As has already been reported, Westlake Market is operating in the red and the current owners, the DeLanos, are looking to sell. What has not been widely reported is that the landlord is making a deal with the Dollar Tree to come into the adjacent store space that has been vacant during the nearly two years of operation for Westlake Market
But there is a catch, “The problem is that the Hosseinyouns (landlord) have just announced that they are inking a deal with the Dollar Tree and DT sells many items and categories that compete directly with the grocery.”
Davis already has a Dollar Tree, and West Davis residents would prefer a more traditional grocery story. Mr. Nelson reported “The potential new grocery operator is getting cold feet because of this and the fact that the DT will attract a bargain-oriented clientele. He also intends to expand the grocery by 2000-3000 sq ft to be able to offer a wider selection.”
On July 26, Ms. Hess wrote, “I have talked to Dollar Tree, and expect to do so again. I don’t think they were expecting neighborhood opposition to the project, and would likely not look forward to an extended public process.”
A late July communication between Todd Wright, representing the potential IGA buyer, and Daria Hosseinyoun, who represents the landlord, shows clearly that the buyer would drop out if Dollar Tree remains a possibility.
Writes Mr. Wright, “Before we move forward we will need to know what the intentions are in regard to the Dollar Tree deal. After much discussion with my investor/partner we have decided that we would not be interested in the Westlake market if the DT deal is signed.”
He added in his July 27 email, “As you know the Westlake Market is operating in the RED and the DT deal would make it even more difficult to move the store profits in the right direction not to mention the impact DT would have on your shopping center.”
Not only are they concerned about the competition, but Mr. Wright also indicated that expansion was needed. “The additional square footage is critical for my store operational business plan, I need to expand some of the store’s categories significantly. I might be able to adjust the footage slightly but I will need the additional space to proceed.”
Early John Drust, agent for Center Point Brokerage, illustrated this point, “It is very important to keep DT out of this center to keep my buyers moving ahead with the purchase of Westlake IGA.”
The communications go silent after August 4, so the Vanguard asked Katherine Hess last week what the current state of affairs is.
For one thing, Westlake Market is no longer affiliated with IGA. Katherine Hess did not realize that Westlake Shopping center and IGA were no longer affiliated.
“IGA is a buying cooperative (like Ace) but I’m sure the Delanos have other options for suppliers,” she told the Vanguard.
She added, “I talked to Dennis Delano in the middle of August – he said that sales had picked up, they were looking forward to having the students return to the neighborhood, and they were hoping that they could make it work.”
Furthermore, there has been nothing recent about the Dollar Tree.
“I haven’t heard anything recently about Dollar Tree,” she said. “The owner of the center said he was in discussion with a few potential tenants, including a gym.”
Meanwhile, the Laundromat has closed down recently, with the owner indicating that the landlord was just too difficult to deal with.
Katherine Hess told the Vanguard, “We’ve been referring retail and office prospects to the center, but nothing has stuck so far. If the office space were leased, that would help support all the businesses.”
The city has repeatedly told the Vanguard that they do not get in the way of what they consider landlord-tenant disputes, even when those disputes result in businesses leaving Davis and the loss of tax revenue that follows.
Redevelopment is not an option for the Westlake Shopping Center.
On July 27, Katherine Hess said, “I don’t believe there is any way to use redevelopment funds outside the project area – we ran into the same issue with the Davis Manor shopping center on East Eighth Street. We can contribute to public improvements like roadways or sidewalks, but that wouldn’t do much for this project.”
She added, “The City does have the ability to use Community Development Block Grant [CDBG] for economic development. If I recall correctly, it needs to be a low-income neighborhood (last I checked, West Davis didn’t qualify, even with all the students) or it generates a certain ratio and type of jobs.
According to Patrick Conway, an Administrative Analyst who works on the CDBG and HOME (under the US Dept. of Housing and Development) programs, “the City can use its CDBG funds for economic development projects with the key being the creation of jobs. At least 51% of the jobs created must benefiting low and moderate income persons.”
He added, “If it is a microenterprise (i.e., 5 or few employees) the business owner could be counted as the one of the jobs generated. The jobs need to exist for a minimum period of two years with one job created for every $50,000 of assistance provided.”
Moreover, “The assistance is usually in the form of an amortized loan based on an analysis of the business’ financial needs. Since CDBG funds are Federal dollars, the use of the funds should be considered, because activity like construction will trigger the payment of prevailing wage rates. Often a safe use of the funds is to purchase equipment or inventory.”
But there is a downside, “The real problem I see is the large bulk of our CDBG funds are needed for ADA [Americans with Disabilities] improvements for projects like the Third Street corridor and other public facility projects.”
The city council has constantly spoken of the need for economic development in the City of Davis. This is a goal that everyone undoubtedly supports. But economic development must begin with retaining existing businesses. What the city does to bring in new businesses for attracting sales tax revenue does little good if the businesses are leaving due to untenable rental situations and a poor economy.
Hopefully this is something the city can find ways to address, and soon.
—David M. Greenwald reporting
I’m confused… so is Delano’s staying or going for now?
I believe they are hoping that the sale goes through, to the buyer that does not want to be next to DT.
As I have been saying for 10 years–the problem is not with the markets at Westlake Shopping Center. The problem is with the consumers. Most people prefer to do most of their shopping at a large full-service supermarket like Safeway on Covell Blvd. And that is what they are doing. So that only leaves the small numbers of shoppers who like a small market with less selection and usually higher prices and fewer non-food selections (like a flower shop and a bank and so on) plus the occassional “I need a quart of milk” shoppers.
My view is that the best hope for a successful food market at Westlake is some sort of niche seller, who finds a niche that is otherwise not being served in Davis and could possibly draw from the rest of town. There is a very small Asian foods specialist on 4th Street downtown. (I have never been inside.) I suspect there might be demand for that kind of thing on a larger scale that Westlake could support. Perhaps an Asian seafood and fish market which wholesales to restaurants, retails to households, and also sells a full line of Asian food items and fruits, vegies, milk, meat, etc.
This is an excellent example of the consequences of planning decisions. When Al Smith originally proposed the Westlake Shopping Center, it was to be the only neighborhood shopping center in west Davis. Then Karen Fox came along and proposed the Marketplace (which our family has always called the Dancing Pigs shopping center). It was not in the general plan. Al referred to it as “that rogue shopping center.” The city council approved it, then shortly thereafter approved expansion of all Davis supermarkets to 40,000 sq. ft. from the previous smaller-size limit.
Obviously the Marketplace location has much better traffic and visibility. So from the start that site has been more successful, by far, and a series of grocery tenants have come and gone in Westlake. Planning decisions have predictable consequences and this was one of them.
How could the closure of the market and the addition of a Dollar Tree reduce tax revenue when most groceries are not taxed and most of the items sold at Dollar Tree are taxed?
Why do we think the next grocery store is going to survive? You all heralded the arrival of Delanos as the great coming of a grocery store which was well run and could survive in this location (and you argued that previous failures were the fault of poor management or an inappropriate store format). Once again, for the fourth or fifth time, the market has proven that the area will not support a grocery store even specifically targeted to its market.
I don’t know anything about this landlord, but we should allow him to fill this center with tenants who want to be there and don’t have to be cajoled. If he fails, then no one is worse for it – seems like the center is emptying out now, even with local intervention.
Don: [i]”This is an excellent example of the consequences of planning decisions. … Planning decisions have predictable consequences and this was one of them.”[/i]
Don is right. But that does not mean that for most people in Davis, the change to 40,000 sf markets has been a bad thing.
For most this has been a good thing. Consumers have shown that by choosing to do their shopping at the larger stores and side-stepping the smaller ones. Consumers seem to like the larger, full-service stores, especially if they are cheaper.
If consumer choice was merely based on proximity to one’s residence, Delano’s and its predecessors would have succeeded in attracting at least all or most of the business of people who live west of Hwy 113.
I realize that Davis has long had a goal of neighborhood shopping. But Davis residents have proved that is not the goal of most people. It does not bring them the most utility. So most of us are happier with the ways things turned out, even if, as Don correctly says, they would not have turned out this way if our planning rules prohibited larger stores.
A side note … I was shopping for clothes at the Target in Davis about 3 weeks ago (first time I had been there since the attempted ATM robbery and I was also curious to see if the store had been fully repaired–it was in fine form) and I asked a Target cashier if they get a lot of food business from their grocery section. She gave me a one word answer which, though anecdotal, was repeated when I looked at the shopping carts of others buying items: “Nope.” … So I don’t think just because a store is big — or huge, as with Target — it means Davis shoppers will buy their grocery items there. My guess is that the Target food business is incidental. Someone who goes there to buy a dress or a kids bicycle and passes by the food area might also pick up a few bananas or a half gallon of milk. But I cannot imagine that anyone does his normal, weekly household grocery shopping at Target.
Rifkin: [i]”the problem is not with the markets at Westlake Shopping Center. The problem is with the consumers.”[/i]
How can the customer be the problem?
Other than semantics, I agree with Rifkin’s points. Originally, I did think Delanos would succeed, but now I am down on small neighborhood shopping unless in congested urban centers where public transportation is the norm. The reason I changed my mind has to do with the time/convenience criteria combined with access to the auto.
As I have written before, I think convenience tends to be very high on everyone’s list of shopping criteria for food and general supplies. I think this is one of the main reasons that many Stonegate area residents supported Westlake getting a grocery store… we envisioned the added convenience. However, what I noted is that I generally drive to the store even though I only live about 3-4 blocks away. I also note that most of Westlake’s customers do the same. Grocery shopping is a chore and most of us just want to get it done as quickly and as painlessly as possible. Since we are already in our car, Safeway is not too far away, and there is a much greater likelihood that it will have everything we are looking for… thereby saving us the added time requirement from having to shop at two stores.
I think what we have is a conflict of vision and reality… the vision of Davis’s active planners to make us into a European village with the reality that we are still a typical American small city that is car-based/ car-rich… and our “local” economy is still much more geographically dispersed than they want to admit.
So, for any small neighborhood store to work, it has to focus on criteria other than relying on convenience. It has to specialize to be a destination that does not compete with a Safeway another 2 minutes away. It needs to draw shoppers from outside the area. Today the specialty mode is even more difficult since Trader Joes came to town. What is the shopping niche that will work? I’m not sure. The Dollar Store, interestingly enough, is in the genre of consumables-retail that seems to be the only one doing well these days. It is taking share away from Walmart and causing Walmart to look at expanding to inner-city locations. The model includes lower overhead and higher margins than traditional grocery stores. It does carry many grocery items and has some ability within the franchise model to tailor product carried to meet local market needs.
For selfish reasons I would like to see a market there. However, as a business person, I think it is clear that one cannot survive there. However, the Dollar Store might work… thereby keeping more of our retail tax dollars from leaking to Woodland. If it works, it will be a more viable anchor for the other retail businesses at Westlake… including some type of small specialty store like an Asian market like Rifkin suggests.
[i]” they would not have turned out this way if our planning rules prohibited larger stores”[/i]
So, without Safeway at the Three Dancing Pigs market, I only have to drive to Albertsons a few blocks away. If you limted all Davis grocery stores to 20,000, Bel Air in Woodland is only a 7 minute drive for me. Just down the street from that is Costco and Home Depot is just the other side of the freeway.
I’m not so sure that we can win this battle of the small neighborhood grocery store and the full service downtown unless we wall in the city and expect residents to get rid of their cars and reduce their consumption. As I have pondered before, who exactly are we trying to benefit with this vision anyway? I wanted Delanos for my selfish reason of convenience… when I was out of something and I knew they had it I could save a few minutes going there instead of Safeway. I would go there for staples and small shopping runs. But when I needed things that they did not carry, I would go to Safeway and do all my shopping there.
However, just because I support Delanos does not mean that I support getting rid of 40k Safeway. On the contrary, considering this from just my own selfish perspective, if I had to choose, I would demand a 40k Safeway over a 10k Delanos. My prefernece is to have them both, but the 10k and 20k neighborhood model has proven not to work. So, bye-bye neighborhood grocery idea. I think the full service downtown is also not sustainable. It just does not work this day and age of plentiful choice and transportation. We are fooling ourselves thinking they will.