Small-Format Grocer Expanding To 2 New D.C. Neighborhoods

Streets Market & Cafe is looking to bring back the neighborhood grocery store with its small, urban-style locations, representing a departure from the large-scale grocers anchoring many of today's mixed-use projects, and the company is now expanding to two new parts of D.C. 

The grocer this month signed a lease to open at 1255 22nd St. NW, the new Legacy West End project that delivered this year. It also recently signed on in the ground floor of Ava NoMa, an apartment building at 51 M St. NE that delivered last year. 

The two new deals come after Streets Market & Cafe this spring opened its third D.C. location in Cleveland Park. The grocer also has stores in Arlington, Alexandria and Baltimore. It opened its first store in 2014 at 2400 14th St. NW, in the ground floor of the Capitol View apartment building, which UDR delivered in late 2012. 

Streets Market has a strategy of going into the ground floor of new apartment buildings, and it can be flexible about its footprint size. Its latest locations are for between 5K and 6K SF, but its Baltimore location is 15K SF, and it will likely do more deals that size in the future, said Rappaport Director of Brokerage Michael Kang, who has represented Streets Market in most of its deals. He said landlords have been willing to bring rents down below market level because of the value Streets Market provides as an amenity for residents. 

"If landlords are building 300 units above 15K SF of retail, there are so many food tenants they could find. At the same time a lot of the millennial apartment builders make money on the apartments and want something special for residents," Kang said. "They want a really nice operation of an organic specialty grocer." 

While its store footprint is a fraction of the size of grocers like Giant, Wegmans, Whole Foods or Harris Teeter, Streets Market aims to offer everything a shopper needs so they don't have to venture to the larger stores. Its selection includes fresh produce, meat, seafood, packaged foods, baked goods, household products and prepared meals.

Other small-format concepts, like Yes! Organic Market or Mom's Organic Market, focus primarily on organic foods, but Streets Market offers a combination of natural foods and conventional brand-name goods. 

"We like to call it a throwback to the old neighborhood grocery store of 50 to 60 years ago," Streets Market Vice President of Development Campbell Burns said. "Some shoppers like to get certain things that are organic and also pick up Diet Coke and Oreos. We're trying bring that under one roof." 

Streets Market plans to open the NoMa store in early 2019 and the West End store next summer. Burns said the decision to sign on at Legacy West End came down to the project's location.

"We thought this area in West End was fantastic because it borders on the daytime crowd coupled with a permanent, residential, nighttime crowd as well," Burns said. "It's a mix between both worlds." 

Tasea Investment Co. and the Auger Family earlier this year completed the Legacy West End project, a conversion of an office building to 192 apartments with retail. Miller Walker Retail principal Bill Miller, who represented the landlord, said the landlord could have gotten a higher rent by signing a national fast-casual chain, but decided to come down on price to have the local grocer. 

"This is a better amenity for the project," Miller said. "They stretched a little bit and said, 'This is the right thing to do, and it's going to get you more rent upstairs' ... Long term what's sexy is a grocery store, and this is a cool market that's halfway between a bodega in New York and a Whole Foods." 

After opening the NoMa and West End locations next year, Burns said Streets Market plans to continue growing. It does not have an expansion goal and wants to make sure each deal makes sense, but Burns sees plenty of neighborhoods in the city where the concept could work. 

"There are a lot of great submarkets in D.C. that don't have a neighborhood store that people can turn to throughout D.C., across the river and in all wards," Burns said. "We're doing our best as a small company to at least spend time in each one of these markets to see where the opportunity is today, a year from now and five years from now." 

Kang expects Streets Market to open at least three stores per year going forward, but he said it has the potential for even faster growth. 

"The more I work with them, and the more I make introductions with different developers, I see the landlords out there all love the Streets Market concept," Kang said. "I wouldn't be surprised if their momentum gets better and I believe there's so much opportunity for Streets Market if they continue doing what they are doing well."