CINCINNATI — We still don’t know where or when the Kroger Co. will build a downtown Cincinnati grocery store. But if a deal is announced, don’t be surprised to see apartments or condos above the store.
“I really personally like the apartments,” Kroger Vice President Nick Hodge told Cincinnati-area real estate professionals Friday. “It seems to be working well for the developer.”
Hodge participated in the University of Cincinnati’s Real Estate Roundtable event at Kenwood Country Club, providing fresh insight into what the region’s biggest company is contemplating when it comes to urban-format retail.
Hodge is a 15-year Kroger veteran who was promoted last fall to lead its corporate real estate division. He’s responsible for developing the capital-investment strategies that bring about new stores nationwide.
“Clearly, we want to be an urban player,” Hodge said. “With everything that’s going on with the gentrification of the urban areas, we want to be a player in those markets. And we will do it when it’s economically viable. That’s the key.”
In a sense, having a Kroger store with residents above is a return to the company’s origins. Founder Barney Kroger lived above his parents’ dry good store while growing up as one of 10 children in Cincinnati.
Kroger has been saying for years that it’s interested in a Downtown store, but the company hasn't revealed much detail about what kind of sites it prefers and what its requirements would be for parking, lease or purchase terms.
Hodge said Kroger has high hopes for a new 50,000-square-foot store on the ground floor of an upscale apartment building in Denver. The King Soopers store at Elan Union Station in the LoDo district offers luxury-apartment dwellers a private entrance to the store.
“Walking some of these sites that are under construction with some of the partners that we’re working with to develop the residential, they’re very happy with the early leasing that goes on,” Hodge said. “When we open, we generally have a full apartment complex above it.”
In Atlanta, Kroger is part of a $140 million development called 725 Ponce. It replaces what used to be known as “Murder Kroger” with a 60,000-square-foot store and 360,000 square feet of loft-style office space above.
Kroger’s urban-format stores tend to be smaller than its neighborhood and Marketplace formats. So, it’s experimenting with “different types of offerings” that can help those smaller stores operate profitably. That could mean a merchandise mix catering to foodies at the new Main & Vine concept in Gig Harbor, Wash. Or it could be the Todd’s BBQ concept that offers slow-cooked regional pork and beef recipes from a food stand inside Mariano’s stores in Chicago.
And it could also mean different kinds of lease deals in which Kroger partners with developers to anchor larger office or residential projects.
“The key for us is to understand what value we bring to that equation and understanding how do we work that into deals going forward,” Hodge said. “We don’t have a ton of these, so with every one we need to learn what is the real value of that Kroger box on the ground floor.”
