SAN LEANDRO -- Plans for a new shopping center in downtown San Leandro have been delayed after the departure of its largest tenant, Fresh & Easy Neighborhood Market.
Fresh & Easy terminated its 20-year lease Dec. 7 for the largest space in the Village Marketplace, a six-shop center to be built on East 14th Street between Juana and Dolores avenues.
Cynthia Battenberg, business development manager for San Leandro, said a replacement for Fresh & Easy's former space -- which takes up about half of the 28,000 square feet of retail space available -- must be found in order to obtain the financing needed for construction.
Construction of the center was slated to begin in November and open as soon as September of next year. If a replacement is found by mid-February, construction can begin in March and the shops will open by December next year, the site's developer estimates.
The property was purchased from the city in May by developer David C. Irmer of Sausalito-based Innisfree Ventures II for $2.25 million under a deal initially arranged by the city's redevelopment agency before it was dissolved by the state in February.
Irmer said signs of Fresh & Easy's wavering commitment delayed the groundbreaking, and said that the economy has made retailers more wary of opening new stores.
"It's been difficult. There is no denying it. There are a number of tenants interested in coming to the marketplace but not now," Irmer said, adding that the issue is not unique to San Leandro.
Fresh & Easy representatives said the reversal is tied to an announcement this month by the chain's British parent company, Tesco, that the stores would undergo a strategic review and possibly be sold.
The lease termination could mean the largest tenant in the Village Marketplace won't be a grocery store as envisioned and recommended in a report by a Citizens Advisory Committee in a 2007.
"We would love to have a grocer come in, but I would not be surprised if it were a non-grocer tenant, but we are in the process of evaluating the options and seeing who is out there," Battenberg said.
Irmer said the space available isn't large enough for a larger grocery chain or other specialty grocers like Whole Foods or Trader Joe's.
"Those footprints are larger so we just don't qualify, and I certainly have no interest in turning this center into a quick convenience center," he said. "We are looking for a tenant that has credibility in the marketplace, one that will be acceptable to the greater San Leandro market."
Plans for the space include a clock tower and fountain, both Mediterranean style, and a Raymond Loewy tile mural.
The property was the site of the first Lucky grocery store, opened in 1947, and later became an Albertsons. San Leandro's redevelopment agency acquired the property in 2009 for $6 million, which included demolition of the store. The space is currently used as a parking lot for downtown shoppers.
San Leandro resident Derek Duarte, 57, has followed the development of the marketplace and said he will not miss Fresh & Easy.
"I thought Fresh & Easy was a bad choice to begin with. They didn't have a track record," he said, adding, "It's a really small site. I don't see how they can put in a decent-sized store and all the parking people want."
Guillermina Martinez, a San Leandro assisted-living worker in her 30s, disagrees. She drives to Hayward to shop at a Fresh & Easy.
"I really like that store. It has fresh and organic items like chicken and fruit, and it tastes good," she said. "I am sad they cannot build one here."
Tenants that have secured a lease, or are in the process of securing a lease in the center, include Peet's Coffee & Tea, AT&T, Chipotle, and most recently the Southern California chain Habit Burger. In addition to the largest vacancy left by Fresh & Easy, a space remains for a full-service restaurant.
City officials project the marketplace will cost $8 million to build and create 113 permanent jobs and 500 construction jobs. They also say it will bring the city more than $100,000 in sales tax revenue and $650,000 to the state and county combined each year.
Irmer, the developer on the project, also built the three-building Creekside Plaza Office Complex in San Leandro in March 2010.