Save Mart loses lease-Tahoe City, CA

[storewanderer]

As the title says this store lost its lease and closes in a few weeks. This was one of the stores that got to keep its Albertsons interior until Save Mart finally remodeled it a few years ago (it looked a lot better with the Albertsons interior but Save Mart's remodel did address some issues like flooring that was coming up, and replacing decrepit looking old produce cases). This appears to have been announced last week. What is funny is I went to this store over the weekend and there was zero indication it is closing. Large pumpkin displays out front, seasonal for the holidays all set up, winter stuff, etc.

I am surprised Save Mart put so much money into this place when it was near end of lease.

This was a good store for Save Mart. They claim they are looking for a relocation. I don't really think that is going to be possible in Tahoe City. Ralphs used to say that as they were closing their NorCal Stores too.

[reymann]

the new ownership of save mart just simply seems clueless. the pricing has been terrible at both save mart and foodmaxx under their watch. vallarta and now el super are starting to gain ground on them in the fresno, granted pricing at their stores isn't any better. the piccinini family selling the chain is turning out to be a gigantic mistake as of right now.

[ClownLoach]

The question is what's going in to replace it? Obviously they were at end of term, thought they were going to be able to renew but landlord probably had rights to seek other offers. Or tear it down entirely and build something more lucrative. I'm more likely to believe the rug got pulled out from under them.

I saw recently where Marshall's found out from a press release by REI that they had lost their lease. They had also recently cleaned up that location and put work into it. The landlord didn't even have the courtesy to call and give them an opportunity to outbid REI, they let REI announce the new store and address then they got their letter via snail mail that they need to move out and fast. It's rare to see that a viable retailer "loses their lease" but there were for a while cases where the Amazon folks were out bidding existing groceries too; I recall they outbid a long time Ralphs in the valley area and surprised them (store probably is still empty too!). Or it could be getting torn down for a development like a hotel or housing.

I'm hearing that despite the rising interest rates the lumber prices have dropped to the point where it's more profitable to start now. I'm seeing land that developers have sat on for decades suddenly starting to build right now even though there is tons of nearby unsold and slow moving housing inventory. The math equation is telling the builders to put up the homes immediately because they will save a ton of money on construction even if they sit on the market and sell very slowly; the builders also manipulate the sales these days to compensate and keep prices high (they say everyone is on a waiting list, once they've got five solid leads they send an email "good news, we are releasing 3 homes for sale Saturday" even though they're sitting on a hundred finished units).

There will start to be pressure to tear down retail again in California since the government has basically decided you can remove any commercial use and replace with housing without zoning approval, and it is always more profitable to tear down perfectly good shopping centers and replace them with apartment complexes and condos. Unfortunately its even more profitable to tear down high performing shopping centers because they are typically in better locations which means they'll command much higher rents or housing prices. So the problem becomes that the old dead Kmart type places in bad locations that the legislators intended to see built over will instead continue to sit and rot. While the developers would happily boot a perfectly good and highly profitable Safeway and CVS that pay above market rents, along with accompanying restaurants and shops a community needs to function, and rebuild as housing. End result becomes the reverse of what the "smart" government planners want - everyone has to drive further, clog the roads more, pollute more etc to get what they need. The developer doesn't care because they are going to get a one time massive cash infusion of the entire amount they've ever sunk into the property plus 50 years worth of rent. Many shopping centers look like they're owned by a big firm like Kimco, but the truth is they're the management and each box has a different owner. Lots of family trusts, etc. I've dealt with leases in big box centers two blocks long where there are 20 different owners, all financed ownership. And a master developer comes in and says "how would you all like to retire, buy a mansion by the beach, a Bentley or Ferrari or two, and never work another day in your life? Just sign here so I can replace this Safeway (or Petco or whatever segment of the complex you own) and your check for more than you could ever imagine will be delivered by my couriers tomorrow." The unglamorous Pep Boys building or whatever else that family owns and rents as their primary investment that they paid $7M for (on a loan) is suddenly bought for $25M by the developer and they never have to work a day in their life again. They would be insane to say no, as crazy as tearing up the winning lottery ticket and throwing it in the fireplace. And the jokes on them because the developer is going to double their investment. Meanwhile the entire community loses, property values decline as pollution goes up, traffic becomes so gridlocked that even mass transit won't work anymore, and hundreds of people lose their jobs.

[storewanderer]

As you can see on the map in Tahoe City this is definitely a great location for just about anything, and a grocery store (especially a Save Mart) is not highest/best use of the land. There is little new development on that entire north side of Lake Tahoe in 30+ years and it is very difficult and a long project to get anything approved. Next to this Save Mart was a longtime Bank of America building which at some point closed and was vacant for a while but eventually re-tenanted by Plumas Bank (regional out of Quincy who likes to go into closed branches of larger banks). I was surprised the bank was not replaced by a different kind of building.

[storewanderer]

So Safeway is taking over this store.

The current (lakefront) Tahoe City Safeway and an adjacent parcel are redevelopment subjects to receive 31 condominiums and 80 hotel rooms, along with 8,000 square feet of retail and some other things that I do not recall.

I am not sure how this went down but I suspect it went something like this:
Someone saw that lakefront Safeway (which the back of is offices), motel next to it, and plot and thought this is a great place for condos and a hotel and the existing uses are already multiple stories so we can get something multiple stories approved using this foot print. Safeway said we have a long term lease on this building (and they expanded it recently) and are not leaving.

Developer won't take no for an answer and finds out Save Mart's lease is about to run out.

Next the proposition is presented to the Save Mart landlord:
We want to get Safeway into your space. We MUST get Safeway into your space for our Boatworks lakefront condo and lakefront hotel project to proceed from which we will make many millions of dollars. Safeway will be the only store in town. You can charge them way more rent since they'll be the only store in town.

Landlord makes the proposal to Save Mart you can keep the store but Safeway will pay who knows how much more for it (since Safeway will get a monopoly position by moving into this store and letting their store get changed to hotels/condos). So you will have to pay that. And Safeway will stay in their current space with their long term lease. Obviously this would not make economic sense for Save Mart.

I have no idea if this played out the way I describe above but the whole thing is pretty funny.

Funniest thing is Safeway used to own that entire complex in Tahoe City. They sold the real estate 15 years or so ago.

[ClownLoach]

So Safeway is taking over this store.

The current (lakefront) Tahoe City Safeway and an adjacent parcel are redevelopment subjects to receive 31 condominiums and 80 hotel rooms, along with 8,000 square feet of retail and some other things that I do not recall.

I am not sure how this went down but I suspect it went something like this:
Someone saw that lakefront Safeway (which the back of is offices), motel next to it, and plot and thought this is a great place for condos and a hotel and the existing uses are already multiple stories so we can get something multiple stories approved using this foot print. Safeway said we have a long term lease on this building (and they expanded it recently) and are not leaving.

Developer won't take no for an answer and finds out Save Mart's lease is about to run out.

Next the proposition is presented to the Save Mart landlord:
We want to get Safeway into your space. We MUST get Safeway into your space for our Boatworks lakefront condo and lakefront hotel project to proceed from which we will make many millions of dollars. Safeway will be the only store in town. You can charge them way more rent since they'll be the only store in town.

Landlord makes the proposal to Save Mart you can keep the store but Safeway will pay who knows how much more for it (since Safeway will get a monopoly position by moving into this store and letting their store get changed to hotels/condos). So you will have to pay that. And Safeway will stay in their current space with their long term lease. Obviously this would not make economic sense for Save Mart.

I have no idea if this played out the way I describe above but the whole thing is pretty funny.

Funniest thing is Safeway used to own that entire complex in Tahoe City. They sold the real estate 15 years or so ago.

Funny that considering I knew nothing about the area, a retail removal redevelopment project was involved just like I thought. Just happened to be on a different property. We are going to reach a point where suddenly everyone is screaming that there isn't anywhere to shop, and the e-commerce model is too inefficient and environmentally damaging (packaging, trucks on the road, etc.). We are going to have these towns where everything has gone to residential and then nobody wants to live there because there's nothing to do, nowhere to shop or eat etc. because all the damned retail properties have become housing. And of course the best locations are the ones that get converted, not the dead Kmart and other junk properties.

[storewanderer]

Funny that considering I knew nothing about the area, a retail removal redevelopment project was involved just like I thought. Just happened to be on a different property. We are going to reach a point where suddenly everyone is screaming that there isn't anywhere to shop, and the e-commerce model is too inefficient and environmentally damaging (packaging, trucks on the road, etc.). We are going to have these towns where everything has gone to residential and then nobody wants to live there because there's nothing to do, nowhere to shop or eat etc. because all the damned retail properties have become housing. And of course the best locations are the ones that get converted, not the dead Kmart and other junk properties.

I guess at that point the junk properties turn into retail and you have to shop there and like it because there is nowhere else to go...

Not unlike how shopping for groceries has been in a number of large cities before we started to see chains like Whole Foods take up prime/desirable real estate...

[norcalriteaidclerk]

Unless I looked wrong on Google Maps,the Save Mart looks a hair smaller than the Safeway.Considering neither has a pharmacy,I wonder how planned redevelopment of the current Safeway property will affect the CVS as there there doesn't appear to be competing pharmacies in Tahoe City itself.

[storewanderer]

Unless I looked wrong on Google Maps,the Save Mart looks a hair smaller than the Safeway.Considering neither has a pharmacy,I wonder how planned redevelopment of the current Safeway property will affect the CVS as there there doesn't appear to be competing pharmacies in Tahoe City itself.

CVS thinks they are safe.

The back 1/4 or so of the Safeway building is actually an office building. I'm not sure how occupied it is. I do think even factoring that in that the Safeway may be a little larger than the Save Mart. Safeway expanded recently (CVS was previously right next to Safeway, a former Longs Pharmacy, in about a 6k square foot space.

I never liked that Save Mart up there- even as a Lucky. It just isn't a nice store. The late Albertsons remodel was very nice. The Save Mart remodel a couple years ago that wiped away the late Albertsons remodel was a downgrade. It has basically no windows, it has 9 long aisles, produce is tiny and under a low ceiling.

[storewanderer]

There has been active construction but the relocated Safeway that is going into what was Save Mart, and was slated to open Summer 2024, is delayed, and now not opening until January 2025.