Fresh Market Leaves, and Leaves City and Developer in the Lurch

By Stephen Siegel
Falls Church Times Staff
July 23, 2016

The Fresh Market, an upscale natural food grocer similar to Whole Foods, has changed its mind and will not open in the new Reserve at Tinner Hill project nearing completion on the old International Motors site on South Washington Street, the Falls Church Times has confirmed.

Rumors about the departure have been circulating for several weeks, but nothing official was released from City Hall, apparently because officials were hoping the chain would change its mind again and come back. But that does not appear to be in the cards.

A City official told the Times Friday that developer Lincoln Property Company is “actively marketing the space” which suggests they believe they no longer have a tenant for the largest space in their new building, a 20,000 square foot ground floor that already has been built out to Fresh Market’s wishes.

That’s a big blow to the developer, who stood to gain substantial cash from a lease with the store. It also hurts their efforts to attract other retailers to the complex; stores like to be near supermarkets because of the traffic they draw. And it’s also a major blow to the City, which was looking forward to a large influx of sales tax revenue from the highly-regarded grocer.

Additionally, it removes some of the rationale for the project. One of the reasons the City Council approved the large building, with its 224 apartments, in 2013 was because of the presence of The Fresh Market, which had signed a letter of intent in late 2012 to locate in the project.

The Council required that letter of intent before approving the mixed-use plan, which required a Special Exception to the zoning code. But the chain’s decision to pull out anyway shows the limits of such a letter. It’s not an iron-clad guarantee, and even the existence of a signed lease prior to Council approval wouldn’t guarantee they would open, either. Leases are broken all the time, and it appears that occurred in this case.

Business conditions can change quickly, and it’s not clear why the chain reconsidered. They already were aware they were locating near a new Harris Teeter supermarket, which is scheduled to open next week in the new West Broad building at 301 W. Broad Street.

But they didn’t know, when they signed their letter, that they’d also be competing with their arch rival Whole Foods, which is now expected to open in a few years in the new project slated for the northeast corner of Broad & Washington streets. That project had not been announced back in 2012.

However, it may not be a reconsideration of the competitive landscape, but instead internal policy changes that made the decision. The Fresh Market recently was purchased by private equity group Apollo Global Management, and such investors may be seeking higher profits than were projected at the proposed Falls Church location.

The chain recently pulled out of the state of Texas entirely, closing eight stores, and also shuttered two in Iowa, one in Missouri and two in Kansas. The North Carolina company still has 175 stores nationwide.

But regardless of the reasons, it’s a loss for City coffers and for the emerging retail corridor of South Washington and South Maple, which now features Pizzeria Orso, and Elevation Burger, among a number of other businesses.

It also may be a challenge for Lincoln to find a new tenant. Many businesses interested in the area cannot afford and do not need 20,000 square feet. So the ideal situation for them would be to find a replacement grocery, such as a Trader Joe’s or Mom’s Organic Market.