The story goes that e-commerce would hollow out community retail, and the neighborhood supermarket would end up looking like Blockbuster Video. The story was wrong in a specific, quantifiable way — and the way it was wrong is the entire thesis for a community-retail franchise worth owning in 2026.
Grocery-anchored community retail is, on almost any durable metric you care to use — occupancy, rent growth, cap-rate stability, tenant retention, re-leasing spreads — the best-performing slice of U.S. commercial real estate over the last decade. Office fell off a cliff. Urban high-street retail has had an uneven recovery. Power centers have compressed. The quiet winner has been the Publix-anchored strip two turns off a state road in Central Florida.
There is a temptation to explain this sentimentally — people like their neighborhood shops, the pandemic reminded us of community, and so on. None of that is load-bearing. The real explanation is a set of unglamorous numbers about trip frequency, basket economics, and anchor-specific durability. It is worth walking through.
The trip is the product
Grocery is a high-frequency, low-ticket business whose economics live or die on trip behavior. The average American household makes roughly 1.6 in-store grocery trips per week — a number that has moved almost nothing since 2015, including through the pandemic spike and the retreat that followed. Delivery has absorbed something in the neighborhood of 13% of grocery spend in metro areas, but the delivered trip is structurally a different product: larger baskets, lower margin, and a customer who still makes several in-store trips per week for produce, prepared food, and the things a picker simply should not be choosing.
The math that e-commerce bulls got wrong was confusing share of dollars with share of trips. A household that buys sixty dollars a week in delivered groceries is still walking into its local Publix two or three times for the items that travel poorly. Each of those walk-ins is a distribution event for every other tenant in the center.
Community retail does not need to win the basket. It needs to win the trip.
Once you see it that way, the question of whether "grocery is a good anchor" stops being about grocery at all, and becomes a question about how many individual consumer decisions the anchor creates in the parking lot per week. By that metric, it is not close.
The halo, quantified
Grocery is the most durable traffic generator in community retail, and the math is unkind to formats that skip it. In our portfolio and in broader industry data, the effect looks roughly like this:
- Grocery-anchored centers produce 25 to 35% higher inline sales per square foot than non-grocery centers with comparable demographics.
- Inline vacancy runs 2.5 to 4 percentage points lower at grocery-anchored centers across the cycle, with the spread widening during downturns rather than narrowing.
- Rent growth at grocery-anchored community centers has compounded at roughly 3.2% per year between 2015 and 2025, versus approximately 1.1% at unanchored strip centers over the same period.
These spreads are not accidents. Grocery trips are the spine around which a local household organizes its other errands. The nail salon, the dry cleaner, the UPS store, the chiropractor, the pizzeria — every one of them is piggybacking on the grocery run. Take the anchor out and inline tenants are suddenly paying for their own traffic, which is an entirely different business model and one most of them cannot afford.
The Publix premium
In Florida specifically — which is where our franchise lives — the analysis collapses into one sentence. Publix is the best community-retail anchor in the country, and we are geographically concentrated where it operates.
The Publix-anchored center has a set of characteristics that underwrite something close to a full point of cap-rate compression versus the non-Publix comp in the same trade area:
- Replacement risk on the anchor is structurally low. Publix owns or long-leases its stores, typically on 15 to 20 year initial terms with multiple five-year options, and has closed fewer than 1% of its locations in the last decade.
- Lease terms are written conservatively — low base rents, modest escalators, and reciprocal easement agreements that meaningfully protect the co-tenancy rights of inline tenants.
- The customer profile — a median household income in the roughly $72,000 to $85,000 band in most Publix trade areas — is the specific customer community retail needs in order for the inline math to work.
None of this is news to an institutional buyer. It is news to a lot of private owners who still treat grocery anchors as commodities interchangeable with any national name above a certain square footage. They are not interchangeable, and the cap-rate spread between the Publix comp and the second-tier-grocer comp is the market's way of telling you so.
What actually breaks it
The failure modes are real and knowable. Two of them matter enough to be worth underwriting explicitly.
The first is secondary-anchor risk. A center with Publix and one second anchor — a junior department store, a dollar store, a fitness operator — carries meaningful replacement exposure if the second anchor goes dark. The right response is to underwrite conservative on the second anchor, not to celebrate the co-anchor in the offering memorandum. We have passed on otherwise-attractive deals because the secondary anchor was fragile and the replacement economics were ugly.
The second is competitive re-anchoring. When a competing grocer opens within a two-mile drive of the incumbent, the inline sales impact at the incumbent can be 8 to 15% in year one. This is measurable in advance — mobility data will tell you where competing grocers are already overlapping their trade areas before the ground is broken — and should be priced into the acquisition.
The quiet conclusion
We do not buy grocery-anchored community retail because it is fashionable. We buy it because the trip-frequency math, the halo effect, and the anchor-specific durability compound into something that functions like a long-dated bond with optional upside — which is what a multi-generational holding portfolio actually wants on its balance sheet.
The sentimental version of this argument is weaker than the mathematical one. We prefer the mathematical one, and we own the portfolio we own because of it.