You work downtown. Or live, eat, shop or party there. Why can’t you buy groceries?
Downtown Tacoma is changing before our eyes, and growing.
Cranes jut out along the skyline, feverishly constructing housing and more office space.
The University of Washington Tacoma continues to transform Pacific Avenue and its large footprint, stretching up an urban hillside once left for development dead.
Just last week, the city announced plans for a branch of the U.S. General Services Administration to relocate to the Columbia Bank Center, bringing 320 existing jobs with it, while a small handful of tech start-ups gamely make a go of it nearby.
So why can’t downtown Tacoma support a full-scale grocer?
That’s the question we’ll attempt to answer in the first installment of “Ask Matt.”
As the name implies, the idea behind this new monthly column and video series is straightforward:
Readers submit questions about Tacoma and Pierce County, and I try my best to track down answers.
Let’s see what happens.
Retail follows rooftops
Ellen Walkowiak doesn’t hesitate when asked about downtown Tacoma’s grocery conundrum.
The assistant director of Tacoma’s community and economic development department says what the city’s downtown core needs to support more retail businesses — especially a grocery store — is more people living there, period.
“My short answer is retail follows rooftops,” Walkowiak says. “It is the question of density.”
So there. Case closed.
Well, not quite.
Yes, Walkowiak’s answer underscores the no-nonsense bottom line of the grocery business, and plenty of other brick and mortar operations. It’s kind of stating the obvious.
Still, when you get into the weeds, there’s plenty of economic nuance in the supermarket racket.
Grocers, in particular, operate on a razor-thin net profit margin, Walkowiak says.
That means they rely on not just people but on consistent volume and customers who return.
In other words, grocers depend on people doing their primary shopping, buying staple goods. Whether it’s big, weekly hauls or more frequent trips throughout the week, grocery stores need overall high volume sales because they’re simply not making much money on a per-time basis.
Office workers stopping in for lunch and little else just aren’t going to cut it, even at an upscale (read: fancy and expensive) supermarkets.
Then there’s this: Typically, the cost of renting retail space is higher downtown, which heightens the stakes.
Because of these factors, grocery stores, Walkowiak says, are forced to be “very specific about where they’re going to locate and what the cost per square foot is.
“Obviously, it’s an economic circumstance. They have to be very cognizant of what their costs are.”
Lack of grocery story a familiar issue
Bert Hambleton, has been providing sales forecasts and helping grocery stores develop retail strategies for roughly four decades.
During that time, the owner of a grocery consultation business has analyzed the market for a grocer in downtown Tacoma “no less than eight times,” he says.
Using models that factor in variables like population, density, income and family size, Hambleton says it’s possible to accurately forecast what the demand is for a grocery store in a particular area.
When it comes to downtown Tacoma, Hambleton says, his work has typically foreseen what he describes as a tough go for potential grocers.
He notes it’s “a fairly common problem for urban areas.”
Given the low net margins and generally higher rents, Hambleton says, grocery stores rarely represent “the highest and best use” of available retail space in an urban area.
“Economically, it doesn’t make sense,” Hambleton says, noting that businesses such as high-end stores or office space typically pencil out more favorably given the associated costs.
Hambleton explains that a successful grocery store might only “squeeze a penny and a half” in profit out of every dollar in sales.
That’s not much.
“You need a lot of dollars going into the top of the funnel,” Hambleton explains of the blunt capitalist machinery. “There’s a reason why people don’t do this very often.”
Tacoma City Grocer
It’s been six years since the IGA Tacoma City Grocer closed its doors for the last time.
Writing the obit, former News Tribune reporter Kathleen Cooper appropriately noted that the short-lived Pacific Plaza grocer was “the first full-service grocery store in the downtown core in decades.”
“Store operator Tyler Myers said he had no regrets about the store and said the only reason the store closed was that there wasn’t enough sales volume,” Cooper reported. “It was time to make a business decision.”
In a number of ways, the demise of Tacoma City Grocer illustrates all the factors Walkowiak and Hambleton have highlighted.
The store did gangbusters sales at its deli during lunch, serving Tacoma’s downtown workforce, Walkowiak recalls, but overall it struggled — it needed more than that.
“The density was in the workforce, Walkowiak says. “When you look at who’s downtown, it’s your office workers and other workers. So they’re going to shop when they’re there, for particular items.
“They’re not typically buying the kind of thing that one needs for the week for their families.”
At the time at least, there simply weren’t enough people living downtown.
Hambleton says he wasn’t surprised when the IGA Tacoma City Grocer closed.
He was surprised, he says, when it opened in the first place.
He analyzed the location before Tacoma City Grocer opened and says he “pretty much told them what would happen, and it pretty much happened.”
Hambleton doesn’t offer recommendations, he reminds, just forecasts.
It’s up to potential grocers to look at the numbers and make a decision, he says.
When Tacoma City Grocer closed in early 2014, Myers, the store’s operator, told the The News Tribune that maybe the attempt was “five years too early.”
He was overly optimistic, but it brings us to today, and another gaze into the future.
‘Somebody will open a grocery store’
While hopeful talk of a downtown grocer never goes completely silent, a store has yet to materialize.
Still, there’s reason for optimism, Walkowiak says.
Right now, she said there are 26 projects that have received multi-family tax exemptions currently planned or under construction downtown, pointing to thousands of downtown units on the way.
It’s a total investment, Walkowiak says, of more than $615 million.
The area surrounding UWT is in a particular moment of transition, Walkowiak notes. More students and more housing are pushing the numbers in a hopeful direction.
Could the UWT, which has already served as a catalyst for downtown rebirth, be what finally brings a successful grocer downtown?
So far, according to Ben Mauk, who oversees the school’s real estate portfolio, it hasn’t been enough.
Over the last five years, Mauk says, UWT has discussed the potential of bringing a smaller grocer — or “micro-grocer,’ operating out of 1,200 to 1,400 square feet — to campus. But each time potential grocers have told the university that the “the neighborhood is just not quite ready in terms of population density,” he says.
Still, Mauk remains hopeful.
“If you think where this campus was even five years ago or 10 years ago, and then extrapolate that out in five years to 10 years, I’m of the opinion that there’s going to be some remarkable and really positive change,” Mauk says.
UWT, he says, focuses its development work on serving faculty, students and staff while providing broader community benefit.
A grocery store would check all the boxes.
“Without pointing to anything hard and specific, I think it is reasonable to assume that it would be on the plate of options as we’re thinking about the development of campus and what’s shaping the neighborhood,” Mauk continues. “If it’s something that could work, I think it’s safe to say we would take it under serious consideration.”
Hambleton also believes it will happen for downtown Tacoma.
Some day.
Downtown Tacoma is adding density, he says, suggesting that “critical mass will be reached and somebody will open a grocery store and it will be a success.”
“There are retailers and people in the business who are interested in opening in downtown Tacoma,” Hambleton says.
“When? That’s a good question. Five years? Ten years? Twenty years? I don’t know.”
