H&S Properties Development Corp. plans to push its Harbor East development east across Central Avenue with an expanded Whole Foods Market, a possible department store and apartments on two sites, baker-turned-developer John Paterakis Sr. said Friday.
The developer will convert the one-story, brown-painted H&S Bakery distribution center into one or two floors of retail space, with apartments above, Paterakis said. H&S Bakery revealed intentions last month to move the center to an East Baltimore office park, freeing up the real estate by the end of 2014, he said.
But first, H&S plans to start construction this summer on what would be a new Whole Foods supermarket on what is now a parking lot one block south of the center. The store would offer Whole Foods three times more space than its current store, with parking above and below.
The grocer has anchored Harbor East's growth since 2002, but its officials would not confirm the move.
"At this time we do not have any plans for stores in development in the Baltimore area, but we are always actively seeking new locations," Kristin Gross, a Whole Foods spokeswoman, said in an email.
The retailer may be unwilling to tip its hand to competitors or might still be negotiating with H&S.
Whole Foods' expansion would make sense, said Jeremy Diamond, a food consultant with Diamond Marketing Group in Baltimore.
As the only upscale supermarket in the waterfront neighborhood just east of the Inner Harbor, Whole Foods will have little competition, he said. An expanded store should fare well even with the planned addition of a Harris Teeter supermarket anchoring the Shops at Canton Crossing, a large shopping center on Canton's waterfront scheduled to open this fall.
"It's a smart move for Whole Foods," Diamond said. "They have to protect their territory, and their customer base is going to increase with the development" of areas bordering Harbor East.
Whole Foods appeals to shoppers who are less concerned about price than quality and availability of natural products, Diamond said. And that makes it a good fit for Harbor East, with its upscale shops and the luxury Four Seasons hotel.
"They're definitely in the right spot, having all these higher-end stores … and a surrounding area that's being built up," said Diamond, noting that for Harbor East clientele, "Whole Foods is the kind of store they would rather shop at, rather than Giant, Shoppers or Safeway."
The move also fits into Whole Foods' strategy of building larger new or replacement stores, he said. The grocer has said it plans to build stores in the 50,000- to 60,000-square-foot range, rather than the typical 25,000- to 30,000-square-foot range.
"As a customer, I'd be thrilled with a larger Whole Foods," said Chela Woodruff, a city schools kindergarten teacher and Mount Vernon resident who takes the circulator bus to shop at the store. "I'm curious to know if there would be more departments," such as the demonstration kitchen she's seen at the Boston store that has turned into a community gathering spot.
Woodruff does worry about a large development's impact on small mom-and-pop stores such as the Fleet Street Market in Fells Point, where she goes to buy bread. She and other shoppers said they hoped any new development would offer adequate parking in a neighborhood where parking is tight.
Emma Bohl, a student who lives in the Eden apartments in the block across the street from where the new store would be built, said she shops at the existing store because "it's convenient, and the food is good."
A student from Brisbane, Australia, on a study-abroad program in Baltimore, Bohl envisioned a new store similar in size to the large Whole Foods in Annapolis. "That would be fantastic," she said.
The parking lot is the former home of Baltimore Contractors Inc., purchased by H&S for an undisclosed amount in 2004, according to state property records. The property is worth $591,900, according to the records.
The new grocery store is expected to be about 60,000 square feet, Paterakis said. He did not say when it could open, but the aim is to start construction this summer as the weather permits.
Paterakis said he hopes to woo a department store for the base of the distribution center site, or at least a floor of retail space.
H&S built the distribution center in 1981, and it is valued at nearly $2 million, according to property records. It is one of two H&S distribution centers in the Baltimore area; the other is in Annapolis Junction.
H&S has bakery operations across the Mid-Atlantic and is known for supplying hamburger buns to McDonald's and Wendy's, and Schmidt sandwich bread to supermarket shelves. The bakery turned developer in the 1990s, taking on construction of the Marriott Waterfront hotel and later much of Harbor East, including the Legg Mason tower and Four Seasons hotel.
Observers had speculated on what H&S might do with the distribution center space since the city Planning Commission approved plans for a new facility, at the Hollander 95 business park overlooking Interstate 95. Rumors had also circulated about a possible larger space for the Whole Foods.
"They've been wanting to move to a larger location because that location right there does a tremendous business," Paterakis said. "It's not too much space in there."
H&S's plans come amid other projects sprouting along Central Avenue.
A block north of the distribution center, a team of Baltimore-based Chesapeake Real Estate Group and Bethesda developer Ken Finkelstein plan a Hyatt Place hotel with ground-level retail. A block north of that, Union Box Co. developer Larry Silverstein is redeveloping the Fallsway Spring building at Eastern and Central avenues as a headquarters for local technology company Groove Commerce.
Farther south, near the planned Whole Foods, city transportation officials and H&S's Harbor East Development Group are planning a four-lane bridge to extend to Harbor Point, the 27-acre waterfront parcel where a 23-story office tower is planned for energy company Exelon Corp.
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