Apr 13, 2018 -- Addition of new grocery square footage slowed last year as retailers scaled back store openings and smaller formats took hold, according to real estate and investment firm Jones Lang LaSalle (JLL).
In 2017, grocery store openings dropped 28.8% year over year, JLL’s 2018 U.S. Grocery Tracker study found. The decline reflects chains’ efforts to re-examine their current store footprints and fine-tune strategies to deal with new competition — both online and brick-and-mortar, the report said.
Activity varied by market area. JLL said California led the way in 2017 with 1.6 million square feet of new grocery store space. Also seeing strong growth were Virginia and North Carolina, which combined had about 2.7 million square feet of new space. And Texas was described by JLL as “still one of the hottest states for grocery expansion” with 1.2 million square feet of new space, though that total dropped from 3 million square feet in 2016.
Across the United States, California accounted for 12.2% of new grocery square footage in 2017, up from 10.8% in 2016. JLL cited Sprouts and Grocery Outlet as growth drivers, as the chains represented 47.7% of California’s openings. Both retailers aim to continue “ambitious expansion plans for 2018,” with Sprouts looking more closely at the Mid-Atlantic region and Grocery Outlet sharpening its focus on its current markets, the report said.
Virginia had 10.4% of new U.S. grocery square footage in 2017, up from 5.1% in 2016, while North Carolina’s share rose to 9.4% from 5.2%. Also seeing gains were Florida at 6% of new U.S. grocery space (4.8% in 2016), Maryland at 4% (2.4% in 2016), Pennsylvania at 3.7% (2.7% in 2016) and Illinois at 3.7% (3.2% in 2016.)
Texas’ slice of new U.S. grocery square footage shrank to 9.2% in 2017 from 16.1% in 2016, JLL reported. Other states with decreases included New Jersey, down to 3.6% from 5%, and Georgia, down to 3.3% from 4.3%.