At one point, Red Apple Group owned and operated 200 supermarkets in the New York metro, but the number is now down to 30 Gristedes stores in Manhattan, Brooklyn, and Westchester.
“The average rent of a Manhattan supermarket today is over 10% in sales,” Red Apple Group chairman & CEO John Catsimatidis mentioned during a panel session at EisnerAmper and Real Estate Weekly’s Real Estate Dealmakers Forum on May 7.
And energy costs in Manhattan are over three percent in Manhattan, versus one percent in the Garden
State, he added.
“So when people say, ‘Oh, I can buy milk in New Jersey for XYZ, how come you’re charging so much?’ I tell my operations people they have a choice,” he continued. “We can renew the lease and pay, or not renew the lease and not pay. But if we do renew the lease, we have to charge more for the product. And that’s the cost of doing business in Manhattan.”
Catsimatidis says the industry talks about free enterprise in real estate, and while he’s certainly a believer in it, the city also needs essential services in neighborhoods. “It’s a problem that has to at least be discussed without hurting the real estate industry, but let’s talk about not hurting the neighborhoods either.”
“The joke I tell around town is that I wasn’t in the supermarket business, I’d be higher up on the Forbes list,” he quipped.
Catsimatidis was No. 272 on the Forbes 400 list of richest people in America in 2014, with a net worth of $2.3 billion that also comes from interests in the real estate development and energy industries.
Catsimatidis was joined by former New York State Governor David Paterson and Mintz Levin member and Port Authority Commissioner Jeffrey Moerdler, who discussed the impact of local and national policy issues on commercial real estate.
– by Amanda Marsh