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Grotto Pizza to redevelop HQ offices into mixed-use

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Grotto Pizza is reimagining their Route 1 office space into a mixed-use building, complete with apartments. | PHOTO COURTESY OF GROTTO PIZZA

REHOBOTH BEACH — Grotto Pizza plans on redeveloping its Route 1 corporate offices next year, modernizing the space as well as offering apartments for some of its employees.

Grotto Pizza received site plan approval from the Sussex County Planning and Zoning Commission to build a $6 million, mixed-use building, complete with office and storage space on the first floor and 12 apartments on the second and third floor. 

Included in the 24,308-square-foot project would include a training room for new employees, a display kitchen to occasionally test new recipes as well as office space. The plan is for at least 16 staff members, including operational and key staff members, to work out of the office in a shared workspace model, while there will be private office space for departments that require privacy, like accounting.

The regional pizza chain has run corporate services out of a one-story building at 20376 Coastal Highway outside Rehoboth Beach since 1999. After leasing the space for about five years, Grotto Pizza bought it for $850,000.

“It’s probably the ugliest building on Route 1 right now,” Grotto Pizza Vice President Jeff Gosnear joked during an interview with the Delaware Business Times. “We’ve been talking about renovating, but looking at the cost, we figured it would be better to rebuild it.”

Right now, the Grotto headquarters is 8,000 square feet, and about two-thirds of the space is for storage, he added. In its warehouse portion, Grotto stores paper products, marketing materials and more.

In the new floor plan, Gosnear said he expects the company to be able to sublease some space to other businesses.

But on the second and third floors, the new Grotto corporate office will include at least eight one-bedroom apartments and four two-bedroom apartments. The restaurant chain plans on offering those apartments to select staff at a discount before opening to the public, as housing is becoming a major barrier to attract and retain the workforce.

“We find it all the time, when we want to bring a manager from Kent or New Castle County for the summer there’s nothing they can either find or afford to rent in the beach market,” Gosnear said. “It comes up all the time in our interviews about where they can look for housing, since what’s on the market is $2,500 to $3,000.”

Gosnear, who’s been with Grotto Pizza for 14 years, said he personally noticed the market shift after Hurricane Sandy. When the Category 1 storm hit the New Jersey shore in late 2012, it closed the beaches and forced major restoration efforts.

“That’s when you started to see people from New York to New Jersey coming to the Delaware beaches, because the Jersey Shore was closed,” he said. “Housing was less expensive six or seven years ago, but when people realized we had great beaches and a lower cost of living, that’s when the demand rose.”

Demolition and construction on the Grotto corporate office is slated to begin in December, and the project should be complete by the end of the next year. In the meantime, Grotto is running corporate services out of Nassau Commons near Five Points in Lewes.

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