Whole Foods Market Looks at Virginia Beach Loaction

Nov. 18--VIRGINIA BEACH -- Whole Foods Market Inc., a supermarket industry darling that emphasizes health-conscious and organic products, could be the next magnet to come to the revitalized Pembroke commercial corridor.

Representatives of the Austin, Texas-based chain are known to be scouting sites in Hampton Roads, and a multi use development planned at the southwest corner of Virginia Beach and Independence boulevards is said to be on their list.

"It is my understanding, based on what I have heard, that Whole Foods is looking at this market," said Jon S. Wheeler, president and chief operating officer for Perrine Wheeler, a local commercial real estate investment firm.

"I have heard, and it is not just rumors, that they have a strong interest in the Town Center corridor," Wheeler said.

Wheeler's company, based in Norfolk, has developed and owns a number of shopping centers throughout the East Coast, the Southeast and the Southwest.

He voiced what others in the local commercial real estate community have been saying privately for weeks. The property the company is said to be considering is owned by L.M. Sandler and Sons Inc., Wheeler said. The developers purchased the 12-acre parcel, a block west of Town Center, last year for $13.5 million. Plans are for the area to be redeveloped into shops, condominiums and possibly a hotel.

Divaris Real Estate, a Virginia Beach-based firm that has handled leasing for Town Center, is representing the Sandlers. Gerald Divaris, its chairman and chief executive officer, declined to say much about Whole Foods' possible entry into the market other than to confirm a contact has been made.

"We have talked to Whole Foods," Divaris said. "They are among a bunch of grocers we have talked to. At this juncture, for me to confirm or deny anything is premature."

Divaris acknowledged he is working with the grocer on leases in markets in the Washington, D.C., area and in Pennsylvania. "I am very familiar with them as a company and think very highly of them," he said.

Wheeler, whose company also does business with grocery chains such as Farm Fresh, Kroger and Food Lion, said it makes sense for Whole Foods to consider locating in Virginia Beach.

"They should be interested considering all the new development there," he said. "The only thing that is going to be an issue in the Town Center area is the road network. Everyone knows that is something that is going to have to be handled."

According to its Web site, Whole Foods has a set of criteria that must be met for it to consider a location. Those are:

--200,000 or more people living within a 20-minute drive;

--available space that is between 40,000 and 75,000 square feet;

--a large number of college-educated residents nearby;

--abundant parking available for its exclusive use;

--stand-alone occupancy is preferred;

--easy access from roadways and a lighted intersection;

--excellent visibility from the street;

--and the location in a high-traffic area accessible by foot or vehicle.

Considering those criteria, the planned multiuse development in Virginia Beach would appear to make sense. The parcel is on a corner of one of the region's busiest traffic intersections and has already been home to a grocery store, most recently Kroger. That space is now vacant.

Ron Dennis, president and chief operating officer of Farm Fresh, complimented Whole Foods as a supermarket operator. "They do a wonderful job in their stores. They're a great merchant," he said Thursday.

But while any new grocer to the market would bring competition, Dennis said Farm Fresh stores can hold their own. "I would compare the store we opened in Great Neck to Whole Foods," Dennis said, referring to a recently refurbished store in Virginia Beach that boasts valet parking and a culinary area where chefs prepare take-home meals.

Whole Foods has declined to discuss its interest in a particular market, preferring to announce its new locations during release of its quarterly earnings. Numerous publications have reported that the company is in an aggressive expansion process with about 65 stores in development.

During a conference call with investors last week to discuss its latest quarterly earnings, company executives announced eight leases for new stores in Arizona, Florida, Oregon, California, Pennsylvania, Texas, Massachusetts, and Connecticut and another in England.

If Whole Foods were to enter the Hampton Roads' market it could be considered a watershed event in terms of recognition.

"It represents a high-quality retailer discovering that our market is a good consumer market," said H. Blount Hunter, a real estate and retail industry expert. "It says that we have the appropriate income, education and sophistication comparable to other markets our size."

Launched in 1980, the 176-store chain has built a strong consumer following by retailing such items as organic chicken broth and prepared dishes such as herb mascarpone polenta.

The publicly traded company reported last week quarterly sales had risen 20 percent to $1.1 billion. Shares of its stock have been up more than 50 percent for the year and traded at about $145 on Thursday.

As with The Cheesecake Factory, a popular restaurant that opened in Town Center last year, Whole Foods is a darling of the commercial real estate industry in that it helps to attract people, experts said.

"They are the 400-pound gorilla in the grocery store business," Divaris said. "They have food that is hard to find. But you can also get your Cheerios and you can get muesli from Spain."

Divaris said construction on the multiuse development at Independence and Virginia Beach is expected to start sometime early next year. The project, tentatively called "City Walk," will be built in three phases and could have as much as 300,000 square feet of retail space.

That amount of space will be determined by which retailers locate there and what their functions are, Divaris said.

Staff writer Carolyn Shapiro contributed to this report.

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