As it approached the 50-year anniversary of its founding as a buying club, GreenTree Co-op Market had been searching for opportunities to relocate from its 1977 location for several years. GreenTree wanted to stay close to downtown, but wanted a larger, more modern grocery facility. However, as they searched for locations, it was difficult to find a anything affordable, given their cash balance and future estimated sales level. Forecasted sales were double their current revenue, but still under $5 million. Early conceptual consultation with NCG Store Development suggested that GreenTree would need to find a developer that could contribute substantially (at least $1 million) to the project’s construction and equipment budget for a larger space.
Finding the Right Developer and Location
With patience and persistence, GreenTree General Manager Sarah Christensen found a nonprofit developer that fit the bill — they were able to underwrite a $1 million contribution toward tenant improvements, as well as finance $1 million in fixtures and equipment. With less than $100,000 in cash on hand, GreenTree needed to raise $1 million in preferred shares from its membership to fully fund the co-op portion of the project.
The location was to be a multiuse facility, which brings lots of challenges both to plan and to operate. NCG Store Development assisted Christensen with the negotiation of a lease that would make the facility competitive with suburban competitors by securing onsite parking, as well as maximizing visibility with signage and other visual cues. GreenTree also worked through engineering complexities, such as placement of exhaust, refrigeration, multiple utilities and extra columns — typical of multiuse buildings — in addition to a challenging floor plan with front and rear entries to face both the street and the rear parking lot.
Even with the significant landlord financing, the pro forma and reminders from NCG staff helped show Christensen how truly tight the budget was for the project.
“The cautions were helpful, even though they were stressful to hear, and helped emphasize the seriousness of the risks around cash, budgets, and our capital raise,” Christensen said.
Pandemic Challenges
She could not have foreseen that COVID would hit just as construction on the building was starting. But having money saved up front, and by making further adjustments through the procurement phase, reserves were available to pay for work-arounds created by extreme supply chain disruption. Moreover, having specific performance clauses in the lease for both GreenTree’s space and for the overall construction project helped the co-op when it was needed most.
After numerous delays caused by the pandemic, GreenTree was able to open in December 2021 in a new 10,000-square-foot store just blocks away from their old location. The store sales have exceeded the original forecast — on track to more than double to $4.5 million this year — and the community has been very excited by their full-line grocer downtown.
Getting there was a testament to the patience, resilience and leadership from Christensen working through unconventional funding and leasing structures designing a complex building, and building a store during COVID, all while transitioning the organization.
“I don’t know how co-ops did this before NCG Store Development,” Christensen said.
