Retail Traffic

Tesco Tiptoes

When U.K. supermarket operator Tesco PLC announced in February that it would invest $472 million a year to establish a beachhead in the U.S., it tried to allay fears that it would further complicate the Darwinian struggle in the supermarket business. Instead, company officials said, their U.S. efforts would center on Express stores, which average between 2,000 and 3,000 square feet in size.

But when the notoriously secretive company signed its first U.S. lease in early October it turned out to be a supermarket site — a 32,500-square-foot former Albertsons in Glassell Park, Calif. And, brokers say, it is in the market for more.

The Glassell Park space is in line with Tesco's standard supermarket format, which has floor plates greater than 30,000 square feet. Tesco officials declined to comment on their U.S. strategy.

But Tesco is tipping its hand as it shops for similar sites. According to Don MacLellan, managing director of Irvine, Calif. — based Faris Lee Investments, Tesco has been talking to several developers about supermarket buildings.

“We have two or three clients who are negotiating with them right now and they are very aggressive,” MacLellan says. “The spaces they are looking at are up to 30,000 square feet and there are a number of former Albertson's locations in the market.”

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