Vacant QFC Draws Interest From Small Grocers

Much as they would like it, Gig Harbor residents aren’t going to see Trader Joe’s, Metropolitan Market or Whole Foods Market replace the QFC on Judson Street. But there are smaller grocers currently considering the space.

That’s what Kidder Mathews broker Jerome O’Leary told those who attended an open meeting of the Gig Harbor Historic Waterfront Association this week. Some 50 residents and business owners packed the downstairs of on March 23 to hear what O’Leary had to say about his firm’s efforts to fill the 25,000-square-foot vacancy created by in February.

Gig Harbor residents have been vocal in their desire to see a big-draw grocer – most notably Trader Joe’s – take up residence in the downtown space. But O’Leary, who has been out shopping the site on behalf of its new owners, told the group those companies aren’t interested.

“We have covered the grocery market to the best of our ability and we continue to get the same feedback. And that feedback so far is that a 25,000-square-foot grocer in this market is not viable,” he said.

What looks to be more viable is a niche grocery store that would require half the space. One grocery operator has put together a proposal for a smaller store format that is currently under consideration, O’Leary said. Another that specializes in stores between 10,000 and 15,000 square feet is looking at the site as well.

Leasing to a grocer of this size would require splitting and redesigning the site as well as finding an additional tenant or two. The new owners, members of the Milgard family who took over the QFC space with their of the Peninsula Shopping Center in January, are amenable to that.

“The ownership is all for this community and will put their resources on the table for the right kind of opportunity,” said O’Leary.

The right opportunity involves attracting a quality tenant (or tenants) that suits both the needs of the community and the investment requirements of the owners.

A destination grocer could have accomplished all of that, but Kidder Mathews’ efforts to attract one so far have been unsuccessful. Trader Joe’s, Metropolitan Market and Whole Foods Markets were all approached, said O’Leary. They all politely said no. So did Marlene’s Grocery & Deli and Red Apple Markets.

For most of them, the primary reason was that Gig Harbor’s – at 7,100 within city limits and 48,500 for the peninsula – is too small to generate the sales needed to support a store investment on its own.

“Trader Joe’s specific response was that a store in Gig Harbor would cannibalize their other two stores in University Place and further out in the peninsula,” said O’Leary. The grocer is opening up in Silverdale this summer.

Whole Foods requires a core population of at least 50,000 to draw regular customers from, he added. Gig Harbor would draw much less than that, especially given the number of competing major chain grocers in the area.

O’Leary said he spoke directly with Marlene’s Grocery owner, Marlene Beadle, about coming into Gig Harbor. But she doesn’t want to expand beyond her two organic food and products stores in Federal Way and Tacoma.

on Olympic Drive NW also declined the opportunity to expand, even though the owners offered to help financially as an enticement to the boutique grocer to relocate its store downtown, O’Leary said.

As a result, the search for a suitable tenant hasn’t been limited to the grocery sector. “We’re looking at all types of retailers,” O’Leary said.

To date, these have included dollar stores as well as sellers of mattresses, supplements, auto parts and marine products.

The notion of a mattress or dollar store in downtown Gig Harbor didn’t sit very well with those at the meeting, with one calling it a “major downgrade” for Gig Harbor.

“We still need that anchor that people want to come down to,” added owner Bill Fogarty. “They won’t want to come down to a dollar market.”

O'Leary cautioned that considering all options was just part of the process. Finding a grocery tenant is still the ideal choice, he said.

It’s just too soon to say whether Gig Harbor can achieve that ideal or end up with something else.