Lund Food Holdings Inc. said Tuesday it plans to build a supermarket as part of a mixed-use project being developed on Hennepin Avenue between 10th and 11th Streets in downtown Minneapolis.

Construction of the store will begin in fall 2009; no completion date has been set yet, according to Aaron Sorenson, spokesman for the Edina-based supermarket chain. The 30,000-square-foot store will be on the ground level of the project being developed by Alatus Management.

The other elements of that development should be determined in the next month or two, said Alatus partner Bob Lux.

Lux said it will include housing but otherwise declined to comment. Area real estate sources have said Alatus is known to also be considering office space and an all-suites hotel.

The announcement by Lunds marks a shift in plans for a downtown store, albeit by just one block. In 2004, it announced plans to build a store on a site it had acquired at 12th Street and Hennepin Avenue. Lunds held off as it built a store on the northeast side of downtown at University and Central avenues, which opened in 2006.

"Originally we planned to open both in 2006, but we realized later that building two stores so close together was a little overambitious for us," Sorenson said.

"While our location has changed, we have never wavered on our commitment and vision for a second Lunds in the downtown area," said Tres Lund, chairman and CEO. "There is a tremendous need for a full-service supermarket in downtown Minneapolis."

The 11th and Hennepin site is preferable because it allows Lunds to build a larger, single-level store, Sorenson said. Building at 12th and Hennepin would have resulted in a 22,000-square-foot, multi-level store in a redeveloped, older building.

He said Lunds has hired Cresa Partners "to explore options" for the 12th and Hennepin site that could include selling or leasing it.

The new store will have a format similar to the northeast location, which Sorenson said has exceeded sales expectations. It will feature a heavy emphasis on premium "take-and-go" prepared foods for downtown apartment and condominium residents.

Tuesday's announcement could mean Lunds will have its store open before Whole Foods can open one planned as part of a retail-and-apartment project to be built on the north end of downtown at Hennepin and Washington Avenues. Seattle-based Milliken Development originally expected to start construction earlier this year but has pushed back the construction timetable indefinitely as it continues to secure financing.

Susan Feyder • 612-673-1723