Urban-issues columnist Will Doig tackles the so-called Whole Foods Effect in a Salon story about development in Detroit—and well, development in every city that’s seen significant gentrification in the last decade or so. Detroit is the latest—following Washington, D.C., in 2000, Pittsburgh in 2002, and Boston last year—to see a neighborhood jolt following the announcement of the arrival of a Whole Foods.
In Detroit, developers are betting big that the Whole Foods Effect will transform Midtown—$4.2 million big, Doig reports. “That figure suggests city leaders believe that Whole Foods is a force unto itself that can give a neighborhood the escape velocity it needs to break free of its doldrums,” he says, and then asks: “Are they right?”
Doig writes that Whole Foods occupies a unique position in the food-market eco-system: It’s a debt-free company with 50 new stores coming online. Businesses piggyback off of Whole Foods’s advance work: The company looks for neighborhood areas with 200,000 people (a college-educated set at that) living within a 20-minute-drive radius. That may be Whole Foods’s greatest signal to developers and businesses: They’ve done the math so you don’t have to.
The numbers bear out, Doig writes:
An exhaustive 2007 study by Johnson Reid quantified the effects that individual urban amenities have on home prices. Using hedonic modeling, it found that a specialty grocer will increase surrounding home prices by an average of 17.5 percent, more than bookstores, bike shops or gyms (with the caveat, of course, that this varies greatly depending on the situation — in the instances studied, the increases ranged widely from 6 to 29 percent).
Then he digs into the effect it’s had on D.C.’s Logan Circle neighborhood (which is a stone’s throw from ARCHITECT’s offices):
When Whole Foods moved onto P Street in Washington, D.C., 13 years ago, the only nightlife on the block was a divey (and awesome) rock club called the Vegas Lounge. The Lounge is still there, but it’s since been joined by a popular burger joint called Stoney’s, a “food-to-fork” locavore restaurant called Logan Tavern that owns a farm 30 miles south of the city, a Starbucks (open till 8 p.m.), a coffeehouse-slash-bar called Commissary and several retail stores, all squeezed onto the same block as Whole Foods.
His D.C. example raises a couple of salient points. One big plus to the P Street N.W. Whole Foods is its design: Its parking lot is small and underground, as it was clearly meant to fit into the neighborhood, not replace a big chunk of it. Many of the Whole Foods throughout the U.S. Northeast, in fact, are designed to encourage walkable communities. Other grocery stores in D.C. looked like the original Whole Foods in Austin, Texas—that is, a stand-alone, big-box grocer with a great deal of its footprint set aside for parking. When the D.C. Whole Foods opened it 2000, it was the only grocery store signaling urban density at the time.
Back then, Whole Foods was also one of relatively few grocery stores serving D.C. at all. A Safeway store popularly known as the Soviet Safeway—so named for its frequent shortages—was then the closest grocery store, and that one was a neighborhood away. It’s hard to say whether the Whole Foods Effect is the function of a singular urban-organic-brand signaling, or if Whole Foods is just a savvy company identifying niches in the marketplace.
Doig puts this question another way: “Could a Safeway gentrify a neighborhood like Midtown Detroit? Could a Wal-Mart?” Doig says no—but Safeway and Wal-Mart want this answer to be yes. Wal-Mart is opening six new stores in D.C., and the preliminary designs that the company has released for its first foray into the capital look nothing at all like their sprawling cousins in the suburbs. They look like Whole Foods. Chains such as Safeway and Giant are updating their brands to follow; a popular Giant a mile or two up the road from the Logan Circle Whole Foods is known widely as the Gentrification Giant—because it appears to have contributed to (or to have benefited from) the sort of growth that the Whole Foods Effect describes.
One thing is clear: When it comes to big-store grocers spurring urban growth, Whole Foods has won the first-mover advantage.