No More Fresh and Easy

No More Fresh and Easy
By: Nicholas A. Dunlap

Tesco to Exit US Venture

Just a few short years ago, UK Grocery giant Tesco launched Fresh and Easy in the United States.  In many markets, Southern California included, they came into sub-markets that were rebuilding or re-gentrifying.  Landlords quickly found out that the UK outfit was quite aggressive and would overpay to help build it’s presence Stateside in the hopes that they could eventually become the preferred neighborhood market.

Many shopping centers were over-valued based on the presence of a qualified foreign business that had yet to prove it’s business model in the United States.  Unfortunately, things didn’t pan out for Tesco (the UK Parent of Fresh and Easy).  They posted their first loss in 20 years.  As a result, they will shut down their US operations, starting with California first.  Of course, the horse meat scandal didn’t help things, but that’s another story.    

Two things come to mind.  First and more on a personal level, it’s a good thing we didn’t buy any of those shopping centers that had been partially re-developed to include Fresh and Easy as the anchor tenant, and second, it’s a good thing that our economy and more specifically the commercial segment of the rental market is in a better place now than when Fresh and Easy came in.  Perhaps the successors of Fresh and Easy will be able to negotiate more favorable lease terms on their behalf.

On a non-real estate note, it is a disappointment to lose the additional source of fresh, quality produce and healthy, ready to eat meals in bourgeoning markets across Southern California.  The Fresh and Easy concept was not unsuccessful, I’d say their Tenant Rep and lease review team are to blame for getting them into overpriced commercial space in unproven markets.  It will be interesting to see who competes for their old space.