Seattle's Grocery Problem: A Fix

With Fred Meyer closing in Lake City and the loss of QFC in Wedgwood back in 2021, North and Northeast Seattle have felt real pain from the closing grocery store trend. Over a dozen stores have closed in Seattle since 2016, and a fistful more in the region.

There is no easy solution to this problem, as consumers buy ever more online. But that doesn’t mean we cannot fix it. It just means we need a serious, all-hands effort to fix it.

A Public Option: I’m with Zohran Mamdani on this. If we assume that groceries are a basic good that should be physically present in all communities (and we should assume that!), and it is clear the market will not provide this, we should provide a public option.

These stores can be government-run, but they don’t have to be. They could simply be government-owned locations that lease at rock bottom prices, or government-owned but operated by a third party. One way or another, the market is not doing the job. They should certainly be unionized.

MFTE for Grocery - we have a program in Washington State that provides significant property tax reductions for owners of buildings with workforce housing set aside. One really cool thing about this particular tax break is that it is a tax shift - it mostly just shifts taxes onto the rest of the property base (we’re talking pennies per parcel), so we don’t starve local governments of revenue.

A similar property tax exemption for unionized grocery stores, with a more aggressive exemption for unionized grocery stores in food deserts, would go a long way.

Vacancy Taxes:

We need to design well-calibrated commercial storefront vacancy taxes that make it less profitable to hold out for a rich renter. This should include an exemption for newer spaces (so we don’t discourage them from getting built), and have a grace period that accounts for the regular interval between leases.

If done right, this will reduce rents for retail businesses all over the region

More GOD in our lives.

You’ve heard of Transit Oriented Development? How about Grocery Oriented Development!

Grocery stores inside urban growth areas should get substantial height bonuses and parking/setback waivers that allow them to build lots of housing on top of their stores, and in adjacent parcels. In Seattle, they should allow buildings up to a total of eight stories. A portion of these should be set aside for workers (this should be offset through funded inclusionary zoning, which must be designed to make the affordable set asides revenue neutral.)

This will greatly increase the profitability of building grocery store style buildings in the city. It will also help by bringing in a ready-made nucleus for both the customer base and workforce. And it will help with the housing crunch.

This one will require careful design. The funded inclusionary part will be particularly important to get right. Also, if the developer builds with this bonus but cannot keep the store leased, there should be a grace period, but then the loss of the property tax exemptions. This will keep them highly motivated to lease at a lower rate. The threat should not be so punitive, however, that the building never gets built in the first place.

Keeping the Consumer in the Center

None of this suggests we should juice the profits of these big corporations. These incentives need to be targeted to bring them into undeserved areas. At the same time, we also need to continue to protect consumers and workers from corporate consolidations and stop algorithmic pricing/price discrimination so consumers do not get ripped off.

The industry will do its best to portray these goals as at odds with one another. But we can manage to combat broad corporate exploitation of workers and consumers while we also target incentives to ensure good geographic coverage for grocery stores.

Just know this will mean a fight ahead. Here is the Seattle Times on recent attempts to address the matter.

“Yet despite broad public concern around the loss of grocery stores, and backing by labor and anti-hunger groups, legislators had scant success. Four of five bills stalled out under industry pressure, budget realities and the constraints of a short session.”

We will need legislators who are ready for the fight.