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New Brunswick FreshGrocer Owes $784,754 in Back Rent, May Abandon Store

Downtown Supermarket Shelves Conspicuously Going Unstocked as Parking Authority Files Notice of Default Against Store Owners
Half-Empty Beer Section
Barren shelves have left customers puzzled and concerned for the future of a new 50,000 square-foot supermarket in downtown. Charlie Kratovil

NEW BRUNSWICK, NJ—As rumors spread that New Brunswick's new downtown supermarket will close its doors for good in a matter of weeks, the market's landlord today filed a court notice saying the store is already far behind on its rent payments.

Officials at the New Brunswick Parking Authority, the owner of the building, confirmed late this evening that the supermarket owes $784,754, the equivalent of nine months, in back rent.  The store has been open for business for just over fifteen months.

"We've been working with them for quite some time to help them remain in business," said NBPA Chairman Kevin McTernan.

"So far these efforts have been unsuccessful."

Among the favors the landlord has done for its anchor tenant were free rental space used for staff recruitment and training while the store was completed, three free hours of parking to all customers who spend $10 or more in the store, and cutting a deal for low-price rent: just $13 per square foot.

New Brunswick Today asked via email this morning if the rumors of an impending closure were true, perhaps accelerating the authority's decision today to file the notice of default for non-payment of rent against FreshGrocer.

Mitch Karon, the Executive Director of the parking authority said this evening that he did not know for sure if the store would be closing.

"We were not told that they were closing," Karon said, adding that the authority will "cross that bridge when we get there."

The authority's Board of Commissioners met tonight, but chose not to discuss the $775,000 debt, or the notice of default, until New Brunswick Today asked if the store would close during the public comment portion of the meeting.

Officials tersely addressed the issue, but declined to elaborate on the future of the 50,000 square-foot space.

Board Chairman Kevin McTernan said, "We filed the notice, the next step is up to them." 

Wellness Plaza, a nine-story NBPA garage with the supermarket on the ground floor and a fitness center right above it, opened in November 2012.

At a momentous grand opening ceremony, the building's developer credited Mayor James Cahill with having the vision to move forward with the mixed-use project, even before a supermarket chain had signed on.

"If you build it, they will come," said Mayor James Cahill, according to remarks from Chris Paladino, the President of New Brunswick Development Corporation.

When the store opened, it was in many ways a first for the city: the store offered beer and wine as well as a wide variety of groceries and prepared foods, and it was open 24 hours a day.

Even before the project was completed, the state's Lt. Governor Kim Guadagno called it "another important step in the ongoing revitalization of New Brunswick."

"The opening of Fresh Grocer helps address two very important priorities of the [Gov. Chris] Christie administration: Jobs for city residents and access to fresh and healthy food for local families," said Guadagno, according to a report on NJBIZ.com.

But sources inside the store said that the company overestimated the quantity of food stamps that would be spent at the store, a miscalculation due to the differing demographics of New Brunswick and Philadelphia, where most of the company's stores are located.

In New Brunswick, a much larger percentage of the city's population is undocumented residents, who do not qualify for most government subsidies.

After less than a year, the chain sold its trademark and agreed to switch distributors to Wakefern, the state's largest employer and the nation's largest retailers' co-operative, best known for the Shop-Rite brand.  The switch in distributors and sale of the trademark was announced in August, as we reported.

Sources tell New Brunswick Today that Wakefern, based in Keasbey, had planned to make the "FreshGrocer" line of stores into its urban brand.

As we reported last month, the store cut back its hours significantly on January 26.

A spokeswoman for Wakefern told New Brunswick Today at the time the new hours were "better suited to the neighborhood and the times at which our customers are working and commuting via the nearby train station."

The spokeswoman, Santina Stankevich, did not respond to an email sent this morning asking for confirmation on the rumored closure of the New Brunswick store.

Paladino declined comment today.  A spokesman for Mayor James Cahill did not respond to our question emailed this morning, nor did Patrick Burns, the CEO of the grocery chain.

TheFreshGrocer, a small Pennsylvania-based chain store, first eyed expansion in New Jersey after being approached by the developer of the Wellness Plaza.

It was the chain's first store in New Jersey, and the seventh grocer in total.  Plans for an eighth store in Camden have been nixed.

If the New Brunswick store closes it won't be the first time the company unexpectedly abandons a community it recently opened up shop in.

In February 2011, the chain abruptly shut down a store in Germantown, PA leaving a state loan unpaid.  As Newsworks reported, it appeared the company was hoping to avoid paying the loan by re-opening under a new name.

According to the report:

Local residents have felt played by the Fresh Grocer’s role in recent events. Through spokesperson, Carly Spross, the company has denied any connection with Save-A-Lot or the property owners at Chelten and Pulaski. Though activists last week uncovered some apparent overlaps among the companies: Save-A-Lot and Fresh Grocer share the same address and phone number as well as the same management firm, Philly Metro Management, while Philly Metro Management shares the same registered corporate address as a company call Pulaski Real Estate Inc., in Wayne.

The New Brunswick building was part of a multi-million dollar package of tax incentives, granted by the state's Economic Development Authority to DEVCO.  Because the building is owned by the city's Parking Authority, it does not add to the city's traditional tax base.

The building also received a $3 million appropriation from the county government, while county officials boasted that they helped secure $23 million in low-interest federal bonds.  The Parking Authority also borrowed significant sums to build the project.

Originally touted as creating some 300 jobs by Mayor James Cahill, Wakefern admitted the number of associates was closer to 200 in late 2013.

This week, sources inside the store have been informing New Brunswick Today anonymously that "people are being fired left and right," and it is apparent that many items in the store are not being re-stocked.

Editor's Note: The author of this article was a part of the team that opened the FreshGrocer in November 2012, and is no longer affiliated with the company.

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