City Beat

Whole Foods plans new store in midtown Sacramento with 140 apartments on top

After years of rumors that Whole Foods Market might come to midtown Sacramento, the Texas-based grocery chain said Wednesday it had signed a lease for a new location at 20th and L streets.

“We are excited to expand our reach into Sacramento’s eclectic and dynamic midtown neighborhood,” Rob Twyman, Whole Foods president for Northern California, said in a news release.

Pappas Investments said Whole Foods will occupy the entire 40,000-square-foot ground floor of a mixed-use structure that the Sacramento-based developer plans to build across from its offices on L Street. The project will include 140 apartments and two stories of parking above the market, and one story of parking below it, Pappas said.

Pappas will tear down the existing low-rise parking garage it owns on the block to make way for the mixed-use building and plans to develop additional parking at 21st Street and Capitol Avenue.

The project is still in its early planning stages and must win city approval, the firm said.

Whole Foods has four stores in the Sacramento region: in the cities of Davis, Roseville and Folsom, and in the Arden Arcade area of Sacramento County. The midtown location would be the first Whole Foods store in the city of Sacramento.

Some officials expressed excitement that the project would add to midtown’s growing residential and retail options.

“A grocery store in that area with housing is a huge win,” said Sacramento City Councilman Steve Hansen, who represents midtown. “The biggest thing the city can do is to make sure we don’t dawdle.”

Some weren’t so enthused.

Among them were supporters of the Sacramento Natural Foods Co-op, the member-owned grocery store in midtown that sells many of the same natural and organic products as Whole Foods. The co-op, now located on Alhambra Boulevard, is planning to build a new, larger store at 28th and R streets, about a mile away from the proposed Whole Foods site.

“They’re the biggest natural foods retailer on the planet,” said Paul Cultrera, the co-op’s general manager. “We’re concerned, of course.”

The co-op has about $32 million in yearly sales, he said.

In its earnings report Wednesday, Whole Foods said its total sales had increased to a record $3.4 billion during a three-month period that ended July 6.

Walter Robb, Whole Foods’ co-chief executive officer, told investors that opening new stores was “first and foremost” among the company’s initiatives for growing its business and paying “healthy returns for our shareholders.”

Whole Foods now has 388 stores and expects to have more than 500 by 2017, the company said. Long term, it projects enough demand to operate 1,200 stores in the United States.

The company said it recently signed 11 new leases for stores in Sacramento, Montgomery, Ala., Bloomington, Ind., and other cities across the nation.

In Sacramento, the planned Whole Foods store will will be part of a mixed-use project conceived before the last decade’s economic downturn, said Merrilee Margetts, project manager with Pappas Investments.

“Now the market’s back and everything’s getting exciting again,” Margetts said. “It seemed to be the right time to do this.”

The design will reflect Pappas’ own mid-century modern building, she said. The 140 apartments will add to the clusters of newer rental units and condominiums that have sprung up in midtown in recent years, along with trendy restaurants, bars and shops. The area is close to Sacramento’s downtown job core, where an estimated 100,000 people work.

“This is already becoming a vibrant section of midtown, and we’d like to keep that energy going of having it be walkable and sustainable,” Margetts said.

Whole Foods’ impact on nearby grocery stores, including the co-op and the Safeway at 19th and S streets, remains to be seen.

Bob Reynolds is an expert in the supermarket business and head of Reynolds Economics in Moraga. He said Whole Foods was a leader but is now part of a much larger pack of grocery stores, including giants such as Costco and Safeway, selling organic and natural items, often at lower prices.

“Whole Foods stakes a lot of its image on natural and organic and good-for-you foods, but everybody else is doing that, too,” Reynolds said.

The company devotes a large portion of its stores – and makes a lot of its money – from prepared foods, including hot and cold food bars, he said. Such fare should go down well with busy urbanites and commuters looking for a fast, healthy meal, he said.

“You can get something hot, quick and tasty and have dinner in front of your TV set just a few minutes later,” Reynolds said.

The Sacramento Natural Foods Co-op also has a popular hot food and salad bar.

Co-op manager Cultrera said the store initially saw customers drawn away by the Whole Foods on Arden Way, but that many eventually returned. Meanwhile, the market continued to grow for local organic produce and more natural food options.

Now he hopes there will be enough consumers for the co-op to thrive with Whole Foods blocks away.

“There’s a lot of demand for the things we do that Whole Foods does, too,” he said.

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