Walgreens Reducing 24 hour Stores

[storewanderer]

How much you willing to bet that person with Ralphs bags was somehow sent there from San Diego? We were suddenly inundated with wandering, lost looking homeless starting a week before San Diego Comic-Con which has become the top tourist event in SD annually. The tens of thousands of homeless in massive encampments all over downtown SD disappeared at the same time.

I've been concerned about these mixed use redevelopment trends, along with the over-densifying that comes from demolition of the true low income housing.

Another new trend I am seeing in my former hometown of Long Beach is new plans to ensure "diversity" by adjusting density and zoning. I have read the plans and I fail to recognize any way diversity would improve. Here is the gist of it: zoning moves up another density level or two in "under resourced" areas to allow for larger new developments. "Under resourced" means poor. Somehow the belief is that greater diversity in the community will occur with the building of higher end housing in lower end areas. I believe the real goal is to just incentivize development in the areas where there is less political push back and fewer political donations coming in so that the "NIMBY" donors are satisfied while the poor get poorer, especially the disadvantaged.

The problem is that landlords constantly monitor each other's listings within a neighborhood and use management firms to constantly adjust for the highest possible rents. So now the lower end area with $2000 apartments gets new buildings with $3500 rents, and new "affordable" units at $2750. Now the ceiling has been raised significantly for the neighborhood, and every landlord starts to jack up the rents for new tenants to be near the $2750-$3500 range. So that $2000 apartment is now $3000, and they will apply the legal maximum increase to existing tenants until they hit it. They also are incentivized to concoct a renovation scheme to "upgrade to compete" with the newer units, where the intent is to just open up enough walls, plumbing etc. to surpass the legal limit of a cosmetic remodel which tenants can't be evicted for. Now maybe it becomes a $3400 apartment just a few bucks below the new development that has a few more amenities. And worse, since only the new building has a "affordable" requirement, the net result is a removal of hundreds of actually affordable housing units for every dozen or so new ones that are erected. The entire system is backwards and the only ones who are benefiting are the developers who are so massively profitable that they don't care about rising interest rates, they don't care if it takes years for their building to be fully leased, they don't care how much it costs to acquire the land, they don't care how much it costs to pay lease severance for good businesses needed in the community that they'll force to close, and they sure as hell don't care how many more people are forced into the streets as they can't afford or even get approved for a replacement housing unit where they were previously making ends meet.

And the cities, counties, and state will keep spreading the lie that there is a terrible housing shortage so we need to approve more. They benefit the most from the misery of everyone else as they rake in billions from increased property taxes, building permit fees and charges, income tax from laborers, and so forth plus these days every needed infrastructure improvement like streets, water, sewer etc is paid for via developer bonds AKA "Mello-Roos Taxes" and "Community Facilities District" taxes. I can't find an accurate figure newer than the 2020 census but there was already a 3 million plus housing unit to households surplus then, and I can't imagine how many million additional units have gone online since with negative to minimal population growth. There is no shortage of housing, rather there is a shortage of affordability due to artificially propped up prices and massive developer profit taking.

The other thing on the retail side that this over-densifying does (of course the cities and developers don't consider it over-densifying...) is it makes the current retail inadequate for the area. In a number of cases retail space is reduced while they attempt to exponentially increase population in a given area so it really messes up the current retail situation in a given area.

These developers- they roll in, destroy areas, and roll right back out again to look for the next place to go destroy. Some get caught in a pants off situation like 2008 etc. but so far this round that has been generally avoided. Never thought I'd be anti-development but this overly dense development situation has turned me.

[HCal]

The other thing on the retail side that this over-densifying does (of course the cities and developers don't consider it over-densifying...) is it makes the current retail inadequate for the area. In a number of cases retail space is reduced while they attempt to exponentially increase population in a given area so it really messes up the current retail situation in a given area.

I suppose this could be an issue in theory, but in practice I don't think it happens very often. The US has a lot more retail square footage per capita than needed, so the existing stores can usually absorb an increase in sales quite easily. With the shift to online shopping, this is even more true.

Do you have any specific examples in mind where this has happened?

[storewanderer]

The other thing on the retail side that this over-densifying does (of course the cities and developers don't consider it over-densifying...) is it makes the current retail inadequate for the area. In a number of cases retail space is reduced while they attempt to exponentially increase population in a given area so it really messes up the current retail situation in a given area.

I suppose this could be an issue in theory, but in practice I don't think it happens very often. The US has a lot more retail square footage per capita than needed, so the existing stores can usually absorb an increase in sales quite easily. With the shift to online shopping, this is even more true.

Do you have any specific examples in mind where this has happened?

Look at the grocery situation in various major cities in core city areas. Start in CA. Undersized stores, inadequate parking, inadequate backrooms.

Tons of square footage dedicated to clothing sales in these big cities though...

[HCal]

The other thing on the retail side that this over-densifying does (of course the cities and developers don't consider it over-densifying...) is it makes the current retail inadequate for the area. In a number of cases retail space is reduced while they attempt to exponentially increase population in a given area so it really messes up the current retail situation in a given area.

I suppose this could be an issue in theory, but in practice I don't think it happens very often. The US has a lot more retail square footage per capita than needed, so the existing stores can usually absorb an increase in sales quite easily. With the shift to online shopping, this is even more true.

Do you have any specific examples in mind where this has happened?

Look at the grocery situation in various major cities in core city areas. Start in CA. Undersized stores, inadequate parking, inadequate backrooms.

Tons of square footage dedicated to clothing sales in these big cities though...

Stores in core city areas are obviously going to be smaller than in the suburbs, there's nothing wrong with that. People there have plenty of other places to shop, and don't need a grocery, bakery, deli and pharmacy under one roof. They are also used to dealing with difficult parking.

In downtown areas of California cities, I don't think there is any shortage of supermarket capacity. The stores seem to be able to handle the customer levels and are not particularly crowded.

[storewanderer]

I suppose this could be an issue in theory, but in practice I don't think it happens very often. The US has a lot more retail square footage per capita than needed, so the existing stores can usually absorb an increase in sales quite easily. With the shift to online shopping, this is even more true.

Do you have any specific examples in mind where this has happened?

Look at the grocery situation in various major cities in core city areas. Start in CA. Undersized stores, inadequate parking, inadequate backrooms.

Tons of square footage dedicated to clothing sales in these big cities though...

Stores in core city areas are obviously going to be smaller than in the suburbs, there's nothing wrong with that. People there have plenty of other places to shop, and don't need a grocery, bakery, deli and pharmacy under one roof. They are also used to dealing with difficult parking.

In downtown areas of California cities, I don't think there is any shortage of supermarket capacity. The stores seem to be able to handle the customer levels and are not particularly crowded.

My point is the stores are undersized to support further dense development. Stores are bursting at the seams. Too small. I understand the utopia these developers design don't want any parking at all as they only want the ultra rich to own vehicles, but even forgetting about parking, I am just talking the sheer store size and store back room areas. Sure there are examples like that large Ralphs by UCLA that got a proper expansion to handle the additional density and volume it created. But there are various other undersized Ralphs around Los Angeles. Various undersized Vons. Some of which have closed over the years.

New store openings by parties like Whole Foods have helped to a degree in some places.

Seattle is another example. Ton of residential development downtown. They have that City Target which is a nice size store in my opinion but a borderline war zone with all the crime and lock up. I don't think it is adequate for grocery either specifically fresh grocery. H-Mart is coming, but will that be adequate on fresh grocery? Time will tell.

Some examples in Chicago's downtown core too. But they do seem to plan things better in Chicago than they do out west. A number of years ago they got a new Mariano's, an undersized but well positioned Dominick's closed, and Jewel did a major expansion to what was an undersized store.

[HCal]

My point is the stores are undersized to support further dense development. Stores are bursting at the seams. Too small. I understand the utopia these developers design don't want any parking at all as they only want the ultra rich to own vehicles, but even forgetting about parking, I am just talking the sheer store size and store back room areas. Sure there are examples like that large Ralphs by UCLA that got a proper expansion to handle the additional density and volume it created. But there are various other undersized Ralphs around Los Angeles. Various undersized Vons. Some of which have closed over the years.

How are they bursting at the seams? They don't seem that crowded to me. If anything, suburban stores are busier.

I have no idea about Chicago or Seattle, but in LA, the undersized Ralphs and Vons locations are simply from a different era when smaller stores were the norm. They were designed that way, and they are working as designed. Some can be expanded/modernized but that isn't always possible. If they can't be expanded to fulfill the demand created by more housing, then new stores like the Whole Foods you mentioned will come on line.

[storewanderer]

My point is the stores are undersized to support further dense development. Stores are bursting at the seams. Too small. I understand the utopia these developers design don't want any parking at all as they only want the ultra rich to own vehicles, but even forgetting about parking, I am just talking the sheer store size and store back room areas. Sure there are examples like that large Ralphs by UCLA that got a proper expansion to handle the additional density and volume it created. But there are various other undersized Ralphs around Los Angeles. Various undersized Vons. Some of which have closed over the years.

How are they bursting at the seams? They don't seem that crowded to me. If anything, suburban stores are busier.

I have no idea about Chicago or Seattle, but in LA, the undersized Ralphs and Vons locations are simply from a different era when smaller stores were the norm. They were designed that way, and they are working as designed. Some can be expanded/modernized but that isn't always possible. If they can't be expanded to fulfill the demand created by more housing, then new stores like the Whole Foods you mentioned will come on line.

I am not seeing that. I am seeing when additional housing is added, specifically "TALL" buildings, stores are getting more and more crowded, and "tapped out." As you point out parking was already a problem and with more people around it is a bigger problem. Also the vendors and delivery people need places to park too... more people around, more vendors coming more often (small backrooms- can't leave much if any backstock)...

Also if you really want to see something you can see how they do it around Vancouver, BC. Super tall, super dense. Even the worst US stuff has nothing on the density of newer developments there. Yet. But there are absolutely some west coast developers and west coast politicians who want to get things there.

[ClownLoach]

The other thing on the retail side that this over-densifying does (of course the cities and developers don't consider it over-densifying...) is it makes the current retail inadequate for the area. In a number of cases retail space is reduced while they attempt to exponentially increase population in a given area so it really messes up the current retail situation in a given area.

I suppose this could be an issue in theory, but in practice I don't think it happens very often. The US has a lot more retail square footage per capita than needed, so the existing stores can usually absorb an increase in sales quite easily. With the shift to online shopping, this is even more true.

Shift to online shopping? You do realize the hottest thing in retail is omnichannel fulfillment, where the online distribution centers everyone's been building for the last twenty years are all shut down and the store becomes the fulfillment center? This is one of the serious mistakes Kroger has made with investing in Ocado. Wall Street allowed retailers to screw around and lose money left and right on e-commerce, only now to demand profitable sales which forces closure of extra warehouses. The undersized, small store problem makes it much harder to fulfill orders efficiently and profitably. This is one of the reasons why Target did a hard 180° and is now trying to get out of the small format stores business, because they lack the capacity to pack and ship e-commerce orders. You see the supermarket companies including Kroger and Albertsons directly removing the in-store bank branches, labs and other vendors from that front wall over this as well (and I have family in banking - don't buy the public myth that they wanted to close all those branches). The figure of online sales is the brick and mortar store because it's already paid for.

And the retail footage per capita issue is probably an overgeneralization. For the flyover country in the Midwest and such where you see small towns of 50K to 100K population or less and each one had a half million square foot mall across the street from a Wal-Mart Supercenter next to a dead Kmart and down the street from a Super Target each in its own big box power center, that is totally overstored and shouldn't have been built out. That's why those malls are now dead and boarded up and such. Go to the West Coast and you've got retailers everywhere who want to expand but can't find any retail footage to do so with or it's the wrong size, location, logistics etc. I have personally been in charge of searching for sites and had to relocate a store that had been searching for a new location for twenty years, while having to close another simply because no replacement could be found in advance of lease ending in "overbuilt" Orange County. Look at one popular topic here, ethnic grocers. They are hungry for space and want to expand but they can't find space to lease where they're needed, they can't find land to develop, or the cost is so high that nobody could pay it thus they can't open and fulfill the needs of the community. Plus as populations grow, traffic changes, employment has shifted to the home, so even some existing space is now redundant while there is even worse need in others. Some areas were over built like major parts of Orange County, corrected this, and now due to densification are grossly under served forcing shoppers to gridlock streets and highways to get what they need.

[storewanderer]

There may be more retail per capita, but it is relevant retail?

If you have a downtown that has 5 million square feet of clothing stores and only 30k square feet of grocery stores... yet in the immediate area live hundreds and thousands of people plus the tourists plus the business people who come around... sure per capital retail may be high, but what good is it when most of it is stores that don't handle the basic everyday needs of the people in the area?

[Romr123]

Relevant retail is a good point---when those silly 500k sqft dumbbell malls were built in Anytown (JCP/Sears or JCP/junior department store) malls were relevant. They have lost relevance...and they're empty with tumbleweeds.

We were recently in Ashland, OH which epitomizes that type of place (small college town, older manufacturing hub). They have just what you'd expect (I recall a WalMart and Meijer and maybe a Kroger) and one thing you don't....a Buehler's supermarket of 80-100k sqft (high-end independent in central Ohio) which would not be out of place in an upscale Cincinnati/Columbus/Cleveland suburb.

Very reminiscent of some of the Wegmans in upstate NY...but a relevant addition to the retail landscape (charitably the WM was probably a C- for groceries, Kroger a B, Meijer a B-B+ but this was a surprising A effort.

You could make the same argument for an high-end ethnic grocer in some of these isolated shopping towns---the retail cycle makes it all about the local relevance.