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March 09, 2005

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Palo Alto Online

Publication Date: Wednesday, March 09, 2005

Departing Albertsons clamps down on possible competitors Departing Albertsons clamps down on possible competitors (March 09, 2005)

Restriction on mall's deed of sale bans any food store more than 18,000 square feet

by Jocelyn Dong

History will not repeat itself at Alma Plaza shopping center, at least when it comes to battles over grocery-store size.

In selling its 5.6-acre property to an investment group led by McNellis Partners in February, the Albertsons grocery chain included a restriction in the sale: No part of the land would be used for a "supermarket," at least in the legal sense of the word.

The deed defined a supermarket "as any store or department containing more than 18,000 square feet of ground floor area, including aisle space and storage, primarily devoted to the retail sale of food for off-premises consumption."

The restriction, it continued, is attached to the land, regardless of who may own it in the future.

What this means for the center is that a boutique grocery -- rather than a general-purpose one -- is more than likely to come in, acknowledged developer John McNellis.

The final store may only be 10,000 square feet, he added, owing to the lack of companies building groceries at 18,000 square feet.

Emslie said that size is significant when it comes to a shopping center's anchor tenant, and could affect the mall's economic viability.

"An anchor is real important, and that's what a grocery is. It provides foot traffic that supports the whole center. Shops without anchors become strip malls," he said.

Albertsons spokesperson Quyen Ha would not comment on the restriction. McNellis, however, called the condition "understandable" if "regrettable."

"This is done time and again by all kinds of retailers: supermarkets, shoe stores, department stores. Any time a tenant is leaving a store but not a trade area and trying to protect (assets)" it imposes restrictions, McNellis said. "It's not unique with Albertsons."

Albertsons has a store at Edgewood Plaza and one in Mountain View at the San Antonio shopping center.

The issue is somewhat ironic, given that Albertsons fought for years to expand its 13,323 square-foot store to 50,000 square feet. Complicating matters, opponents at the time cited -- among other objections -- that the proposal violated the city's 20,000-square-foot limit on grocery stores.

Yet Palo Alto never had such a limit, according to Planning and Community Environment Director Steve Emslie. That belief rises from the fact that commercial-neighborhood districts have a 20,000-square-foot cap on all stores, unless the city grants a conditional-use permit.

In square footage, Palo Alto's Mollie Stone's is the largest at 26,000, with Andronico's at 25,000, Whole Foods Market at 23,000 and Safeway at about 20,000. But Piazza's Fine Foods in Charleston is 14,700 square feet, and JJ&F Market is 8,000 square feet and looking to expand.

Alma Plaza is not in a commercial neighborhood zone anyway; it's a planned community district, which carries its own set of building conditions -- none of which limits groceries.

Looking on the bright side, longtime Albertson's opponent Jay Hammer said a moderate-sized store of 18,000 square feet was in keeping with what he believes neighbors near Alma Plaza seek.

For one thing, it would allow for adequate parking and traffic flow.

He favored bringing in a store that offers grocery staples as well as specialty items, even though he acknowledged that may be a tall order.

The irony that Albertsons had lobbied for a large store, then turned around to limit the size of its successor was not lost on Hammer.

"That is ironic isn't it? I don't know what its significance is. It's ironic they finally settled on a store that's moderately sized," he said. But, he added, "hopefully that'll get us where we need to go.

Senior Staff Writer Jocelyn Dong can be reached at jdong@paweekly.com.


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