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Independent grocers series: What are triple-net-leases and why do they matter?

We take a deeper dive into one of the issues raised by our story on the challenges facing independent grocers. And unsurprisingly, it has to do with property prices

Author

Geoff Sharpe
December 09, 2024

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Good morning,

I was debating whether to share this personal update. I’m naturally a private person, so even writing this newsletter has been a journey of opening up.

Our family’s dog, Clinton, passed away a couple of weeks ago. Even writing it is still difficult. He was in our lives for over ten years, full of love for everyone he met, always demanding pets and head rubs. He was a lucky guy who got to travel the world, seeing almost every part of Canada. He was always ready go for a car ride, cross-country skiing, camping or, whenever he could, steal bread off the counter.

Anyone who owns a pet knows the indelible effect they leave on you. I always found it hard to describe to people. It’s a feeling, a smile when you see their tail wags, a happiness that overtakes you when you return home knowing they’re there. A bad day melts away as soon as you see them. Now that he’s gone, it really dawned on me how much he mattered to us.

If I could leave readers with one thing, it’s to treasure those moments you have with those you love, whether it’s a pet, family or friends. It’s those relationships that make life so great.

And now that I’ve dried my eyes after writing that, let’s get to today’s newsletter.

— Geoff Sharpe, Lookout managing editor

PS - If you find this newsletter valuable, please consider forwarding it to your friends. New to the Lookout? Sign-up for free.

WEATHER

Monday: 5 🌡️ 1 | 🌤️

Tuesday: 6 🌡️ 4 | ☁️

Wednesday: 8 🌡️ 4 | ☁️

ANALYSIS

Independent grocers series: What are triple-net-leases and why do they matter?

(Dustin Godfrey)

What happened: On Saturday, we released our investigative story on independent grocers in the city, which talked to Vancouver store owners about the challenges they’re facing. 

A tale of two grocers: Large grocery stores have seen their profits rise quite dramatically over the last few years, with net profit margins increasing 83 per cent compared to averages a decade ago. Meanwhile, smaller grocers all told our freelance report Dustin that this has been some of the toughest periods of running their business.

The problem of triple-net-leases: Those interviewed for the story noted rental prices were a huge problem for independent grocers. But a small part of the story briefly touched on triple-net-leases. These types of leases are different from what you might consider a normal lease for a vehicle, or when you rent a home.

With these leases, tenants occupying buildings not only pay rent, but are required to pay most fees associated with the property, including property taxes and fees, insurance and utilities. 

  • This form of lease is especially problematic with Vancouver’s sky-high property values. The property tax value is set at the highest and best use of the land, meaning the tax burden could be based on the land value, say, with a hypothetical condo tower, according to Urbanized. This is set at the provincial level. 

These leases disproportionately hurt small mom-and-pop businesses. As noted in a column by Dan Fumano in the Vancouver Sun back in 2017, the problem with highest and best use is that it doesn’t take into account what makes a place great to live, like live music halls, bars, restaurants, second-hand stores, and businesses like that.

What it means: One observation is that our city is increasingly designed for larger businesses, who can afford such things as triple-net-leases. Yet, the reason many people choose to live in a city, besides for a job, is the access to services, amenities, arts and food. Development is important, the city needs to build more homes, but the question for council and planners is how do we maintain what makes it great? How can we help small operators like independent grocery stores survive?

  • Trying to find independent grocers in Vancouver? A Reddit user made this helpful map of all the independent grocery stores in the region. View it here. 

Lookout readers share their thoughts

We asked Lookout readers to share their thoughts on this issue. A surprising number of readers, 76 per cent, said that they did have access to an independent grocer in their area. Around 86 per cent of readers also said they supported a smaller, independent grocer in their area. But all said they also wanted access to big stores and smaller ones.

Thought-bubble: It’s clear readers want smaller grocers, many with lower prices, but I suspect most people don’t want to have to visit multiple places in one day to do all their shopping. Smaller grocery stores really fill a need when you need quick fresh fruits and vegetables, and reduce the need for vehicle trips. Making a city more livable means more smaller, independent grocers, and the city has a role to play in that.

Here are a few reader responses and my comments.

Reader: It's frustrating when there is no local market to go to.  It's also frustrating that if you do have to travel & pack your groceries home, transit isn't a choice.

Geoff: The problem of transporting goods is a real one. For older residents, it can be a challenge to do any sort of large shop. If you’ve ever tried to transport anything on a bus, you know it can be a real challenge.

Reader: There's an ethnic small grocery downtown that has a resident mouser cat in it, I won't name it because I don't want them getting in trouble for it. But I do think more bodegas should have cats. It completely makes up for how dour and rude the cashier always is.

Geoff: While I can’t speak to the health code violations (I assume there are many that would violate) it does speak to what I think is an underappreciated aspect of city building, which is the character of a place. New York has it in spades. It’s the almost indescribably tapestry of a place, the people, characteristics, design elements and so much more that make a place livable, fun and unique. Go to a place like Olympic Village or any other newer development, and compare it to Commercial Street, and you see what I mean.

Reader: I also live by Meinharts in South Granville. It’s a small neighborhood grocer, but its prices are outrageous. It makes me so mad every single time I go there as to what they get away with charging (but I live in an older apartment near it and don’t have a car so it’s convenient). I know Pattison now owns it (once up on a time it was independently owned) but are they just marking up prices because they have “cornered” the market in an expensive area? Eggs are $10, produce is never on sale, some canned/jarred goods are 30% higher than what they sell at their bigger stores. Is it necessary? Is it just greed? I just always feel taken advantage of there. I’d like to know how they justify the prices they charge. 

Geoff: Meinharts seems like part of a trend in the business world, where the middle class and lower affordability of product is less of a concern, and the focus tends to be on more well-off clientele. You can see this in big grocery stores like Whole Foods. Cities need to provide options for all income levels. Places like Gaya Arun at Stadium Market are such a critical part of the fabric of Vancouver.

New feature from Unfair Canada

Sound unfair? Air Canada flight attendants are forced to work hundreds of hours for free. Tell Air Canada unpaid work is unfair.

VANCOUVER NUMBERS

🥓 270: The number of breakfasts that are served to Strathcona students at the Strathcona Community Centre. It serves one of the poorest neighbourhoods in the city. [Vancouver Sun]

🧑‍🏫 647: The number of BC teachers that resigned in 2023-24. In that same year, 1,310 left their district. It aligns with reports that school districts have struggled to retain teachers. [The Tyee]

📉 1/3 to 1/2: The drop in walk-in clinics in BC, according to recent data. This is partially to do with changes to the incentive structure by the provincial government in 2023, which encourages more doctors to work in family practices. That’s a good thing for family doctor numbers but bad for walk-in clinics. [Vancouver Sun]

THE AGENDA

🖼️ Vancouver city council will debate a motion on Dec. 11 on whether to move the East Van Cross. The current location is obstructed by development and current space limitations which means the public cannot view it that well. It was created as part of the Olympic and Paralympic Art Program in 2009. The artist has been in touch with the city, but the entire process is still in the early stages. [Vancouver is Awesome]

🏢 Surplus land at Sir Sandford Fleming Elementary School in East Vancouver was sold as a 99-year lease to a developer to build commercial space and a rental building, for the cost of $8.5 million. Critics of the sale say the decision was rushed, short-sighted, and not in the best interest of the public. [CBC]

🎤 NDP leader Jagmeet Singh, on a visit to Vancouver, said in an interview with Urbanized that he believes one of the biggest issues facing young people is that they can’t afford to live in Metro Vancouver. According to Ratehub, you’d need $214,000 in annual income to afford an average home in Vancouver. [Urbanized]

👍️ But those prices sure aren't stopping people from continuing to rank Vancouver as a great place to visit. Wanderlust Travel Awards ranks Vancouver as the sixth most desirable city in the world and the best in North America. Tokyo was ranked number one (and as someone who visited there, I’m not surprised!). [Urbanized]

✈️ So, about your jet needing jet fuel… YVR jet fuel delivery workers, who move the jet fuel from deepsea vessels, could strike Tuesday morning. The union representing the workers say workers have to work two jobs in order to live in Vancouver. The airport does not expect any delays due to other ways they receive airline fuel. [CityNews]

🎶 It’s the end of an era. Literally. Taylor Swift’s Eras Tour ended last night, and with 149 shows around the world, it’s estimated to have generated $2 billion in revenue. Some unlucky fans whose flight was cancelled from Prince George, drove all the way down to see her show. [CTV, North Shore News]

👮 The man who randomly sucker-punched someone at the end of November near West Georgia and Seymour has been accused of a similar assault four days before. He has been charged with assault from the Nov. 24 incident but not the Nov. 28 incident, which was caught on camera. [Global]

JOBS

Discover your dream job in Vancouver

EVENTS GUIDE

Merry/Happy/Jolly | The Improv Centre, 1502 Duranleau St | Until Dec. 29 | A hilarious, audience-driven, holiday-themed improv show where you help shape the story | Tickets $28+

Christmas With Chor Leoni | St. Andrew’s-Wesley United | Multiple December dates | Immerse yourself in a choral holiday experience with Chor Leoni, featuring carols and songs | Tickets $20

The Lion, The Witch, and The Wardrobe | Waterfront Theatre, 1412 Cartwright St, Granville Island | Until Dec. 15 | A magical adaptation of C.S. Lewis's classic tale | Tickets $15+

Chinatown BBQ Dongzhi Festival | Chinatown BBQ, Vancouver | Dec. 9, 11 AM - 8:30 PM | Celebrate the Dongzhi Festival with traditional Chinese winter solstice food and cultural activities | Tickets $6

Vivaldi’s The Four Seasons | Chan Centre at UBC | Dec. 14, 8 pm and Dec 15, 2 pm | The VSO’s holiday tradition with violinist Timothy Chooi performing Vivaldi’s iconic The Four Seasons | Tickets $33+

African Christmas Market | Moberly Arts and Cultural Centre, 7646 Prince Albert, Vancouver | Dec. 14, 12-5 PM | Shop authentic African products, arts, and crafts for Christmas | Free

Make It Vancouver | PNE Forum, Vancouver | Dec 12, 5 PM - Dec 15, 5 PM | Explore 250 handmade vendors at this festive shopping event filled with unique gifts, food trucks, and holiday cheer for all ages | Tickets $10.50

Reflections on Crooked Walking | Firehall Arts Centre | Until Dec. 22 | Ann Mortifee's musical follows four friends seeking a cure for a mysterious sleeping sickness in their town | Tickets $30+

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VANCOUVER QUIZ

Here’s a tough one that’s a bit more technical.

What are triple net leases?

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PHOTO OF THE DAY

Now that’s a sunset photo!

COMMUNITY HIGHLIGHTS

  • Unsurprisingly, local Vancouverite Michael Buble is a Taylor Swift fan. [Daily Hive]

  • I love local creativity, and this miniature public cinema in Vancouver is a great example. [The Tyee]

  • Grouse’s new gondola will be open on Thursday, Dec 12. [Daily Hive]

  • The Vancouver Holiday Food Drive is trying to raise $20,000 to help those in need. 

  • It’s been a warm fall/winter so far — it’s only the fourth time that Vancouver has been above 0 C on average during all of November. [Reddit]

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