Is Safeway eyeing Larkspur?

It passed under the radar earlier this year, but the ownership of the property currently occupied by Lucky's Market in downtown Larkspur changed hands in March. The new owner, who picked up the property for just $4.0 million, is Vons, otherwise known as Safeway. 

Grocery Stores Gone Wild

This might sound strange, but the most dynamic sector of Marin's economy has to be grocery retailing. The transformation in this sector over the last few years has been remarkable and is set to continue this year with more new stores opening and - very likely - more old stores closing.

Ten years ago, the grocery scene in Marin was dominated by mid market regional chains such as Albertsons and Bell Markets that operated 15-20,000 sq.ft stores. By 2006 Albertsons had closed or sold all their stores. Also in 2006 DeLano's took over five Marin Bell Market stores, although the ones in downtown Tiburon and Novato have since closed.

Over the last couple of years we've seen new stores from Trader Joe's in Novato and Larkspur, a large new Safeway at Hamilton Marketplace, the discount Grocery Outlet opened in Novato and Paradise Foods took over the old Safeway store at Pacheco Plaza.

And the action is set to continue in 2010. First out of the blocks this year is Mi Pueblo, which opened March 20 in the old Circuit City store in San Rafael's Canal neighborhood. Of all the new supermarket openings in Marin, this one seems to make the most sense, providing a large format grocery store targeted precisely at the local Hispanic market and serving an area that didn't already have such a store.

But grocery retailing will get really wild in the next few months with the opening of two new Whole Foods stores. The first will be a 40,000 sf store in the new Millworks development in downtown Novato, which will open on April 22nd. This will be followed early June by the new Mill Valley store, which will occupy the 23,000 sf ex-Albertsons space at the Alto Center.

The Whole Foods in Novato will no doubt make life tough for other grocers in the local area, in particular those competing at the higher price points, such as Paradise Foods and Harvest Market. The smaller WF store in Southern Marin will pull customers from Tiburon and Corte Madera as well as Mill Valley, so any sales impact will be spread among several existing stores. Whole Foods will also provide some serious competition for the various farmers markets around the county, some of which are already under strain.

If any other grocers want to try their luck in Marin there are several vacant stores available, including those at Fair Anselm in Fairfax, the ex-Delano's in downtown Tiburon and The Square Novato, and Marinwood Plaza. Unfortunately, as the current crop of new markets get established, this list is more likely to get longer than shorter.

Novato DeLano's to close

The Novato Grocery War claimed it's first victim yesterday, with news of the closure of DeLano's at Novato Square. DeLano's was always the weakest of the incumbent grocers in Novato, so no major surprise that the store was getting hit by the slowdown in consumer spending and the new competition from the Hamilton Safeway , Trader Joe's at The Village and Grocery Outlet.

Despite the DeLano's exit, there are more battles ahead for Novato's markets, with Whole Foods and Paradise Foods scheduled to open within the next few months. I wouldn't be surprised to see either of these stores postponing their opening given the current state of the economy, and in particular a lot of negative press about the viability and impact of the Whole Foods / Millworks development, which has switched from condos to apartments after only 2 of the 124 units were sold.

But if the stores open as planned, the underlying problem will remain - that with these new stores, Novato will have too much grocery space for its population, and the grocery war will surely claim another victim.

Miller Avenue in Mill Valley

Miller Avenue is the long boulevard that leads into Mill Valley from the south. It's a historic street that follows the path of the original railroad and contains a mix of uses, including many retail stores that serve the local neighborhoods of Sycamore Park and Homestead Valley. The area's history is covered in detail in this excellent piece by Matthew Stafford in the Pacific Sun.

In recent years Miller Avenue has made the news through the preparation of the Miller Avenue Precise Plan (MAPP), which is the City of Mill Valley's attempt to beautify and enable limited development in the area, make more efficient use of the commercial spaces and add affordable housing. This being southern Marin, the MAPP caused quite a stir, particularly among those that want to retain the small town atmosphere in the neighborhood. A local group called the Friends of Mill Valley were very active in the debate and produced an alternative MAPP, pointing out that the City's proposal could result in a lot more development than was anticipated, with resulting impacts on traffic and local services. With no final resolution on the Plan, the City has focused on developing a Streetscape Plan for the Avenue.

One new project that is typical of the kind of development envisioned for Miller Avenue is Tamalpais Commons. This is a mixed use development at the southern end of the Avenue's commercial area, which includes street level retail uses, upper level residential apartments and a separate block of 12 townhouses.

The commercial part of Miller Avenue starts at the southern end with a mid-sized Safeway supermarket. The area immediately north of Safeway is sparsely developed and is one of the main areas of focus for increased density by MAPP. A solitary Taco Bell / KFC stands on the west of the road. On the east side there's a medical center, Wells Fargo, the Tam Commons site, Grilly's mexican diner and Malugani TiresMy favorite building is the Caletti Construction building, which looks like a huge pile of sticks.

Other stores along this part of the commercial strip, south of Whole Foods, include the Art & Paper store and Cafe of Life Chiropractic.

It's not easy to make a living on this part of the strip - ask Ciao Bella, gradually succumbing to the ivy.

I'll put up some more photos in Part 2 of the Miller Avenue story, later this week.

Weekend news digest

At the end of another week of depressing stories of store closures, bankruptcies and sales declines, it's time to tune in to the serious news stories in Marin-land.

First off, the Marin IJ took an excursion to northern San Rafael this week and came back with two stories about Northgate. The first article was about the renovations to Northgate Mall, where the big news is that the mall is.... still being renovated. There are a couple of photos of the (still empty) new food court, but not much to get excited about.

Second article reports on approval of the redesign of Northgate One, home of the World's nastiest Safeway. No word on whether Safeway will remodel their store, but they at least show some nice before and after shots of the center's refurb:

Meanwhile, the Twin Cities Times gets enthusiastic (and who wouldn't be) about the replacement of the Town Center Corte Madera's Maccas with The Counter. From the website:

Step into The Counter® and you’re greeted with a clipboard and an extensive list of fresh mouth-watering ingredients that allow you to build your own gourmet burger. Our 312,120+ different burger combinations make every burger as unique as each customer. Rarely is the same burger made twice in one day.

Anti-Established in 2003, The Counter® is the 21st century’s bold answer to the classic burger joint. Ushering in a fresh era of industrial decor, today’s music, cold beer, unique wines, cocktails, and burger options that are only limited by your imagination.

Read the build-a-burger menu and try not to drool.

Pacheco Plaza renovations continue as hunt for anchor gets close

According to the Marin IJ, the owners of Pacheco Plaza are close to announcing the new anchor tenant of their refurbished Ignacio shopping center, and if the reports are true, it looks like it's going to be "one of the best upscale markets in the Bay Area".

But which grocer will it be? Woodland Market? Andronicos? Mollie Stones? Or maybe the Boardwalk Market that is scheduled to lose its Tiburon lease in 2 years? A few other potential candidates not already in Marin are Draegers, Bristol Farms, Napa's Oakville Grocery perhaps?

There are plenty of candidates but also plenty of hurdles to get over before that lease is signed. The biggest Safeway in the county has recently opened half a mile away at Hamilton, and the county's biggest Whole Foods is under construction in Novato. Oh, and we're also in the middle of the biggest drop in consumer spending in living memory.

But let's hope a deal gets done and the owner's investment in upgrading the Plaza pays off.

Hamilton Marketplace is now (partly) open

I dropped by Hamilton Marketplace this afternoon and had a quick look at Marin's newest Safeway. The supermarket is the only part of the Marketplace that is open so far. It sits by itself at the southern end of the car park, alongside a Safeway gas station. The specialty shops and restaurants are located at the morthern side of the car park and are still being fitted out. Wells Fargo bank has its own building and looks ready to open. Peets Coffee & Tea is also nearly finished, and is scheduled to open tomorrow. The other units look like they need more work, and aren't likely to be open before the end of the month. These include a couple of eateries: Toast, La Boulange and Latina Grill, a phone shop and Pet Food Express.

The center is built in the popular mock-Tuscan style that you also see at Strawberry Village and the Town Center at Corte Madera. There's some nice attention to detail, such as the awnings, beams and cast iron streetlamps, but it's the architecture of the roofline, including the orange tiles and false turrets that really gives the center its character. But of course this is a retail center, which means that the architecture of the roofline is only there to show off the retailer's name. Contrast the Safeway storefront with the unfinished (and as-yet un-labeled) building opposite. A nice mess has been made of the front of the Safeway, with some rather ugly logos for US Bank and Safeway's pharmacy and cafe. As if this wasn't enough to bring the visual impact of the store down to the level of some of its neighbors, the Safeway store manager has also piled high several crates of sodas and watermellons at the front entrance.

Inside, the Safeway is big (55,000 sq.ft), with wide aisles and a large selection. It's Safeway's "Lifestyle" concept store, which has the wooden flors in the produce section, a full flower kiosk, pharmacy and the usual deli, bakery and meat & fish counters. The row of checkouts is book-ended by Starbucks and Jamba Juice kiosks, which get great exposure by being close to the entrance/exits. There's a cafe area near the entrance, which has sofa seating as well as tables and chairs.

The good news for safeway is that the store was buzzing, with plenty of local shoppers chcking out the new strore, and checking out with fully-loaded shopping carts. One strong advantage the store has is the gas station: today's customer special = 20c discount per gallon.

Hamilton Marketplace nears completion

Grosvenor's 95,000 sq.ft Hamilton Marketplace is signing up more tenants as it nears completion. The neighborhood center will be anchored by a 55,000 sq.ft Safeway and supported by a range of local and chain retailers, including Peets Coffee, Jamba Juice and Wells Fargo. According to the IJ, three eateries have also signed up: Toast Cafe, La Boulange and Sonoma Latin Grill.

Meanwhile, across Highway 101, Pacheco Plaza is set to commence its redevelopment. The center's owners have received full planning permits to revive the tired mall, which is losing its anchor Safeway to the Hamilton development. No news yet on whether a replacement has been signed up, although the Pacheco Playhouse has been warned that it may be evicted in order to make way for a drugstore.

Novato Grocery Wars

For many years the citizens of Novato have bemoaned the lack of good retailers in their town. Well things are certainly changing now, at least in the grocery sector, where two major supermarkets are under construction, a Trader Joe’s recently opened, Costco is expanding and a discounter called Grocery Outlet is planning to enter the market.

So is there room for all this additional supermarket space – or will the massive increase in competition force some existing grocery stores out of business?

In the incumbent corner, the supermarkets currently serving the community are:

Safeway, Novato Fair: 42,800 sq.ft
DeLano’s, The Square: 30,000 sq.ft
Harvest Market, San Ramon Plaza: 25,000 sq.ft
Costco, Vintage Oaks: 40,000 sq.ft (food section)
Safeway, Pacheco Plaza: 22,500 sq.ft
Trader Joe’s, The Village: 12,100 sq.ft

Total 172,400 sq.ft

Population 60,000
Sq.ft per Capita 2.9 sq.ft

By 2009, the following new additions will be open:

Safeway, Hamilton: 55,000 sq.ft
Whole Foods, Novato: 42,500 sq.ft
Grocery Outlet, Novato: 25,000 sq.ft
Costco expansion: 10,000 sq.ft (est. food section)

Total (existing & new) 304,900 sq.ft
Population 61,000
Sq.ft per Capita 5.0 sq.ft

Going from 2.9 sq.ft per capita to 5.0 sq.ft per cap is a major increase, which is certain to have some lasting impact on the existing food retailers in Novato. There isn't going to be a lot of population growth to support this additional floor space, so retailers are going to have to fight hard to grab market share.

The table below details my estimate of how grocery sales will be affected by the new competition. In total, annual supermarket sales will increase from $128.4 million to $164.7 million. This means supermarkets in Novato will hold on to a bigger share of resident spending on food by taking share from supermarkets outside Novato and from non-supermarket channels, such as convenience stores and specialty food shops.

Because of the increased floor space, the average trading level per square foot will decrease by 22% overall. Individual stores will be impacted to different degrees, depending on their individual competitive strengths. But it looks like some existing supermarkets will see their sales fall by 30% or more.

I’ve also assumed that the Safeway at Pacheco Plaza will not be replaced by a supermarket, but if one were to open it would really struggle to establish itself in this market.

Strawberry Village

Strawberry Village is located on the eastern side of Highway 101 in the Strawberry suburb of Mill Valley. The center is anchored by a 45,000 sq.ft Safeway supermarket and also contains around 120,000 sq.ft of externally-oriented space in several separate buildings.

Originally opened in 1964, the center was owned by the University of California until 2004, then sold and redeveloped. Safeway expanded its store by 15,000 sq.ft and a new main street and plaza were added. The design is Tuscan-inspired, which means red tiled roofs, lemon trees, terracotta pots, oak beams and one or two towers and false turrets in shades of yellow and burnt umber.

The lease-up and opening of stores in the Piazza area has been slow; the last two remaining units are still waiting fit-out nearly two years after construction was completed. The focus of this area was always going to be the eateries, and the two that have opened so far seem to have hit the mark. Pizza Antica is a small-chain family restaurant that has a big open high-ceilinged dining room that gets very noisy. La Boulange is a Bay Area chain of 8-9 French bakery/café/pastry shops. When the weather is good the Plaza is a great place to sit outside for breakfast or lunch. Other eateries at the center include the ever-popular Thep Lela Thai, Harmony, which specializes in Dim Sum, High Tech Burrito, Pasta Pomodoro, Sushi Gourmet and Rain Tree Café. At the southern edge of the center are In-N-Out Burger and Round Table Pizza. There are two separate parts to Strawberry Village. The northern part is the largest section and contains Safeway and all of the remodeled components. The southern part is smaller and comprises mostly financial and professional services. Ideal Stationers is an old-style office supplies store that has been at the center forever and is worth seeking out at the southern end of the center for its eclectic merchandise. The most visible new store at the center is Smith & Hawken. The iconic garden & patio furniture chain originally started trading from a small store in downtown Mill Valley and now occupies an eye-catching 10,000 sq.ft unit with enough room to show its range of adirondaks, firepits and outrageous gazebos. Other stores that are long term tenants at Strawberry include Wolf Camera, Arch Rival, which has a strong following as the place to go to get tennis shoes professionally fitted. World of Sound specializes in high-end home theatre and hi-fi installations. Patrick James West Coast Classics has classic outfits from the likes of Corneliani, Bills Khakis, Tommy Bahama etc. Among the newer stores the common theme is catering to the higher end of the market. Given that the local market is affluent Tiburon & Mill Valley, this is a sensible approach. Nancy Koltes at Home is a small store that showcases the designer’s linens.Nicole Gray & Co. mixes beauty products with gifts and homewares. Other new stores that seem to have found their niche include Woodlands Pet Food & Treats which, in addition to all the pet products also offers dog training and adoption clinics. The adjacent Monkey Business toy store stocks quality products of the kind that all parents would want to buy for their kids if they had the budget. The Spanish Table's niche is all things Spanish, including foods, wines and cookware.Stores that always seem to be busy include Starbucks, New York Bagels (aka the slowest bagel store in the west) and Woody’s frozen yoghurt place. Other stores always seem to be empty, especially the poorly-located Jos A Banks, which sits by itself at the back of the center. Safeway is usually very busy. It was remodeled in 2005 to the latest "lifestyle" format and extended to include bonus services, such as the pharmacy and hot food counter.

The two new stores that are yet to open at the center are Asqews Grill, which is a small Bay Area chain specializing in skewered and barbequed dishes, and Lavande Spa & Boutique, which promotes itself as offering an interesting combination of manicures, pedicures and womens shoes.

Safeway, Terra Linda

I took a look at the Safeway at Terra Linda when I was passing through there last week. The store is located just north of The Mall at Northgate, on Las Gallinas Avenue. It is part of an old strip mall that includes Pier One, Starbucks, the Magic Flute music store and several services and take-out food stores.
I heard that the Safeway wasn't too good, and having seen the store I can see why. Both inside and outside the supermarket needs some work to bring it up to the standards of other Safeways in the region. The store is smaller than average and seems crowded, with stock piled in the aisles, making it difficult for customers to pass each other.

With no other full-sized supermarket in the Terra Linda/Las Galinas/Civic Center area, it looks like Safeway does not have an incentive to improve its act.

Pacheco Plaza

In Ignacio, just south of Novato, is one of my favorite Marin shopping centers: Pacheco Plaza. This local grocery-anchored center was built in 1967 by the Kieckheffer Company and is still owned by the family. I love it simply for the architecture, which has something modern and typically Californian about it – it’s the shopping center equivalent of an Eichler house. The entrance to the center is framed by the Bank of Marin and West America Bank, with the latter having a neat drive-through tucked under its slanting roof that looks like an upturned planter. The other key elements that I like are the stylish monument sign and the big red Safeway signs on the supermarket. Alas for poor old Pacheco, those big red “S” logos won’t be there for much longer. A gleaming new Safeway in steel and glass is growing out of the ground at Hamilton on the eastern side of 101. In a matter of months the Pacheco store will close, the customers will disappear and the specialty shops will exit.
But of course the Kieckhefers are not going to give up without a fight. After forty one years service to the community they're ready to re-model, re-brand and re-launch! Behold the Pacheco Lifestyle Village! Plans have been submitted and approved. Architects drawings portray ultra-trendy shoppers loaded with full shopping bags and sipping lattes in the sun outside brightly-lit shops. Ah... the dream lifestyle.
I wish them luck and I think they might need it. Lucky Novato-area shoppers will soon have new full size Safeway and Whole Foods markets, as well as the recently-opened Trader Joe’s. Competing with that will be tough, especially with a new Safeway just across the freeway.

But I will certainly miss the old center. Can we at least keep the monument sign? The City wants to replace it with one that is up to code - i.e. no more than six feet tall, like this one at Novato Fair. Yuk!