Development Watch

Former Safeway sold; future of Albertsons space unclear

Gyms, food halls, other uses may replace them, trends indicate

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The depressing look of a bare storefront where a well-known logo once sat has become a common sight in the Denver metro suburbs, even amid a strong economy. And Centennial stores have been no exception.

At opposite ends of the city, two grocery stores have sat vacant for years. One, a Safeway along East Smoky Hill Road, closed in September 2017. The other, an Albertsons right across from Arapahoe High School, closed in November 2016, with the Petco next door shuttering after.

They weren't alone: The former U.S. Toy building near South Quebec Street and East County Line Road closed in recent years, now poised to become an Alfalfa's Market after Centennial City Council approved a sales tax rebate for the project in June 2018.

That's just a short walk away from a Safeway that closed in June 2015 — one of nine in the metro area announced to close at the time — which was taken over by a VASA Fitness.

It's all part of a trend for large brick-and-mortar stores: other kinds of business rising in their place.

“Regional trends suggest that these spaces could be occupied by non-retail uses including private fitness (or) gyms, churches or seasonal stores. There is a growing national trend of food hall (and) marketplace concepts as well,” said Neil Marciniak, Centennial's economic development manager.

The former Safeway at 20153 E. Smoky Hill Road was sold last month, while the Albertsons and Petco vacancies at 7450 and 7460 S. University Blvd., respectively, haven't changed hands yet. Here's a look at what could change at these locations.

The players

Denver-based JFRCO LLC owns the University Towne Center shopping development where the former Albertsons and Petco sit.

“I do not believe that JFRCO is prepared to announce anything at the present or share the various plans that are being discussed with regard to the Albertsons/Petco vacancies, but they are working on several options,” said Tami Lord, vice president for SRS Real Estate Partners, who works with JFRCO. 

The property is for lease only, according to SRS, and Albertsons recently ended its lease, Marciniak said.

On June 5, Safeway Stores 46 Inc. sold the former Smoky Hill Safeway to VIG Safeway LLC, a business listed at the same address as Value Investment Group in Colorado Springs. It sold for $4 million, according to county clerk records.

What could replace stores?

While the former Albertsons future is unclear, the path forward for the Safeway is taking shape.

Value Investment Group has seen “a promising amount of interest from potential tenants, including two national fitness centers and a regional swim school,” the company said on its website. Two national quick-service restaurants have shown interest in other space on the property, the company added.

The property is “deed restricted,” meaning the conditions of its sale included that it can't be used for a grocery store, pharmacy, alcohol sales, cigarette or smoke shop, or a convenience or dollar store. Those restrictions apply for 20 years, according to the deed.

“Grocery remains an option at University Towne Center,” Marciniak said. But “King Soopers is located at this intersection, and they are the dominant grocery brand in metro Denver with over one-third of the grocery market share.”

What is the city's role?

The City of Centennial has been in contact with businesses regarding what could occupy the former Albertsons and Safeway, including food hall operators, Marciniak said. Stanley Marketplace in northwest Aurora, which houses many food providers in one place, is an example of that type of outlet.

The city can consider tax incentives for “extraordinary” projects that significantly enhance the community, Marciniak said.

Through its zoning code and other tools like incentives, the city can attempt to help create an attractive environment to developers and desirable retailers, Marciniak said. But who ends up in a space largely depends on owners and market demand.

“As much as the community may want the city to, we're not able to make a certain retailer go into a vacant space or make a shopping center owner lease (or) sell to certain businesses,” Marciniak said.

The city is not considering rezonings or planned unit developments — which allow for a mix of possible types of properties where a city's normal zoning wouldn't — for those locations, Marciniak said.

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