Jean Smith, the chief operating officer and partner at United Commercial Realty, has worked with Sprouts Farmers Market to open 11 stores in DFW in a little more than five years. Smith, who was interviewed for September’s “Where’s the retail?” story, is now working with Prescott Realty to make the Lake Highlands Town Center the 12th Sprouts site.
“Sprouts is fully focused and wants to get this deal finished up,” Smith says. “We’ve got leases working with Prescott currently. They also are working with a known pet supply company, and collectively, those two would co-anchor the first phase of a retail portion of the development.” (Smith was hesitant to name the pet supply company because he’s not representing that potential tenant.)
The main holdup for Sprouts, according to Smith, is Prescott securing the pet supply store because Sprouts can’t anchor the Town Center alone. This goes back to all of the TIF and design discussions from this summer, when Prescott showed two different site plans — one with a large grocery store anchoring the project (which, according to real estate mumbling, would be a 50,000-square-foot or larger Tom Thumb), and one with a couple of anchor stores: a smaller grocery store and an additional complementing store (Sprouts and a pet supply store).
Without naming Tom Thumb, Smith says that “Prescott had worked with a grocer previously that was a larger conventional grocer, but I think at the end of the day, the neighborhood seemed to want something more unique and special, and not quite so conventional.” Sprouts, Smith says, is “kind of like a Whole Foods” in that it looks for a “highly educated and a little higher income consumer because people that are educated are a little bit more health conscious.”
The problem is that “Sprouts are half the square footage of a traditional grocer” such as Tom Thumb or Kroger, Smith says, and “for coverage, the developer needs quite a bit of square feet pre-leased in order to get their construction going.” Prescott’s Stephanie Colovas had mentioned at one of the TIF meetings that though Prescott has “been tenacious about finding the right organic grocer … we can’t build something if we can’t get financing for it.”
And from what Smith is saying, Prescott’s ability to obtain loans for construction would require not only a 25,000-square-foot Sprouts signed on to the project but also a 12,000- to 13,000-square-foot pet supply store (or another “junior anchor”) plus “some small shop space that would be in that same first phase, probably including some service types of tenants and some restaurants.” In all, Smith believes Prescott will need 50,000 square feet of signed leases in order to launch its first phase of retail construction.
Smith says he obviously can’t speak for Prescott in terms of the details and timing (we’ve contacted the developer and will update when we have more information), but he believes it is “feasible to get leases completely done this year to the extent where they can start construction sometime next year.” Based on Smith’s own project experience, he estimates another 10 to 12 months to “build these things out,” so the Town Center is “at least a year and a half from getting tenants open.”