Whole Foods looks set to open a second store in Berkeley after pulling out of negotiations to build a new store in Albany in September. The site would be at 1025 Gilman St., in the location currently occupied by Office Depot.
Office Depot is slated to move across the street to Gilman Village which will give it about half the space of its current 30,000-square foot store. “That’s as much space as it needs,” said Doug Wiele of retail developers Foothill Partners, who is about to close on buying both properties this week in partnership with Marin-based property management company The Pratt Company.
Wiele would not confirm Foothill was in talks with Whole Foods specifically, but he said he was in negotiation with grocery stores and “expected the next tenant to be a grocery store.” Although the lease has not yet been signed, sources close to the deal say the real estate arm of Whole Foods has given the go-ahead to the Gilman site.
A Whole Foods spokesperson said: “We are actively looking in the area but cannot comment on any specific location at this time. We announce all new store locations on our quarterly earnings calls – the next one is scheduled for February 2013.”
Sites that can accommodate a large grocery store are scarce in Berkeley. The only other potential location is the spot formerly occupied by the shuttered McNevin Cadillac/Volkswagen dealership on San Pablo Avenue and Cedar Street. Whole Foods is known to have considered and rejected this spot. The shuttered Andronico’s on University Avenue might have been another option, but it is to be taken over by Savers Thrift.
Wiele said the decision by Office Depot to downsize was made at a corporate level. Business like Office Depot have seen much of their business go online and therefore don’t need as much retail footprint as they used to. Gilman Village is vacant after tenants including Trove and Ethnic Arts moved out.
Whole Foods’ one Berkeley store is on Telegraph Avenue and Ashby. In September, Whole Foods terminated a lease agreement it had with UC Berkeley for a grocery store and senior housing project designed to be built at University Village in Albany. The decision came in the wake of lawsuits filed against the city that sought to delay or cancel the project, for which negotiations had already been ongoing for five years.
Although 30,000 square feet is considered small for a chain like Whole Foods, the Austin, TX-based retailer is pursuing a strategy of opening smaller stores with a view to reaching a target of 1,000 — it currently has 340 units and aims to open around 50 a year soon. Reporting on Whole Foods’ plans last month, Supermarket News said that stores measuring in the 38,000- 40,000-square foot range cost less to build and are highly productive. “Smaller stores are more nimble and require fewer employees. Shelf space is limited, so they only stock the best sellers. Likewise, their smaller prepared-foods departments center on self-service areas such as the salad bar, which operate at higher margins than the more labor-intensive departments offered in larger stores,” it wrote.