Possibly fed up with opposition to a mixed-use development atop its grocery store in the Palisades, Safeway has offered to sell its store. Residents worry the deal could prohibit a new grocery store in the area, leaving residents in a “food desert,” but councilmembers are trying to stave off that possibility.
As Richard Layman chronicles, Safeway in recent years has been eagerly pursuing deals to turn its stores on valuable urban land into mixed-use developments that contain stores at ground level. It has recently redeveloped the stores in Petworth, Georgetown, and elsewhere.
Safeway merged with the Albertsons chain this year. Albertsons has been a grocery chain for a long time, but its current owner, the Cerberus private equity firm, is looking at much more than food. Layman writes,
One of the reasons that Cerberus has moved into this sector is that many supermarket chains own real estate—store sites and shopping centers—and the value of the underlying real estate can be worth more than the profit stream from store operations.
Safeway is now less patient when it comes to redeveloping stores and will even walk away. Already the change in regimes is evident. More recently, rather than continue with a project in Tenleytown that had dragged on for years, Safeway sold the property to a local private school and will close the store. [Some hyperlinks added]
Would the deal prohibit a new grocery?
Neighbors are worried that Cerberus’ sale could include a covenant forbidding a new grocery store on that site. The Current reports (huge PDF) that “Spence Spencer, chair of a Palisades Citizens Association task force on the Safeway issue, said it’s his understanding that a sale of the Safeway property would include a covenant prohibiting a future grocery store on the site. The Current could not independently confirm this information, but a similar restriction will be in place at the site of the Tenleytown Safeway.”
Trying to stave off this possibility, councilmembers David Catania and Mary Cheh (who represents both the Palisades and Tenleytown) are proposing an emergency bill to ban the practice, and they asked to put it on the agenda for today’s council meeting. Their notice to fellow councilmembers about the bill states,
Such covenants are particularly detrimental as residents of city neighborhoods rely on the close proximity of grocers to their homes as nearly 4 in 10 District households are car-free. Further, the District’s seniors and those residents who intend to age in place rely on immediate access, as they often face mobility challenges.
The District has long sought to expand the number of grocery stores in neighborhoods throughout the city as the benefits of a full service, neighborhood grocer are well established. The circumstances described above underscore the need for the Council to act in order to prohibit such restrictive covenants and prevent the creation of food deserts in the District.
Layman notes that when a proposed project falls through, residents can sometimes find themselves worse off. That certainly happened at Georgia and Missouri, where a plan to build 400 units of housing above a new Walmart got delayed from opposition and then, once it got approved, collapsed due to the recession. Instead, they settled for a 75-year lease with Walmart to build a store with no housing.
The council may pass the bill and keep the covenant out, but it’s likely that Cerberus will sell to someone who wants to build new housing on the site. A standalone one-story grocery store, which some residents desire, may not be an option regardless of who owns the property.