published Saturday, January 14th, 2012

Food Lion closings punch retail centers in gut

The Food Lion store on East Brainerd Road is an anchor store in a strip of businesses. The store will close in the next 30 days.
The Food Lion store on East Brainerd Road is an anchor store in a strip of businesses. The store will close in the next 30 days.
Photo by Angela Lewis.
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Rodney Billingsley worries the customer stream to his shoe store may dry up after the neighboring Food Lion closes in February.

M&J Shoes on Wilcox Boulevard has been getting by. The store's five part-time employees haven't been getting as many hours as they'd like, though customers come in fairly steadily.

But Billingsley said 100 percent of his store's traffic comes from the next door Food Lion, one of 14 area Food Lions that will shut down in the next month.

"I really don't know what we're going to do after they leave here," he said. "A lot of people didn't know we were a business before the Food Lion. You get new faces every day."

Food Lion will shut down 113 underperforming stores across the U.S. as the company retreats to stronger markets. The company will empty nearly a half million square feet of retail space and vacate as anchor tenants at shopping centers across the Chattanooga region.

Billingsly, manager of the 15-year-old shoe business, said all the stores in his plaza seem dependent on the Food Lion.

Bryan Rudisill, vice president of local commercial real estate group NAI Charter, said that type of anchor store influence is typical of shopping plazas. Rudisill helped sell vacated buildings after other area Food Lions shut down around 2004 and watched as adjacent retailers dealt with the fallout. He expects the plazas that Food Lion leaves this time will face similar conditions.

"An overwhelming percentage of them will take a hit immediately," he said.

Finding a replacement anchor store can be particularly challenging because of the unique space grocers require. Not only are the boxes too large for other retailers, the air conditioning systems are built to rely on cold air from grocery store freezers.

Competing grocery stores often are hesitant to fill the spaces, because they often already have a presence in the market, Rudisill said. That leaves property owners with the pricey proposition of remodeling their empty 35,000-square-foot spaces.

"Someone's going to have to make a decision in ownership that says, 'Hey, it's going to cost us X amount to subdivide this building,'" he said. "It's going to be hard to make the numbers work."

But Rudisill said it could work, and envisions a demand for deep discounters such as Family Dollar in the spaces if property owners will renovate to meet the stores' needs.

Some locations, such as the busy Brainerd Road site, are better positioned than more rural spots such as the Trenton plaza. Rudisill expects the high-traffic sites will more readily attract new business. But the rural sites could sit empty for years. The LaFayette. Ga., Food Lion was vacant for more than six years before the area's public library moved in.

Tom Getz, owner of 13 local Little Caesars Pizza restaurants, has two stores sharing parking lot space with Food Lions. Customers won't have much of a reason to go by the plaza without the grocer, he said.

But most of the customers in his East Brainerd store pop off the busy road for some quick food, so he's not too concerned about the Food Lions shutting down.

"It will have an impact, but I think it will have a small impact because those were underperforming stores to begin with," he said. "The Food Lions just seem to be pretty slow. There wasn't a whole lot of traffic to them, anyway."

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