Schnucks to spend $3.4 million on downtown St. Louis store
St. Louis Business Journal - by Christopher Tritto
It will cost $7.56 million for Schnuck Markets Inc. to build out, stock and open downtown St. Louis' first full-service grocery store. But the family-owned supermarket chain is getting help.
Schnucks will pay $3.42 million necessary for tenant improvements, inventory and other opening expenses at the downtown location, at Ninth and Olive streets, according to state finance board documents. The remaining money will come from a combination of state, federal and city subsidies.
"If we didn't have the public support, it wouldn't be a viable project," said Scott Schnuck, chief executive of Schnuck Markets. "We're starting with a space that wasn't designed for a grocery store." The location will require a leveled floor, extensive wiring and other improvements, he said.
The grocery chain will receive $1.1 million in state funds from the Missouri Development Finance Board (MDFB), $1.29 million in proceeds through the federal New Markets Tax Credits program and $1.75 million from the city of St. Louis through a development agreement that will operate like a tax increment finance (TIF) plan, according to a resolution approved March 18 by the state finance board. The city's Board of Aldermen approved the development agreement March 14 and has sent its bill to Mayor Francis Slay for his signature.
The planned 20,800-square-foot urban concept store, a first for Schnucks, will be smaller than the chain's typical stores, which are about 55,000 square feet.
The store will feature all of the services of a traditional store, including a pharmacy, floral department, bakery and meat department. But it also will feature a Kaldi's Coffee bar and a 6,306-square-foot mezzanine with a wine department, tapas bar and seating space to cater to daytime workers in the area and to downtown residents who eat out often. The store is slated to open in late 2008 or early 2009.
"This is a store specifically designed for this market," Schnuck said. "It is unlike anything else we have today."
The state owns the 1,065-space Ninth Street Garage, where Schnucks will lease ground floor retail space for the store. The initial term of the lease will be 10 years at a rate of $9 per square foot. After that, Schnucks can extend its lease for one or more of six consecutive five-year terms at slightly increased rental rates, according to the lease summary.
Gary McElyea, spokesman for MDFB Chairman Lt. Gov. Peter Kinder, said state funding for the store will help drive economic development downtown and get a project off the ground that would not otherwise be feasible.
"Having a full-service grocery store has been perceived as critical to raising the downtown residential market to the next level," said Barbara Geisman, deputy mayor for development. "When (Schnucks) wanted a TIF to be able to do it, we were happy to entertain the idea. It does considerably enhance the credibility of the downtown residential market that an established name-brand store is confident there is enough of a market to invest there."...
..."We realize we're probably early in opening here, and we have been watching downtown very closely," Schnuck said.
"But we feel strongly that the first person who comes downtown with a full-service grocery will really stake out the market. We're counting on the continued momentum downtown."
ctritto@bizjournals.com
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