Eli Hamann

Lunds is in talks with a developer about opening a store at 10th & Hennepin, according to a source familiar with the deal.

Lunds eyeing new site for Downtown grocery store UPDATED May 23, 2008, 8:36am

By Michelle Bruch

Lund Food Holdings is looking at an alternate Downtown site for its grocery store.

A new Lunds has been slated to open at 12th & Hennepin for the past three years, but the company is now planning a larger store with the developer of a lot between 10th and 11th streets and Hennepin and Hawthorne avenues, according to a source familiar with the project.

Plans call for a store that would have underground parking as part of a larger, mixed-use development, according to the source.

Lunds spokesman Aaron Sorenson did not confirm those details.

“I can tell you we’ve had some discussions with that developer as part of reviewing our options for opening another Lunds in the Downtown area,” Sorenson said. “At this time it would be very presumptive to conclude that we would be opening a store at that site.”

Bob Lux, a member of the site’s development team, declined to comment for this story. Lux has also developed The Carlyle and Grant Park condominium projects Downtown.

According to Hennepin County property records, Minneapolis Venture LLC now owns the entire block at 11th and Hennepin, a site currently home to surface parking lots. Minneapolis Venture also owns the Ramada Inn, which is located one block west of the potential Lunds site.

City officials approved plans for a Lunds store two blocks away at Hennepin and 12th Street in 2005. The project required renovating a 1912 building that housed automobile showrooms before it was converted to offices in 1950. The grocery store was initially slated to open the spring of 2006, but that time frame was pushed back while Lunds staff focused on opening a store across the river and worked on the tight floor plan for the two-story grocery store. A sign at the site announcing a 2007 opening was changed to say

“Coming Soon,” and the proposed grocery building is now boarded up.

Lunds has long stated it remains committed to opening two Downtown stores — the Northeast Lunds at University & Central opened in late 2006 — but the company has stopped specifying the second location.

Downtown Council President Sam Grabarski said a Council survey found that groceries are an unmet need here.

“The good thing about having an important grocery store that’s located there is that it not only serves people who are Downtown commuters, who especially going to the west will be able to shop, avoid the rush hour and get home, but it also encourages and enables more residential growth in the core of Downtown,” he said.

Grabarski said grocery stores tend to choose locations where at least 3,500 households would support them. The Downtown Council reports that the residential population here is close to 32,000 residents.

“We think it’s long overdue, because the customers have been here for years,” he said.

Council Member Lisa Goodman (7th Ward) said the project on Hennepin would help connect the theater district to Downtown residences.

“When you have to walk by seas of surface parking to get to the theater portion of Hennepin Avenue, it really creates a mental and visual break,” she said. “The two parts of it to me are having development there that is pedestrian friendly for residents and visually attractive to visitors, and having a very quality product. Half of it is there — a great developer who has a track record of good urban design, and uses that are really pedestrian friendly and are good for the avenue. Clearly a grocery store, a hotel, housing — all of that just fills a giant gap.”

Downtown resident Carletta Sweet said she would appreciate more amenities for residents here, but a variety of stores is also important. Whole Foods is proposed to go up on Hennepin and Washington avenues, nine blocks north of the potential Lunds site.

“We’re getting more residential density, so it may make sense,” Sweet said. “I wish them well in the success of the store if it’s built. ... The more amenities, the better.”

Larry Lund, principal of Chicago-based Real Estate Planning Group, performed a Downtown grocery store feasibility study last year for the city of Pittsburgh.

Downtown grocers have a few challenges, said Lund (no relation to the grocery owner). Office workers tend to shop close to home, and a vast majority walk no more than three blocks for lunch. Downtown households tend to be smaller and comprised of people who eat out more often than larger households. In addition, shoppers can be skittish about parking underground.
Minneapolis should have the capacity to handle two Downtown stores, Lund said, based on the rule of thumb that 15,000 residents need to live in close proximity to a grocer.

Andrea Christenson, second vice president of Colliers Turley Martin Tucker, said the new Lunds site would trump the former site because it is an easy, timesaving stop for commuters on the way home. She thinks both Lunds and Whole Foods can do well Downtown, because residents here tend to be high-paid professionals, without dependents, who are less price-conscious. In addition, Lunds’ first urban store across the river is filled with its own prepackaged products that bring in higher profit margins.

“I think it’s a great move,” she said. “I think they are going to get a lot of suburban business.”

— Sarah McKenzie contributed to this report