Mayor Zohran Mamdani’s plan to open a city-run grocery store in East Harlem is drawing criticism over its steep projected cost and potential impact on local businesses, with officials confirming the first location will require $30 million in taxpayer funding to build, the NY Post reports.

The proposed store will be constructed from scratch at the long-standing La Marqueta marketplace, a city-owned property, and will be operated by a yet-to-be-selected vendor. According to City Hall, that operator will benefit from a rent-free and tax-free arrangement, an incentive officials say is intended to lower prices for shoppers.

Mamdani introduced the initiative during a celebration marking his first 100 days in office, arguing that the favorable financial terms would allow the store’s operator to pass along savings to residents struggling with rising food costs. Still, nearby grocers are questioning both the scale of the investment and its practicality.

“How can they manage something like that? A small supermarket?” said Shaher, who owns and manages Healthy Choice near La Marqueta, laughing with disbelief.

Industry analysts are also raising concerns about the unusually high construction estimate. Adam Lehodey of the Manhattan Institute said that even in New York’s expensive, union-driven construction environment, a typical 25,000-square-foot supermarket should cost far less.

“Thirty million dollars for one store is exceptionally high, considering land prices are a significant part of the capital costs of new construction, and the city has announced that rents will be waived,” he said.

The East Harlem location is part of a broader proposal by Mamdani to invest $70 million in building five municipally owned grocery stores across the city. While La Marqueta has been identified as a key site, officials indicated that other locations—particularly those not requiring full construction—may open sooner.

City officials said a second store is expected to launch before the end of the year, with all five planned locations scheduled to be operational by the conclusion of Mamdani’s first term in 2029. In the meantime, the administration is actively searching for additional sites that would not require building from the ground up.

The grocery initiative was a central component of Mamdani’s campaign platform, aimed at addressing affordability concerns. However, critics have warned that publicly run supermarkets could undermine private businesses, with some likening the concept to “Soviet”-style markets. Billionaire grocer John Catsimatidis had previously warned he might shut down or sell his Gristedes chain if Mamdani took office.

Skeptics have also pointed to past failures of similar ventures, including a city-operated grocery in Kansas City, Missouri, that ultimately closed. Mamdani, however, has defended the concept by citing successful examples, including a government-run store in St. Paul, Kansas.

New York City already operates several public retail markets, including La Marqueta, which adds symbolic importance to the chosen location. Mamdani highlighted that history during his remarks marking his first 100 days.

“We will continue his legacy,” Mamdani said.

“We are building a brand-new store on city-owned land currently sitting empty in East Harlem, a neighborhood where nearly 40% of households received public assistance or SNAP in the past year.”

La Marqueta, along with Essex Market and Moore Street Market, is managed by the city’s Economic Development Corporation, which will also oversee the design and construction of the new grocery. Other public markets, including Gourmet Glatt, Jamaica Farmers Market and Arthur Avenue Market, are run by tenants under EDC supervision.

Local business owners near the site say they are bracing for a hit to their bottom line if the city-backed store opens.

Still, some residents say the neighborhood lacks access to quality groceries and welcome the idea of a new option, provided it proves sustainable.

City officials said the stores will be run by experienced third-party operators who will be required to pass along any subsidies directly to consumers through lower prices. Those operators will also be subject to strict oversight, including pricing controls, labor requirements, and reporting standards.

Tanya Sanchez, who owns Tanya’s Herbal Cabinet and has lived in East Harlem for years, acknowledged both the need for healthier options and the concerns of local shop owners. She said she does not expect the city’s store to completely displace existing businesses, pointing to past retail patterns in the neighborhood.

“People were going there first when it was brand new, but then a lot of people just kept continuing, going to their regular grocery stores,” Sanchez said. “So, it balances off.”

Fiscal watchdogs warn that the plan could become more expensive over time, especially given the city’s broader financial pressures.

“New York City has a challenging budget landscape; so far we have yet to see an analysis that shows this is the most cost-effective way to promote food security,” said Andrew Rein, president of the Citizens Budget Commission.

Others argue the city should instead focus on reducing barriers for established grocery chains to expand into underserved areas.

“I think the city is going to struggle to balance the delivery of a high-quality, affordable grocery store with all of the ancillary demands for above-market wages for store and construction workers and the city’s very slow procurement process,” he said.

“The grocery industry is low-margin, so heavy subsidy will be needed to counteract the these inherent inefficiencies, and I’m just not sure there’s going to be the political appetite for much of that for long.”