With Amazon Fresh stores still in limbo, Willow Grove landlord files lawsuit
An Amazon Fresh location at Brookwood Shopping Center on Street Road in Bensalem has yet to open.
By: Ryan Mulligan
With plans for at least six new Amazon Fresh stores in the Philadelphia area on hold, one local landlord has filed a lawsuit alleging Amazon is breaching its lease agreement.
Federal Realty GP LLC submitted a complaint against Amazon Retail LLC and Amazon.com Inc. (NASDAQ: AMZN) in Montgomery County Civil Court on March 21, and Amazon filed its response to the suit this week. The landlord-tenant dispute involves the delayed opening of a proposed supermarket at the Willow Grove Shopping Center and sheds some light on what's happening behind vacant Amazon Fresh storefronts across the Philadelphia area and the country.
Federal Realty Investment Trust's legal action comes after Amazon said earlier this year that it was pausing growth plans for the brick-and-mortar Amazon Fresh brand. During a February earnings call, CEO Andy Jassy said Amazon was "not going to expand the physical Fresh doors until we have that equation with differentiation and economic value that we like."
Amazon Retail LLC applied for a Pennsylvania liquor license at 102 Park Ave. in the Willow Grove Shopping Center in August of last year.
According to the lawsuit, Amazon informed Federal Realty Investment Trust on a conference call in October that it had made a companywide decision "not to open all retail stores" it originally intended to launch in 2023.
The proposed Amazon Fresh location in Willow Grove Shopping Center at 102 Park Ave., shown in September 2022.
The complaint alleges that Amazon is "intentionally withholding rent under the false premise that landlord is in default of its lease obligations" and "has intentionally refused to complete its work, commence operations or pay rent, despite no interference by landlord.” Federal Realty says that it relocated other tenants within the shopping center for the "sole benefit" of Amazon, including Barnes & Noble, which the grocery store would replace. The suit alleges that Amazon has "unilaterally ceased all efforts" to complete its fit-out work and commence operations, constituting a default on the lease, while Federal Realty has fulfilled all of its obligations.
Amazon signed a 31,133-square-foot lease at the shopping center off Park Avenue in Montgomery County around April 2020, according to court filings. Rent, along with other expenses, totaled over $71,000 per month, the suit shows. Federal Realty, represented by Philadelphia law firm Zarwin Baum DeVito Kaplan Schaer Toddy, is seeking reimbursement of almost $180,000 in unpaid rent and expenses.
In its response filed Monday, Amazon denies the claims. The e-commerce giant, which is is being represented in the case by Greenberg Traurig, said the complaint "incorrectly represented the content" of the October 2022 conference call during which Federal Realty alleges Amazon disclosed the decision to halt Amazon Fresh openings.
Amazon's response alleges that the store is unable to open for business because Federal Realty "has failed to satisfy the landlord work completion date conditions." It argues that because Federal Realty hasn't completed the necessary alterations or improvements to the building agreed upon in the lease, Amazon has no obligation to start paying rent.
A motion or petition has not yet been filed in the case, and no court hearings have been scheduled.
There are currently 44 Amazon Fresh stores operating nationally, according to the brand's website, with two in the Philadelphia area in Broomall and Warrington. Many others have yet to open their doors, and there are signs that Amazon may be reconsidering its plans — at least in some parts of the country. In Minnesota, the company has put a half-dozen proposed Amazon Fresh locations up for sublease. No Minnesota locations have opened.
Landlords at proposed Amazon Fresh locations in the Philadelphia area either declined to comment on the status of the stores or have not responded to requests for comment.
Amazon could not be reached for comment.
The facade of the building at the Willow Grove Shopping Center has been largely built out for months, though the status of the interior work is not clear. It's the same story around the region, with new Amazon Fresh stores in Philadelphia, Bensalem, Langhorne and Havertown at a standstill after applying for liquor licenses, despite outwardly appearing finished. Some of the buildings already feature the Amazon Fresh branding.
The other Philadelphia-area sites identified as proposed Amazon Fresh stores are:
403 West Chester Pike in Havertown
1837 Street Road in Bensalem
9960 Roosevelt Blvd. in Philadelphia
2424 E. Lincoln Highway in Langhorne
570 N. 5th St. in Philadelphia
North Bethesda, Maryland-based Federal Realty is undertaking redevelopments of the Bala Cynwyd Shopping Center into a more walkable, mixed-use community and at Lawrence Park, a 374,000-square-foot center off Sproul Road in Broomall.