetroiterOnTheWestCoast]

Whether you like WF or not, or approve of the incentives or not, I think most people will agree that the cachet of WF in Midtown is important. Its like having Starbucks. I don't care for Starbucks, but most people seem to view having them around as a sign of the economic success of an area and the "coolness" of it. And with out a doubt WF stores, especially the more urban ones, are way more attractive inside and out than a Meijers or a Krogers. I view this as one more step towards the tipping point where such generous incentives won't be necessary.

[iheartthed]

Whether you like WF or not, or approve of the incentives or not, I think most people will agree that the cachet of WF in Midtown is important. Its like having Starbucks. I don't care for Starbucks, but most people seem to view having them around as a sign of the economic success of an area and the "coolness" of it. And with out a doubt WF stores, especially the more urban ones, are way more attractive inside and out than a Meijers or a Krogers. I view this as one more step towards the tipping point where such generous incentives won't be necessary.

Good analogy. Whole Foods is the new Starbucks. I agree that the name is a selling point for the neighborhood.

But guess I should start thinking about taking a short position on their stock...

[kraig]

Whether you like WF or not, or approve of the incentives or not, I think most people will agree that the cachet of WF in Midtown is important. Its like having Starbucks. I don't care for Starbucks, but most people seem to view having them around as a sign of the economic success of an area and the "coolness" of it. And with out a doubt WF stores, especially the more urban ones, are way more attractive inside and out than a Meijers or a Krogers. I view this as one more step towards the tipping point where such generous incentives won't be necessary.

Form over function in the Supermarket game doesn't work. Lack of parking and the new policy by the Municipal Parking Department of ticketing vehicles until 10:00 pm is going to end this store faster than the F & M store that was located right across the street from Fishbones back in the day.

[Detroitnerd]

I want my $4.2 million too. And I'm not even rich to begin with!

[kraig]

I want my $4.2 million too. And I'm not even rich to begin with!

Consider it done. Will you be selling organic liquor at your 20,000 square feet Party Store?

[Det_ard]

While I still think WF coming to Detroit is a good thing for Detroit's image, the incentives leave a bad smell.

According to the exchanges, the 21,000-square-foot project is expected to get $1.5 million in local and community foundation funds, $1.2 million in federal tax credits under the New Market program and $1.5 million in state incentives.
The documents also say the project will apply for a brownfield incentive through MEGA.
http://www.crainsdetroit.com/article...ole-foods-deal

The feel-good Whole Foods story feels a lot less good when you think about all the tax subsidies aimed at helping yuppies, hipsters and health huts get their upscale groceries.

[rjk]

Excuse my ignorance on tax incentives, but is there another similiar sized buisness in the midtown area that received this amount of incentives?

How much financial risk is involved for WF if they decide that they can't make a go of it after a few years?

[Detroitnerd]

Consider it done. Will you be selling organic liquor at your 20,000 square feet Party Store?

Gluten-free beers, organic, locally sourced vodka, and each bottle wrapped in 350 pounds of bubble wrap and hard plastic you need a reciprocating saw to cut through.

[stinkytofu]

Are they talking about the tiny plot of land between the Chase bank and the Ellington or whatever is on the corner of Woodward? Or is the bank going to vacate their property? The currently-vacant patch seems pretty small.

I read somewhere a few weeks back that the likely plan is to demo the bank as well [[apparently the bank isn't even used - it only has an ATM).

[BigD]

I guess I don't understand all the anger over the incentives. $1.2 million is federal new markets tax credits. Is there a better use of these credits that bringing a Whole Foods to Detroit? $1.5 million is state money. This will come out of the $75 million pool the MEDC has earmarked for economic development projects. Is there a better use of these funds than helping to bring a Whole Foods to Detroit?

The final $1.5 million is local money and foundation grants. We don't know the breakdown. So, worse case scenario, maybe the City is out $1 million. Once all the financing is made public, I doubt it will even be that much.

We will have a full-service grocery store with major name recognition in the heart of the city. It will certainly result in more people taking the City seriously as a place to work and live. Meijer, by the way, will also be getting incentives for its Detroit store or stores.

Again, I ask, how else would you like the feds, the state, and the City to utilize its economic development programs? Seems like a pretty minimal investment for the City, with a potentially huge payoff.