Downtown Whole Foods to become a reality

The Texas-based chain confirmed plans for the vacant site at Hennepin and Washington.

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An artist's rendering of the planned 222 Hennepin mixed-use project. Whole Foods will be the anchor tenant.

Organic and natural foods grocer Whole Foods confirmed Wednesday that it will open a store at the former Jaguar dealership site in downtown Minneapolis.

The store will serve as the ground-floor retail anchor for the $70 million complex called 222 Hennepin, which will also include 286 luxury apartments. Now home to an abandoned car lot surrounded by a chain-link fence, the site at the corner of Hennepin and Washington avenues is seen as a potential hub connecting disparate areas of downtown -- from the North Loop to the Mill and central business districts to the Mississippi riverfront.

"This is a very visible, prominent corner of our city," said David Frank, president of the North Loop Neighborhood Association. The addition of Whole Foods "will bring life to that block. It's a very big deal for our neighborhood."

Whole Foods, the $10 billion grocery store chain based in Texas, had long been rumored as a possible tenant for the site, which spans a full city block and has been vacant for about five years. Whole Foods plans to build a 38,000-square-foot store that will include a separate annex selling beer and wine. About 145 parking spots will be set aside for the grocery store.

The store is expected to open as early as the summer of 2013, said Tony Barranco, development director at Ryan Cos. U.S. Inc., the Minneapolis-based firm that is developing the site.

This will be the fifth Whole Foods store in the Twin Cities, and the third grocery store to locate in either downtown or on its periphery. Lunds has opened a store in northeast Minneapolis, and the locally based grocery chain is building a 20,000-square-foot store at 12th Street and Hennepin Avenue S., close to Loring Park.

Mark Schoening, Ryan's senior vice president, said Whole Foods was the preferred anchor as the project moved forward. "We really wanted something innovative and unique," he said.

Whole Foods is the nation's largest retailer of natural and organic foods. Founded in 1980, it quickly expanded nationwide and then in Canada and the United Kingdom partly through an aggressive acquisition strategy. But the 300-store chain only recently began expanding in the Twin Cities after several years of dormancy here.

The company's first area store opened on Grand Avenue in St. Paul in 1995, followed by a second four years later in the Calhoun Commons mall in Minneapolis. But that initial entry was a "disappointment" due to tough competition from local co-ops and higher-end grocers Lunds and Byerly's, said John Dean, a Twin Cities supermarket consultant.

"Lunds and Byerly's did what they could to maintain their business and the co-ops have a very good, a very unusual, presence in this market," Dean said.

The Twin Cities has a particularly high concentration of grocery co-ops and is home to the Wedge, one of the nation's largest single-store co-ops, as well as the Mississippi Market and Seward Co-op, among others.

But in 2011, Whole Foods opened a store in Minnetonka and is slated to open another April 18 in Edina off France Avenue. Dean said there's more room for the chain to grow here since it has only one outlet east of the Mississippi River and nothing on the north side of the Twin Cities.

Whole Foods' Midwest regional president, Michael Bashaw, said in a statement Wednesday that the company looks forward "to adding to our existing locations in the Twin Cities. The Twin Cities is definitely an area of growth for us." He didn't offer any specifics on potential locations, however.

The proposed Minneapolis site has experienced its share of challenges in a tough economy.

Milliken Development Group of Vancouver paid $14 million for the block in 2005 and tried to develop a condo tower also with a Whole Foods anchor. But the project was never realized as the condo market fizzled and the recession took hold. The property went back to HSBC Bank USA, and Ryan signed a purchase agreement to buy it last year. Ryan then chose Eden Prairie-based Excelsior Group to develop the apartment portion of the project.

Janet Moore • 612-673-7752 Mike Hughlett • 612-673-7003

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