CLEVELAND, Ohio -- Heinen's Fine Foods, a suburban shopping stalwart, plans to step into the city next year with a 33,000-square-foot store in the heart of downtown Cleveland.
The homegrown grocer, led by twin brothers Jeff and Tom Heinen, will occupy a key corner at East Ninth Street and Euclid Avenue. Their store will anchor the northern edge of a huge project -- the transformation of the former Ameritrust complex into a hotel, apartments, offices and Cuyahoga County's new headquarters.
Developer Greg Geis confirmed that he is finalizing a 15-year lease with Heinen's and hopes to open the market, and the rest of the rehabbed complex, in fall 2014. That will make Heinen's downtown's first -- and likely only, in the near term -- major grocer, as the local company bets on continued residential growth in the center city.
The store will fill the first two floors of the historic Rotunda and the first floor of the neighboring Swetland Building, at 1010 Euclid Ave.
"It's a risky deal," said Jeff Heinen, a co-owner of the Warrensville Heights company. "We're hopeful that the growth of population continues to happen. For this particular site, we're willing to take the risk."
Amid Cleveland's broader population losses, downtown has been a bright spot. U.S. Census estimates place the 2013 downtown population at roughly 10,000 people -- or closer to 11,000, depending on where you draw the boundary lines. The Downtown Cleveland Alliance, which represents property owners, says its surveys indicate there are nearly 12,000 residents. And that number is rising.
"We've got about 1,000 new (apartments) that are coming online or will be under construction shortly," said Joe Marinucci, the alliance's chief executive officer. "We estimate that we'll be close to 14,000 people in about 18 months."
That's a dramatic jump from a decade ago, but it's still far below the threshold that most major retailers want to see. Heinen's won't necessarily lead a procession of stores back to the city from the suburbs, analysts say, but the grocer will provide a much-desired service for city-dwellers and act as a powerful magnet for new residents.
"This is very, very positive for the city of Cleveland," said Bob Antall, a retail consultant in Shaker Heights. "The clientele of Heinen's tends to be more middle- and upper-income, so they've got to have that demographic going for them. It is definitely surprising, but I think that they're an intelligent company that does their homework on this sort of thing."
Downtown Cleveland hasn't got many grocery stores. But there are a few to keep the new Heinen's company.
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Downtown isn't a food desert. Constantino's Market, on West 9th Street in the Warehouse District, expanded three years ago and offers a mix of fresh, prepared and packaged foods. Convenience stores and drug stores sell basic items. The West Side Market and two Dave's Markets are a short drive away.
But residents want more options. And Heinen's, which has been eyeing downtown for a decade and came close to a deal at the Flats East Bank project before the recent recession, is entering the market at a critical time. Analysts say a 33,000-square-foot store will more than fill the need downtown, making it unlikely that other grocers will follow anytime soon.
"If you wait until the population gets there, you're too late. Somebody else probably beat you to it," said David Livingston, a Wisconsin supermarket analyst who last studied downtown Cleveland in 2006. "Between now and the time they open, they're looking at population growth. And between the time they open and the time they mature, they're looking at more population growth."
During a recent focus group arranged by the Downtown Cleveland Alliance, the Heinen brothers heard requests for high-quality produce and enough variety to satisfy home chefs. One retired couple, longtime downtown residents who live at the Pinnacle Condominiums in the Warehouse District, said they do most of their shopping at Whole Foods and Trader Joe's in the eastern suburbs.
Joe Gramc, a 30-year-old who lives in the Avenue District apartments and commutes to Willoughby, also shops in the suburbs, at Heinen's or Giant Eagle. Every week, he picks up a bag of food collected from Northeast Ohio farms, through a community-supported agriculture program.
"If there was a grocery store downtown, I would still eat out a good amount," said Gramc, who works for his family's trucking business. "But I probably would cook more. When I get home and I don't have anything to cook at my place, if I want to go shopping anywhere it's a 10- to 15-minute trip each way to get something decent."
Potential shoppers including Suzanne Ryan, who sold her house in Westlake two years ago and moved into the WT Grant lofts on Euclid Avenue, said they would gladly walk a few blocks or take the free trolley to Heinen's.
The Heinen brothers are banking on that foot traffic, since their downtown store won't have free, controlled parking -- a critical element of the suburban supermarket formula.
"We have no intention right now to be associated with free parking," Tom Heinen said. "Based on the concepts we have, we don't need parking. The walking market clearly goes from Cleveland State down to the Flats."
Still, Geis said he is working with the city to carve out metered spaces and pick-up and drop-off points on Euclid and East Ninth. And Tom Heinen said the downtown store might offer online ordering and curbside pick-up.
"Parking would bother me," Livingston said. "I've got a feeling that they're going to find a way. This is Cleveland. This isn't Manhattan. There aren't 60-story apartment towers up above the store where you can depend on having a quarter-mile trade area and 20,000 people. That's not here."
Leaders at the Geis Cos., which bought the former Ameritrust complex early this year and started calling it the M on 9th, still are circumspect about other details of their redevelopment plan -- including the number of apartments and the nature of the hotel.
Geis, who leads the family of companies with his brother, Fred, is wrapping up financing for the Heinen's project. He would not discuss the terms of his deal with the grocer, beyond saying it's not a typical suburban transaction.
It's also not a typical suburban building. This will be a small store for Heinen's, which has 17 Northeast Ohio locations and recently expanded to Chicago, with a standard footprint of 42,000 square feet. The Rotunda, an ornate, round space once filled with bank tellers, will be a challenge for a business that uses square display cases and rectangular shelves.
The brothers said they're still playing with the downtown store layout and product mix, but they won't necessarily be selling pet food or 24-roll packages of toilet paper.
Antall, the local retail consultant, says Heinen's probably won't lose money on the deal -- but it won't be as profitable, short-term, as the company's suburban stores.
Jeff and Tom Heinen acknowledge that risk, but they're confident about their decision. And this deal is about more than dollars for a family business that started in 1929 as a small butcher shop on Cleveland's east side.
"Heinen's always makes long-term commitments, and this is the town we live in," Jeff Heinen said.
His brother jumped in: "There isn't anybody who lives in any city or major metro area that isn't enhanced by the city being vibrant or stronger. This helps everybody. We're hoping this isn't an act of charity."