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VOL. 127 | NO. 180 | Friday, September 14, 2012

Sarah Baker

SEND COMMERCIAL LEASE ANNOUNCEMENTS to Sarah Baker, who can be reached at 521-2464 or sbaker@memphisdailynews.com.

Kroger Buys Union Space for Expansion

By Sarah Baker

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Kroger has acquired the Belvedere Apartments in Midtown as part of a long-term project to reconfigure the grocery store’s antiquated and challenged layout.

Kroger Delta Division closed Wednesday, Sept. 12, on the 10-story apartment high-rise at 1733 Union Ave. from Belvedere Apartment Inc. The sale includes Belvedere’s attached and front parking areas.

Kroger spokesman John Bell said while the deal does not signify immediate action for construction of a new store, it’s a step in the right direction.

“We don’t own enough property with just purchasing The Belvedere to even start putting a new store on the lot,” Bell said. “It takes a much bigger footprint than that. If we could twitch our nose, we would love to go and build a new store there tomorrow, but … we’re way out on the front end of this, it could be a year, it could be two years, it could be 10 years.”

The 145,804-square-foot Belvedere at Union and Lemaster Street was built in 1964 and has a 2012 appraisal of $2.1 million. Bell said he did not know the purchase price, and deed filings had not been recorded by press time.

Kroger at present rents the store at 1761 Union as part of a long-term lease from Art Seessel’s family. The family also owns the sliver of land behind the store as well as the parking area directly behind Belvedere Apartments.

Kroger bought eight Memphis area Schnucks supermarkets last September, including the Midtown location. That acquisition gave Kroger ownership of the entire block spanning east to South Idlewild Street, including the old Trousseau building at 1775 Union and the former Brice Antiques & Interiors at 1793 Union.

Bell said Kroger typically looks at a store somewhere in the 60,000-square-foot to 75,000 square-foot range. Built in 1941, Kroger’s current Midtown grocery is 39,723 square feet spread across two levels, with the sales floor occupying less than 30,000 square feet.

It’s an uncommon format compared to other Kroger locales, and the parking situation is an issue that “everybody that’s owned it prior to us has struggled with.”

“Most of the upstairs is our receiving and prep area where we prepare, cut meat, do our produce – all of the normal facilities that are behind departments in regular stores are upstairs,” Bell said. “Our intent is to build a store that satisfies our customers’ wants and needs and demands for what they want in a grocery store. Right now, we can’t do it in the store we’ve got.”

Memphis-based Kroger Delta Division, a division of Cincinnati-based The Kroger Co., operates 42 stores in the metropolitan area. Kroger is in the midst of construction of a new prototype store in Poplar Plaza that will be just shy of 100,000 square feet. But Bell said stores of its scope are “unusual.”

“We’ve got the space and we’ve got the customer loyalty in that area that have been asking for more offerings like nutrition and organics and sushi bars – things that we just didn’t have the square footage to offer in the old store,” Bell said. “That store will be a very nice store, but much larger than we would ever even have the luxury of considering even if we did own all of the property on that whole block.”

• In other commercial leasing news, a local contract packaging and logistics company has renewed and expanded its presence in Airport Industrial Park.

Tips Cos. Inc. signed a 47,500-square-foot lease at 4292 E. Raines Road. Hank Martin and Elliot Embry with NAI Saig Co. brokered the deal, including representation of the landlord, Net Magan Property Owner One LP.

“They originally signed a short-term lease for half the building and renewed and expanded to take the entire building,” Embry said. “The additional space will allow them to continue to grow their business and meet additional demands from existing customers.”

The warehouse distribution space is rail served and contains 4,200 square feet of office space.

In addition, Pac West has leased 22,500 square feet of warehouse distribution space at 3742 Air Park St.

Martin represented the tenant. Michael Mullis, partner at Farnsworth Investment Co., brokered the deal for the landlord, Progression Realty LLC.

• And in renewals, Central Defense Services has renewed its 6,046-square-foot office lease at Apple Tree Center, 6073 Mt. Moriah Road Extended.

Justin Lubin, vice president at Makowsky Ringel Greenberg LLC, represented the tenant. Alex Stringfellow, associate at CB Richard Ellis Memphis, represented the landlord, Apple Tree Investment General Partnership.

PROPERTY SALES 28 290 16,197
MORTGAGES 33 165 10,087
BUILDING PERMITS 184 608 38,544
BANKRUPTCIES 33 125 7,597