It used to be beachfront views or accessibility to public transit that drove up real estate prices. But now it seems that your neighborhood grocery store is the real reason rents are so high. According to a recent study by Marilyn-based RCLCO Real Estate Advisors, developers often charge a premium on rent for convenient access to food shopping.
The report found that having a ground-floor Whole Foods or Trader Joe’s impacts the rental rate by an increase of 5.8-percent. Live close to a regular grocery store? Expect to pay 3.3-percent more. “Brand cachet, particularly among Millennials who have been the primary target market for most new apartment buildings, is clearly important,” said the study. The popularity of properties with these onsite stores speaks to the “growing importance of convenient access to high-quality, wellness-oriented grocers to renters, particularly affluent renters in major metropolitan areas,” which the study calls the “Premium-Grocers Effect.” You’ll need to make sure your salary commensurates with your health plan: Whole Foods is likely to drive the strongest rent growth, too.
The report looked at case studies of 64 apartment communities across 20 different metropolitan statistical areas, each of which contains a premium grocer on the ground floor. Rents were adjusted and mitigating factors like amenities and location were taken into account to ensure comparisons were the same across the board. The analysis also took into account Amazon’s $13.7 billion acquisition of Whole Foods in 2017, along with the proliferation of other premium grocers beyond just Whole Foods.
Yet even in the advent of Instacart, Amazon Prime and other grocery delivery services, it seems people are still willing to pay more in rent for the expediency of walking downstairs to pick up whatever new seasonal item Trader Joe’s just introduced. We can’t say we blame them. Have you seen the newest assortment of pumpkin things? We’d also move any place where fall-inspired food is our neighbor.
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