When Austin, Texas-based Whole Foods Market announced earlier this year that it would build a store at Jackson’s Highland Village shopping center, it was assumed that nearby commercial and residential real estate would receive at least a small bump in value.
Two studies conducted within the past six years — one by Realtors in Portland, Ore., another by Citigroup — found that what has become known as the “Whole Foods Effect” on surrounding real estate generally included a rise in property value between 10 and 20 percent.
Realtors interviewed by the Mississippi Business Journal since the natural foods grocer’s February announcement have said the lower end of that estimate is probably more realistic (and perhaps even a little optimistic) but there will be a bump.
At the Whole Foods groundbreaking Nov. 8, Jackson Mayor Harvey Johnson Jr. said he and other officials hoped Whole Foods’ arrival — scheduled for fall 2013 — would lead to other national retailers that are currently not in the Jackson market to follow it. “We certainly think it’s a possibility that they’d look at us,” he said.
There is reason to believe it will. Whole Foods opened its Washington, D.C., store in 2000 in a neighborhood whose nightlife consisted of only one bar, though it was a popular one, according to a story in the May 2012 issue of Architect magazine that cited a study done by Oregon-based real estate development consultant Johnson Reid.
The bar is still there, but it’s no longer the only game in town. It’s been joined by a half-dozen locally owned businesses, including restaurants, coffee houses and retail stores. Starbucks followed suit. Officials in Detroit are hoping the same thing happens when a Whole Foods opens in a neighborhood in that city that was decimated by the recession.
If the operators of Highland Village have similar hopes for the 220,000 square-foot shopping center in northeast Jackson, they’re not saying.
Officials in Jackson referred questions to WS Development, the Massachusetts retail development firm that acquired a controlling interest in Highland Village last month.
WS has properties in the Northeastern U.S. that have Whole Foods stores. WS’ vice president of development Lou Masiello said at the Jackson groundbreaking that the company has proven to be a good partner.
Nobody at WS was made available for a phone interview last week in response to questions about Highland Village’s occupancy rate and how that might change once Whole Foods opens, but spokesman David Fleming wrote in an email to the Mississippi Business Journal that if the Whole Foods Effect helps Highland Village gain new tenants, it won’t be because WS actively pursued them.
“We’re not focused on attracting new tenants as we’re pleased with the ones we have today at Highland Village,” Fleming said. “In our experience at other centers, Whole Foods Market is a tremendous draw for both our tenants and the centers themselves. Bringing in the nation’s leading grocer has been a win all the way around. We expect the same at Highland Village.”
The Whole Foods Effect will likely stretch south down Old Canton Road to the District at Eastover, a mixed-use development whose construction is set to start in 2013.
Breck Hines, one of the District’s developers, told the Mississippi Business Journal shortly after the February news that Whole Foods was coming to Jackson that it would be a “game-changer” for the area.
“I think we’ll ultimately get to share in it whether it’s on our property or Highland Village,” Hines said then. “It’s a no-brainer that it will help us.”
Whole Foods has 400 stores in 40 states. The Jackson store will be the first in Mississippi.
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