The Vancouver City Council is dropping its push for a grocery store at Block 10, the city-owned undeveloped acre in the heart of downtown, and will instead work with an investment property firm to erect a corporate headquarters building on the site.
At a workshop Monday afternoon, the council heard a formal recommendation from Chad Eiken, director of community and economic development: enter direct negotiations with Holland Partner Group to build the 11-story office building at Block 10, as well as a seven-story workforce housing and retail space.
“A grocery store is still a high priority for the city. However, we’re feeling that the timing might not be right,” Eiken said. “There’s been challenges in getting traction with grocers.”
The new direction for Block 10 would effectively end negotiations with Gramor Development, which has been going back and forth with the city on the terms of a deal since 2017. Council wanted a guarantee that Gramor would be able to sign a grocer to the site — one that would bust up the food desert that currently stretches around 3 square miles across downtown Vancouver.
In March, Gramor CEO Barry Cain told The Columbian he was confident he could get a grocer signed to the lot, if given a little more time. City leaders evidently thought differently. Eiken said he’d reached out to Holland for an alternate site proposal back in February.
Over 35 years, Gramor has helped bring in grocery stores to about two dozen different communities. The difficulties surrounding Block 10, Eiken stressed, aren’t Gramor’s fault. They stem from upheaval in the grocery store industry and Vancouver’s relatively low urban density.
If anyone could have done it, Eiken said, it would have been Gramor. The fact that the company couldn’t attract a grocer means it’s time to pursue a new path, he said.
“We tried the best we could with all the levers available to get a grocery store into Block 10,” said Councilor Erik Paulsen. “I think it tells us a little bit about where we are at this point in time.”
If all goes according to the new plan, Holland will likely break ground on its new corporate headquarters by the end of the year, utilizing a prime piece of property that’s sat vacant since the early ’90s.
“I’m excited to see this proposal,” said Mayor Pro Tem Bart Hansen. “I’ve been doing this for eight years now, and it’s been a little depressing to see this property sit, and sit, and sit.”
Council is expected to formally close negotiations with Gramor and enter negotiations with Holland at its next meeting on May 13.
Nailing down a future
The new vision for Block 10 would see an 11-story, 110,000-square-foot office building to serve as a corporate headquarters for Holland Partner Group. Of that space, 60,000 square feet would be occupied by Holland and 50,000 square feet would be leased out for office space.
Eiken said the company was also considering reserving around 3,000 square feet as a business incubator — a temporary space to help budding businesses to get off the ground, with the structural resources of a major corporation.
Details on the seven-story housing complex are less defined. It would be workforce housing, Eiken said, meaning that rents would be geared toward people making 80 percent of the area’s median income.
Headed by CEO and Chairman Clyde Holland, the Holland Partner Group owned more than 15,000 residential units and managed close to 25,000 additional units as of a 2017 report.
It keeps a low profile, but it’s a huge company. Holland handled about $10 billion in development and redevelopment over the last 18 years, Eiken added.
Currently headquartered at 1111 Main St. in downtown Vancouver, the company was considering a move to Camas. The new proposal would keep it — and all 175 of its employees, and counting — in Vancouver.
Holland is also the developer building the fourth Vancouvercenter tower, just across the street from Block 10.
Bordered by Eighth, Ninth, Columbia and Washington streets, Block 10 used to be part of the five-block Lucky Lager Brewery property. It was purchased by the city in 1993 and has sat vacant since.
In the mid-’90s, Kaiser Permanente briefly considered the site for an office building. In the early 2000s, the lot was a handy staging area for construction on Heritage Place condo development. But city leaders agree that it’s been a grossly underutilized property.
The Holland deal fast-tracks the site’s development. Block 10 is in an Opportunity Zone, meaning that developers who move quickly can better take advantage of a capital gains tax deferment.
“Another thing that was really attractive about this Holland project is that they want to be under construction by the end of the year, which is super, super fast. The Gramor project probably would have been another year and a half, two years, before they were breaking ground,” Eiken said. “If we can get such a sizable project on an earlier time frame, that made a lot of sense to us.”
Grocery store saga
It’s a tough time to get a grocery store.
In March, The Columbian examined the perfect storm of factors that built a food desert in Vancouver’s downtown. It comes down to two main issues:
1. We lack the density. While around 5,200 housing units are in the works, they’re not filled with residents yet. Grocers who operate on 2 percent to 3 percent margins, working with specific density formulas, are still bypassing Vancouver. The downtown’s an awkward shape, too — the Columbia River breaks up the radius a grocer would usually draw around a perspective store site.
Or, as Paulsen put it Monday evening: “We just don’t have the rooftops yet to attract what we want.”
2. The grocery store industry is in the midst of a major upheaval, led by Amazon’s purchase of Whole Foods in 2017. More people are buying groceries online, utilizing Amazon-esque delivery services. And grocers are skittish about opening a brick-and-mortar store that might become obsolete in a few years.
“We’re not pushing grocery carts up and down aisles like we used to,” Mayor Anne McEnerny-Ogle said.