Grocery Chain Wields Influence on Real Estate Scene

By DANNY KING
Staff Reporter

Roger Chen has come full circle within Southern California's Chinese communities.

In 1986, the Taiwan native decided to open a supermarket because there was an empty space in the Westminster mini-mall he owned with a partner. Sixteen years later, his position as founder and chairman of San Gabriel Valley's busiest supermarket chain has given him great influence on the real estate market more influence than he probably imagined as just a developer.

Chen's company, Buena Park-based Tawa Supermarkets Inc., owns and operates 21 99 Ranch Market stores, seven of which are in the San Gabriel Valley. 99 Ranch's success is based on combining the huge selection of staples and fresh fish found in the markets of mainland China and Taiwan with the convenience and cleanliness of U.S. supermarkets.

While Tawa officials declined to give revenue figures for the privately held company, the firm was reported to have generated $150 million in revenues as a 16-store operation in 1997. The chain has since expanded to 21 stores and boasts an estimated 25,000 shoppers each week.

"Everyone wants to be close to Tawa," said Alan Lee, vice chairman of Tawa Supermarket. "The rent is higher but the tenants are still willing to pay for it."

Rental rates in its shopping centers are boosted by 50 percent to 70 percent compared to nearby spaces.

Chen the developer

Chen himself has developed 1 million square feet of shopping center space. Currently he has an ownership stake in seven centers throughout California, all of which are anchored by 99 Ranch Markets.

"There's no other market out there that has the drawing power that this market has," said Brian McDonald, vice president at CB Richard Ellis. "He's got quite a following."

The press-shy Chen, who declined to be interviewed, opened his first store in the San Gabriel Valley in 1989. At the time, the influx of Asians that had begun in Monterey Park and Alhambra headed eastward toward Rowland Heights, where space was available.

Having had success at his two Orange County stores, Chen took a long-term master lease at the 120,000 square foot center at Nogales Street and Gale Ave., opening a 30,000 square foot store and leasing out the rest.

While a 99 Ranch location can secure a master lease for as little as $1 a foot, market-adjacent spots can rent for as high as $3, according to Vilma Chau, senior vice president at City of Industry-based Lee & Associates.

Though Chen has ownership at centers in Westminster, Irvine and San Diego, the only center he developed in the Valley is the 220,000 square foot Universal Shopping Plaza in the city of San Gabriel in 1991. That center is anchored by a 45,000 square-foot 99 Ranch Market, the company's largest.

Influential player

Whether as the landlord, master leaseholder or tenant in a center, Chen exerts substantial power over property's value and tenant mix.

"Prior to 99 Ranch, rents were anywhere from $1.15 to $1.50 a foot, and it was a real challenge to lease it up at that rate," said McDonald, who leased the space for 99 Ranch's Hacienda Heights store in 1998. "Since then, our rental rates went from about $1.50 to $2.50, and there was a waiting list to get in there."

Such premiums are not necessarily unusual. "Other supermarkets, if they do well, can attract the same kind of rental rates," said Chau, citing Rowland Heights' Hong Kong Supermarket and San Gabriel's Super Store as other examples of Asian markets boosting center rents.

But 99 Ranch-adjacent spaces are especially popular. McDonald points to the other stores' insistence on being in 99 Ranch-anchored centers as a testament to Chen's influence. Retailers like Diamond Bakery and Evergreen Books, and restaurants like Sam Woo Barbecue currently have several of their units next to the markets.

"They say we're a trend setter," said Lee. "We create a lot of convenience for the community and customers (and) synergy with all the tenants."

Chen's influence is expected to migrate eastward with the rest of the San Gabriel Valley's Asian population, as Tawa looks at a West Covina location and may be looking at San Bernardino County locations.

"Chino Hills will eventually have a 99 Ranch Market," said CB Richard Ellis broker Joseph Lin, who added Rancho Cucamonga as another possible location.

Lee confirmed Tawa's interest in the San Bernardino communities, noting that Chen would look at a location whether it was available to lease or to buy. "If there's the right property and right demographics, we will consider it," said Lee.

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