Malls seek grocery tenants to bring traffic


Because they generate consistent traffic and occupy vast swaths of rentable space, grocery stores are often regarded as the bread and butter of mall developments

That was the reason Toronto-based developer Quaestus Corp. sought out specialty grocery chain Galleria Supermarket when seeking tenants for its newest property in Mississauga, Ont.

The regional grocer will not only be the flagship tenant of the new Quaestus property – occupying approximately 40,000 square feet of the 255,000 square foot facility when it opens in 2014 – but also the namesake of the Galleria Centre.

“We aggressively pursued them to be an anchor tenant of the shopping centre,” says Quaestus president Barry Godfrey. “When you’re bringing customers in every week, it helps the whole shopping centre.”

Grocery stores are so attractive to mall developers, says Godfrey, they will often discount rents by up to 25 per cent in order to attract them.

Galleria currently operates two stores in the Greater Toronto Area – with a third set to open next year – but the Galleria Centre marks its first foray into a mall setting.

The decision reflects the chain’s objective to grow its customer base beyond its core Asian demographic says Won Ha, category and marketing manager.

In addition to giving Galleria a much-needed presence in the GTA’s west end, the mall location could also enable the chain to attract customers who might not otherwise shop at its other locations, he says.

“We will get additional traffic from 200 other mall tenants, and they might also benefit from our name value and customers who may do some additional shopping in the shopping centre,” says Ha.

The typical Galleria Supermarket customer visits the store 1.8 times per week, which will generate steady traffic for other mall tenants says Ha.

Ha predicted that the shopper profile for the Galleria Centre location will be considerably different for its two existing locations.

He projected the shopper profile for the Galleria Centre location to be 30 per cent Korean and 30 per cent Chinese, with the remaining 40 per cent a mix of other ethnicities, significantly different from the customer profiles of both its Toronto (an estimated 50 per cent Korean and 30 per cent Chinese); and Thornhill (80 per cent Korean and between 10-15 per cent Chinese) locations.

Demitry Omrin, a principal with the Toronto-based Real Estate Consulting Group of Canada, says there it is a longstanding tradition amongst Canadian mall developers to seek out grocery retailers.

The better the anchor tenant, the better the pedestrian traffic and quality of business flowing to other mall tenants, he says.

look at grocery stores as secure tenants because people have to eat,” says Omrin. “Providing traffic and taking up a lot of the leasable mall space makes them very attractive.”

This ad will auto-close in 10 seconds